The just published Homelet Rental Index for May 2013 shows East Anglia suffering the largest annual drop in average rents in May of any of the geographic regions they analyse. Rents were lower by 6.7% compared to May 2012 and were down 2.4% from April 2013. The average rent for May in the region was £685 pcm.
We've been saying for the last few months that we feel rents are flattening and this is certainly further evidence to support this view. Tenant incomes continue to fall in real terms so falling rents are a natural consequence and, of course, as in every cyclical business, the UP cycle was bound to turn at some point. We've had 3 good years of rent increases after all.
Tenant demand could well be flattening also. In Norwich we're moving into the peak time of year for tenant demand so its hard to tell whether there's a consistent pattern emerging. However, while our weekly lettings figures are increasing as we would expect at this time of year, each of our available properties are taking a little longer to let than they did say this time last year and more viewings are needed before they are being applied for.
If indeed, demand is flattening, we think there's two main reasons for this; the first is the impact of tenant incomes falling in real terms (as above) and secondly, renters who would be buyers are now closer to realising their home-owning dream with the 2 Government help schemes announced. One of these is available now and the other kicks in next year but those who are saving for a deposit are staying put for now rather than making an interim move to another rented property.
The way to counter flattening demand is to make sure when your property becomes vacant, it is in good decorative order throughout and spotlessly clean. Bear in mind, the properties with the nicest kitchens and bathrooms always go first. Norwich Landlords with good properties can take heart, even if demand is flattening, there will still be demand as Norwich is, overall, a very good lettings city. It will be the weaker properties that suffer longer void periods, good properties will always let provided a commonsense approach is taken in respect of rent levels. The other important aspect is to be proactive in managing the re-letting of your property; make sure you give yourself time to market a vacating unit, process an application, take comprehensive references etc. A good agent will do this for you - We do!
In truth, the above holds good whatever the condition of the market.