It’s a question we’re asked on a daily basis by tenants across all of our offices. From Darlington to Chester-le-Street, from Crook to Durham. Where have all the rental properties gone?
Tenants can’t have failed to notice the difference in the market before and after Covid. To give you an idea on the lettings market in Darlington, for a long time there were over 300 rental properties for the the market at any one time for the whole of the town.
Post-Covid, we’ve been working around the 70 figure, with it recently going down as low as 46. For a town of 100,000 people, it’s not a lot to work with.
So, what’s the reason behind all this? It mainly falls down to two factors:
Landlords are selling
Most people don’t realise the amount of regulation a landlord needs to abide by. It really can be mind-boggling and it just increases year-after-year. Smoke alarms, CO2 detectors, How to Rent guides, prescribed information for deposits, Right to Rent immigration checks on all tenants, Holding Deposit information on adverts, EICR (electrical reports), gas safety certificates, consent to let from lenders, landlord insurance. The list is relentless and only continues to be added to year-on-year.
In 2019 the government banned all tenant fees and therefore costs for landlords went up across the country. Agents were left with a big gap to fill financially and had to pass on at least some of these costs to the landlords.
Throw in massive price increases in property values in the last two years and you’ve got the perfect storm for landlords to exit the market. This is what we’ve seen a lot of and goes some way to describe why there’s a real shortage of rental properties at the moment.
Tenants are staying
Most of letting agents’ listings online will be what’s called re-lets. These are properties that have been previously rented, the tenant has given notice and the landlord has wanted it to be re-marketed with a view of finding a new tenant. Imagine you’re a tenant paying £395 per calendar month and you’ve been in your current place since before the start of the pandemic. A similar property will probably now cost you £495 per calendar month. Would you hand your notice in? Didn’t think so. And that’s why this repeat business of re-lets is a lot lower than it was. Tenants in situ still paying lower rents are happy to stay for the time being.
Demand still there. In fact demand for rental properties is massive at the moment. Like any supply and demand equation, high demand and low supply means price increases, which is exactly what we’ve seen.
What can be done?
To attract new landlords to the market, it’s simple. Make it attractive. Don’t burden them with reams of regulations, costs and ultimately reasons not to be a landlord.
Regarding re-lets, we feel this will come in time. I don’t think rental prices are going to return to what they were, bearing in mind they were stagnant in County Durham for probably 10 years and an increase was due anyway. Once tenants accept current prices are here to stay, they’ll accept that and start moving more regularly again but that’s only if there are the properties available to do this.