2011 will be the year of the landlord, argues Guy Garrard, head of business development at Tiuta

Entering into a New Year can sometimes signify a rise in optimism for many and the recharging of batteries from the festive period generates some positivity for the year ahead. In recent years for those of us operating in the intermediary market much of this initial optimism has been tempered by the knowledge that tough market conditions and limited business opportunities lay ahead. January can also be a slow month in terms of a return to business and that can take the shine off any genuine new resolve or resolutions.

Maybe a more sensible solution for brokers is to save the formation of any business resolutions until after the celebrating of the Chinese New Year, which this year falls on 3 February. After all this seems like a much more civilised idea both in terms of business momentum and allows a little more time to shake off any lingering December hangovers. Even I suffer from them and I don’t drink!

Looking at the Chinese New Year – don’t worry I won’t dwell on it for too long, I don’t know enough about it – and this will turn from being the year of the tiger to the year of the rabbit. I don’t know about you but for some reason this doesn’t appear to me to be good news, after all if a tiger can’t cope with last year’s tough conditions how can one of our leporine chums? Fortunately I don’t think it works like this. In fact one of the main characteristics of the year of the rabbit is the benefit it will offer in the form of an increase in astute and artistic new business partnerships. The year will also show how fragile business dealings can flourish. Those reading this who know me will know that I don’t believe in much that I can’t see or touch but these are certainly decent sentiments to carry into what will undoubtedly be another challenging year.

In the mortgage market I think we could call 2010, and 2009 for that matter, the year of the borrower with a good tracker deal. To be honest there hasn’t been much competition although in its defence the short-term finance sector has more than held its own especially over the past 12 months. So what will 2011 hold? Well I believe 2011 will be the year of the landlord.

Affordability issues and strict lending criteria are forcing more and more people down the rental route. Numbers of non-standard borrowers will continue to grow at a significantly larger rate than products will become available to satisfy this area of the market. All this, amongst a myriad of other factors, adds up to the fact that the rental market will be the only available option for an increasing majority of the population. We have already seen evidence of how landlords are looking to benefit from this. Evidence suggests that 41% of landlords plan to increase rents during 2011, with 55% planning to keep rents at 2010 levels, according to research from buy-to-let lender Paragon.

Only 4% of landlords plan to reduce the rent they charge. 30.7% plan to increase rents by up to 4% of the current value, with 10% aiming to increase the rent they charge tenants by between 4% and 8%. 45% of landlords believe tenant demand will continue to grow during the year, with 44% forecasting that it will stabilise.

Backing up these statistics in its predictions for 2011, the Association of Residential Letting Agents (ARLA) says that the shortage of rental property will continue into next year, with demand far exceeding supply. This will inevitably ensure that landlords can let out their properties swiftly and for a good price.

Put all the statistics though to one side for a moment, and trust your own eyes. I certainly used to see plenty of To Let signs locally, but the agents now tell me that with waiting lists of tenants being of such a length by the time they get a board put up, the property is already let.

Of course it is not all sweetness and light for landlords as access to funding still remains difficult for some and competition needs to increase in this sector to enable real value for all but there are signs that the market is turning a corner. Momentum is certainly with buy-to-let and as such it will inevitably be the professional portfolio landlords who will be looking to seize the initiative. Let’s hope that innovative lenders and more competition will continue to emerge so they are given an opportunity to run with the ball and be in a position to supply this growing demand.