Rents across the UK's high streets and shopping centres are set to drop by almost a fifth between now and the end of next year, quashing hopes of a revival of the troubled retail property sector, an influential property report has forecast.

As struggling retailers demand cheaper deals from landlords desperate to keep properties occupied during the recession, rents are forecast to have dropped by about 11 per cent by the end of the year, according to the annual midsummer report on retail property from property consultancy Colliers CRE.

Some landlords are resorting to offering rent-free occupation for up to six years in a bid to attract tenants.

Colliers said overall average rental values are expected to fall by 9 per cent in 2010 and 1.3 per cent in 2011, only returning to growth in 2012. That will put extra pressure on retail property owners already struggling with a slump that has wiped out almost half the value of their assets.

In total, about £12bn is expected to be knocked off capital values this year, taking the decline to £45bn since the turn of the market in 2007, although there are signs of stability in the prices for the best properties. Colliers forecasts that the sector will be valued at about £48bn by the end of 2009, down from £93bn at the end of 2006.

FT.com - Daniel Thomas, Property Correspondent - 18 June 2009

Landlords have been buying more properties in the last quarter according to a survey.

The Association of Residential Letting Agents (ARLA) quarterly survey revealed a "bounce back" in the buy-to-let market.

In the ARLA members' survey of the Private Rented Sector (PRS) for the second quarter of this year, nearly twice as many ARLA members reported landlords are buying more properties.

The Bank of England's decision to cut interest rates to a historic low for the last four months has also helped struggling landlords, according to ARLA. Half of those surveyed said they thought the cuts are tempting investor landlords back to the market because of the minimal interest to savings rates.

Hundreds of thousand of buy-to-let investors face a "landlords' tax" and could be forced to register details about their property, according to Government proposals.

Myra Butterworth and Richard Evans, The Telegraph - 13 May 2009

Under the new scheme, outlined on Wednesday, a national register of landlords would be set up, with landlords required to sign for an annual fee of £50 to cover the administration costs.

The aim would be to root out rogue landlords who leave vulnerable tenants high and dry, and bring damage to the reputation of the buy-to-let sector, according to the Government department, Communities and Local Government.

But experts have expressed their opposition, saying the collection of rental property addresses would be "overly intrusive" and of no "benefit to tenants or landlords".

David Hollingworth, of mortgage brokers London & Country, said: "Landlords are facing more and red tape against a backdrop of increasingly difficult financial times for them.

"They will be asking what they get for their £50 or whether it is just a landlord's tax."

Landlords would be issued with their own registration number, which would be included on all tenancy agreements, and they could be stuck off the register for failing to carry out essential repairs or not protecting tenants' deposits.

But as one horror recedes, another looms into view. With economic activity reviving, oil and gold prices rising and central banks printing money like wallpaper, many investors and economists, who only a month ago were panicking about a catastrophe of falling prices, are starting to believe that inflation will bring the sky falling down.

Assuming that signs of recovery continue, as the Bank of England clearly expects despite the Inflation Report's downbeat tone, Mervyn King could soon face pressure to start raising interest rates. Indeed some commentators believe that it is already too late - that by printing huge quantities of money the Bank has guaranteed an inflationary crisis in the years ahead.

As a result, many financial experts are advising borrowers to lock in to fixed-rate mortgages at relatively high interest rates to protect themselves against even higher rates to come. But are increases really inevitable? There are four reasons why the Bank could keep rates in the 0 to 2 per cent range for years ahead - and would be right to do so.

Anatole Kaletsky, TimesOnline.co.uk

Britain's economy is set to keep shrinking well into next year, even after all or most of its leading competitors have begun to enjoy renewed growth, the International Monetary Fund will warn this week.

Gary Duncan, Economics Editor, Times OnLine - 18 March 2009

In a severe blow to Gordon Brown's hopes for an economic revival to take hold by Christmas, the IMF will predict that the UK economy will shrink in 2010 by a further 0.2 per cent.

