The beginning of 2011
saw an influx of higher value property into the Private Rented Sector
(PRS), according to the latest research from the Association of
Residential Letting Agents (ARLA).
Research for Q1 2011
shows an 11.6% increase in the average capital value of rental
houses, from £401,400 to £447,900. Previously, this figure had
declined following the last market peak at £442,600 in 2007.
This growth was driven
by London and the South East, with a 14.8 per cent increase in
average capital value in central London and 16.2 per cent in the rest
of the South East. The rest of the UK experienced a drop (5.2%).
According to ARLA, this growth is due to an increase in family homes
coming onto the rental market, which generally carry a higher value
than smaller homes.
Ian Potter, operations
manager of ARLA, said: "We believe that this increase in the
overall average capital value of rental properties has been driven by
different types of home being offered to let. Today's housing
climate and uncertainty around jobs and income means many people are
choosing to let rather sell their home, causing an increase in the
number of family-sized homes available to rent."
ARLA's research shows
that, of the 39 per cent of ARLA members reporting an increase in
property coming onto the market because it could not be sold, the
biggest proportion was for family-sized homes, with 66 per cent
reporting an increase in semi-detached and 63 per cent reporting an
increase in detached houses.
Mr Potter added: "While
these changes do not necessarily mean individual properties are worth
more money, they do indicate that there is increasing flexibility in
terms of the types of property available to would-be tenants in the
expansion of the PRS for those unable to buy reinforces the need for
greater institutional investment, which was acknowledged in the
Budget through the Chancellor's amends to REITs and Stamp Duty on
bulk purchases. The Government must recognise however that these
investors see consumer protection as paramount to protecting
reputational risk, and so regulation is urgently required if there is
to be an influx of landlords into the sector.
"Landlords with a
greater valued asset recognise that by using a regulated ARLA member,
their money will be protected by a client money protection scheme, a
service which many unregulated agents do not offer. ARLA members can
also market the property more effectively through PropertyLive.co.uk,
the only property portal which uses professional, regulated agents."
ARLA research also
showed a slight rise in the average capital value of rental flats,
from £258,500 to £267,400 (a 3.4% increase). Again, this occurred
mainly in central London (4.7%) and the South East (4.4%), with a 1.7
per cent drop in the elsewhere in the UK.
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