RESIDENTIAL RENTALS RISE IN RESPONSE TO HOUSING DOWNTURN

The much publicised crisis in the UK residential property market has set the scene for a boom in lettings – and a similar trend is now discernible here in the Western Cape, says Lanice Steward, MD of Anne Porter Knight Frank.

 In the UK, said Steward, buying the home that they really want last year was either impossible for many as a result of the latest mortgage bond restrictions (which are similar to those of SA’s National Credit Act) or was regarded as unwise until house prices clearly began to stabilise.

 Many have, therefore, opted to rent, with the result that, according to Knight Frank (with whom Anne Porter is associated) rents in central London have risen 16% in one year, a very significant growth in a country with low inflation.

 Knight Frank, said Steward, report that the shift towards renting has brought about a change in the way it is viewed.

 “It is,” said Steward, “no longer regarded as a second class option but, rather, as a shrewd move – because it frees up capital for other purposes and has all the benefits of uncommitted flexibility.  The length of time that tenants remain non-homeowners has also been noticeably extended.”

 Knight Frank predicts that rents in the UK are temporally levelling off but will “take off” again in early 2009.

 “This expectation,” says Steward, “will in the UK make buying-to-rent a viable choice – and I am willing to predict that much the same will happen here in the Western Cape where, like the UK, we have had a property boom followed by a slow period and are now awaiting, with confidence, the next upward turn on the graph.  Until it materialises, renting will be popular and rentals will rise in the same way as they did in the UK.  Now, therefore, is a good time to buy-to-rent:  we are unlikely to see current low prices ever again.”

 Many investors, said Steward, already appreciate this:  the latest FNB report has shown an increase in buy-to-rent properties.

For further information contact Lanice Steward on 021 671 9120 or email lanice@anneporter.co.za.