The PRS has absorbed a large number of property owners who have chosen to rent between purchases, done so to free up equity or simply those who can no longer afford to keep their own home. But it’s not just the economic situation that has seen the sector’s role increase over the past few years.

Buy-to-let investment has become much more popular, higher education opportunities have led to a surge in student numbers and UK immigration levels have risen – all of which are contributing factors.

In June, I highlighted the importance of the PRS in supporting the housing industry – it now represents over 13% of current housing stock levels in the country according to recent government statistics.

A newer study, carried out by CB Richard Ellis reports even further growth within the sector, estimating its worth to the UK economy to be approximately £500bn. For an industry that is outperforming the country’s entire commercial property sector, one might assume that a real effort was being made to support this now thriving market. However, the demand from consumers has not been met by support from the Government.

Despite the PRS accounting for over 20 per cent of new build stock, this is still not enough to cater for this ever-growing sector. Our own quarterly survey in July revealed that almost three quarters (70%) of ARLA member offices said that there are more tenants available than properties – up from 59 per cent in the last quarter. The coalition government’s continued Capital Gains Tax (CGT) policy, which levies a tax on those purchasing a second home, works only to burden current small-scale landlords and discourage others from investing.

Clearly, the £500bn quoted demonstrates that the sector is capable of achieving great things. Maybe now it is time for institutional investors to stand up and see for themselves the opportunities that the residential lettings market can offer.

I happen to agree with the CB Richard Ellis report, which argues that given lower capital values and stable rent payments, the PRS represents a good return on investment. And a significant cash injection would help to drive new residential housing supply too.

As Government efforts have been minimal and so far largely inhibitive (they have refused to introduce compulsory regulation to the sector, for example), large-scale investment from institutional landlords is required, working alongside smaller, experienced landlords in the marketplace. These small investors and tenants already benefit from ARLA’s consumer redress and client money protection schemes, and only through this partnership can we create a more healthy industry sector.

Renting offers flexibility to tenants at a time when mortgage availability is still very low. As demand for rental property will continue to expand, and with market conditions still favourable to landlords, there has never been a better time to invest in the PRS.

ARLA agents will happily disciss market demand and potential rental figures using their extensive market knowledge. The Propertylive and ARLA website both have a link to ARLA mortgages which offer a choice of the currently available market products to suit investors’ needs.

While the NAEA echoes these calls, the Government must get tougher in order to get more money into the mortgage market. Indeed, despite a doubled profit for the last six months of £7.2 billion, HSBC increased its mortgage lending by just 3% and has already made clear that it would be unwilling to follow government-set lending targets.

In order to secure a mortgage, buyers still require a seriously hefty deposit, which explains why the steady increase in the numbers of house hunters registered at NAEA branches has not translated into increased mortgage lending and house sales. Mortgage providers are continuing to ration the size of their loans to home buyers and those remortgaging.

Additionally, only 8% of deals are currently available to borrowers with 10% deposits, and these come at the price of significant interest rates and strict lending criteria, resulting in the decreasing loan approval rates we are seeing now.

Certainly the lack of mortgage finance is a huge factor in the recent housing market reversal. However, a recent Bank of England report suggests the situation is not going to improve in the short-term.

The increase in the Stamp Duty threshold earlier this year went some way to helping first-time buyers, but many in the current mortgage climate are still put off by the deposit that first-time buyers need to find. In light of this, we will continue to urge the Government to consider a US style First-Time Home Buyer tax credit incentive to further stimulate the housing market.

We also welcomed Grant Shapps’ announcement to retain and refocus the mortgage rescue scheme, which is a vital safety net for homeowners struggling to meet mortgage repayments, despite the drive for austerity. Nevertheless, the strict eligibility requirements of the scheme at present, means only a small number of households have received assistance. We await with interest the full impact of these changes.

The new Government must consider the issues affecting the whole spectrum of people within the housing market when looking at ways to foster a recovery in the property market. A recovery seriously threatened by the ongoing lack of mortgage availability.

Throughout the recession, the PRS helped to support a stagnated housing market where many homeowners were forced to rent a property either as a stop gap between purchases, or following a job relocation change or job loss. Now, according to government statistics, the PRS represents more than 13 per cent of UK housing stock – some three million people – making it a sector that can not be ignored.

