Rental Demand to Continue to Outstrip Supply

The Association of Residential Letting Agents (ARLA) is forecasting that rental demand will continue to outstrip the supply of rental property in 2011. With relatively little new rental stock coming to the market and a continued strong demand the news will be welcomed by existing landlords as a sign that demand should hold up well.

With first time buyers having to meet tougher lending requirements, many are struggling to buy their own property. There should continue to be a steady stream of tenants seeking quality rental property, which has seen rental yields remain solid.

ARLA suggests that some new rental stock has come to the market due to accidental/reluctant landlords that cannot sell their property turning to the letting sector. However it is not enough to keep pace with growing demand.

Life has been more difficult for Buy to Let investors on the mortgage front in recent years with a reduced level of competition and tightening of criteria and mortgage availability. This means that those seeking a Buy to Let mortgage will need bigger deposits, typically in excess of 25%.

However, there have been some new entrants to the mortgage market with the likes of Aldermore Bank and Precise Mortgages launching and Paragon lending again. There seems to be an air of optimism around the Buy to Let market and other lenders could enter in 2011.

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