11th March 2003

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Quiet optimism over rent levels is beginning to be a feature of the lettings market, according to the most recent quarterly survey of its members by the Association of Residential Lettings Agents, ARLA.

The ARLA survey is conducted through the offices of member letting agents, the front line of the Private Rented Sector and the latest quarter shows that well over half (58%) believe that rents have stabilised or even risen.

Nationally, a quarter (25%) of all agents believe that rents had risen at the end of February. Exactly a third (33.3%) believe rents have remained the same while 41.3% believe rents are down.

The rental market in prime central London is still having a disproportionate effect on the national average figures as only 5.3% of ARLA members in the Capital see signs of rents rising. 71.3% believe rents are down and 23.3% believe they have stayed the same.

However, in the rest of the South East there is more optimism. A quarter, 24.3% believe achievable rents are up, 35% that they have stayed the same and 40.8% believe them to be down.

For a different picture, go to the rest of the UK. 43.5% believe that prospects are bright for rents with achievable rents rising. 40.6% believe they have stayed the same and only 16% believe they are down.

This picture is drawn from the biggest quarterly survey of letting agents. It takes in the Buy to Let market as well as general issues concerning the Private Rented Sector.

It is conducted every three months with a base of over 500 ARLA member letting agents and is supported by the ARLA Panel of Buy to Let Mortgage lenders: Birmingham Midshires, GMAC Residential Funding, NatWest Mortgage Services, Paragon Mortgages and Standard Life Bank. The ARLA panel are all active specialists in the Buy to Let market.

For Buy to Let investors, although prime central London continues to show lower rent levels, the average values of property acquired for investment purposes have risen by 4.7% over the last three months. The rest of the South East saw rises of 3.2% and the rest of the UK just 0.8%, the ARLA survey showed.

The average value of Buy to Let property has risen over the past year from £156,700 to £167,9000. This rise takes account of the downward blip towards the end of last year caused by the fall in values in prime central London.

The number of new tenancies arranged over the last quarter was down by 14%. However, it is noticeable that the average void period has remained unchanged. Therefore, it is likely that the number of tenants extending the length of their current agreements has compensated for any apparent decrease in newly arranged tenancies. The average void period remains unchanged at 28 days, although prime central London has higher than average voids at 36 days.

The overall balance of supply and demand is believed to be improving. At the three months to the end of February, a little over half of the ARLA members (56%) responding to the survey believed that there were more properties than tenants. This is an improvement on November, when two thirds, 66%, believed there was oversupply.

In prime central London, 78.6% believed there was an oversupply during the three months to the end of February. This is a drop from 84.5% in November.

In the rest of the South East, 54% believed there was oversupply, against 68.2% in November. In the rest of the UK, only 37% believed there was oversupply, a drop of nearly 10% from 46.8% at the end of the last quarter.

The survey shows that ARLA members continue to believe that the Buy to Let initiative has boosted the whole Private Rented Sector and continues to be a dominating factor in the continual improvement of standards throughout the rental market.

Commented John Crossley, Chairman of ARLA, “ There seems to be an overall return to balanced supply and demand as a result of traditional growth in the rental market that always appears when house price growth slows down. The survey also proves, once again, that Buy to Let investors are a driving force in housing by providing choice in housing.”

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