Landlords in the UK, again find themselves on the horns of a dilemma as yet another survey reports that house prices are once more on the slide.
Great news for landlords with ambition and a bank balance to match. For these landlords, acquiring property and landlord insurance to go with it, at this moment in time could be a good idea. There is no doubt that for the foreseeable future, the landlord prepared to take a gamble will find some really good bargains and not necessarily in basements. On the face of it, adding to your portfolio does seem an attractive proposition at the moment. Estate Agents and letting agents agree that demand for private residential accommodation is booming.
The austerity measures have not really kicked in yet, so the short term outlook for rented property surely suggests that demand will grow. Job losses in the public sector should start snowballing late autumn and could stay at high levels for the next two years. The NHS and local government spending cuts should see steady job losses until 2013 and with it a reluctance for people to commit themselves to a mortgage in such uncertain times. One great source of income for landlords of course is students. Perhaps here too, landlords will see a growth in demand, with less jobs around there is obviously a chance that many youngsters fresh out of school will opt for University life rather than sign up for jobseekers allowance. So the landlord looking to expand appears to have many factors in his favour, however, there is a flip side.
Over the last 6 months, surveys by landlord associations and letting agents, have reported a small but steady increase in the amount of rent landlords are able to charge. This has been more or less nationwide and not confined to the South East. Although this should continue short term, if more and more properties are turned into private rental accommodation then the tide could turn, and small landlords may find their rental income squeezed. Worse still for the small landlord are the reports on falling house prices.
The Royal Institute of Chartered Surveyors (RICS) survey out today backs up similar data produced by the Nationwide and Halifax in recent weeks, house prices are dropping. Many forecast this drop to continue next year and one report suggests property prices will not increase in value between now and 2020! Many landlords see the actual value of the property of more importance than the actual rental value. This particularly applies to landlords with just one or maybe two properties who see their investment as a retirement package.