2010 tough for Private Rented Sector

2010 is likely to be even more challenging for the UK's private rented property sector than this year has proved.

According to the Association of Residential Letting Agents (ARLA), increasing numbers of landlords defaulting on their mortgage repayments will pose a threat to tenants, while at the other end of the spectrum, problems with the Local Housing Allowance (LHA) system will result in more tenants failing to make their mortgage repayments.

Both landlord and tenant defaults and arrears will be compounded by rising unemployment.

ARLA operations manager Ian Potter said:

“Mortgage defaulting is a problem that will not go away in a hurry, and we have long emphasised the importance of careful selection of both tenants and landlords to ARLA members, as well as the implementation of contracts and agreements.”

However Potter also pointed out that 2010 will bring opportunities for investors as more buy-to-let mortgages become available while house prices have fallen and become more affordable.

The oversupply of rental property which characterised 2009 should disappear as more ‘reluctant landlords’ who were forced to rent out their properties because they could not sell, manage to leave the market as buying activity picks up.

“As demand rises, in particular due to a lack of social housing, there will also be mounting pressure on the sector to provide good quality rental properties,” said Ian Potter.

“There has been little commitment from the Government thus far on economic measures to help the wider industry meet property demand, but increasing demand should have a positive effect on the PRS, creating opportunities for new and existing investors and driving standards up.

“In a recent debate the Housing Minister displayed a lack of empathy with those living in the PRS when he argued that it consists of three million households – when it in fact consists of eight million people. Perhaps we should question why he seems to have depersonalised the PRS, as the Government continues to evade implementing measures to help the sector.”