Insight – why the increase in tenant demand is great news for landlords

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  • Insight – why the increase in tenant demand is great news for landlords

The current market conditions are driving tenant demand across the UK, meaning now is a great time for landlords to rent their properties. Or increase their current rents.

Priorities have changed and people have been looking for properties located in areas that suit their lifestyle. As offices continue to open their doors slowly but steadily to their employees, more prospective tenants draw interest in prominent cities.

Workers and students returning to major cities are helping to fuel a rise in rental demand across virtually all major UK cities, according to new research and data.

To make the most of this emerging trend, it is essential that landlords prepare properties effectively to ensure they are legally compliant and attract the best possible tenants.

The current factors increasing tenant demand

Over the coming months, we strongly anticipate an even higher boost as many tenants look to secure a property ahead of the new year for a fresh start.

Tenant demand is at record highs, and this is great news for landlords in terms of occupying their properties and charging higher rents.

As a landlord, the main goal is to have your property occupied by a tenant so you can receive regular rental income, so the fact that there is an increase in tenant demand is promising.

Depending on the time of year and the area of a property, tenant demand can vary. Propertymark recently stated that there has been an increase in rent prices for the second month in a row. Some 79% of agents said landlords increased rents. Compared to 71% in July, making this the highest rate increase on record.

The property website Zoopla also discovered that average rents across the UK outside of London rose by 5% over the year to the end of July, increasing the average annual rent up to £450. This is the biggest increase since Zoopla’s index commenced in 2008.

During Q3, rental demand increased across most major UK cities. The greater demand for rental homes within major urban areas could be partly due to the new academic year commencing in September. Students returning to face-to-face education contributed to the increase in numbers as renting is highly popular among this demographic.

While demand from prospective tenants is high and stock levels of available rental homes are low. Now is a great time to let a property.

Make the most of the current market 

We often find that when a new property enters the market multiple tenants wish to view the property. When this happens, we create open or bulk viewings on the same day. This helps to speed up the letting process as it encourages urgency and competition among tenants. Allowing us to select the most suitable tenant for your property.

Here at Harringtons Lettings, we strongly advise that landlords do not solely rely on the housing market to secure tenants. There are many adjustments landlords can make right away to make your property more desirable. Making them more likely to proceed with a transaction.

Why not call us on 01273 724000 or contact us at admin@harringtonslettings.co.uk to discuss any requirements you may have.

UK Landlords

The market has moved so much that even Lloyds bank is planning to become on the of biggest UK landlords in the country. The banking joint is aiming to buy 50,000 homes in the next 10 years and charge tenants rent as a private landlord. Lloyds has launched the Citra Living brand in attempt to moving into new streams of making money. Lloyds is the biggest mortgage lender in the UK, providing nearly 1 in 4 home lines, but, with interest rates at a historic low for more than decade, returns have been squeezed. The new plans were first announced a month ago and will be managed through a new brand Citra Living. Based on property prices, the could create a portfolio worth 4 billion generating tax profits of around 300 million.

If the targets are hit, Citra will over take the UK’s largest private landlord, Granger, which has 9,100 properties worth 2.1 Billion. These are not the only company that has moved into this area. Several fund managers have also entered the private rental market in recent years, including Legal and General and M and G. The retailer John Lewis recently announces plans to convert unused floor space in its department stores into rental homes. The switch from small scaled private landlords follows changes in tax rules which means buy to let mortgage payments are no longer tax deductible.

Many landlords and investors may be looking to expand their portfolios, don’t hesitate to contact us for advice.

Lockdown

With the lockdown restrictions gradually being eased and major lenders such as Barclays, Acord Mortgages and Skipton international are cutting rates and raising their lending ceilings.

If you want some free advice in relation to the letting market then please don’t hesitate to contact us. We are happy to provide this.

Not looking to invest in the Brighton area? We are more than happy to do deal with the property for you anywhere in the United Kingdom.

Where are the current hot spots for investing in property?

There are an estimated 2.6 million buy to let landlords in the United Kingdom. Many still have funds to invest in investment opportunities. There are also lenders starting to cut rates on their buy to let products and raising affordability thresholds.

Where is the top 20 buy to let areas?

