Rental Prices and The Market
We have seen a steady decline in rents achieved on property in certain towns. This is not isolated to a particular area nor is it a particular type of property. The main reason, in our opinion, has been down to basic economics of supply and demand. Towns where major developments have taken place over the last two to three years have seen rental prices driven down. The good news is that rental prices have now stabilised and that over time as we see these developments being sold or rented out, the property rents should increase, albeit at a slow pace.
As property prices have generally fallen in these areas of high development and in particular for certain types of property, new landlords or further landlord purchases of these properties will generally keep rental prices subdued as theoretically the rent achieved now will achieve a better rental yield than those who purchased at the peak of 2006/2007.
The view across the whole market is that unfortunately due to the economic situation we are seeing a high demand for property that will accept benefits. No two situations are the same and tenants who are receiving benefits can be an attractive benefit to landlords. With some tenants eligible for council backed deposits or assisted placements meaning the risk can be minimised. Together with a guarantor these types of tenants are not always the initial “no” we have seen in the past from landlords who have realised an opportunity exists.
We are also seeing a number of situations where tenants have sold their home and are renting to ride the economic storm. The current rental market is still very active and good quality applicants are still renting albeit maybe with a better chance of negotiating rents down and having the pick of a number of property.
We are often asked, how long will it take to rent out my property, or what can I do to make it more appealing. The simple answer is that the decor needs to be kept simple, clean and neutral. i.e. if it’s furnished then de-clutter and for both furnished and unfurnished keep the carpets/flooring and walls neutral in colour. Rental price seems to be the key factor for the majority of property let. If the rent advertised is not in keeping with the market price for the property, it will not let or may take an extended period of time. As discussed, rents have generally fallen and therefore what was achieved several years ago may not be achievable today. Therefore, advertising a property at a price that exceeds the current market will simply stall the lettings process. The only areas where we have seen strong demand or where prices have held up to previous year’s figures have been the detached large property’s or where there is a unique aspect to the property. For instance, maybe a property that has more parking spaces than other similar property. Property, located within the heart of a city with parking, as generally city locations with parking are now seen as unusual. Other instances are those properties which have gone under major alterations giving the property maybe an open plan modern feel.
The good news is that if the property is priced to the current market then we have seen and should see good demand and subject to the property being presented appropriately then it should let within a short timescale. How you price your property is down to the tools available to you. Papers, Internet and local newsagent advert. All these sources should enable you to gauge what letting agents and private landlords are advertising similar property for. Letting agents do have a number of tools available to them, including powerful tools enabling them to see prices property that have been advertised over the last five years including the adverts placed. Using these tools you can find very quickly similar property and find the current market level, even for the more unique types of property.