No Soaring Rents as Supply and Demand Levels Come Into Balance Quarterly ARLA Survey Shows

LONDON, June 9 /PRNewswire/ — Marginal falls in rental returns for houses and flats are reported in the
latest quarterly survey of ARLA’s member letting agents published today, June
9. This, ARLA believes, is due to the number of new developments coming
on-stream. The Association also points out that this demolishes the myth that
rent levels are soaring.

Demand for rental property still outstrips supply in some areas, with the
proportion of letting agents reporting this imbalance at its highest in
Greater London and the South East, followed by Prime Central London and the
rest of the country. Overall, the proportion of agents reporting more tenants
than there are properties available to rent remains at a historically high
level of 39%. However, average weighted rents for houses are down by 7% and
for flats by 9%.

Commented Ian Potter, Head of Operations for ARLA, “We are seeing
corrections in individual locations throughout the country. The main cause of
these is the developments of new blocks of two-bedroomed flats coming
on-stream. In many places this has had a positive effect as it has allowed
the rental market to provide stability in housing at a time of volatility in
the sales market. It also demolishes the myth of soaring rent levels. As
before in volatile times, the rental market is proving to be the white knight
for housing as a whole.”
Average rents for a house range from GBP3,000 a month in London to GBP931
a month outside the South East. For flats, the rental difference is GBP2,000
a month in central London, GBP854 in the South East and GBP585 a month
elsewhere.

The ARLA survey shows that most investment landlords (77%) are marking
time and neither selling nor buying.

The average capital asset values of rented houses have fallen by 2.4% in
Prime Central London, 1% in the rest of London and the South East and 5.1% in
the rest of the UK. For flats, average values rose in the South East by 0.9%
while falling 3% in Prime Central London and 8.1% in the rest of the UK.

The average values of rented houses are GBP800,000 in Prime Central
London, GBP336,900 in the rest of the South East and GBP223,500 in the rest
of the country. Rented flats in Prime Central London have an average price of
GBP486,300, compared to GBP213,000 in the South East and GBP149,400 in the
rest of the UK.

Void periods have continued to shorten. This quarter they have fallen
from 24 to 22 days. Tenants are still staying in properties for longer for an
average of 16.3 months against 16.1 months in the previous quarter. They stay
the longest in central London at 17.3 months. In the South East they stay for
16.8 months and for 15.4 months in other areas. 17% of all tenants are
immigrants.

The ARLA Survey of Letting Agents is the largest independent survey of
its kind conducted in the Private Rented Sector and is supported by the ARLA
Group of Buy to Let Mortgage Lenders: Bank of Ireland, Cheltenham &
Gloucester, GMAC Residential Funding, Mortgage Express, NatWest and Paragon
Mortgages. The Second Quarter 2008 survey was drawn from 444 responding
lettings offices.

The full ARLA Members Survey of the Private Rented sector can be
downloaded from http://www.arla.co.uk.

ARLA