The rise in UK rents
A significant change will be the ability to have a property management expert assist more flexibly and cost-effectively in maximising your profit yield from your property’s rental income.
Zoopla reported that rental growth across the UK reached 4.6 per cent between July and September, with particularly strong markets in the South West, Wales, and the East Midlands in the last quarter of 2021.
Zoopla’s rental market predictions:
● Average rental prices across the country could rise by another 4.5 per cent
● Growth in London is forecast to reach 3.5 per cent, exceeding pre-pandemic levels
● Rents could rise above earnings in areas of the country where it’s cheaper to rent
Offering an alternative view, letting agency Hamptons predict rental growth will slow in 2022. It has forecasted average growth of 2.5 per cent over the next 12 months.
Despite variations, most experts agree that an imbalance of supply and demand will continue fuel rental growth in 2022.
That’s the good news, so what other changes are happening and are they as good?
First, put forward in 2019, the Renters’ Reform Bill intends to ban’ no fault’ Section 21 evictions and introduce lifetime deposits for tenants.
Interestingly, the removal of Section 21 evictions and the introduction of lifetime deposits – two of the expected flagship policies – were least popular with tenants, with just 10 per cent saying they’d like to see these changes (Connor Shilling, Simply Business, 2 November 2021)
Since April 2020, it’s been illegal for landlords to let properties with an Energy Performance Rating (EPC) of F or G unless they have an exemption.
From 2025, the minimum standard will be increased to C for new tenancies. This will be extended to existing tenancies from 2028.
Government estimates suggest that over three million rental properties currently have an EPC rating of D or below. As a result, many landlords will need to start improving their energy efficiency ratings in 2022.
One of the steps landlords can take to improve energy efficiency is to replace gas boilers with a heat pump. As part of the Autumn Budget, the government announced that from April 2022, landlords would be able to access grants of £5,000 to pay for heat pumps (Connor Shilling, Simply Business, 13 December 2021).
Negatives for UK landlords for 2022
Connor Shilling, Simply Business, also stated in December 2021 that there would be:
● More landlord licensing schemes and increased enforcement of existing ones
● Higher interest rates that could push up buy-to-let mortgage costs
● A government clampdown on short-term lets, starting in Scotland
If Connor is correct, which is very likely, then is it not time for more positive news for landlords this year and rising rents.
We think it is, and now that positive trend has started with the availability of low-cost property management agents who offer increased choice and income.
Other sources also comment that there are many challenges for buy-to-let landlords#. For example, new taxation and legislation introduced during the last couple of years makes investing buy-to-let a less straightforward prospect, with many landlords stepping aside.
Our rental industry has a general feeling that there may be room for further rental growth in some markets. Still, as affordability levels move away from historical averages, even with a lack of rental supply, affordability considerations will put a cap on rental increases. Nevertheless, some forecast that rents will rise by around 4.5% this year in the UK and by 3.5% in London.
Key questions are still being asked, though, such as the following questions:
● Should I buy more rental properties?
● Should I raise the tenant’s rent price to recover from pandemic losses and inflation this year?
● Should I ask my property agent to investigate additional digital amenities and services?
● Is this the wrong time to buy and upgrade/renovate apartments and houses to increase my portfolio?
● How can I capture more leads for good reliable long term tenants?
● If a recession is not far ahead, then how do I minimise the risk of losing tenants and rental income?
● Are remote at-home workstyles going to persist, and what do I need to capitalise on that trend through my property agent?
● Is my property agent flexible enough and working hard to maximise my net profit on my rental income?
● Finally, how much do property technology amenities and services affect the choices of better quality tenant prospects?
Only a harder working property management agent such as Rent Quality, who is adopting a more flexible and low-cost approach, will provide the answers to these questions. Hence a visit to Rent Quality will start you on a journey to discovering this new breed of property management agents.
The British Landlords Association is a national landlords association for residential & commercial landlords. Join us today membership for the year is only £69.95
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