Shortage of properties to cater rental demand boosts investment

Posted under General by Jermaine

There is spurt, for the first time in last 2 years, in purchase of more homes by landlords than in selling. Developers are also keen on letting rather than selling properties.

But it does not mean that developers are desperate or landlords are foolhardy. The data regarding demand for rentals points out that it is set to rise due to acute shortage of mortgage and increasing realisation among people about benefits of rental accommodation.

As a result of increasing repossessions, long wait for social housing and owning a home becoming almost impossible for young people, demand for letting is going up more than supply, as revealed in the findings of most surveys. It will be even more difficult for the firs-time buyers to get mortgages if the Financial Services Authority decides to ban 100% mortgages and puts “three times a borrower’s income” cap on home loans, as reported in the media.

According to report by the Centre for Cities, by 2021 demand for rental will be so high that one in five homes will have to be a rental property. Hometrack’s research head, Richard Donnell, believes that rental sector does have a larger role to play. According to him in the last few months rents have been increasing continuously in some areas as many prospective buyers were opting for renting. He predicts this will gather momentum as fewer people will afford to buy.

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