Housing shortage will increase rents

The third quarter in 2010 saw the development of new homes at its lowest in 5 years, the second lowest of the past 19 quarters and the lowest since 1923. The country has an estimated one million housing shortage and the New Housing Pipeline shows there was a steady fall in planning permission being granted.

Although property prices are predicted to fall again in 2011, London and the South are expected to remain resilient.  This coupled with the housing shortage does make buying Buy To Let (BTL) properties still a positive return and current yields are still bringing in a more favourable return than savings accounts.  New BTL mortgages are starting to slowly come back, Coventry recently released a 3 years deal at 4.99%.

Good news for Landlords – because of the housing shortage, we will see a rise in rental prices, however due to the economic climate a rent guarantee insurance of some kind will be advisable.  2009 saw a 50% increase in rent arrears nationally and although this decreased slightly in 2010, there is concern we will see this coming back again in 2011.  This makes it more vital to use a good reputable agent who can limit this with good referencing techniques.

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