This is always difficult to know. There are so many different areas within the United Kingdom and so much different data within it. However, we understand from Zoopla that these are postcodes generating returns are as follows;

Liverpool – 10.3% average price £95,000

Bradford – 10% average price £57,000

Sunderland – 9.4% average price £61,000

Middlesbrough – 8.8% average price £56,000

Burley, Leeds – 8.6% average price £169,000

Liverpool, North West – 8.4% average price £97,000

Liverpool, North West L1 – 8.1% average price £104,000

Newcastle Upon Tyne – 7.8% average price £128,000

Edinburgh – 7.6% average price £215,000

Glasgow – 7.5% average price £117,000

Wavertree, Liverpool – 7.4% average price £138,000

Liverpool, L2 – 7.4% average price £127,000

Sheffield – 7.2% average price £112,000

The North West has remained the top reign for strong buy to lets for some considerable time. However, this has to be in context with the increases in price. A lot of the towns whilst have increased to a certain amount during the pandemic are still quite relatively low to other areas.

The worst areas according to Zoopla are in London. These are mainly due to the substantially high prices and the fact that people have left towns with a view to letting elsewhere.

This has now started to change as the pandemic reduces and people return to the cities.

Has demand continued in 2022?

Obviously the Covid situation that is forever changing means the market will change on a regular basis. There is still a huge lack of supply across the whole of the rental market.

This has also been caused by Government intervention helping people to buy homes and making the crisis worse not better.

The Chancellor recently looked at the UK housing crisis and focused on boosting demand rather than supply. The conservatives long held belief that increasing homeownership is good for the economy is massively effecting the rental market. Whilst tenants are leaving to purchase more properties there is still a lot more than are not. The Chancellor has also given help to Government backed mortgage scheme that helps to make more people become homeowners.

The banks are now incentivised to offer 95% mortgages at cheaper rates, and the Government indemnifies against some of the risks. They are trying to aim and turn the generation of rent to the generation of purchase.

However, with the average price in the United Kingdom now costing 8% it’s earnings it is pretty much the only way people will be able to get onto the housing ladder.

Homeowners

A recent environmentally report published recently concludes that England needs at least 90,000 net additional social rent homes a year for the next 15 years just to keep up with supplies. The mortgage guarantee scheme will undoubtedly increase demand for lower priced homes, but without corresponding boost to supply.

Over the long term this will only give rise to higher property prices and leave fewer properties available on the rental market. Any Government scheme designed to solve housing crisis should provide a strong incentive for investments in building new, affordable properties to let. The Government should be looking to encourage private property investors to be part of the solution not the problem.

Rents are still growing quite substantially and have not stopped. Tenants are now reporting consistently bigger debts, smaller savings and more financial worries than owner occupiers. It is though that approximately 250,000 landlords have now sold up through the buy to let system which leaves an even bigger shortage in the market. The market has divisively shifted away from amateur landlords looking for income in favour of professional investors, owning dozens of properties, who establish limited companies to hold them.

When was the last time you renewed your rent for your property?

We often hear landlords state that they would rather have their tenants in long term rather than constantly increasing the price. However, we have found on occasions that when we have taken over from private landlords the rents are so far out the market that tenants struggle to be able to catch up or can afford it. There are many properties that come back on the market but at a much higher rate.

Touching up the interior of your home, decluttering and cleaning should be done before any viewings. Also, as a landlord, it is your duty to ensure that the home meets industry standard. In addition is compliant with all the rules and regulations governing the lettings sector.

Choosing a local letting agent is one of the most important decisions that a landlord can make. A reliable agent will know the latest property trends and regulations. They will also provide useful information including the value of your asset or investment.

Although we specialise in a wide area across Sussex, including Brighton, Hove, Hove centre, Hove Lawns, Central Brighton, Portslade, Shoreham, Worthing, Lewes, Peacehaven, Seaford, Newhaven, and Eastbourne. We are also able to offer management across the whole of the UK.

Get an instant rental property valuation in just a few clicks or if you would like to be in contact with one of our agents, please contact us. Any correspondence is replied to within 24 hours at the latest.

Reposit

We also offer tenants a deposit free option in order to try and help them move into your property without having to generate a high deposit. This allows you to have at least a minimum of 6 weeks worth of cover for any damages or outstanding rent at the end of any term. Although we use a guarantor system and we very rarely have any form of arrears if at all. This is an insurance based product. The tenants pay a premium in order to insure themselves during the term at the property. They also pay for any renewal etc.

Are you compliant?

Do you know what your responsibilities are as a landlord?

The Government have made in excess of 130 changes in the past five years regarding legalisation for landlords. Many don’t understand that they are not currently compliant with the law.

We outline some details and guides below;

Creating tenancy agreements.

It is absolutely critical as a landlord that you ensure that your tenancy agreement has everything in it that you require and that the tenants understand their rights and liabilities.

Tenancy agreement can be either written or oral. But, a written agreement ensures proof that the terms agreed are at the start of the tenancy.

