Landlords looking to 'sit tight' in 2012

by Sarah Ashcroft

Buying and selling property in the private rented sector (PRS) brings added paper work for landlords. But expanding or consolidating a property portfolio can prove worthwhile, even if it does mean having to change all the accompanying documents.

However, a new report shows landlords may be shying away from buying and selling property in 2012, happy instead to sit on their portfolios as they are. There was increased activity in the market last year, but this will not continue in 2012, according to the Association of Residential Letting Agents (Arla).

It found that the number of landlords who sold a property in the last 12 months increased from six per cent to eight per cent in Q4 2011. The number of landlords saying they had bought properties also rose, from 23 per cent to 25 per cent over the same period.

However, the number of landlords saying they expect to acquire further properties in the next year dropped from 27 per cent to 25 per cent, while the number forecasting to sell rose from eight per cent to nine per cent.

Arla president Tim Hyatt says rental growth will be "robust", though at a more sustainable level of around four to five per cent for this year.

"This will come about in part because of the continued inactivity in the sales market but nothing like the growth we have seen for the past two years. But the PRS still represents substantial value for investors looking to enter the market or increase their participation," he added.

Meanwhile, predictions for the PRS from other sources suggest 2012 will be very healthy. Research from buy to let lender Paragon shows more than half (56 per cent) of landlords expect tenant demand to "grow or boom" over the next 12 months, compared to 45 per cent who were asked the same question at the end of 2010. Just six per cent of landlords think demand will fall this year.

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Published on: January 30, 2012

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