Spending cuts make tough year ahead for agents

Since the announcement of spending cuts in the in the public sector, public confidence in the housing sector has reached an all time low.

We are likely to experience a cooling in buyer demand, transactions flattening and a modest decline in house prices for the foreseeable future.

Over the past few months lenders have continued to tighten their credit scoring criteria even further in a market where prices are falling and jobs are more uncertain. Public sector employment, especially, could lead to a rise in the number experiencing difficulties in paying their mortgage and a lack of attractive funding will continue to hamper the remortgage market which according to CML is already at a 10 year low.

For many home buyers a large deposit will still be required and for most this isn't a reality with current property prices. The letting market will remain the only option for many buyers but, with the diminishing supply of mortgage products aimed at landlords, the number of available rental properties could well fall as demand takes up any slack, pushing rents up further. Good news for landlords and letting agents - not such great news for many tenants.

Ray Hugill, Executive director of Templeton LPA, commented: 'Today's spending cuts will have widespread effects on the private rental sector. With nearly half a million public sector jobs axed in the next four years, we are going to see a surge in the number of tenants unable to meet their monthly rents. Rents are already at a record high, and with a new wave of redundancies and job losses likely to hit thousands of households in rented accommodation, tenant finances will be placed under an even greater strain. And as many tenants fall behind in their rent, we are likely to see landlord arrears rise over the medium-term. In this environment, it is even more vital that landlords closely monitor their current tenants payment performance - not to mention vet prospective tenants even more rigorously.'

There is no doubt that 2012 is going to be a tough year, however those agents with the foresight to plan ahead, carefully control costs and concentrate hard on diversifying and maximising all available income streams, will come out intact.