It now expects that to come on the heels of a brutal 3.8 per cent contraction this year that would be the sharpest since 1944 — and much worse than the 2.8 per cent that the fund forecast only in January.

The new, even harsher forecast comes ahead of official unemployment figures today that are set to show that numbers out of work soared above 2 million during January.

Mervyn King, the Governor of the Bank of England, last night warned of the danger of a return to an era of mass joblessness.

Speaking to bankers at the Mansion House in London, he highlighted the "extraordinarily sudden, severe, and simultaneous downturn of activity and trade in every corner of the world economy" since last autumn.

"Most of us have come from the generation that grew up believing that mass unemployment and world recession were things of the past, relevant to the history books but not the textbooks … That assumption is under threat," he said.

The use of rental homes as cannabis factories by tenants is an increasing problem facing private landlords, warns the National Landlords Association (NLA).

Some 29 police forces across the UK have reported "a sharp increase" in rented housing being used for cannabis production - a worrying issue for private landlords, said David Salusbury, chairman of the landlord interest body.

Tenants who use accommodation for drug trafficking not only breach the law, but negatively affect a landlord's reputation and can damage their properties significantly.

If private landlords have failed to take sufficient precautions, their building insurance claims for damages could be affected.

One incident cited by the NLA involved a tenant who had demolished the interior walls of a property so it could be made more efficient for growing cannabis.

Mr Salusbury said: "By taking references and making regular visits to your property, these problems can be avoided."

This comes after Gwent Police issued a guide to private landlords on how they can assist in the fight against drug problems in rental properties.

Home buyers will be prevented from borrowing more than three times their annual salaries under new mortgage rules to be announced this week.

As part of a wide-ranging package of measures for banking regulation, Lord Turner, the chairman of the Financial Services Authority, will also declare a ban on 100% mortgages.

In all but the most exceptional circumstances, it will become 'normal practice' for loans to be limited to a maximum of three times the borrower's salary.

Prospective home owners will have to provide a deposit of at least 5%, with many banks and building societies expected to ask for even larger amounts.

The move is in response to Gordon Brown's request last month that the FSA look into banning risky mortgage lending.

Daily Telegraph

The Bank of England has cut bank base rate for the fifth consecutive month to an all-time low of 1%.

Mortgagestrategy.co.uk - 5th Feb 2009

A 0.5% reduction was widely expected despite the growing clamour to hold rates at 1.5% from trade bodies and economic commentators.

Some economists have branded the interest rate mechanism as a blunt tool in turning the tide of the recession, preferring instead measures of quantitative easing.

This would involve the BoE artificially boosting the money by buying up assets such securities and corporate bonds.

The Building Societies Association warned against cutting rates further this week in a bid to protect the interests of savers.

The trade body argues that it is not logical to hit savers with rate cuts when they represent the one group who may be able to buy and resume the process of lending.

Adrian Coles, director-general of the BSA, says: "Mortgage availability, rather than the cost of mortgages, has become a more pressing issue over the last few months.

"This suggests that what is important to potential borrowers is maintaining the flow of mortgage funds to the market rather than reducing interest rates further."

The FSA could begin regulating the controversial sale and rent back industry as soon as July this year, a consultation paper has revealed.

John Bakie, IFAOnline.co.uk - Friday 6th February 2009: 14:15

The set of proposals published today follow the Office of Fair Trading's (OFT) recommendations that the industry should be regulated to protect consumers.

A two-stage approach has been suggested by the FSA, with an interim regulatory regime to be brought in from July, with a full regime following in the second quarter of 2010.

Under an interim regime, sale and rent back firms would need to meet existing FSA threshold conditions.

These include being run by fit and proper people, adhering to the Principles of Business and will need to meet some systems and conduct of business rules. The final regime will implement prudential requirements, full conduct of business rules and firms will need full FSA authorisation.

