Amid rising housing prices, fewer people can afford to become property owners, they are tenants

Despite the fact that rental rates for residential property in the UK are rising steadily, it is expected that they will still be below the level of inflation. The Bank of England forecast inflation for the coming 12 months – 2% per year. And projected growth rates for the rental of residential property can reach 1.8%.

This forecast indicates slower growth rates. Over the past year, growth of cost of rent was 2.4%.

Most of the interviewed homeowners have stated that they do not intend to raise rents in the coming 12 months. Approximately 43% of the surveyed landlords are going to raise the price for their tenants, and most of them explained this intention with the desire to cover inflationary costs, the bulk of which is the costs of maintenance of a house or apartment.

For the last 6 months 41% of landlords reported an increase in demand from tenants. The number of rented housing is growing across the UK. For the year, with August 2013 the number of agreements on rent grew by 6.9 % across the UK.

Good demand for rental helps reduce idle periods of housing. All these factors are inspiring for potential investors. The number of investors buying residential property in the UK to rent is increased. More than half of investors, the key motivation for the purchase of residential property believe increase the rental yield and note that the yield from such investments is higher than the traditional yields from any other kind of investment.

The UK government has made great efforts to ensure that more people become owners of their own homes. This and various state programs of assistance for the buyers who first buy a house, and low interest rates on loans and a decrease in the size of the down payment.

However, all these factors are also the cause of the increased demand, and therefore the cost of housing and ultimately boomerang hits the market rent of residential property.

In addition, more and more people prefer flexibility in movement, preferring to lease housing near work.

In the short term confidence to the market rent of residential property in the UK should make sure the economic recovery and employment growth. Given the relatively low forecast for inflation this year, the rental yield of residential property will remain one of the most profitable and stable ways of investments.

® Helen Antre 03.10.2014 g

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