Norwich Lettings Market - September Catch Up

Norwich Lettings Market - September Catch Up

Another high volume month last month both in terms of actual lets agreed and the number of potential tenants chasing the same properties. It’s always hard when we take multiple applications for a property only to have to disappoint the non-chosen one. We follow a very strong ethical code in these circumstances; when we take multiple applications, we explain that we will place the respective details in front of the landlord with the expectation that they will choose to go ahead with the tenants most likely to best meet the landlord’s needs. Usually, it’s not an easy choice for the landlord because we will have already weeded out the inappropriate tenants (relative to the restrictions imposed by our client) and we’ve had many a situation where it has come down to a toss of a coin. This is one of the many differences between Martin & Co in Norwich and the Rest – we don’t see ourselves as letting agents, we see ourselves as Risk Managers.

Rents in East Anglia have continued to bubble upwards during the Summer months. Most of the tenancy renewals we’ve taken care of during the last few months have had a rent increase factored in. The Homelet Rental Index, just published for August 2014, says in the three months to August 2014, average tenant incomes, nationwide, were 3.9% higher than in 2013 and while we’re not so sure the rate of increase has been so high in this particular part of the world, it is true we have had less resistance to rent rises this year compared to previous ones. The average rent across our portfolio of managed properties in Norwich is holding ‘upwardly steady’ at £710 pcm.  Just to highlight the differences between here and London, the Homelet Index showed average rents for new tenancies in London reaching a record £1,464pcm in August but don’t forget, properties by and large cost twice as much there as they do here.

When London is excluded, the average UK rental value was £729pcm – this is 2.4% higher than last year (£711pcm).

Where’s the local lettings market headed? As the rest of the UK, the population here is growing at a much faster rate than new houses being built, so over the medium term the market is set fair for landlords. Accordingly, it is little wonder that there is no shortage of people trying to get themselves on the buy to let ladder and with the froth having gone out of house price increases since the end of Summer, there is a more than realistic prospect of buying a good house, in a good location, for a sensible price. In addition, there seems to be no shortage of mortgage availability at the current time – please see our article in this newsletter arguing the case for why property investment works best with a bit of borrowing attached to it.

The biggest risk to the lettings market is always going to come as a result of interference from central Government. Both of the two main parties have the Private Rented Sector on their political agenda with the 2015 general election now very much in view. The red corner say they will introduce formal regulation while the blue corner acknowledge that some measure of overhaul is required. Add to that, the cold wind that blows from the central cronies in the EU who are saying the Buy To Let mortgage market should be regulated and there’s likely to be some ‘interesting’ times ahead for landlords. Taking the positives from this, those who are already invested in decent buy to let properties should have nothing to fear because the fact remains the various housebuilding targets in this country are just not going to be met, thus, demand for accommodation is only likely to get fiercer and fiercer. So, even if there’s more hoops to have to jump through, the increased returns (in the form of rising rents and capital growth) should more than compensate.

Mike White

Martin & Co Norwich

01603 766860