What should be included within a tenancy agreement?

  1. The names of everyone involved.
  2. The address of the property you are renting.
  3. How much rent you are charging.
  4. How your tenants should pay the rent.
  5. Which bills the tenants must pay if any.
  6. The cost of the tenants deposit.
  7. How you will protect the tenants deposit.
  8. The situation in which you would deduct money from their deposit.
  9. When their tenancy begins and ends.
  10. Any specific responsibilities on the part of the landlord and tenant.

Any other requirements such as whether pets will be allowed at the property.

Whether or not subletting will be accepted.

There are many more clauses you should include that you need to ensure your agreement is not considered unfair or in breech of the law. You cannot take tenants rights away even if they sign an agreement in which it attempts to restrict them.

Setting up the deposit protection.

There are extremely strict rules on protecting deposits which you and/or your letting agent must follow. You could face a hefty fine and potential restrictions on removing your tenant from the property if you do not adhere to them. These rules apply if you are renting out your home or an assured shorthold tenancy in England.

You must within 30 days of receiving the deposit, put it into a scheme that is backed by the Government.

Tenants will also need to be supplied with the following information within 30 days of receiving their deposit;

  • Your name and contact details.
  • The address of the property you are renting to them.
  • The amount of deposit they have paid.
  • If a third party paid the deposit, you should include the third parties name and contact details.
  • How the deposit has been protected, including the name and contact details of the scheme. This should also include information its dispute resolution service.
  • How they can get their deposit back when the tenancy ends.
  • Reasons you might deduct money from their deposit.
  • What they can do if they cannot contact you at the end of the tenancy.
  • What they can do if they disagree with you over the deposit and any deductions made.

You must ensure your property is fit for human habitation.

You must ensure that your rental property, including the common areas, are fit for human habitation at the beginning of the tenancy.

There is a criteria that determines whether a property is fit for human habitation which was original set out in the landlord and tenant Act 1995. Landlords must now ensure that the property is free from serious hazards, which would make it unsuitable for occupation in that condition.

These include;

  • A building that has been neglected or is in bad condition.
  • An unstable building.
  • A serious problem with damp.
  • An unsafe layout.
  • Not enough natural light.
  • Not enough ventilation.
  • Problems with supply of hot and cold water.
  • Problems with the drainage or the toilets.
  • Difficulty to prepare and cook food or wash up.

There are also a lot more items that landlords need to consider.

What are your rights and responsibilities for repairs?

While you have tenants in your rental property you do have certain responsibilities to them. One of the most important is to carry out repairs where necessary. Your tenants have the right to live in a property which is safe and in a good condition. You need to ensure you take action on any issues.

These would include;

  • The properties exterior or overall structure.
  • Sanitary fittings such as sinks, baths and toilets.
  • The pipes and drains of the property.
  • Heating equipment and the hot water supply.
  • Gas appliances.
  • Flues, chimneys, ventilation.
  • Electrical wiring.
  • Damaged to shared areas such as entry halls or common stair cases.
  • Any damage you cause the property yourself or attempting to repair things.
  • Any other fixtures or fittings provided as part of the tenancy such as kitchen supplies.

If you need to carry out emergency repairs on the property you do not need to give the tenants notice. However, if these are not emergency repairs you need to give them at least 24 hours notice.

Your properties energy requirements.

If you have a private rented property this should have a minimum energy performance certificate rating of E in England. The Government is also currently analysing feedback on proposals to raise property performance standards for an EPC to B and C for the private rented sector by 2028.

Your fire safety obligations.

You must absolutely ensure that your property follows fire safety regulations for all property rentals and it stays compliant. You need to avoid potential legal action in event of a fire. Do this by conducting a thorough assessment of the potential fire hazards in your property.

In order to do a fire risk assessment of your property you may consider employing a professional to review it for you. Please do not hesitate to contact us if required.

Otherwise you would need to look at the necessary five steps;

  • Identify fire hazards.
  • Identify anyone at the risk at the property.
  • Evaluate, remove or reduce the risks.
  • Record your findings, prepare an emergency plan and provide training where necessary.
  • Review and update the fire risk assessment regularly.

What should I consider when assessing the fire risk assessments?

Smoke and carbon monoxide alarms.

You should have at least one smoke alarm on each floor of your property plus a carbon monoxide alarm in each room where there is an appliance with a solid burning fuel such as coal or wood fire. However, this has recently been extended to also include them where there is a gas central heating system. You should check each alarm before the beginning of any tenancy and ensure they are working.

Escape routes.

