Are rents on the up?

The sales market for family homes is picking up again, and the tide of frustrated sellers renting out their homes is retracting. This drop in supply means rents at the top end of the market could begin to creep up again, albeit at a very slow pace for as long as the economy remains fragile. But first time buyers are still struggling with restrictive mortgage criteria, and only those with very large deposits are able to make the step onto the property ladder. This means that rental demand for smaller homes remains strong, but supply is also high as owner occupiers on the bottom rung continue to rent out their unsellable properties.

The current economic climate is forcing more people into higher education and the number of self employed is also increasing. This is pushing up tenant demand and on the whole, rents will remain fairly stable for the rest of this year. Yields are looking attractive and with the housing market nearing the bottom many landlords are looking at expanding their portfolios. But despite the financial aspect of property investment currently looking attractive, rising unemployment among tenants poses a big risk to regular returns. Landlords should make sure they protect themselves by taking out rent guarantee insurance against late rental payment and default.