EMBARGO TUES 13 FEB 00.01: The rapid growth of Northern Ireland's private rented sector is the focus of a new study led by University of Ulster housing expert Paddy Gray.

More small-scale landlords are buying their way into the market, but some could fall victim to sudden changes in its economic conditions, says the report by a three-strong team led by Mr Gray.

Commissioned and published by the Northern Ireland Housing Executive, the researchers say the private rented sector is playing an increasingly important role within the housing market in Northern Ireland. The sector has increased by 120% over a 15 year period. However, the researchers suggest that the buy-to-let boom may have reached its peak.

Mr Gray, who is a Senior Lecturer in the School of the Built Environment, said: „There is evidence of increasing numbers of vacant properties in the private rented sector. By 2004 there were over 12,000 vacant properties, bringing the total number of private rented properties to 75,000.

His colleagues in the research were Professor Paddy Hillyard of Queen‚s University and Ursula McAnulty, of the University of Ulster.

Reporting a recent trend for new, small-scale landlords, the research suggests that a combination of factors including poor performance of pension plans, availability of buy-to-let mortgages, rising house prices and low interest rates has encouraged a growing number of individuals that property is a safe, long-term investment.

But the research found many landlords had relatively high loan-to-value ratios. Half had loan-to-value ratios of 76% or more, leaving them vulnerable to interest rate increases or periods of vacancy which might result in some being unable to sustain their investment in the sector.

Mr Gray said: "Increasingly, the private rented sector is housing the type of tenants traditionally associated with the social sector: low-income, unemployed tenants are over-represented in the sector, and around 40% of tenants are in receipt of housing benefit.

"Planned reform of the housing benefit system, with housing benefit paid directly to the tenant, is causing concern for many landlords, and increases uncertainty in the sector, the team say.

"There is a fear that these changes could lead to landlords with housing benefit tenants exiting the sector or letting to non-housing benefit tenants," Mr Gray said. "This scenario may have serious consequences for the Northern Ireland Housing Executive, as these tenants would be forced to seek accommodation in the social sector.

"It is important not to exaggerate this risk as the majority of landlords also indicated that they would not sell-up even if they were making a loss, and rely on capital appreciation to consolidate their investment."

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