Says Leaders’ managing director, Paul Weller: “Despite the disruption of the snow during the first two weeks of January, most of our branches experienced an incredibly busy month, with high demand for all types of properties, from studio and 1 or 2 bedroom flats to big and small family homes. We are finding that good quality properties are being snapped up quickly with many people waiting for more to come onto the market. This is an excellent time for anyone considering buying a property to let, or renting out their home, to enter the lettings market.”

Although the UK is officially coming out of recession, many people are still either unwilling or unable to take on a mortgage and are choosing to rent rather than buy. The availability of finance for first-time buyers has not improved significantly since last year and is still stifling the sales market, leading to increased demand in the rental sector.

Whilst recent research by the Association of Residential Letting Agents (ARLA) shows that 54% of landlords believe that tenants are being forced into renting as they either cannot afford to buy; cannot find a competitive mortgage; or are unable to find a suitable property to buy (these tenants have been coined “reluctant tenants”), Leaders believe that a significant number are choosing to rent because they prefer it.

Says Mr Weller: “Renting offers a more flexible and carefree lifestyle than buying. There are no worries about maintenance and repair costs, fluctuating interest rates affecting mortgage payments, or committing to a property or area long-term. Many people want or need to be able to move easily for work and enjoy the freedom that renting offers.”

This attitude towards renting, which is becoming more similar to that of mainland Europe where renting is the norm, means that renting out a property – provided it is done with professional, expert advice – is an attractive long-term investment.
Says Mr Weller: “Boom or bust, the letting market has the capacity to thrive: when the economy is doing well, people want the flexibility to move for work opportunities; when it is doing badly they prefer not to commit to a mortgage and the additional expenses of home ownership. Throw in the issues we have been experiencing lately – a credit crunch and a slow sales market – and it is clear why the lettings market is doing so well.

“Overall, we are very positive about 2010 as we expect the high demand for rented accommodation to continue in the face of both the slow sales market and the wider economic uncertainty.”

Oakwood Estates of Iver

HomeLet, the market-leading tenant referencing and specialist insurance provider to the lettings industry, conducted an independent customer satisfaction survey in December 2009 which revealed that 98% of agents expect the lettings market to stay the same, grow or grow substantially in the next 12 months. This is up by 12% on January 2009.

This figure reflects the results of recent research by ARLA which revealed that the surplus of rental property is reducing, while demand for properties is rising.

According to ARLA, this shift has generated a wave of reluctant tenants. During Q4 2009 41% of members reported that there were more tenants than properties – compared with just 24% in Q3 2009. In addition, ARLA research among landlords revealed that 54% of those asked felt that consumers were being forced to rent rather than buy.

The rise in tenants and the downturn in supply is likely to result in rental price growth which is a positive sign for the lettings industry.

Managing Director of HomeLet John Boyle said: “Demand for rental properties will remain strong over the next few years as first-time buyers continue to find it difficult to obtain mortgage finance.”

“Confidence in the buy-to-let market is also likely to be buoyed by figures released by LSL Property Services which showed gains of 7.6% in the private rental sector over the last 12 months, and a gradual increase in buy-to-let lending as the year progresses.”

The HomeLet survey of its approved agents also produced some positive results surrounding customer perceptions, with 80% of respondents saying HomeLet delivers good customer service.

Meanwhile 69% of the agents think HomeLet is innovative, which is a 27% increase and reflects the work HomeLet has been doing to reinvigorate its products and processes.

Encouragingly 91% of agents surveyed said they are still likely to be a HomeLet customer in a years’ time and 88% would recommend the tenant referencing and specialist insurance provider to another agent.

Commenting on these results, John said: “This survey has thrown up some really promising results for our business and the industry as a whole.

“It shows our customers think HomeLet is innovative, provides good customer service and communicates effectively with its customers, it also reaffirms what we think HomeLet has to offer the marketplace. We’re always striving to improve and deliver an exceptional level if service to our network of dedicated professional letting agents.”

Oakwood Estates of Iver

Statistics from the Council of Mortgage Lenders (CML) showed that the number of buy-to-let loans grew by around 25,000 in the third quarter compared to the preceding three months.

CML director general Michael Coogan said that although the recovery was modest, the report indicates buy-to-let is “here to stay”.

Ian Potter, Arla operations manager, said: “Arla welcomes the rise in buy-to-let lending, which suggests that the market is getting back on its feet following two years of pain through a lack of lending from high street banks.”

He added that the CML’s figures had been borne out by his organisation’s own findings, which recorded that landlords have increased their average number of properties to seven in the past year, up from a previous figure of 6.3.

The pair are leading a coalition of property-related organisations, including the Council of Mortgage Lenders and the Home Builders Federation, in asking the government to review the “anachronistic” tax.

Speaking to the Press Association, NAEA chief executive Peter Bolton-King said: “It limits market flexibility, creates regional inequality and its slab structure unfairly distorts the housing market.”

The coalition wants to see the level at which the tax is introduced go up in line with inflation each year, as well as an immediate increase on its current £175,000 threshold.

At the moment, stamp duty is charged at one per cent of the purchase price on properties costing between £175,000 and £250,000, with houses worth up to £500,000 charged stamp duty of three per cent.

Earlier this month, research agency BRDC revealed that around 25 per cent of landlords are either making a loss or just breaking even.

