I was talking to a landlord earlier today who has had properties in Northampton for a decade. As he'd admit himself he bought at the top of the market in 2006 / 2007 so has had to wait some time for his properties to regain their value after losses in 2007 / 2008. But they've always been rented - we calculated that Belvoir had signed up over 20 tenants for him over the years off 3 properties so the income has never been an issue.
What's interesting is that the income is now starting to rise. Since starting the business in 2006, we've never really struggled to find tenants - it's usually landlords and properties that we're short of. But until recently this hadn't translated into rising rental prices.
What's interesting is that the income is now starting to rise. Since starting the business in 2006, we've never really struggled to find tenants - it's usually landlords and properties that we're short of. But until recently this hadn't translated into rising rental prices.
The graph above shows the rent actually achieved for a 2 bed house in St James - in Wimbledon Street. I've chosen this one as it's a fairly typical rental property - the type of thing a lot of people own and a lot of tenants want. It's in decent to good condition and doesn't really have void periods.
You'll note that for the first half of the last decade the amount of rent only crept upwards slowly. We were getting something starting with a £5 for it and when we tried for something starting with a £6 nothing really happened. But move on to 2017 and we'll get something starting with a £7 and this is the case for most other 2 bed properties that are in decent condition and in decent areas.
It's the same with most other types of property too: 1 bed apartments that for years have traded at around the £500 mark are now achieving £550 assuming the condition is decent. 3 bed houses that for years have been somewhere between £750 and £800 are now at £900 with very little issue. There's been a general upward movement of 10%-15% for most places up to 3 beds.
And the rise is being caused by supply and demand. There's a lack of supply because fewer people move out of rental property these days, and also because there hasn't been a huge amount of new build in recent years - particularly of smaller properties. Equally there's ever increasing demand - over 70% of enquiries for rental properties are from EU migrants who have little trouble finding employment given the huge and increasing warehousing industry around Northampton. The result is appreciating rental prices.
The landlord I was speaking to related higher rents with higher property prices - if it costs me more to buy it, I can charge more to rent it, etc - but I'm not sure it's that simple. It's hard to envisage a situation where demand for rental property may significantly fall in Northampton, but if it did that certainly would squeeze returns for owners who's bought more recently.