The planned rise of 10 percentage points to 28 per cent in Capital Gains Tax (CGT) for higher-rate tax payers may not be as severe a blow as anticipated, but is still inhibitive to the industry’s growth. It represents a substantial increase in the costs involved with the purchase and sale of second properties let to tenants, and will almost certainly lead to a drop in investment. Some landlords will simply not be able to afford to survive in the buy-to-let market, while other potential landlords will be put off from entering into it.

PRS investment has also been hindered by the Government’s recent decision not to press ahead with compulsory regulation of letting agents. Regulation would have been both reputation enhancing and standard-boosting, with greater controls to reassure existing and potential tenants and landlords alike, ultimately boosting investment.

It is therefore a great shame that the progress ARLA made under the previous administration has since been ignored. Anyone can become a letting agent, or landlord – regardless of experience or qualifications, leaving consumers exposed to financial risk.

We believe a dual approach is required if the current problems of the housing sector are to be addressed. If difficulty in obtaining mortgages continues, the role of the PRS will become more and more integral to the recovery plan. It therefore makes sense for the Government to support the rental industry in the same way it has promised the aspiring homeowner.

Introducing more stringent regulation into the buy-to-let sector would represent a big step in the right direction, enabling significant investment into the industry. Equally, categorising landlords as businesses would exempt them from CGT, further encouraging investment and professionalising the industry. Without these kinds of measures, the sector is likely to suffer – as will its consumers.

Estate agents, buyers and sellers throughout the United Kingdom will no doubt be breathing a sigh of relief at the prospect of less bureaucracy and red tape that accompanied the sale of a property. It cannot be denied that this unnecessary system significantly contributed to the stagnation we have seen in the housing market over the past two years.

Since their introduction in 2007, we at the NAEA continually appealed to the previous administration to abolish this ineffective system that has benefited no-one involved in the housing industry – now it seems finally our call has been heard!

Costing many hundreds of pounds, the HIP dissuaded many homeowners wishing to put their house on the market.

We are just thankful that the transition phase between the announcement that HIPs were to be scrapped and this actually getting carried out has been swift and relatively painless.

At the start of the month, we were faced with a confusing political picture in Downing Street and the real prospect of a double stall in the housing market. There was considerable concern that sellers would wait for HIPs to go in order to save a lot of money.

But looking ahead to June, the outlook is good. We no longer face uncertainty, but instead, more stable government and a less obstructive sellers market now that HIPs are no more.

Of course, don’t forget that Energy Performance Certificates (EPCs) are still a legal requirement, and one has to be commissioned before a property is marketed!

During the very worst of the recession many homeowners were forced to sit tight or downsize. So it’s a really encouraging sign that the study, which asked our NAEA members to give the main reasons for a new house purchase in their branch, found that more than three quarters, (78%) cited ‘upscaling’.

Any evidence that ‘upscaling’ is back is welcome news to property professionals – after a couple of tough years for the industry a return to something approaching normality is definitely to be welcomed!

There are a number of reasons for this positive trend. Increased mortgage availability could be a factor, and a welcome one. A frustration over the past year has been the inability of those people who do want to buy a house to find a mortgage. Slowly that is changing.

More can always be done, of course. Recent changes to stamp duty for first time buyers will be a big help for an important part of the market, but we still believe that more reform is needed for this tax to make sense.

For now, however, all of the indicators are that the slow recovery is continuing its steady progress.

Mr Darling’s announcement was a victory for our ongoing campaign calling for a reform of this tax on aspiration. More importantly, it was a victory for thousands of first time buyers, who form the bedrock to the UK housing market.

However, the policy is not 100% perfect and more needs to be done before this unpopular tax is knocked into shape. In its current form it is heavily weighted against the South of England, and the threshold rise could actually exacerbate this problem. There are more £1m houses in London and the South East than anywhere else, and buyers of these houses will be paying a disproportionate amount to fund first time buyers.

There are also concerns over how such a scheme will operate. Already a number of voices have complained about the limitations of the Government’s definition of a first time buyer.

It is clear that more detail is needed to allay these grey areas, especially if the Government wants to inspire confidence amongst consumers and property professionals alike.

Whilst the increase in the threshold is welcomed the saving is only a small amount towards the deposit that first time buyers need to find. This is why Mr Darling should consider an incentive scheme such as the $8,000 First Time Home Buyer Tax Credit in the United States. The scheme, which is widely credited with stimulating the housing market gives FTBs purchasing any kind of home—new or resale—a tax credit of up to $8000. Lenders also need to provide more 95% mortgages at reasonable levels of interest otherwise first-time buyers will continue to have a major problem.