You are legally required to ensure that your tenants have access to safe and reliable escape route on every floor. This should be external and internal to avoid tenants becoming trapped. You should make your tenants aware of the routes to help them exit the building as quickly as possible in an emergency.

Fire doors.

You need to make sure that all the front doors and doors onto corridors and staircases are self-closing fire doors. Ensuring they don’t slam shut to discouraging your tenants from wedging them open. You should also do regular checks to ensure they are working.

Furniture and finishing’s.

You need to check your furniture and furnishing meet safety standards and that they are made from fire-resistant materials. This will be on the manufacturers label. You are only responsible for furnishings you provide not the tenants.

Fire extinguishers and blankets.

It is a legal obligation to have a fire extinguisher per floor and a fire blanket per kitchen and HMO. However, this will be outlined by your local authority.

Your gas safety obligations.

You as a landlord are required to use an engineer registered with the gas safety to install and maintain all gas equipment in your property. The engineer has to be registered with gas safety to do an annual gas safety check on each appliance. The gas safety certificate has to be kept as a record for at least 2 years. You also have to ensure the document is served on your tenant and acknowledged by them.

Your electrical safety obligations.

You must have the electrical installations in your property inspected and tested by a person who is qualified and competent at least every 5 years. You have to provide a copy of the electrical safety report to your tenants and local authority if requested. This is commonly known as an EICR.

The electrical safety standards in the private rented sector regulation 2020 applied to assured shorthold tenancy. It also applies to housing in multiple occupation and licenses to occupy. Exceptions to regulations include social housing, lodgers, those on long leases of 7 years or more, student halls of residents, hostels and refuges.

Electrical safety compliance check list.

In order to stay compliant you need to check the following;

  • Ensure the national standards for electrical safety are met, set out in the latest regulations edition.
  • Ensure electrical installations in relation to your property are inspected and tested by a qualified and competent person every 5 years.
  • Obtain the electrical installation condition report from the inspection which includes results and a set date for the next inspection and test.
  • Supply a copy of the report and have it acknowledged by your tenants within 28 days of it being carried out. You should also do this for any new tenants.
  • Supply the local authority with a copy of the report within 7 days if requested.

You should also consider a portable appliance test commonly known as a PAT test. This test ensures that your appliances are safe at the property. These should be freestanding. If they are built in then it is just a visual check that is required.

iInsure 365

Have you been introduced to our sister company iInsure 365 who deal with all types of insurance? You wont have to worry about filing out a long lengthy forms to find cheap landlord insurance. With iInsure 365 you can speak to one of the team and they will find you a quote through their panel of provider. They deal with all types of level of cover and have various different insurer who can offer quotes for you. There are legal requirements for landlords and it is important that you have the right insurance company to deal with your insurance cover.

A landlord may have one or more properties in the United Kingdom that they rent out. It is important for landlords to spend time looking for the right insurance. Make sure you find an insurance policy specifically designed for landlords. They can ensure properties from all over the United Kingdom for you.

Landlords often believe that a new home policy will suffice. This is not the case and they will then make a claim which virtually all insurers will turn down. Standard home insurance policy mostly cover homeowners or property owners, not landlords. If you stick with your normal house insurance policy you can find yourself with no cover at all.

Landlords building insurance

Landlord building insurance is specifically tailored for landlords and their requirements. iInsure 365 will insure what you need for your policy.

Are you aware of the growing risk of underinsurance?

In the words of the financial conduct authority “there is already an alarming degree of underinsurance”. With both the UK businesses and consumers creating issues throughout each of the property sectors.

It is the responsibility of landlords to ensure they take out sufficient levels for cover for the insured risk of having insurance.

If they fail to take out sufficient level of cover this can have devastating consequences for you. It can result in significant reductions to any insurance pay outs and potentially in the worst case scenario, it may void the policy. Resulting in no pay out at all.

A practical example is as follows;

If the rebuild cost of your premises is £200,000 but the property is only insured for £100,000 then you are underinsured by 50%. Every insurance company will have an average clause in the policy which is standard and therefore it reduces the sum insured by leaving the policy holder with 50% of an insurance pay out of just £50,000.

We understand from iInsure that they recently had one of their clients check their rebuild costs. iInsure have an ability to be able to check a policy for the correct sum insured for only £160.00. Substantially more than what most surveyors charge.

The client was insured for £630,000. Once the report was carried out it stated that it should have been £856,000. There was an underinsurance of £226,000 which would have been taken off any claim.

They can provide you with a RICKS certified up to date revaluation. Ensuring that your property is correctly insured for the right amount. The cost is minimal compared to what the situation would be if you weren’t paid out to the correct amount.

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