With the property market in a state of flux, and with prices still to hit bottom out, it may be understandable that a considerable number of the families who were considering putting their toes in the water of the property market are hanging off for the meantime. Their reticence may well have created a situation where the demand for rental properties have actually increased, and more and more property developers are in the market to pick up properties at their current market value even though they are fully aware that the properties that they are buying may yet fall in value by a further ten or even fifteen percent.

The logic behind their thinking is that, because their may be a shortage of rental properties and a surplus of potential rental clients, they stand a very good chance of recuperating most of the depreciation over the next two years through being able to charge rental fees sufficiently high.

Current trend

The current trend towards find property to buy for let is crowded, with many developers with cash in their pockets scouring the market for properties priced below current market value. There are a number of interesting situations occurring where house owners are actually selling their properties in order to release equity, and renting them back from the developer. With many home owners, especially those fairly recent, first time buyers who are seeing their equity slowly being eaten away, see buy/rent as the only solution of rescuing some capital will move fairly quickly to save capital and some face.

Another untapped market for buy to let opportunists is the large sector of immigrants from Eastern Europe who have arrived in the UK over the last few years, and who are always hungry for cheap rental apartments.

The buyer will expect no more in the first few years than to recover their finance costs till property prices hit the depths of their trough and begin to recover.

As long as prices continue to drop, property investors who are capable of keeping a very accurate track on current market values should be able to find bargains, with the added benefit of knowing that they will be able to rent them out immediately, in a market where the demand is getting stronger all the time.

And how does a property investor know that now is the time to become involved in the buy to let market.  A very good indicator is  the ARLA quarterly survey issued early September 2008. The survey shows an increase in demand of nearly twenty percent in rental property in the preceding quarter, with all indications that this is not a flash in the pan. Instead this is a trend that is bound to continue for the foreseeable future as the owner-occupier market slows down apace.

This increased demand naturally has brought competition amongst renters for good quality accommodation, with rental prices rising by around five percent in the same period, both for houses as well as flats.

Indeed, renting flats in central London has returned to become the most lucrative sector for property development with property values rising by almost fifteen percent and rental charges accordingly.

Buy to Let the place to be

There is no doubt that the buy to let property investment sector is the place to be these days. Tenancies are lasting longer, and when properties become vacant, they are snapped up like hot cakes. On a national scale, rental prices have risen in the last quarter by three percent for houses and a whopping seven percent for flats. The dramatic rise in rental prices for flats has been distorted by the central London flat property gauge, with rental income from flats outside of London rising by around four per cent. Still a very considerable rise.

Popularity: 34% [?]