Letting agents can look forward to a bumper year as management fees are expected to keep on rising as landlords up their rents.
At least 40% of landlords are expecting to edge rents up during the year, according to a survey by a mortgage lender.
The rises are on the back of strong tenant demand that has boosted the private rental sector over the past year.
Just 4% of landlords expect to drop rents – while 30% are considering an average 4% increase and another 10% are planning to charge up to an extra 8%.
The good news for letting agents is this pushes up income in line with inflation – currently running at about 3% – without any increase in charges.
Figures from the Royal Institution of Chartered Surveyors show rents showed a steady upward trend during 2010. The latest residential letting survey from RICS reported that more than a third of surveyors (34%) expected rents to keep rising.
Buy to let demand expected to increase in 2011
Buy to let landlords also expect tenant demand to keep growing over the next 12 months as the supply of rental property dries up because tenants are not moving on because they cannot buy a home.
Just under half of landlords (45%) see demand increasing while 44% feel demand will level out without decreasing.
Nigel Terrington, of Paragon Group, the lender that carried out the survey, said: “Landlords are in a strong position. Tenant demand has risen faster than supply during 2010 and that is expected to continue well into 2011. This is reflected in landlords’ expectations of future levels of tenant demand and also the rent they are planning to charge for their properties.
“There continues to be a lack of finance available in the UK mortgage market, meaning that many potential buyers are opting to rent instead. Meanwhile, many of the factors that have driven tenant demand in recent years, such as positive net migration, high student numbers and people preferring to buy later in life, are continuing.”