6th December 2005

ARLA Members Survey Report Third Quarter 2005 91k

Achievable rent levels in the private rented sector have increased in both prime central London and throughout the country away from the South East. This is shown in the fourth quarter ARLA survey, published today, December 6th.

The return on residential property investment has stayed static at 4.9% for houses and 5.1% for flats. However this appears to be satisfactory for buy to let investors, as a mood swing has become apparent with significantly more investment landlords buying rather than reducing their property holdings.

Up to 35% of the ARLA member letting agents responding to the survey believe that rents have risen substantially.

Average weekly rents for houses in prime central London are now £655 and for flats £406. In the rest of London, the rent for a house averages £266 and £261 for a flat. This compares with a rental of £175 a week for a house in the Midlands and £112 for a flat. Outside London and the Home Counties, the northwest of England achieves the highest rents, with £200 a week for a house and £157 for a flat. In Scotland, the average rent for a house is £168 a week and £129 for a flat.

The balance of property supply and tenant demand has improved in prime central London. This has narrowed the gap between London and the rest of the country, where the proportion of letting agents saying there are more properties than tenants has increased slightly.

However, the proportion saying that there are still more properties than tenants is still at a historically low level. The figure has fallen from a high of 66% three years ago to just 45% for this quarter.

Commenting on the latest quarter's results, ARLA Chief Executive Adrian Turner said, "This is continuing evidence that the private rented sector continues to be an attractive proposition for investor landlords and that it is the most stable sector of the housing market. This is underpinned by the fact that renting is socially acceptable for many for a variety of different reasons making it likely that industry forecasts of growth in renting from 11% to 15% of all housing are likely to prove accurate."

Meanwhile, more than three quarters of ARLA's member letting agents believe that landlords are still marking time over increasing their net investment in residential property. However, the last quarter has shown a significant increase in agents who believe that landlord investors are on the move again.

Compared to the previous quarter, there has been a marked upturn in the number who believe that investors are buying more, up from 10% to 15%. There is also a corresponding fall in the numbers who say that landlords are selling. This is down from 12% to 7%. This suggests a significant mood swing as the net position has moved from 11% of landlords selling to 8% buying.

This latest quarterly survey, supported by the ARLA panel of mortgage lenders: Birmingham Midshires, GMAC Residential Funding, NatWest Mortgage Services, Paragon Mortgages and The Mortgage Business, shows that ARLA member letting agents let some 310,000 properties under full management.

The rental market in prime central London makes the least use of full management services. Full management services are used for an average of 121 properties in prime central London compared to an average of 198 fully managed properties in each office in the south east and 268 for letting offices in the rest of the country.

Tenants stay for an average of 15 and a half months in prime central London but for a month less in the rest of the South East. They stay for just 13.6 months in the rest of the UK. The average void periods between lets throughout the country remains static at less than a month.

The full fourth quarter survey is available on the ARLA website, www.arla.co.uk

Editors Note:
Regional differences in rents and demands are available in the full survey and this release can be downloaded. The ARLA survey of its member letting agents is the largest survey of its kind in the private rented sector. This quarter, 468 member offices responded. These responses were from single office firms (35%), individual offices belonging to a multi-branch firms (55%) and responses on behalf of a group of offices (10%).

ARLA Members Survey Report Third Quarter 2005 91k

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