Summer is over, it would seem. Kids are returning to school, the nights are beginning to draw in and the leaves will soon be falling from the trees.
Despite a shaky beginning to the year it’s been a successful first half of the year for landlords, with rents increasing, yields performing strongly and capital appreciation rising also. Letting agents have also had a good first half with many rogue and unethical agents now coming under increasing scrutiny from authorities meaning that disreputable organisations are closing and good agents are seeing business increase and standards rise.
Across the north of the country house prices have increased quicker than anywhere else, and tenant demand has remained high. The housing market itself is seeing a drop in demand from First Time Buyers (FTBs), meaning that demand for rental property looks set to keep increasing.
With that in mind, what can landlords expect for the rest of the year? A number of reports and research have been released recently painting a positive picture for the sector.
The latest Buy to Let Index from Your Move has been released this week, indicating that rents rose to £874 per month on average. Breaking down the regions the research showed that 9 out of 10 regions surveyed saw an increase in the average rent, with only the South West failing to indicate a rise. This represented an average increase of 3.1% over the past 12 months.
Suggesting a cause for the increases, the survey pointed towards a fall in available housing stock, increasing demand for properties. It went further, however, and suggested that a number of government tax schemes aimed at buy-to-let (BTL) landlords had backfired, causing a marked decrease in available rental properties.
Richard Waind, Director of Your Move, was quoted by Property Reporter as saying “We are now starting to see the real impact of the government’s Stamp Duty revision, plus the additional tax changes which have hit landlords hard.”
“The outcome has been a decline in the number of rental properties on the market and this has had the effect of pushing up prices for tenants.”
“Tenants in London face a different issue as rapidly rising travel costs are increasing the overall cost of living in the suburbs, despite rents generally being cheaper than central areas.”
“The Private Rental Sector, however, could still be seen as an attractive opportunity for investors, with the North East and North West in particular seeing strong growth. Although buy to let investors are preparing for the new PRA changes coming into effect in September, it’s clear that there are still people who believe that, property remains a viable investment option.”
Despite the government changes hitting landlords in general, many who have remained in the sector or even grown their portfolio are now starting to reap the rewards of a reduced stock. Demand, rents and yields are performing well across the UK bar some areas, and capital appreciation has remained strong.
Landlords, to their credit it seems, have remained resilient in a hostile environment, and with a government running low on popularity it may not be long until they are forced to backtrack in order to increase available rental stock.
Landlords should expect, seeing the year out, for things to remain much the same as they have been through Spring and Summer, but may be encouraged to maintain a keen interest in developments as an unpopular government begins to realise the impacts of its actions.
Those agents who have also been reaping the rewards should expect to strengthen relationships with their existing landlords whilst also building their reputation as tenants and landlords require better customer service in order to maintain the positive atmosphere that has been developed over the previous six months.