Member Article

Rental Britain: A bubble that could burst

The special rental report by Savills and Rightmove reveals an extremely optimistic future for ‘Rental Britain’ with the private rental sector set to continue booming for at least the next four years, but one North East lettings expert is urging investors to be cautious.

Ajay Jagota, managing director of property management agency, KIS Lettings, says while it’s fantastic that things are looking positive for landlords and potential investors at present, anyone moving into the private rental sector for the first time needs to be vigilant.

He said: “The report highlights that the number of private rented households has increased from 3.4 million five years ago to 4.8 million and is expected to grow to at least 5.9 million by 2016. This news is certain to attract new investors looking to reap the rewards of the demand for rental property.

“While the rental boom is fantastic news for those savvy investors and experienced
landlords, anyone new to residential property letting and looking to enter the market for the
first time should certainly be vigilant before making any purchase.

“I’m not one to look on the gloomy side, but the bottom line is that where there is a boom, there is going to come a time when things won’t be quite so rosy. And nobody knows how or when that will happen.”

Ajay is concerned that prospective landlords will buy into the rental market without considering the variable factors.

“Current interest rates are attractive and rental yields are high across the UK but investors need to factor in how they will cope if interest rates rise or demand for rented accommodation falls,” he commented.

“They may face huge problems if there’s a major change in the ability for first time buyers to finance a mortgage, for example if required mortgage deposit amounts drop and mortgages become more affordable.

“Buying property at today’s prices and enjoying today’s yields is a smart move as long as those changeable aspects are considered.”

KIS Lettings, which has branches in South Shields, Sunderland and North Shields, supports existing and prospective landlords to assess the viability of potential investment properties as well as providing a full tenant search and management service.

Ajay added: “As someone who has been in property investment for more than 20 years I’ve had a lot of experience with buying to let. I feel it is our duty as a responsible letting agent to provide advice and guidance even before a property is purchased. So, we are more than happy to support any new or existing landlords that come to us when they are considering a new investment.”

This was posted in Bdaily's Members' News section by Ajay Jagota .