What Will 2014 Bring for the UK’s Property Rental Market?

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A-row-of-for-sale-to-let--007Property values have been depressed throughout 2013 as the UK makes its way through recession. Banks have been loath to lend, and many people have not been able to afford mortgages or deposits to buy homes. A few years widespread foreclosures and repossessions have reduced confidence in economic prospects and slowed activity in the property market to nearly a standstill. So now a look at what may be ahead in the 2014rental property market.

If the worst of the recession has run its course, with confidence coming back expect to see small property purchase price and rental increases throughout 2014. As the job market gets better, so rises the general mood and confidence of purchasers and renters who have held off on property investments. Besides financial factors, there have been more marriages and births, and these new and larger families may look for better homes.

In the rental market, the government cutback in financial support for the unemployed coupled with continued financial problems for many people mean a likelihood of more movement into rentals. Some simply want their own living space; others can no longer afford a mortgage or deposit for a home purchases. There probably will be a lower tenant turnover now that more of them have secure jobs, and their relocations are likely to be for longer terms. As a consequence, landlords may raise rents throughout the next two years.

Landlords now seem to be better able to expand their property portfolios, good news for those who want to sell small properties. The recession has made alert landlords aware of the many opportunities to purchase additional properties. It would be unrealistic to expect landlords to reduce rents after they acquire more properties.

Overall there should be more rentals in 2014; however, wherever in the UK property values have remained stable or, as in London or Guernsey, even increased, the number of rentals actually could decrease and that demand for property investment related financial products such as those from Clydesdale Bank will remain high. Because property values continuously rise with no drop ever in Guernsey since records started, to buy now at a high price may be sensible as the price seems always to go up. Such investments in London or Guernsey property is more for capital gain than for steady rental income.

The Ernst & Young Item Club predicts that recovery will be slower than the UK housing market would like. They say property values will not be at their 2007 peak again for five years because funds are limited, and prices probably will drop again in the first half of 2014. If these predictions are correct, the UK housing market will not recover fully until after 2014.

So how will it turn out? Will there be the housing market recovery predicted for 2014? Most analysts now say that realistically 2019 is the year to expect prices to return to their 2007 peak. Confidence is still low, movement stale, and most positive trends no longer than three-month spurts, not a true measure of recovery, so all these signs seem to signal a very slow recovery in the UK rental housing market.

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