Fastest for 6 years
Demand for rental housing is outstripping supply at the fastest rate in 6 years, according to a recent article in the Financial Times, which is good news for homeowners.
Estate agents say rental demand for buy-to-let properties has exceeded all expectations this summer and the trend is expected to continue into the coming year. They report that the Association of Residential Rental Agents (ARLA) says the level at which demand from renters is outstripping supply from landlords is at its highest since they began conducting surveys about six years ago.
London centered spin
Do homeowners recognize this in your local area? Well, chances are most homeowners don’t. What the FT neglects to mention is that these comments relate to rentals of Prime Central London properties.
This is one of the problems of the London-centric media. Journalists based in the capital are surrounded by soaring house prices and rents, often fueled by localized factors such as city bonds and international immigration by the international super-rich. The picture they paint is a real estate explosion that is not being replicated in other parts of the country. The reality is that the residential real estate market and the residential rental market are highly localized.
After the initial wave of house price explosions that began in London in the mid-1990s and then spread out and north. This wave has now touched every part of the UK. Now the UK housing and rental market has adjusted to this new paradigm. The market is characterized by local adjustments as towns, villages and even parts of cities respond to local conditions of supply and demand for properties.
Local Rental Property Factors
For example, in many provincial cities, inner-city rents have been falling sharply as over-buying of rental property from large speculative schemes has hit the rental property market and is not matched by sufficient demand. of tenants.
This more circumspect view is supported by the 1st Quarter 2007 Royal Institute of Chartered Surveyors (RICS) Residential Rental Survey for Great Britain, which reported that “overall tenant demand for residential investment property in the quarter to April increased at the slowest pace since the first quarter of 2005.” This is not an apocalyptic assessment, but it is far from the ‘boom’ that the FT suggests.
Overall, however, the report is positive in seeing rent levels for buy-to-let properties rising at their fastest rate since July 2006 as landlords attempt to shift the burden of buy-to-let mortgage costs. higher to its tenants. This picture was not uniform, as rent changes were strongest in the Midlands and London, with 44% and 50% respectively of the balance of pollsters reporting rent increases. This contrasts with the North and East with figures of 14 and 10%.
Owners must think locally
“Rentants are really demanding better accommodations these days with so much new construction to choose from. However, the shortage of traditional 3-bed semis continues.” COLCHESTER
“There has been a drop in renter demand, most noticeable for 3-5 bedroom properties, but there is a noticeable shortage of 2-bedroom units for rent (particularly 2-bedroom houses).” NORTH WALSHAM
“Properties that have new or renovated kitchens/baths are seeing significant rent increases.” RICHMOND
“There is strong demand for homes in Warrenpoint, however the market appears to be awash with apartments.” WARRENPOINT POINT
“More properties are required to meet demand, especially 1-bedrooms.” WORKING
“There is an oversupply of modern apartments for rent.” PRESTON
These are all quotes from chartered surveyors from the same survey but from different parts of the country. His varied analysis underlies the diversity of each localized property rental market.
It highlights the need for local research.
All of these contrasting figures highlight the need for homeowners to do their own careful research in their local rental market before purchasing a buy-to-let investment property. Catchy headlines can be a visual feast and catch readers’ attention, but they often do little to inform owners. Property Hawk recommends that homeowners take the following steps before purchasing to establish that market conditions are right for the type of investment property they are considering purchasing.
PROPERTY HAWK TIPS
1. Talk to local leasing agents – Leasing agents will usually have a good idea of the local market. Most will be more than happy to spend a few minutes sharing their knowledge of the local rental market, especially if they think you might be a potential client. They can even give you some advice on where and what to buy. Always talk to a number, at least two or three to get the general idea.
2. Monitor local rental ads: Most areas have a newspaper or magazine that runs local rental ads. Be sure to read them regularly to get a solid understanding of rent levels in the area you want to buy in. Take into account the number of rental properties and the number of renters looking for this accommodation.
3. Visit the area: is it a sea of rental boards? This may indicate an oversupply. However, don’t often panic letting agents leave their boards long after the property has been removed or rented out as a way of getting free publicity, so make sure the boards relate to properties that are still listed. for rent.
4. Don’t believe the hype – Ignore the hype that the media and property professionals might generate. Look at the numbers and stay focused on the facts.