Property Rental Market Trends

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14th December 2010

Property Rental Market Trends

specialist letting agents in the UK, we at Martin & Co are ideally placed to provide intelligence to investor landlords on trends in the UK rental market.

The graph to the right is based on data from over 20,000 managed properties within the Martin & Co group from December 2008 to September 2010. The data points to a number of trends:

* Tenants are increasingly staying put in their rental properties, choosing to renew their tenancies for a further fixed term rather than moving out and either renting elsewhere or buying. In December 2008 just 52% of tenancies ending resulted in renewal. This figure has now risen to 63%.

* Tenants increasing propensity to stay on in their rental properties beyond the initial fixed term, reduces ‘void periods’ for landlords - periods where a property is vacant and not generating income (e.g. between tenancies). Fewer void periods will have the overall effect of protecting rental income for landlords and increasing rental yields.

* The number of properties not relet i.e. where the tenancy has come to an end and where we do not then find the landlord another tenant, has fallen to just 9%. The landlord may, for example, choose to sell, or even re-occupy the property themselves. Nationally, in 91% of cases Martin & Co are retained and successfully re-let the property, however in Islington the figure for property (and client) retention at Martin & Co exceeds this at 95%!

Formally Extend Tenancies: Our landlords are always advised to insist that tenants sign fixed term tenancy extensions at the end of the initial tenancy term, as in doing so they can “lock in” future rental income. Statutory periodic tenancies (often known as “rolling tenancies”) may well be convenient for tenants (allowing them to serve a minimum of one month’s notice at any time), however for landlords they offer insufficient security of tenure and an uncertain future, where properties can become vacant at short notice, potentially during seasonally slow times of year.

Keep Rents Under Review: If a rent was agreed 12 months ago then it may well be out-of-date and an upward review is possible. Tenants understand that choice of good quality property is limited and that demand is pushing up rents. What’s more, another agent will charge tenants an administration fee, and then there is the generally uncertainty involved in securing another property on the open market, not to mention the general “hassle” of moving. All of these factors serve to keep tenants in place regardless of a modest rent review (provided this is in line with the current market). Typically, an increase of 5% or a minimum £25 is achievable during an annual rent review.

Review Tenancies Early: We advise landlord clients to consider their position on renewing tenancies up to 2 months before the end of the fixed term. As part of this process, we work with clients to consider any changes in the current market situation, rental values for comparable properties, and the performance of the tenants with rent payments and upkeep of the property. By knowing where you stand with your tenants well ahead of end of the fixed term, landlords can ensure they remain organized and in a position to make the most from their rental business, while at the same time giving tenants sufficient time to consider their options.

Work with the Best!

If you’re considering investing in the islington residential buy to let property market this year, or if you want knowledgeable and informative advice on letting out your existing property, contact the team at Martin & Co, a locally owned Islington based residential lettings specialist.

Tel: 020 7359 0800

Email: adam.clasby@martinco.com

Web: http://www.martinco.com/lettings-agents/islington

Office: Martin & Co Letting Agents, 67 Essex Road, Islington, N1 2SF