Although we are not yet where we need to be, we are moving in the right direction and will continue to highlight these concerns to the Government.

Ends

However, it is disappointing that the OFT has failed to acknowledge that more consumer protection is needed. Buying a home has and always will be the largest financial transaction that many consumers partake in during their lifetime.

The situation still exists whereby those without qualifications can become an estate agent. There will always be a pressing need for the industry to distinguish between those people who are hard working, professional and qualified and those who are simply trying to make a quick buck.

We mustn’t forget that the reputation of ALL estate agents is undermined by those who do not adhere to professional standards. This is why the National Association of Estate Agents (NAEA) will press ahead with the launch of its licensing scheme later in the year. We must demonstrate – very clearly – the differences between those who work hard to acquire knowledge of the market and the area in which they operate, and those that assume that easy money can be made in property.

This month also saw the NAEA and ARLA speak out in joint support for the RICS’ report into Transparency in Professional Fees. This report assessed the clarity of financial transactions in the property sector from a consumer perspective, and did so with some very valid points.

As I’ve said on previous occasions, all of our members abide by a Rules of Conduct which binds them to ensure that all fees and charges are made crystal clear. This is why our customers use NAEA and ARLA members; it’s these strict guidelines which give them the reassurance they need when looking to buy or rent a property.

The survey of NAEA members found that in November, only 19 per cent of registered buyers were FTBs, the lowest since December 2008 when levels plummeted to 11 per cent. This figure pales in comparison to six months ago when 43 per cent of the market was made up of FTBs.

But as Gary Smith, President of the NAEA, rightfully points out, the decline in the first time buyer segment is exactly what the NAEA anticipated and warned the Government about some months ago.

Any tax holidays result in a distortion in the market and in the case of Stamp Duty needed to carefully managed and phased out. Unfortunately as first time buyers often form the foundation of selling chains there could be repercussion throughout the sector.

On a much more positive note, given the usually seasonal lull the number of sales remained steady in November with an average of eight sales made per branch. While the average number of properties available for sale per branch increased slightly from 57 in October to 58 in November.

It is encouraging to see that the market is in a stronger and more stable position than it was twelve months ago. To sustain these improvements, the Government should put more pressure on banks to ensure lending is available.

You can read more about the survey in the FT online.

The beginning of 2010 sees several things happen. The stamp duty holiday will end, despite warnings from much of the property industry that this is a mistake, and this has the potential to reverberate around the market. We also have an increase in VAT and an imminent General Election.

This means that some people will adopt a wait and see attitude to housing as they study what tax changes will mean for them and how the election is likely to play out.

In recent months the market has witnessed a slight increase in housing prices, driven largely by the fact that, in some markets, demand is outstripping supply. If more property comes onto the market the house price rise will flatten or, in some cases might fall slightly over the first six months of the year.

During the year we have however seen a pick up in demand as many take advantage of lower prices and interest rates. This clearly indicates that the British public still believes that investing in bricks and mortar is the right thing to do.

There have been encouraging levels of first time buyers throughout 2009 and I would hope this continues into 2010. Again, the situation with lending will have an impact. The NAEA believes that responsible lending to responsible people is crucial to any recovery.

See our full predictions in more detail here.

Yet there are also opportunities, in particular as availability of lending begins to increase while house prices are still historically low, enabling timely investors to purchase properties for the buy-to-let market.

I predict that the residential rental market will continue to stabilise in 2010, with property oversupply decreasing due to reluctant landlords leaving the market. As demand rises (in particular due to a lack of social housing) there will also be mounting pressure on the sector to provide good quality rental properties.

Unfortunately there has been little commitment from the Government on economic measures to help the wider industry meet property demand, but increasing demand should have a positive effect on the PRS, creating opportunities for new and existing investors and driving standards up.

In a recent debate the Housing Minister displayed a lack of empathy with those living in the PRS when he argued that it consists of three million households – when it in fact consists of eight million people!

Perhaps we should question why he seems to have depersonalised the PRS, as the Government continues to evade implementing measures to help the sector!

See our full predictions here which also covers other key areas such the boiler scrappage scheme and licensing.