The FSA is developing regulations after an OFT investigation revealed customers were often misled regarding their rights to stay in their home after selling to a sale and rent back firm, and the true value of their property.

The Royal Institute of Chartered Surveyors (RICS) and Lambert Smith Hampton (LSH) have partnered to gather evidence from property professionals about the impact of empty rates tax.

Nick Duxbury, Property Week - 6 Feb 2009

In reaction to the property industry's criticisms of the rates charges to empty property, they have launched a survey to find out the tax is affecting businesses.

Information obtained from the questionnaire, which asks about the impact on businesses, regeneration schemes, and regions, will be published in an RICS and LSH report later this year.

RICS Policy Officer Nadia Nath-Varma said: 'Many of our members have given us their views on Empty Property Rates and we think it is essential to gather the facts from those who own, manage and occupy commercial property to help inform future decisions in this area.

'We are looking to understand both the short term impact and potential long-term effect this tax regime is having on the sector, especially at this very difficult time for the property market.'

Lambert Smith Hampton's national Rating Director, Richard Wackett, said:

'The change in empty rate liability has had unexpected and sometimes profound effects on property. We believe that the Government should assess the impact of this legislation and our aim is to assist with hard facts.'

The National Landlords Association (NLA), the leading national body for private-residential landlords in the UK, has called on landlords to shop around for letting agents that do not charge unfair, 'money for nothing' renewal fees.

Many landlords in the UK continue to be charged fees of around 11 per cent for renewing properties on a let only basis.

Over 70 per cent of landlords* consider this renewal fee to be unfair and not a true reflection of the work actually undertaken. It is a regional anomaly - a problem unique to London and the South-East. Most letting agents in other areas of the UK will not make any additional charges for a let only rental property.

During the economic downturn, the NLA strongly recommends landlords carefully consider all their options. Avoiding letting agents that charge this unjust fee will undoubtedly help to reduce landlords' operating costs. The last thing any landlord needs at this time is a hefty bill from a letting agent who has done nothing to earn the fee.

John Socha, Vice Chairman, NLA, commenting on the ongoing campaign, said:

"If letting agents don't stop charging these 'money for nothing' fees, landlords should avoid using their services. It is as simple as that. Landlords get no added value from letting agents on 'let only' deals once a tenant has been secured. Why should they have to pick up the tab just to keep the same tenants?

"It is crucial landlords check the small print of all contracts before they sign on the dotted line. Any clauses which cause concern should be negotiated out of the contract. We would like to hear from any letting agent in the region who is willing to commit to scrapping these fees before the law is changed and they are forced to do so."

* NLA Research (May 2008)

Today's call to government to create a new policy to encourage companies to provide private rental housing (The British Property Federation Conference, 27 January 2008[1]), whilst being well-meaning will never become a reality.

Private landlords currently make up two thirds of the rental sector in the UK, and companies have around 10 percent of ownership[2].

It's also important to remember that many companies, particularly in Greater London, who in the past would have offered employees accommodation as part of their remuneration package, have benefited from rising house prices and sold off their rental property portfolio.

Despite these realities, The British Property Federation is keen to encourage private institutions, such as pension funds, to claim their stake in the rental market. It believes this will lead to a higher quality of stock, which is easier to manage, and which will encourage 'good quality' tenants.

Companies like Property Investment for Pensions plc, an AIM trading company investing in London residential property, are likely to develop; focusing on prime, modern blocks of flats in the main.

But, house building is down year-on-year (as at 2008), and today's tough financial conditions have caused the vast majority of developments to come to a grinding halt, because no one is buying. It seems likely they will follow in the footsteps of companies, such as Unite and Grainger, who have done an excellent job in raising the quality of stock thus far. However, the vast majority will look towards new build in metropolitan areas, but I am not convinced as to where these properties will be based.

