Demand Still High For Buy-to-let By Jim Barnaby At Isnare.com Ezine Articles

On the eve of the budget, with those looking at investing in property having one eye on the measures about to emerge from Alistair Darling's red box, news has emerged of further trends which may provide as much useful guidance as the speech in parliament tomorrow.

The latest Association of Residential Letting Agents (Arla) survey makes for a little bit of mixed reading, but one key finding should be encouraging to landlords: The average weighted return is up from the previous three months.

In the case of houses, this has gone up from 4.8 per cent to five per cent, while for flats it has risen from 4.9 per cent to five per cent.

Slightly more mixed was the situation in terms of property value. The survey found that overall there was a 3.6 per cent fall for flats, but this was concentrated in prime central London (down 5.9 per cent) and the rest of the south-east (down 5.2 per cent). Elsewhere, flats rose in value by five per cent.

Tenancy demand however, remained high, albeit slightly down on its peak. However, Arla stated, the number of respondents reporting that demand exceeded supply was still the third highest since this particular statistic was first researched five years ago.

Not that there should be any surprise that the level of lettings is high. After all, only yesterday it was revealed in a survey by lettings agency Your Move that the number of new tenancies was 21 per cent higher in the first two months of this year than it was in 2007.

Moreover, such a trend appears set to continue, at least for now, as first-time buyers remain in a position of difficulty in terms of trying to get on the housing ladder. Figures from the Council of Mortgage Lenders (CML) showed a major drop in mortgage lending for house buying in January. The total number taken for this purpose dropped from 62,000 in December to 50,300, down 19 per cent, while the total amount of money borrowed was down 17 per cent from 9.4 billion to 7.8 billion.

CML director general Michael Coogan had no doubts that this figure was a consequence of the credit crunch and that those trying to take the first step on the housing ladder were the main sufferers.

He said: "The wholesale funding markets remain largely closed and mortgage funding still remains constrained. This is now having a discernible impact on lending criteria and the ability of first-time buyers to get into the housing market."

The same view was taken by Royal Institution of Chartered Surveyors senior economist Simon Rubinsohn, who, reviewing the CML figures, commented: "First-time buyers are very much under the cosh in this more hostile environment."

Mr Rubinsohn added that changes in stamp duty would provide some help top first-time buyers, but there would still be constraints on the market. This being the case, the budget may only partly alleviate their plight. In the meantime, buy-to-let can continue to provide the housing this group needs until such time as the market conditions show genuine improvement. There may be much of interest in the budget tomorrow, but any new measures could take some time to change the present property market situation.

In today's world Property investment is an excellent investment option especially investment in UK

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