Amidst the deluge of negative publicity surrounding buy-to-let - falling rents, increased voids and oversupply - Leaders, the UK's largest independently owned letting agency, has announced that over the last 13 months it has seen an overall increase in average rents and only modest voids.

Leaders which manages many thousands of homes across Sussex, Surrey and Hampshire through its sixteen branches, reported a 6.5% increase in average rents since March 2001. The largest increase was seen in Brighton & Hove, up 12% since March 2001; followed by Southampton, which was up 8%. All three counties showed an increase in average rents in the year to March 2002: 6% in Sussex; 7.5% in Hampshire; and 7% in Surrey.

Despite the recent flood of downcast reports on letting in London, the company is positive about the private lettings sector in its areas. Leaders' Managing Director, Gayle Morgan said: "Whilst some isolated areas are experiencing a worrying over-supply, such as fashionable parts of London, central Manchester and Birmingham; most areas of the UK are not suffering in the same way, as we have seen in Sussex, Surrey and Hampshire. All our large investment landlords, who are seasoned and sophisticated investors, are still continuing to buy steadily; recognising the value of stable rents and good returns on capital that are still obtainable."

Leaders finds it no surprise that the larger and most prestigious firms of property consultants in London are now reporting distress among buy-to-let investors since it was they, and other residential sales agents, who encouraged investors to buy without taking into account the significant increase in properties available to let in the fashionable areas and city centres.

Over-supply within relatively limited geographical areas has given tenants wider choice and improved their bargaining position. However, those prudent landlords who did not allow themselves to be persuaded to over-borrow in anticipation of ever increasing rental demand are not being affected. Leaders counsels landlords carefully on where to buy, how much to spend and how much to borrow. Borrowings should not exceed 70% of the property's value; rents should equal 150% of mortgage payments to allow for maintenance and other costs; and a reserve equal to at least 2 month's mortgage payment should be put by to cover any voids. Leaders provides landlords with a comprehensive expenditure template to help with budgeting, so there should be no unexpected expenses later on.

"Unlike estate agents, who stand to gain from the sale of a property; we have to live with the success or failure of our landlords' investments," says Morgan. "Now, having encouraged our landlords to avoid central London and other over supplied city centres, we are pleased to report stable rents and modest voids."

Leaders occasionally meets landlords who have difficulty letting their property; often because they were poorly advised when they bought the property, which may be in the wrong location, too highly priced, or poorly presented. "In these cases," says Morgan, "we will offer honest, sometimes hard-hitting advice on what should be done to solve the problem. If the property is in the wrong location and the landlord cannot afford to reduce the rent, the only advice is to sell. We will always be honest about that."

Overall, across the UK, investment in residential property offered excellent returns during 2001, and this seems likely to continue, provided investors are prudent and take expert advice on where and what to buy. Last year, detached houses saw the greatest returns in both income (7.9%)and capital growth (15.8%) according to the IPD UK Residential Investment Index. Returns on UK residential property of all types were 17.1%: 10.7% on capital growth and 6.5% on income. Compared with other assets, such as Equities (-13.2%); gilts (1.3%); and cash (5.5%) these figures are clearly tempting.

There are valuable lessons to be learned from what is happening in London and other areas of over-supply, which should not be ignored. But as Morgan says: "Buy-to-let is still a worthwhile proposition; its not all doom and gloom as our figures testify. However, would-be landlords should always seek advice from a specialist letting agency, preferably a member of ARLA, and from solicitors familiar with housing law before committing their pounds."