We’ve finally entered Spring – the season synonymous with renewed hope and green shoots of encouragement.
Traditionally this is the season when property prices tend to peak, however, this will be no usual spring, as the terms of the UK’s exit from the EU remain unclear. Many in the market are reporting that both buyers and sellers appear hesitant to make any decisions regarding their property unless they absolutely must.
However, the private rented sector is showing signs that it could be a promising year for landlords and tenants alike. Market uncertainty appears to be leading to continued demand for rented homes, as those who choose to move into a new home value the security and reliability provided by a fixed-term tenancy at an agreed rent.
It is this increased demand which could explain why average rents have risen again, now standing at £932 per month - which is an increase of 2.5% when compared to January 2018, according to the HomeLet Rental Index. Likewise, according to the Office for National Statistics, house prices have also risen 2.5% versus the same time last year.
This means both rental prices and house prices are tracking marginally higher than the official inflation figure which was recently confirmed at 1.8%.
As was expected, the Bank of England voted to keep interest rates at 0.75% in February - a rate which has remained unchanged for the last five months, with no sign that rates will rise any time soon.
It’s true that fewer new landlords were registered last year than the year before.
But the truth seems to be that in these more uncertain times, fewer people in general are taking the plunge and buying houses. That creates an unprecedented demand for rental homes, and a well-maintained property will probably be snapped up very quickly.
The basic facts remain unchanged. Almost five million households are in private rented accommodation in the UK, and the figure continues to rise. Some commentators say it will go up to 5.8 million – or 24% of all households – by 2021.
According to the English Private Landlord Survey 2018, well over half of landlords (59%) are aged 55 or older, and the average length of time that landlords had let property was 11.5 years.
The figures show that 46% of landlords became a landlord because they preferred property to other investments; 44% did so to contribute to their pension. And for most it’s not their sole job, but a useful extra income. Only 4% became a landlord to let property as a full-time business.
Most tellingly, only 5% of English landlords are planning to sell their rental property or properties and leave the rental business altogether this year.
Despite the uncertainties, the figures show there’s still plenty of quiet optimism amongst England’s unflappable landlords.
Rental homes remain in demand, rental prices are rising at an affordable level, the overall value of property portfolios are generally increasing whilst mortgage costs are unlikely to rise –all indicators of a healthy market sector.
Of course, ensuring the private rented sector works for everyone whether they are renting their home or letting their property out is paramount. The recent announcement that all landlords must become part of a redress scheme was warmly welcomed by Darlows. We are a member of The Property Ombudsman which is a Government approved scheme which provides independent redress for tenants and their agents and that’s why we hope those landlords who use a professional letting agent should be covered by redress arrangements already in place. We believe tenants should have the same rights and protections, regardless of how their landlord chooses to have their property managed.
Let’s hope 2019 continues to provide continued security for everyone in the Private Rented Sector.