Sell to rent a growing trend in property market

Wednesday, 19, Sep 2007 09:29

Falling house prices have lead to an increase in the number of people selling to rent in the UK, according to the London based estate agent Sourcing Property.

Rightmove.co.uk reported house prices across England and Wales fell by an average of 2.6 per cent in August, creating speculation the recent boom in prices may be coming to end.

In response homeowners are hedging their bets on further falls, moving into rented accommodation and waiting to purchase new property at a lower price.

This is popular among those who have paid off their mortgage, according to Sourcing Property.

"One client is selling his property in Lancaster Gate through Foxtons for £1.45 million with the aim of moving in to rented accommodation," said Jo Eccles, director of the company.

"If he puts the money into a savings account, he could generate more than £85,000 per year in interest - enough to rent a fantastic property while he waits to see what the market does."

Another developing trend has seen those in rented accommodation delaying a property purchase, again waiting on the housing market for further developments.

"A lot of tenants are renewing rental contracts to see what happens in the resale market. At the same time, landlords are being more insistent on longer tenancy periods, tying people in to 12 or 18 month contracts," continued Ms Eccles.

"While short-term lets can be more lucrative for landlords, many want the stability of long term tenants."

However, despite this perceived uncertainty, Sourcing Property predicts stability over the coming months.

"Although people are being more cautious, we are seeing an active autumn market with plenty of transactions at solid prices and a continued high demand for property," concluded Ms Eccles.