Good news for ten­ants, land­lords and econ­omy

Stockport Times East - - HOMES - » www.reed­

OVER the last five years, rents have grown by an av­er­age three per cent per year – but just 0.6pc an­nu­ally af­ter in­fla­tion.

Rents are now 16.3pc higher than five years ago, hav­ing most re­cently risen by 2.8pc over the last 12 months, ac­cord­ing to the lat­est Buy-to-Let In­dex from Reeds Rains*.

In ab­so­lute terms, the av­er­age res­i­den­tial rent across Eng­land and Wales has grown by £107 since Jan­uary 2010, to reach £763 as of Jan­uary 2015.

Look­ing at the north west, av­er­age rents in Jan­uary 2015 were £583.

Steven Cooke, re­gional op­er­a­tions manager for Reeds Rains, said: “The na­ture and af­ford­abil­ity of UK hous­ing is chang­ing be­fore our eyes. In the last five years the pri­vate rented sec­tor has suc­cess­fully ab­sorbed a unique in­flux of ten­ants, while rental prices have broadly tracked in­fla­tion.

“But as this growth ac­cel­er­ates, even more in­vest­ment will be nec­es­sary for the in­dus­try to keep up. So we need more buy-to-let land­lords to help solve the cri­sis in de­mand for homes to rent.

“The only clear way to make rented hous­ing dramatically more af­ford­able is to build far more homes, far more quickly than is cur­rently the case. And un­til this hap­pens, land­lords are likely to con­tinue to earn dou­ble digit re­turns on their in­vest­ments.”

“In the wider prop­erty mar­ket, house price growth has slowed slightly, and we’re see­ing a com­ple­men­tary cool­ing in land­lords’ to­tal an­nual re­turns,” con­tin­ued Steven. “But im­por­tant rental yields have re­mained sta­ble, mov­ing very gen­tly above the five per cent mark. More­over, most land­lords are long-term prop­erty in­vestors who will choose their time to sell to max­imise their cap­i­tal gain.

“More in­vest­ment is still needed in the pri­vate rented sec­tor. Not only do rental prop­er­ties pro­vide an es­sen­tial ser­vice, giv­ing peo­ple who can’t yet af­ford to buy the mo­bil­ity to search dif­fer­ent ar­eas, but also an in­crease in land­lords can only prove ben­e­fi­cial for ten­ants, al­low­ing prospec­tive renters more choice. We are find­ing an in­creas­ing num­ber of peo­ple ap­proach us for ad­vice about be­com­ing land­lords – and what they can do to in­crease the chances of se­cur­ing a ten­ant.

“Good fur­nish­ings at­tract ten­ants along with clean­li­ness and the qual­ity of the in­te­rior. For ex­am­ple, prop­er­ties need to feel loved with clean walls and car­pets. For land­lords to make the best im­pres­sion we would ad­vise their prop­er­ties need to be freshly painted and clean.

“And re­mem­ber that your in­di­vid­ual tastes might not ap­peal to all ten­ants so keep colours neu­tral and dec­o­ra­tion sim­ple. A prop­erty which feels loved will at­tract greater care from ten­ants and they are more likely to look af­ter it.

“Land­lords also have to con­sider that some ten­ants are rent­ing a prop­erty for longer pe­ri­ods and will have high ex­pec­ta­tions for their long-term home. Low main­te­nance gar­dens, cen­tral heat­ing and dou­ble glaz­ing are all im­por­tant fea­tures.”

Steven added: “There are large im­prove­ments in ten­ants’ fi­nances, with the low­est pro­por­tion of rent in ar­rears since Novem­ber 2013.

“In part this is a re­cov­ery from the usual fes­tive squeeze – but also the lat­est chap­ter in a far more sig­nif­i­cant trend. Sea­sonal blips aside, we’ve seen a clear re­duc­tion in ten­ants be­hind on their rent in the past half-decade. This is a sign that ten­ants are more in con­trol of their fi­nances than ever be­fore.

“The cur­rent rate at which peo­ple are be­ing pipelined into em­ploy­ment is a boost for lev­els of rent in ar­rears. In the fu­ture we will look back at th­ese eco­nomic con­di­tions and recog­nise that buy-to-let in­vestors have ‘never had it so good’.

“It’s good news for ten­ants; it’s good news for land­lords, and it’s good news for the econ­omy.”

* Reeds Rains Buy-to­Let In­dex (Jan­uary 2015).

The Reeds Rains team at Wilm­slow

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