David Mackenzie FCMA CGMA MARLA Director of Asset Management Young Group
Young Index Q4 2012 - Private Rented Sector Sentiment Each quarter, through Young Index, Young Group polls investor sentiment among 500 of its Private Rented Sector (PRS) investment clients who hold UK property assets. REGIONAL DISPARITY REIGNS The latest Young Index research reveals the starkest difference in sentiment between London and the rest of the UK since the sentiment survey began in 2007. 95% of active investors expect that capital values in London will rise or remain static throughout 2013. 50% of respondents believe that UK property outside London will experience positive capital growth. 41.5% of PRS investors indicate that they are considering adding further London property assets to their portfolios compared to 15% indicating they will be considering acquiring property elsewhere in the UK. RENTAL MARKET STRENGTH The positive sentiment towards the London PRS continues when looking at rental income expectations.
In 2013, 97.5% of investors expect to see an increase in the rental income generated from their London property portfolio, a 5% increase from last quarter. This compares to only 50% of respondents who expect rents outside of the Capital to increase.
anticipated future hold period decreased to 10.9 years. From those who responded 42.9% have held their investment property for more than 10 years.
The sentiment is that London is still considered a safe haven for money invested in property while areas outside of the Capital are more of a risk and will not see the level of continued demand witnessed within London.
ECONOMIC OUTLOOK The majority of respondents (71.4%) expect that the Bank of England base rate will remain at the current low of 0.5% throughout 2013. In our Q4 2011 Young Index, 26.4% of respondents thought that the base rate would have increased, this has fallen to 21.4%.
Anecdotally, landlords believe that prices in London will increase within a number of “hotspots”, such as SE1 and E1, as regeneration continues to positively impact certain districts in London.
Against the current economic backdrop, 12.2% of investors remortgaged an existing Private Rented Sector asset during 2012, while 17.1% have purchased additional investment property.
COMMITMENT TO THE PRIVATE RENTED SECTOR Investors appear to remain committed to the PRS; 96.4% of respondents have no intention of liquidating their PRS assets during 2013. Those that are planning to liquidate their assets will do so to transfer it to cash.
Mortgage availability remains the principal concern of the majority of investors (37.5%), unchanged from 2011, while 30% of respondents would like to see a stamp duty break for all purchasers. Only 12.5% of those polled considered stable house prices to be the most important thing for them in the coming months.
45.2% of investors are intending to hold their properties for between 10 to 20 years. The average
REGULATION OF THE PRS New to this quarter’s survey, we polled our respondents on their views of PRS regulation. 51.2% of those who responded believe that there is adequate regulation of the PRS already. 17.1% believed that lettings agencies should be compulsorily regulated by a Government body while 9.8% thought the compulsorily regulation should be handled by an industry body. 14.6% of those polled believed that landlords as well as letting agencies should have to sign up to be compulsorily regulated by an industry body, 7.3% who believe it should be handled by a Government body. The information we have collated paints a picture of there being high investor sentiment for the future of the PRS and that many within the industry believe the PRS, especially in the Capital, will continue go from strength to strength. David Mackenzie younggroup.co.uk
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