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Taking Advantage of Stabilising Property Prices

By Parmdeep Vadesha

Republish: EasyPublish™ Published: 16Sep2008 Word count: 642 Viewed: 401 time(s) Get Free Content For Your Site

There is a new trend in the UK's property market. With price stabilisation sweeping through many areas in the country, many people have resorted to strategies that allow them to benefit from the property price adjustment in the UK. According to new research from Abbey, there is an estimated two million homeowners who are looking to take advantage of the levelling out of property values.

Industry professionals are certain that the trend of renting before buying is here to stay. By renting most people see it as stress-free option - the absence of worry over maintenance bills or the need to be concerned about having an exit strategy - many people have decided that the current climate is appropriate and they are thus readily leaping feet first into the letting market. While there are those that have been inclined to question the validity of the strategy, many have chosen to take advantage of the rising number of people looking to rent.

Lettings firm Hamptons International has reported that since the start of the year, the number of people scouting for rental accommodations has risen by a third. The company states that the demand from motivated renters has been extraordinarily robust and that sellers have opted to rent out their property between sale and purchase.

Rental converts

One group of people have wisely turned to a strategy that not only help them beat the evening out of property prices but allow them to reap returns despite the doom and gloom that some in the industry are foretelling. Rather than selling their property in a stabilising market, they have decided to enter the rental market.

In addition to this, Abbey reports that more than 800,000 homeowners are planning to sell their properties and move into rental accommodations. These people referred to as renting converts intend to buy new properties when property values reach their all-time low. Considered an astute move, this strategy could lead to sizeable cash earnings - with some people looking at many thousands of pounds - as well as the possibility of purchasing a more superior home at a good price.

Rental regulars

Meanwhile, those who have already been in the rental market for some time have chosen to remain in the sector. Proof is Hamptons' data revealing that over three-quarters of tenants are extending their rental contracts. This occurrence in addition to the growing numbers of people looking to rent is thus prompting a significant rise in rental charges. Tenants have been particular about locations with good commuter links to London and first-rate learning institutions.

Property investors and buy to let owners

Property investors and buy to let landlords also stand to gain from the balancing of property prices, particularly because of the rising number of people looking to rent rather than purchase their homes. According to the National Landlords Association, rents have risen by 13.8% in the past year. As this trend persists, buy to let investors are sure to reap significant revenues. Lettings company Bidwells says that demand has now exceeded supply and has cited some instances where rental returns have exceeded 10%.

Those thinking about making the most out of a healthy rental market would do well to remember the most important factor when buying investment property - which is to buy below market value. Veterans in the property investment arena know that the key to a good investment is to purchase at the lowest price possible price as you make your money when you buy not when you sell. And when you purchase from a distressed seller, you'll be able to acquire a property for the best price thus enhancing your strategy and allowing you to sidestep the negative equity trap. When you're able to achieve this on regular intervals, you'll be ensured of doing well over the medium to long term.

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