Property: A grand vista opens for renting

Renting is back in fashion, despite, or because of, relentlessly rising prices. considers the plums on offer

To many the scramble to buy a home shows a streak of Eighties madness, when renting was regarded as almost irresponsible. But the rental sector has evolved. Far from faltering as the sales market in London and the south east gained momentum, as many feared, it has continued to flourish and is no longer regarded as a second-rate option. Penny Parr-Head, Central London lettings director for Hamptons International, sees the rental sector as finally having come of age. "It has been taken over to such an extent by investors, particularly from overseas, that it is now far more independent of the sales market. This has encouraged more people here to become landlords," she says."The big difference is that in the Eighties they were trying to make money from their own homes by constantly trading up."

Those whose fingers were burned and became reluctant landlords are a dwindling band as properties regain their former value. Hamptons find with the 10 London properties that on average they are losing to sales each month, others more committed to long-term letting are waiting to step in, even though rental yields in London have fallen to 8 per cent, almost their all-time 1989 low, according to Savills Research.

"Among them are a growing number of parents who want to combine investment with the needs of their offspring," says Ms Parr-Head. "I had someone the other day with a 12-year-old buying a flat for his use as a student."

While most parents might prefer to see the offer of a university place first, in cities like Nottingham, terrace houses are being snapped up by small investors. In some cases, students themselves are raising the money to buy. The same story is being repeated in university towns across the country where there is a shortage of accommodation. The willingness of banks and building societies to give loans and the poor returns on savings elsewhere have fuelled this trend. Black Horse Agencies has for the first time produced a residential lettings report, similar to its successful Home Report, which gives the national average time it takes to let a property (four weeks); average rental yield by area; average rental values and a tenant profile. It shows the highest yield available is from letting a flat in the South-west. It also shows that 27 per cent of tenants were previously home owners and well over half of those are families and couples. The shortage of family houses means that even though prices are rising people are continuing to sell while the going is good and rent before buying again.

That is particularly true of those moving from town to country, which is in turn putting a premium on country houses. "Many owners who might have let their houses while going abroad are selling because they are being offered such whacking good prices," says Anna Sugden of Strutt & Parker. She also finds that the new safety regulations are making it very difficult for owners to let their property furnished. Those who want to hang to hang on to their homes and are aiming for the corporate market have to lavish a great deal of money on a house if they want top prices. Hamptons, which is marketing Kingston Grove, Oxfordshire, (above) says the owners have extensively refurbished it with a new kitchen, bathrooms and expensive carpets and curtains. Since it is in more than of acre of grounds with a heated pool, yet close to London, it is likely to be let as a weekend house, for pounds 5,950 a month. It is in these sought-after spots close to good transport links that tenants are beginning to press for agreements that give them security of tenure. In the past eight months, Parr-Head has seen an increasing interest in premium leases, which means a tenancy is guaranteed for a specified period, such as three years, in return for the whole rent in advance.

"Far from wanting flexibility, these tenants want the peace of mind that comes with knowing the landlord cannot get them out. Landlords like it too."

the landlord''s story:

`fooled by persuasive marketing'

Kittni Chan placed the managment of her flat in Weston-Super-Mare with a letting agency.

When the tenants moved out last year they had caused extensive damage to carpets, curtains and doors as well as leaving delapidated furniture. I had instructed the agents to make reparation from the deposit but found out they had allowed the tenant to use this for the last month's rent. I also discovered that they had failed to get the gas fires checked and that there was a leak. I was unable to pursue an insurance claim because the paperwork had been lost by the agents. I was paying 17 per cent for this service and had been fooled by persuasive marketing.

the tenant's story: `a disaster waiting to happen'

Sarah Foster has a flat in Croydon.

It was disastrous from the beginning, when the agency put enormous pressure on me to commit myself within 24 hours. On the day I took it over, I found the previous tenant had not moved her things out. The flat was filthy and I had to clean it myself. The gas meter had been removed because bills had not been paid so I had no hot water or heating. After the agents broke numerous appointments to let theengineer into the flat I became desperate. I couldn't take any more time off work. It was eventually done at 10 at night. The boiler blew up three weeks ago and still hasn't been mended properly. Nor do I have a proper contract.