Investment rising on back of strong tenant demand

Confusion over interest rates and a belief that house price growth could slow down next year is seeing more would-be homeowners hold off from making a property purchase in favour of private rented accommodation, two separate studies show.

Both the Royal Institution of Chartered Surveyors (Rics) and the Association of Residential Lettings Agents (Arla) have said that rents remain very strong, with Rics predicting record growth rates in coming months and Arla saying that rent levels are already at an all-time high.

Desire for houses as opposed to flats is continuing, Arla added, with average rents for houses more than half as much again as those for flats. But Rics suggests that rental growth for the latter properties will pick up in the autumn.

"Once again, the sector is acting as the only viable safety valve for housing as a whole and bridging the gap between owner-occupation and the various provisions for social housing," commented Arla operations manager Ian Potter.

However, Rics added that those looking to invest in sub-prime properties could struggle moving forwards as lending conditions tightened.


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