Annual rental inflation also slowed to 3.5% in November from 4.1% in October. The average property rent however remains £25 higher than in November 2010.
David Brown, commercial director of LSL, said: “Landlords are looking to avoid having properties vacant over the Christmas period and can be less aggressive with pricing as tenant activity slows in the run up to the New Year.
“But across the country the limited supply of rental accommodation means there will still be strong upward pressure on rents in the early part of 2012.
“The government missed a golden opportunity in the Autumn Statement to give the private rented sector a fillip, and encourage the investment needed for the long-term supply of rental homes to match demand.
“Extending the stamp duty holiday to buy-to-let investments would have removed a financial obstacle in the path of new investors, easing the strain on the current limited stock of properties.
“However, with the failure to even extend the holiday for first-time buyers, despite the new mortgage indemnity scheme, demand for rental accommodation from frustrated buyers will continue to increase as we progress through 2012, and rents resume their upwards trajectory.”
Paul Jardine, receiver and director of Templeton LPA, said: “The average tenant’s finances have outperformed expectations given the difficult economic conditions and the impact of high rents and the increasing cost of living.
“While there are indications that a growing minority may be falling into severe arrears, there are fewer tenants actually behind with their payments in some shape or form.
“In part, this is down to a tougher line landlords are taking to ensure that new arrears cases are dealt with promptly before they can impact on their own ability to meet monthly mortgage costs, alongside a changed tenant mix as a result of an influx of more financially robust frustrated buyers.
“Nevertheless landlords should take note of the deteriorating labour market. Unemployment is now at a 17 year high, and likely to rise further. As it climbs, a growing number of tenants’ household finances will come under strain, and overall tenant arrears are likely to climb in the coming year.”
Duncan Kreeger, chairman of West One Loans, said: “Life for landlords is not as sweet as it looks. For instance, the market for buy-to-let loans only looks in rude health when compared to the ultra-turgid residential mortgage market.
“In fact, lending to property investors is very low by historic standards. There were 34,500 buy-to-let loans in Q3 2011. That’s chicken feed set against the 60,000 loans written in Q3 of 2006.
“Although it’s not as hard for buy-to-let investors to secure mortgages as it is for first-time buyers, it’s still very difficult. And while LTVs might be rising on buy-to-let finance, criteria are still very strict and look set to become harsher as the eurozone crisis pushes up lenders costs and forces them to hoard capital.
“With banks unable to meet high demand for buy-to-let finance, property investors and buy-to-let landlords are turning to bridging lenders. Net bridging lending has risen 53% since start of 2010 as a result and 82% of bridging loans by volume are now made to residential property investors.”
