It's almost 9 years since I opened Belvoir in Northampton, and rental prices today are as high as they have been throughout that period - good news for many landlords!
It's hard to say why this has occurred. Demand for property from tenants has always been good - there have been brief periods where there's been an oversupply of certain types of property (mainly 2 bed flats) but there's never been an issue renting good quality places to good quality tenants, so it's interesting that prices have started to move upwards in the last 18 months or so.
What seems to have changed is people's willingness to pay. Whilst there's always been demand, tenants would haggle and if a landlord overpriced a property it would hang around and sit there empty - people would look at it, but refuse to pay. It isn't the case that a landlord can name his price now - market forces still dictate - but there has been a general move upwards in the last 18 months with the whole market shifting between 5% and 10%. Taking 1 bed flats as an example - £500 per month used to be about the ceiling for a nice modern unfurnished one in the better areas of town - that's now £550, and the rest of the market has moved in the same way.
Of course, property condition remains important. If the landlord hasn't kept his property in good order, returning to it between tenancies and keeping it fresh, he won't be getting a rental increase. Equally affordability is becoming more of an issue. Northampton is Northampton at the end of the day and the average salary is £x.
If rents increase and salaries don't, tenants are in danger of getting squeezed - not something that Landlords usually think about until the rent doesn't come in - but arrears are slowly rising. I was speaking to one competitor earlier in the month who is always charging absolute maximum rents, and gets these by not filtering tenants too much (his admission!). He said his arrears are causing him bother - "hard work, this lettings business, Richard!" Well it's harder if you take that approach certainly.
But there's no doubt demand is at a record high. We don't even advertise 50% of properties these days - when they come, we've got a list of people who want to take them. And when we do advertise, we let them within a couple of days - anything that stays available for longer is either big (4 bed properties move more slowly) or there's another factor slowing to down - maybe the place isn't presented well or maybe we're not getting applications from the type of tenant the landlord wants. My lettings negotiator used to chase prospective tenants - trying to persuade them to take properties. These days she just takes orders, and spends the rest of her time helping out with property management!
So it's good news if you're a landlord - you're getting more rent even though there's increased regulation and hoop jumping than you have been in recent years. How long it will last is another matter. What effect will an interest rate rise have? What about a change of government? Crystal ball needed!
What seems to have changed is people's willingness to pay. Whilst there's always been demand, tenants would haggle and if a landlord overpriced a property it would hang around and sit there empty - people would look at it, but refuse to pay. It isn't the case that a landlord can name his price now - market forces still dictate - but there has been a general move upwards in the last 18 months with the whole market shifting between 5% and 10%. Taking 1 bed flats as an example - £500 per month used to be about the ceiling for a nice modern unfurnished one in the better areas of town - that's now £550, and the rest of the market has moved in the same way.
Of course, property condition remains important. If the landlord hasn't kept his property in good order, returning to it between tenancies and keeping it fresh, he won't be getting a rental increase. Equally affordability is becoming more of an issue. Northampton is Northampton at the end of the day and the average salary is £x.
But there's no doubt demand is at a record high. We don't even advertise 50% of properties these days - when they come, we've got a list of people who want to take them. And when we do advertise, we let them within a couple of days - anything that stays available for longer is either big (4 bed properties move more slowly) or there's another factor slowing to down - maybe the place isn't presented well or maybe we're not getting applications from the type of tenant the landlord wants. My lettings negotiator used to chase prospective tenants - trying to persuade them to take properties. These days she just takes orders, and spends the rest of her time helping out with property management!
So it's good news if you're a landlord - you're getting more rent even though there's increased regulation and hoop jumping than you have been in recent years. How long it will last is another matter. What effect will an interest rate rise have? What about a change of government? Crystal ball needed!
