What's happening with rental prices?

Recently, there's been a lot of talk in the national press about an increase in rental prices. People are struggling to buy houses currently due to strict lending criteria, and people also aren't moving out of rental property, so if you're looking for somewhere nice to rent, it's a lot harder to find something than it was say 12 months ago. This is the case in both Rugby and Northampton.

So have we seen rental prices increasing as a result? Certainly not across the board is the answer, and there are probably a few reasons for this:

1. The natural time to change the rent is when your tenant vacates and you have a new one going in - only this isn't happening much at the moment. To change the rent, landlords have to apply for an increase mid tenancy - and whilst there is confidence in the market, it's still a brave landlord who calls his tenants bluff and risks losing them over a small rental increase.
2. Property condition remains a massive factor in a landlords ability to increase rent. When the newspapers state there is a shortage of rental property, they mean a shortage of good quality rental property. Whatever the market conditions, there's never a shortage of poor quality property to rent, and it's always hard to command a premium rent if the property is in poor order.
3. In certain sectors of the market, there's still oversupply of property. Two bedroom apartments in Northampton for example, are still in plentiful supply, and getting a significant rental increase in this area is tricky business.

Irrespective of this, there have been examples recently of properties getting excellent rents:

1. Two bedroomed house, St Crispins, Northampton, rented at £695PCM. Granted, it was in excellent order, but still the usual price for this would be around the £600 mark. Lucky landlord!
2. Two bedroomed house, Coton Meadows, Rugby, rented at £595PCM. This was in decent condition, and would usually fetch around £550PCM. However the landlord benefitted simply from a complete lack of competition and was able to get more rent.
3. Three bed house, East Hunsbury, Northampton, rented at £795PCM. Whilst a staple rental area, Hunsbury 3 beds usually peak at around £700PCM, with higher prices being achieved across the A45 in Wootton and Grange Park. Again this was a well presented property, which the landlord was able to achieve as the internal condition was genuinely spot on.

And what does the future hold for rental prices?  This isn't an easy question to answer, and if you ask three different 'experts', you'll get three different responses. As such the brutally honest response is probably "who knows"!

From my own perspective, I believe very strongly that the answer remains tied in to people's ability to buy property - as long as this remains difficult, people will have no choice other than to rent. This should keep demand high, and hold prices up too. If you are a landlord that has good quality property, you shouldn't have a problem 1) attracting a good quality tenant and 2) charging a decent rent. This hasn't always been the case though, so don't 3) start to think it's the norm and 4) base your future financial decisons on it!

Richard.