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Demand for rental property will remain strong in 2010

It also predicts:

* Stock levels to fall further in Q1 as accidental landlords continue to return to the sales market;
* Lettings market to receive new investment from professional landlords with liquid cash in the second half of the year;
* Rents to increase next year, pushing annual growth back into positive figures;
* Areas expected to perform well in 2010 – Medway towns eg Ashford; desirable London commuter towns with above average house prices eg Tunbridge Wells; urban hub town eg Milton Keynes.

Phil Calderbank, Director at lettingsearch.co.uk, said: "The lettings market is already undergoing a sustained period of recovery and 2010 is seen as a year of consolidation, driven by stock levels falling back to more normal levels and an increase in tenant demand as consumer uncertainty in the sales market rumbles on.

"The plethora of accidental landlords which contributed to the oversupply of lettings stock has decreased substantially and those that remain are expected to return to the sales market in the early Spring to improve their chances of securing a sale while the demand exists and prices are relatively stable.

"However, with the possibility of a double dip for house prices due to the continued weak nature of the fundamentals underpinning the market, homeowners and first-time buyers are expected to turn away from the sales market in the first half of 2010, preferring to let a property until more stability returns. This caution will be exacerbated by continued tight mortgage availability and the threat of further redundancies.

"As a consequence, rents will stabilise in many areas of the country, rising in areas of particularly high demand, pushing growth back into positive figures and eventually leading to more lucrative rental yields. Professional landlords are also likely to benefit from a gradual increase in buy-to-let lending and, with investments in alternative asset classes continuing to under-perform, those with liquid cash for a deposit may look to invest in further, affordable lettings properties in the second half of the year.

"We are tipping several towns to become lettings hotspots next year. These include the Medway towns such as Canterbury, Rochester and Ashford, which are already seeing increased demand from young professionals as a result of the new high speed rail link into the capital, which entered service on 14 December.

"Traditionally desirable commuter towns with good schools, such as Tunbridge Wells and Guildford, are also set to perform well in 2010 as families choose to let in the current climate. More of an outsider, urban hub towns including Milton Keynes will be popular for lettings as they are still commutable to the capital and offer a good range of shops and services."

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