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UK landlords urged to adjust to changing rental market
By: Instyle Apartments
The UK’s residential rental market is stable but some areas particularly in London there has been a declining trend in rentals since the start of the 2013 and many say it is the time landlords adjusted to the changes.
According to estate agents, the landlords of properties to rent in London need to understand that the levels previously reached were not sustainable as the market tightened and price adjustments became difficult for landlords to justify in re-investing in properties.
Sale Market Better
Greater access to mortgage finance revived the home sales market. So it impacted rental prices and consequently affected the yields. Despite these signals, tenant applicants have not declined drastically implying that demand continues to be high, if the claims of many Lettings and Management experts are anything to go by.
The only thing now required of landlords is to be more realistic and adjust their expectations and prices accordingly to maintain their competitive edge.
Across the UK the rental rate dropped by 1.8 per cent between August and September this year. More people are signing up the ‘help to buy scheme’ of the government leading fewer people opting to rent. This entails a reduction in the demand for rented homes and a subsequent deflation in rents.
The drop in rent levels during August is attributed to the first surge of people taking advantage of the government’s first phase of ‘help to buy’ introduced earlier this year.
The scheme guarantees part of the mortgage for buyers with small deposits. This is set to create more competition among landlords who want good quality tenants and will see average rents crashing.
The new trend is that more tenants prepared to wait and dismiss properties which are not of their ‘value for money’ yardstick. Similarly viewings per property have risen significantly.
At the same time, landlords are not in a position to justify much needed improvements whilst rents are not rising or even falling. To attract the best tenants and avoid a long void period, landlords need to re-view their properties objectively and ensure that what they are providing is justifiable. Even a smallest re-investment makes a big difference in terms of lettability and helps to hold on to good tenants.
Ultimately landlords’ income is still above what was being achieved two years ago and those earning anything above a 4 percent yield are at a good return.
Higher yields in the region of 6 percent are achievable but it depends on market conditions and areas. If landlords refuse to add basic maintenance with higher rent levels they enjoy then they are heading to finances too tight. Price fluctuation in the rental market is part of the business and all shrewd landlords accept that part of the business model, an expert observed.
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Page Updated Last on: Nov 13, 2013