Property condition - speculate to accumulate!

As a student, I rented houses with issues! There were some structural problems with one property which meant that you could see daylight through the crack on the staircase wall. In another there were no internal doors upstairs – definitely a fire risk, but not something that particularly bothered the four of us that shared the house at the time! Why did we do it, I ask myself? Quite simply because we had no choice – 15 years ago there was a shortage of rental property so as a tenant, you took what was available.

This isn’t the case today. The buy to let boom of the last 10 years means that generally there’s a good supply of rental property for prospective tenants. Yes, there are periods of scarcity – right now there are fewer properties available than there were 9 months ago because people aren’t moving, but it’s still the case that if you are a tenant, you can be a bit selective over where you live.

As a result of this, it’s important these days that landlords maintain properties in good order. Gone are the days when you can get away with offering a substandard property. Northampton, which has seen a huge amount of new build in the last decade, has responded as a market to accommodate this – the stock of Victorian properties is generally in good order with landlords having updated to compete with the new build. New kitchens, bathrooms, and neutral décor are common. Rugby is going the same way too – although the Victorian stock is generally more dated in condition, Belvoir is now arranging the refurbishment of 1-2 properties per month for landlords who want to guard against empty periods. The properties that sit empty in Rugby, are the ones that need work.

It’s also a fact that updated properties have fewer void periods. Landlords sometimes tell me they can’t afford to update a property – finances may be tight, but there’s also an argument that they can’t afford not to, as an empty property will cost them more. I also see the ones that do spend on the property being rewarded in terms of better rents and fewer voids. One of the first properties I took on as a lettings agent was a refurbished Victorian terrace – the owner had spent about £8,000 getting it refurbished properly, and in the 60 months since, he’s had a void period of 1 month. The identical property opposite, also managed by ourselves, needs refurbishment. It’s been empty for 5 months out of the last 36, and the owner still has about £8,000 to spend to get it up to a decent standard. Financially, one has invested much better than the other.

My team will always contact landlords when a tenancy is coming to an end and advise if we think works are required. Our advice to landlords is always to keep properties tip top – it’s a classic case of speculate to accumulate.

Richard.