Expect rents next year to be either static or show only minor increases.
That's the view from Belvoir, the letting franchise giant. Director Dorian Gonsalves says factors such as continued low disposable income, anticipated interest rate rises and lower economic growth are likely to combine to keep the rental market low key.
Analysis of rents in 2014 across the Belvoir group revealed patchy recovery in some areas, with rents certainly not rising at the same levels as [sale] prices. For new investors, this means yields are being squeezed unless properties are bought at a discount says Gonsalves.
With pressure on companies to increase wages, potential interest rate rises and landlords realising their income is being eroded if they don't increase rents annually, rents are likely to be static or increase up to three per cent in 2015 he says.
Belvoir has commissioned property expert Kate Faulkner to study data from all of the firm's franchise offices across the UK that had been trading for over seven years.
Our study shows that rents when we first started tracking the index in March 2008 were £698 per month. Rents fell to £678 in 2009 and fluctuated around this level at plus or minus one per cent until 2014 when we saw them rise to £691 per month explains Gonsalves.
So on average, after seven years, Belvoir offices that have traded consistently have seen little or no growth in rents he says.
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Comments
I am afraid I do not place much confidence in Belvoir's statistics because I wonder who in the franchise offices actually sets rent levels for both new take-ons and re-lets.
In my city we have four Belvoir franchises and the majority of staff are extremely young and possibly inexperienced. There is also high staff turnover. Perhaps this is due to franchise offices having to financially contribute to the franchiser and perhaps this limits recruitment of experienced staff via higher remuneration packages.
Just my opinion.