As we are a quarter of the way through 2015, I was talking to a landlord from Great Waltham the other day about what is happening to the level of rents that are being achieved in the Chelmsford property market.
In terms of rents in Chelmsford, it appears that rents being achieved for new rentals (i.e. when the tenant moves out and new tenant moves in) have risen by 14% in the last 12 months. However, landlords with existing tenants are generally not increasing their rents in line with this rate, as most landlords prefer to keep their existing tenant paying the same rent. This gives the landlord peace of mind that their tenant remain thus reducing the risk of a void period.
It must be remembered rents nationally dropped by 7.8% over 2008/9, due to oversupply in the rental market in 2009.) A lot of the people who couldn't sell their property in Chelmsford in 2008/9 when the Credit Crunch hit in 2008, decided to let their house out instead of selling at a loss. In fact, the number of houses on the market in Chelmsford dropped by 30% between March 2008 and March 2010, a lot of which came on to the rental market in Chelmsford. However, looking at the longer term tenants have had it good because, since the turn of the Millennium, average wages have grown by 46%, but rents outside London have only grown by 36% rental growth over this period.
I told the landlord that there is a lack of new rental properties in Chelmsford coming on the market, in fact according to Rightmove, there is an average of 85 new rental properties coming to the market each month in Chelmsford, but when we have registered on average 235 potential tenants each month since January, something will have to give soon! This is compounded by the fact a number of landlords are looking to sell their rental properties in the coming months, as the property market in Chelmsford has improved. This further compounded as tenants in existing rental properties appear to be staying in properties for longer periods of time.
Even though rents have kept pace with inflation in the past, renting as an option has become more affordable and is increasingly seen as a lifestyle choice. With returning economic growth and expected increases in the rate of growth of wages, above inflation rental growth could rise.
If you want a chat about the local Chelmsford property market, pop in for a coffee to our office in Duke Street.