According to property management firms, Chainbow and Berkeley Way, the inaugural Residential Yardstick showed one in five respondents were renters and 86% of these were Londoners, leading the researchers to suggest that private rented sector lending products for the Capital would help keep property in local hands rather than relying on foreign investment as has been the trend in the past two to three years.
The survey revealed 45 per cent of private owners, 55 per cent of investors and 50 per cent of renters want to invest in a property during 2012, however, lack mortgage availability (35 per cent) and lending criteria (19 per cent) where cited among the main barriers to investment.
Three-quarters of Londoners believe rental prices will increase during 2012 while more than half of the regional respondents believed rental values would remain the same.
The difference in perception enforces the researchers’ argument that London PRS investment mortgages could provide a valid solution to housing issues in the Capital.
Adding to the demand for London rental investments is the perception that property values have stabilised meaning now is the right time to secure an asset before inflation and interest rates rise.
Forty-six per cent of all respondents throughout the UK believe PRS will outperform investments in freeholds, shares and bonds, commodities and commercial property.
Roger Southam, Chairman of Chainbow, commented:
“Most of the Residential Yardstick respondents were Londoners and most of the renters who responded were also Londoners so what’s obvious to me is that lenders should be looking at creating London-specific mortgage products, in particular for the PRS investors.
"There has always been talk about the north-south divide and throughout recent years I believe that London has emerged as a completely different market to the rest of the UK so why are the lenders not capitalising on this?
"The Buy-to-Let lending products currently available are not doing enough to foster investment but if there could be a Capital-centric mortgage criteria, this could help bolster the industry.”
Berkeley Way Managing Director, Alexandra Reeves, echoed Mr Southam’s perception, commenting:
“In London, nothing much knocks demand. The credit crunch restricted British investors but these were supplemented by foreign investors from Russia, China, and the UAE. Demand in London is always constant and its population continues to be transient so there will always be a certain level of demand from renters.
"In addition, London offers more job security, pay rises and spending confidence in comparison to the regions.”
The Residential Yardstick was born from a desire to mark the incoming year’s perceptions about the residential sector, gauge it against actual results at the end of the year, use the data to gauge the next incoming year’s perceptions and use the reports as legacy documents to help fine-tune crystal ball gazing.
Other results from the Residential Yardstick survey revealed, regional respondents want to pay their agents on a performance-based fee arrangement while Londoners just want a fixed, all-inclusive deal.
When it comes to appointing an agent, pricing is only a small consideration (11%), while experience (31%) and reputation (29%) are the most important factors. Regions are more likely to hire lettings agent (36%) than Londoners (13%).
Londoners are more price sensitive and less likely to use a lettings agent but 63% are ‘sometimes’ influenced to purchase residential property because of their agent (63%) but 67% of the regional respondents are definitely not influenced by their agent.
This could mean London letting agents have to work harder for their fee but have more influence on their clients than the regions.
