Lack of mortgage finance is pushing would-be buyers into renting and would-be sellers into landlords.
The number of people signing up for rented accommodation rose in September, with demand up 50% year on year, according to UK lettings agent Your Move. The number of leases commencing in September jumped 4.34% from August 2008 coinciding with mortgage advances being at an all time low, which indicates that would-be buyers are renting rather than buying property.
Managing director of Your Move, David Newnes: “As banks stopper the bottle of mortgage finance, potential buyers have to stay in rented homes for longer than they have in the past. The lettings market is thriving – we are seeing the strongest tenant demand we’ve ever had, far beyond normal seasonal fluctuations.”
Although the lack of mortgage finance is pushing would-be buyers into renting and would-be sellers into becoming landlords until the market stabilises, the influx of supply is being met by a flood of demand - keeping rents firm. The number of leases commencing in January to September 2008 is up 45% on the same period in 2007.
In spite of the larger number of rental properties coming on to the market, as disillusioned sellers become ad hoc landlords, would-be buyers are biding their time in the hope that they’ll bag a bargain when the market bottoms out.
