Posted on 18th April 2024
Landlords, think twice before selling
There’s no doubting that the trend in recent years of landlords selling their rental stock is a real problem to the lettings industry. It’s something that’s not unique to the North East but more of a UK-wide problem. While we completely understand why it’s happening, we would strongly urge landlords to stop for a minute and think of the advantages of remaining in the market.
Why have so many landlords sold up?
Since Covid, it’s been a perfect storm of a range of factors. Firstly, a trend that’s happened for years is the over-regulation of the lettings industry. More and more is being asked of landlords (higher agent fees due to the tenant fee ban, electrical reports, selective licensing, Right to Rent checks and smoke and carbon monoxide alarms to name some) and any incentives, such as tax breaks, have been taken away. Secondly, house prices increased substantially after lockdown. And finally, high mortgage rates now mean landlords out of their fixed term products are paying more each month. Not just a little more, either - often, hundreds of pounds every month.
What has been the effect on the rental market?
In a word... significant. Demand is really high but because of fewer rental properties coming to the market, rents have increased substantially and competition for available properties is fierce.
Why is it worth keeping hold of rental properties?
While we can completely understand landlords’ motivations in selling in the current climate, here’s a few reasons why we think you should think twice:
- Record rents. Rents have never been so high. Ask your local branch for an up-to-date valuation. You might be pleasantly surprised.
- You’ll have a selection of tenants to choose from. Generally speaking, landlords who do re-let their properties regularly have several applicants to choose from as competition is so fierce. As a landlord, this gives you more freedom to pick a tenant suited to you rather than just moving someone in because nobody else has expressed an interest.
- Mortgage rates are likely to come down. Inflation is at its lowest for 2.5 years and generally the feeling in the industry and the wider press is that the Bank of England will start to reduce interest rates next month.
- There is also a possibility of new incentives being introduced to tempt landlords back into the market. If you’ve followed the drama around the Rental Reform Bill and EPC regulations being scrapped, you’ll have seen the government has had to think twice a lot lately. They are becoming increasingly aware that any measures that will see more landlords exiting the private rented sector will only punish tenants in the long run, with fewer properties and higher rents. Surely, whichever party is in power at the next election, must do something to address the problem.