The charity says that the amount a person can receive in income before paying tax is so low it is putting people off offering a room to potential renters.

The threshold of £4,250 has not changed since it was set in 1997 although rents have gone up by more than 110 per cent, Shelter said.

Kay Boycott, director of policy and campaigns, said: ‘In the current economic climate, many homeowners are battling to meet their mortgage payments and many are looking for options to maximise their income.

‘If the rent-a-room threshold was higher and the scheme better publicised, it could prove a real incentive for people to take in a lodger, and the take up of rent-a-room opportunities could increase.’

The charity is calling for the threshold to be raised to £9,000 a year, which it estimates would cost the Treasury around £5 million per year.

Meanwhile the Scottish arm of the charity has called for drastic action to stop people losing their home in the country, after figures from sheriff courts showed a 20 per cent rise in mortgage actions between 2008 and 2009.

It wants lenders to get behind the Scottish Government’s proposals to help struggling homeowners, contained in the Home Owners and Debtor Protection Bill.

Graeme Brown, director of Shelter Scotland, said: ‘Radical action is needed at a time when more families than ever are losing their homes. Without that repossessions are set to soar.

‘As first-time buyer numbers plummet protections for homeowners must be matched by protections for tenants.

‘Unless we get a better balance in the housing market we are already sowing the seeds of the next boom and bust cycle.’

He added that the government’s measures should be scrutinised, but ‘the industry must not let that drift into carping about unnecessary regulation’.

Evidence from the research suggests that consumers are increasingly open to alternative methods of buying or selling a home. While the large majority of sellers used a traditional estate agent, more than a third initially considered selling privately, using an online estate agent, or selling at auction. There is a marked increase in interest in online estate agents relative to previous survey in 2004.

Consumer satisfaction with the services provided by estate agents has improved – 88 per cent of both buyers and sellers were satisfied with the service provided by estate agents, a higher level of satisfaction than five years ago (72 per cent of buyers and 74 per cent of sellers). The majority of consumer complaints in the sector are about the individual buyer or seller on the other side of the transaction or their solicitor, rather than with the estate agent involved.

One of the surveys asked Trading Standards about enforcement action against estate agents. On average, 24 per cent of estate agents were found not to be complying with the relevant regulations on the first visit from Trading Standards officers.

The research also covered the question of fees received by estate agents on services provided to buyers such as referrals for mortgages, surveys, legal advice and other services. On average, estate agents made recommendations about the providers of such ancillary services to 65 per cent of buyers and 36 per cent of buyers took up these recommendations and went on to use at least one of these services.

Most buyers said that the estate agent had described the options available for taking third party services, but did not push them – the majority (82 per cent) did not feel that they had received a ‘hard sell’.

In the home buying and selling process, estate agents represent the seller. When asked whose interests they felt the estate agent from whom they bought their property was representing, 53 per cent of buyers felt that the estate agent was working equally on behalf of them and the seller, 40 per cent felt that the estate agent was working mostly on the seller’s behalf, while six per cent felt that the estate agent was working mostly on their behalf, as a buyer.

Nineteen per cent of buyers said they had experienced a purchase falling through after they had made an offer that the seller had accepted – the most common reason for a sale falling through was another buyer made a better offer, followed by the buyer withdrawing after a survey showed problems with the house, and problems elsewhere in the chain.

Heather Clayton, OFT Senior Director of Infrastructure, said:

‘This is important research which updates the available evidence about the process of buying and selling a home and current and future developments in the sector. For example, it shows the enormous potential for new internet-based business models in home buying and selling.

Our final report will look at, among other things, how new ways of buying and selling a home may develop in the future, whether there is scope to improve consumer protection enforcement, consumer awareness of potential pitfalls in the process and ancillary services sold by estate agents.’

The OFT intends to publish the study in early 2010. Today’s reports are available on the Home buying and selling market study page.

James Davies, founder and chief executive officer of the company, explained the potential increase in demand.

Factors that may lead people to choose to rent a property include a successful working culture, an increase in population and the fact that people are choosing to get married later in life, Mr Davies posited.

“It is no longer a taboo to rent,” he commented, going on to add: “Demand for rental properties is going to be increasing.”

However, this may impact on rental prices if supply does not meet demand, Mr Davies cautioned.

According to the FindaProperty.co.uk Rental Index, the average price for a rented property increased from £823 to £825 between June and July this year.

Ian Wilson, Managing Director of Martin & Co, said: “The Ombudsman’s report illustrates a dangerous phenomenon that should be of concern to anyone letting, or thinking of letting their property.

“As properties fail to sell, we have seen a sizeable increase in the number of new (and sometimes reluctant) landlords entering the market. These are the very people who need protecting from the unscrupulous, uneducated or inexperienced letting agent who claims to be able to represent their best interests.

“However, there is also a corresponding increase in the number of estate agents entering the lettings arena as a way of bolstering their dwindling sales revenues, with potentially disastrous consequences.

“Not only is the continual-service role of the letting agent surprisingly different to the quick-fix function of an estate agent, but there are also over 100 pieces of letting-related legislation in which to be conversant.

“Knowing how intensively letting agents need to train, and the pressure they are currently under to deliver ambitious results without compromising customer service excellence, it is not a job for the fainthearted.

“Landlords should be extra vigilant when choosing a letting agent.”