Rental market analysis: what is the outlook for 2018?
08 February 2018 4983 Views
A range of factors - including fierce competition under the supplied housing market, rising property prices and political uncertainty – have made it more difficult for first-time purchasers to take their initial steps on the property ladder in recent times. Therefore, the typical age of a first-time buyer in the UK continues to rise, meaning more people are renting for longer. In fact, the average millennial is now expected to spend upwards of £100,000 on rent before purchasing their first home, according to Landbay.
The peer-to-peer lender also estimates that those who never purchase a property and continue to rent for the duration of their lifetime could pay landlords over £1 million – a figure which could increase to over £2.5 million for tenants residing in the capital for the long haul. It may, therefore, not be surprising to read that almost half of young people are concerned they will never be able to take their first steps on the property ladder and could end up being lifetime renters.
But it’s not just tenants who feel under pressure. A raft of recent tax changes – including the introduction of a 3% stamp duty surcharge on the purchase of second properties as well as the gradual phasing out of buy-to-let mortgage interest tax relief – have put the strain on landlords. Due to a changing marketplace, some buy-to-let investors have reduced the size of their portfolios, while others have left the sector for good.
What is the outlook for tenants?
When millennials rent, they’re likely to find themselves in a continuous cycle of paying rent each month while also trying to save towards a deposit for a home. And, according to our State of the Property Nation research, 58% of letting agents and 67% of renters believe that further rental increases will occur this year. This could be due to the prospect of a ban on upfront letting agent fees combined with rental property demand that continues to outstrip supply. In an uncertain marketplace, many tenants are wary of their financial situation as they feel the effect of continuously rising rents and stiff competition for rental homes.
Our study also found a substantial gap between what tenants expect and what they actually receive from the lettings process. This feeling particularly centred around transparency, agents’ professionalism and fairness at the end of a tenancy.
What is the outlook for landlords?
Around a fifth of members surveyed by the National Landlords Association (NLA) said they plan to sell at least one of their investments in 2018, with a further one in five planning to reduce the size of their portfolio. This is most frequently blamed on controversial tax changes introduced by the Government with the idea of cooling growth and activity in the private rental sector.
The landlord trade body says that the new tax system could lead to higher rents and a dearth of available rental properties on the market. It also suggests that increased demand for rental properties, combined with a rise in landlords leaving the rental sector, could push average rents up by around 3% every year until 2022.
Similarly to renters, landlords are also sometimes disappointed when it comes to what they want and what they get from letting agents. Our State of the Property Nation research found that transparency of fees, the ability to deal with maintenance and good rental valuations were some of the biggest issues for landlords.
How can letting agents thrive this year?
As the private rental sector continues to evolve, new opportunities arise for letting agents to help them manage the changes. With more tenants now renting for longer, their expectations have increased. Therefore, businesses that start to forge a reputation for good customer service can gain an advantage when attracting new clients.
Using property technology products to your advantage could help you to provide an even better service experience. There are many tools out there that can be used to help bridge the gap between tenants and landlords, but PropertyFile is the only one that is built into your property software. It allows you to provide a 24/7 service for tenants and landlords, offering an online maintenance log and progress tracking. But unlike any other product there is no integration to do, Jupix customers can switch it on and it’s ready to go. Enabling you to provide better transparency for all, with the greatest ease.
To find out more about how PropertyFile can help you to stand out in a crowded marketplace, please contact firstname.lastname@example.org or visit https://www.propertyfile.co.uk.