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The UK may need an extra 1.1 Million private sector rental properties within the next 4 Years

The number of people renting homes in the UK Private Rented Sector (PRS) has almost doubled over the last ten years, increasing from 2.5 Million tenants in PRS properties in 2002 to 4.8 million tenants today.

‘Rental Britain’ – A new report from Savills estate agency and the property portal Rightmove, predicts that one in five households could be in Private Rented Sector (PRS) property by the year 2016.

That would require an additional 1.1 Million rental properties to be made available for rent to new tenants.

The report may be gloomy reading for the UK Government but it is great news for thousands UK landlords who have already secured their rental incomes using specialist products and services for landlords, such as, Rent Guarantee insurance.

The ‘Rental Britain’ report forecasts that £200 Billion (GBP) investment in property will be needed, but says that only £50 Billion (GBP) of this is expected to come from buy-to let-funding, with the gap filled by institutional investment in new purpose built rental accommodation, but the report says that this needs to be recognised by the planning system.

The report also states that a shortage in supply is making some regions of the UK unaffordable, with PRS rent rises averaging 5.2% across the UK during 2011.

The report estimates that during 2011, working tenants paid around £48 Billion (GBP) in rent to private landlords, and this is expected to rise to around £70 Billion within the next five years.

Lucian Cook, director of Savills residential research, said: “Meeting the growing demand for private renting and the changing profile of tenant demand are perhaps the greatest challenges facing both the housing industry and policy makers. The dynamics of supply and demand make a great case for investment in this sector, and rising rents and lower capital values have begun to attract private investors back into the market. Investment returns relative to other asset classes will dictate the pace of investor entry to this sector.”

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Specialist provider of Buy-to-Let cover, Total Landlord Insurance, has launched Total Rent Guarantee Insurance.

In these troubling financial times it is impossible for landlords to predict whether their tenant’s circumstances will change in the future and whether they will always be able to pay the rent, even though they have a successful reference. With the number of rental arrears on the increase across the nation, it is important that landlords don’t let their investment suffer.

Steve Barnes, Broking Manager, said: “Drawn out legal wrangles, legal expenses and missed rental payments can be a nightmare and play havoc with the landlord’s investment and financial planning. In the current financial climate our customers wanted a policy that would be cost effective and provide legal assistance and rent guarantee in the event of a tenant falling into rental arrears.  That is why we have launched Total Rent Guarantee Insurance.”

 The policies are available both online and by phone, although there are significant discounts if purchased online.  Online, landlords can purchase legal expenses for just £45 saving £31.85 and combined legal expenses & rent guarantee insurance for just £94.50 saving £31.80 over the call centre price.

 For more information on Total Rent Guarantee Insurance, go to www.totallandlordinsurance.co.uk.

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Private residential renting on the decline?

UK PRS faces mounting rent arrears

The demand for Private Rental Sector (PRS) residential property and the rise in the number of tenants struggling to meet their rental payments on a regular monthly basis is expected to see the decline of the UK residential property rental market.

According to the latest lettings survey from the Association of Residential Letting Agents, (ARLA) 55% of its members reported more tenants than available properties in the last quarter of 2011, down on 74% reported in the previous quarter.

39.2% of ARLA members reported an increase in tenants struggling to pay their rent, over the same period, a figure up from 36.7% the previous quarter.

President of ARLA, Tim Hyatt, said: “With household income decreasing and job uncertainty prevailing, it could be that increasing rental arrears is a sign that the wider economic malaise is having a tangible impact on personal finance – some consumers may have reached the limit of their access to finance, while others may be cutting back as many commentators have predicted. We are reassured by the fact that the number of new tenancies is stable, but we will be watching the market closely in the coming months to determine how significant these latest figures will prove to be”.

The number of First‐Time Buyers (FTB) able to secure finance isn’t expected to significantly increase during 2012 so the demand for the limited supply of private sector rental accommodation will only continue to rise. It won’t be long before rents will resume an upward trend.

With the mortgage market still facing more financial fallout from the Eurozone crisis and the wider economy remaining sluggish, UK credit conditions are unlikely to ease significantly in 2012. As household income become even more stretched during the course of the year, it is expected that the current rental boom will begin to decrease outside of prime areas in the latter half of this year.

With the numbers of tenants having trouble paying their rent being on the rise, UK Landlords are encouraged to use Rent Guarantee products from reputable suppliers such as Legal 4 Landlords as a means to keep their rental income flowing in.
If you are a Landlord who lets a property then you run the risk of rent default by your tenant. Even the best checks and references cannot predict a tenant falling on hard times and not being able to pay their rent. Could you cover your expenditure if this happened?

In the current economic climate, many landlords are finding their default rates soar as tenants struggle with rising unemployment and increased bills. Recovering arrears can be difficult and costly for landlords, without any guarantee of success.
At Legal 4 Landlords, our Rent Guarantee Insurance will cover you against your tenant defaulting or failing to pay the rent

UK mortgage lender Nationwide have confirmed their participation in the UK Government’s newly announced New Build Indemnity Scheme.

The scheme is designed to boost the UK housing market, helping prospective buyers unable to raise the large deposits currently needed to secure a mortgage. It will allow first time buyers (FTB) to secure loans on newly built homes with only a 5% deposit, with security for the loan being provided by the Government and housebuilders.

Nationwide already offers a 95% mortgage with a rate of 6.14% through its Save to Buy scheme, and it has not yet been decided if the New Build Indemnity Scheme will make it possible for the building society to cut rates

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