THIS IS OUR UPDATE FOR THE NORTHAMPTON AND RUGBY LETTINGS MARKETS (APRIL 2013)
The reason I'm choosing to do this now is because the picture painted in the national media is very much that the demand for rented property is massive, and that rents are always up X% on previous months / years. I get landlords asking me when they are going to get their X% increase, and when their tenant gives notice if they can up the rent by £50 per month? Sometimes this is possible. Often it isn't.
The market in both towns is actually as healthy as it has been since we started trading. In Northampton this was 2006, and in Rugby the business actually opened in 2003 under the previous owners. This means that landlords who have a well presented and sensibly priced property are rarely without a tenant. It also means that some landlords have been able to squeeze rents up to higher levels than they've managed previously. It doesn't mean that rents have gone silly and you can charge what you want though - the national media rarely looks outside London when writing these articles, so offers a distorted view of reality when it comes to the bright lights of the East Midlands!
For instance in Northampton, the sheer number of 2 bed flats on the rental market stops prices moving significantly. If you ask for an extra £50, it's fairly easy for a tenant to find a landlord who doesn't. In Rugby, the average income of tenants restricts prices - there's no point raising the rent to a level where your tenant can't afford to pay.
Some landlords have enjoyed an increase though - houses are generally trading at £25 or £50 per month more than they were a few years ago, which is good. The inherent danger here is that landlords come to expect these levels of rent - just as a few years ago people assumed property prices could only rise, the mistake they will make now is assuming that rents can never fall. They can. And at some point they will.
But although I sound negative, there's no reason to be concerned! Just be realistic. The long term demographics of the rental market remain VERY good - a chronic shortage of housing, a growing population, large funds needed to purchase property, etc etc. I chose to open a lettings agency and am a landlord myself which shows that in the medium to long term I think investment property is good place to be.
Our advice to all Belvoir landlords is hence to charge the best rent you can, but fundamentally to AVOID THE VOID. I have one large landlord who for a number of years has insisted that his properties are marketed about 5% under the market value - going against the advice I initially gave him. However when we look back at his portfolio over a number of years, we see his average void between tenancies is less than 7 days - his properties are hardly EVER empty. Compare that to the landlord of a property who let it sit empty for 3 months because the previous rent was £700 and he wanted to wait until he was offered that again. He did get it eventually, but he's lost £2100 by the time he did. Had he accepted our advice to market at £650 from day 1, he would have lost a lot less. Incidentally, he doesn't think he lost - he's happy that he won because he got his £700!
It's also worth remembering that if we're managing your property, we're on a cut of the rent you receive. As such it's in our interests to charge a tenant as much as we can, as well as yours. Hence if we're recommending not moving a rent, or even dropping it, we usually have a valid reason for suggesting this.
