As I’ve said on this blog before,
rents in Northampton are on the up! I’ve been letting properties here for 10
years and rarely has it been necessary or advisable to raise the rent – the market
has been solid but static. However in the last 18 rents we’ve seen rents start
to creep up consistently to the point that when we review (which we do for
managed customers every 12 months) pretty much every rent is seeing a small
increase.
Why is this?
I’m not
100% sure! Well I am – it’s because demand exceeds supply. But what is fueling
the demand?
Property
prices are high – that’s certainly a factor which means that the average first
time buyer is stretched so chooses to rent instead. Immigration is certainly a
factor – every other tenant we let to at the moment is Romanian whereas 5 years
ago they were Polish. Generally speaking this is the good end of the market too
– I hate to think where we would be if we didn’t have Eastern European tenants.
And a lack of house building is also an issue. If you read the local newspaper
you’ll see that every time a development is proposed, local people object to it
– that may suit them but I’m not entirely sure that’s in the interests of
future generations!
What should you do?
If you’re
a managed landlord of ours, nothing! We’ll raise the rent as appropriate but we
won’t squeeze it to the limits, as that’s not in the interests of our landlords
or ourselves. Clearly there’s a benefit for a landlord in increasing the rent,
but zero benefit if the increased rent causes the tenant to give notice.
If you’re
managing yourself you're clearly an experienced landlord so will
doubtless have dealt with this already using the appropriate legal forms and
taking the appropriate safeguards.
Is this a good thing?
I’m a
landlord myself and won’t pretend it doesn’t feel good to see rents creeping
up. We do after all live in an age where the costs to landlords increase on an
annual basis with more regulation and government intervention in the sector –
so it’s nice to reclaim at least a bit of this through increased rents. But I’m
also conscious that Northampton isn’t the centre of the economic centre of the
universe and whilst employment is high, most people aren’t in massively well
paid jobs. You need to remember that whilst the market rent for your property
may be £x, that doesn’t mean the current tenant can afford £x – and by
increasing the rent you may be creating problems (arrears and evictions) that
it ends up costing you to sort out. As an agency we’re seeing more arrears (slightly,
not massively) and when tenants move out there’s a definite increase in “moving
back with the parents” which is a sure indicator that affordability is being
stretched. As such whilst increased rents are a good thing for landlord, they
need to be welcomed with a note of caution.
Is everyone getting an increase?
Certainly not! Rental increases generally apply to properties that weren't over squeezed in the first place, and properties that are in good repair. If your tenant is on the phone every 5 minutes complaining about A, B and C, you're hardly likely to get away with increasing the rent. Deal with any issues outstanding before proposing an increase as ending up having to change tenant will always cost you more than you make back.