I believe it will take a long time for corporations to enter the private rental sector (PRS). For those that do have either equity or cash reserves in the current climate, then the availability of funding to gear this up is limited. There is however opportunity for private landlords who have minimal gearing at the moment, or cash reserves to invest at a time when house prices are competitive.

The main investment source for institutions should indeed be in pension funds (as cited at the conference), but we are in an era where investment in pensions is at an all time low.

There is also an ethical issue around new build versus existing properties. Already a sizeable proportion of London's housing stock lies empty and in poor condition. Therefore, isn't there argument for private landlords to refurbish on their doorstep? And, wouldn't this be better supported by The Government offering tax incentives for landlords to renovate property in their local area?

Despite these misgivings, it is extremely encouraging to see such lively debate being generated on the PRS. In particular it highlights the notion that renting, rather than buying, a home will no longer be taboo in the UK.

The research from home insurer LV, formerly known as Liverpool Victoria, shows that there has been a 56 per cent rise in properties available to rent in the last three months, with the vast majority - 86 per cent - coming from homeowners choosing to let their properties rather than sell in a depressed financial climate.

Last year the Royal Institution of Chartered Surveyors said the number of properties being put on the market for rent had increased by its fastest pace since its records began a decade ago.

The National Landlords Association calculates that as many as 43 per cent of landlords have come into the residential letting market by chance, choosing to let a property that they had previously lived in, inherited or that had been purchased for another family member who had since moved on.

Experts warned about the dangers of becoming a landlord without doing adequate research, highlighting legal obligations, the burden of which has increased thanks to the Government's Tenancy Deposit Scheme.

John O'Roarke, managing director of LV Home Insurance, said: "This research highlights the numbers of new landlords entering the market, many of whom may not be aware of their legal obligations. It also illustrates the need for the Government to raise the profile of legislation such as the Tenancy Deposit Scheme and for these to be more strictly enforced, to protect both renters and landlords, as awareness is currently very low. Although the majority of private landlords are undoubtedly honest, our research shows that many tenants have experienced problems getting their deposit money back in the past, and are worried this could happen again.

Source: telegraph.co.uk 04/01/09

According to the research, the perfect tenant is a female medical professional, aged between 36 and 45 in London.

Seventy-seven per cent of respondents said they preferred female occupants in their properties, while almost 25% reckoned Londoners made the best tenants.

Surprisingly, the ideal income for a tenant was not at the high end of remuneration, with 32% of landlords in favour a tenant commanding a salary of between £20,000 and £30,000.

In terms of professions, GPs topped the poll (24%), while a nurse or a carer found favour with only 9% of landlords questioned.

Least agreeable careers included HGV driver, with 19% of landlords opposed to this group, followed by taxi drivers (15%); traffic wardens (15%) and shop workers (10%).

Sixty-seven per cent of respondents valued maturity and were not keen on renting to people aged 25 and under.

Celebrities were viewed with suspicion, although US President Barack Obama and 007 star Daniel Craig shouldn’t have too much trouble finding digs.

At this stage these are proposals and the Treasury is consulting on them widely, including with key consumer groups, to make sure they are workable. This consultation will go on until 23 April.

In the meantime, all existing measures to safeguard depositors' money remain in place.

"The Government has today decided to bring forward legislation that will enable Northern Rock Plc to be taken into a period of temporary public ownership. The Government has taken this decision after full consultation with the Bank of England and the Financial Services Authority. The Government's financial adviser, Goldman Sachs, has concluded from a financial point of view that a temporary period of public ownership better meets the Government’s objective of protecting taxpayers.

Northern Rock will be open for business as usual tomorrow morning and thereafter. Branches will be open; internet and call centre services will operate as normal. All Northern Rock employees remain employed by the company. Depositors' money remains absolutely safe and secure. The Government's guarantee arrangements remain in place and will continue to do so. Borrowers will continue to make their payments in the normal way. The Financial Services Authority have advised that Northern Rock remains solvent."