In the recently published Homelet Rental Index for March 2014, there is a trend starting to emerge i.e. “rents are increasing at a decreasing rate” and this is being replicated in this part of the world also. The Survey says, rents in East Anglia sat at an average of £725 pcm up some 3% from March 2013
Interestingly, the survey includes another little nugget, namely that the average amount a tenant earns in the UK increased by 6.2% during the past 12 months to £29,000. This surely must be the weighted by the London factor, as we’re not seeing anything like such an increase in the Norwich market. Hopefully, though, we’ll benefit from the ripple effect as the wider economy improves because tenants earning more has to be a good thing; rent is easier to afford and, therefore, rent arrears go down. There is also more justification to effect a rent increase upon tenancy renewal/relet.
The counter argument to “tenants earning more being a good thing” is that this will enable more tenants to become buyers using the Help To Buy Schemes thus creating a drop in demand for rental properties. However, apparently only 2% of all sales completed since the Schemes’ launched were done using either one of them. Also, the recently published English Housing Survey which we highlighted last month not only revealed the number of people living within the private rented sector has almost doubled since the early 2000s but shows nearly half (44%) of private renters expect it will be five years before they’re able to buy a home. This compares with only a quarter (23%) who anticipate they will be in a position to buy a home within two years. The much publicised Mortgage Market Review or MMR (which is probably not coincidentally named after the vaccination) means that lenders are now having to do the job they should always have done, i.e. to properly assess the prospective borrower’s current and future ability to afford the mortgage, factoring in the “What If” of mortgage rates increasing. This is expected to dampen the bubbling market.
OK, that’s the macro situation, what’s happening locally? The first quarter of the year was probably the busiest we’ve ever been and April, though quieter because of Easter, was nonetheless another good month. We currently have only 18 available properties and judging by the number of promotional offers our rivals have on the go, all of the agents in Norwich are “suffering” from a shortage of stock. There is no doubt that if you have a good quality property, at the right price and the right location, it should let quickly to good quality tenants.
Undoubtedly, the private rented sector –once seen as a last resort - is a thriving market that’s an increasingly popular choice for people across this region and the wider UK. The industry is growing, and will continue to do so.