Brexit vs the Rental Revolution
Brexit seems to be having a much more adverse effect than some initially predicted. The majority of Britain voted to leave the European Union with such promises as greater control over immigration, and injecting the money that would normally have been paid to the EU into the NHS instead. How many of you leavers are currently renting your home? Those ballot papers you signed over 2 years ago may just come back to bite! Why is that, you ask? Well, as Theresa May scrambles to convince the EU that her proposed Chequers plan will work, the price of renting your home is increasing as the demand for rental properties increases as well.
Hopewiser meets Bricks and Mortar once again to discuss the rise of the rental revolution, and where in particular estate agents are noticing the wrath of Brexit. After all, we adore addresses, which you’ll see if you take a read of some of our location based blog articles. We’re obsessed, it’s as simple as that. The Time’s Bricks and Mortar instalment features often in our blog, and we recently took a look at where rental prices are increasing and decreasing in the UK.
Anyway, back to the latest findings. It’s good news if you’re a landlord by the way. The Times reveal that due to the uncertainty of Brexit, there’s a good chance that your property yields will increase as a result of the increasing demand for rental properties outweighs supply. Research from Hamptons International shows that rental yields in England and Wales have grown at a steady pace since the first half of 2016, and now stand at an average of 5.8%.
Better still, if you’re a landlord in the North you can look forward to greater yields, with an average of 8.9% in the North East due to the fact that properties in these regions are cheaper. Given that a good yield is considered to be 8% and above, I think it’s safe to say that you’re going to be quids in whilst the Brexit drama simmers. Additionally, the North West has an average property yield of 7.5%, and 6.9% in Yorkshire and the Humber; all of these are above the national average.
That said, if you’re a London landlord then you may not be so flush, with an average yield of 4.4%. In fact, only 31% earn above the national average. Not a good time to be in the buy-to-let market in Old London Town, eh? Clubbed with the fact that rental prices in the capital fell by 0.3% in July, marking the fourth consecutive monthly decrease, many landlords are striking while the iron’s hot and locking their tenants into longer contracts before they can jump ship if things get any worse for Britain.
That said, the number of “accidental landlords” is also on the rise. Hamptons found that in December 2017, 1 in 12 homes that came onto the rental market had actually been up for sale in the previous six months. This resulted in an astonishing 80,000 accidental landlords, most of whom were situated in London, unsurprisingly. With property prices still rising, and with an average London house price of £627,818, many home owners have little choice but to rent out their properties because they can’t sell them.
Now, you renters can wipe that smirk off your faces because things aren’t necessarily looking good for you either. In the past year alone, the average rental prices for England and Wales have increased by 2.6%, hitting an average of £861pcm. Did you know that 40% of tenants saw an increase in their rent during August? That’s what data analyst, ARLA Propertymark, says.
Prices in Scotland have reached an all-time high, soaring to an average of £799pcm in the year’s second quarter. This is down to supply-and-demand discrepancies in the cities. In Edinburgh, you can now expect to find a typical property being let for £1087pcm, along with a quick turnaround of just 26 days to find a new occupier. Talk about high demand!
And it isn’t just generation rent looking to scoop up whatever tenancies are available to them. Oh no, it’s the wealthy as well! Citylets state the strongest annual increase was for four-bedroom homes, 3.3%. This was in comparison to one, two, and three-bedroom properties. In fact, you are now looking at a sum of £1522pcm to rent a typical four-bedroom house.
One still wonders, however, if the current housing crisis is starting to paint a picture of riches to rags, with more people renting rather than buying? This, however, does not seem to be the case as many middle-aged renters are choosing to do so for tactical reasons. With the hope that housing prices will plummet once Britain leaves the EU next March, more and more people are deciding that they will save more money in the long run if they hold off buying until after Brexit is settled. Given the fact that some would-be buyers are now classed as “uber-tenants” and are paying £20,000 per week for a mansion, proves that choice is certainly a dominant factor. Tactical? Or just plain stupid? You decide.
Another factor that has led to people favouring renting is the rise in stamp-duty rates, which is resulting in many international buyers at the top end of the market paying tens of thousands in rent each month. Ouch! Guy Meacock from Prime Purchase explained, “We had one buyer interested in an £8 million house, which needed the best part of £1 million to do it up. With stamp duty on top, he was looking at spending more than £10 million.” Therefore, in order to avoid the added cost this particular buyer opted to rent in the same area instead.
The dramatic increase in demand for rental properties also seems to have had an effect on the affordability crisis. Whilst rents increased by 16% between 2011 and 2017, wages only increased by 10%. Who knows, in years to come people may not even be able to afford renting. This could potentially result in less and less people moving out of their parents’ homes, and may even lead to a rise in homelessness. Only time will tell.
London was once the most notorious for the affordability crisis, but it’s now starting to affect other areas such as Bristol, Birmingham, and Cambridge, according to research from Shelter. So whilst renting may seem like a viable option in the run-up to Brexit, perhaps selling your house in order to rent may not be a good idea. After all, you wouldn’t want to see the price of your rent supersede your wages, would you?
It isn’t only Brexit that is affecting the ways in which we live our lives. Nobody knows what the future holds, but what Hopewiser does know is that with more and more people relocating, these uncertain times make it now more important than ever for your business to update your customer database. After all, you wouldn’t want to send their post to the wrong address, would you?
With our new online Address Cleanse solution, all you need to do is simply upload your data and we’ll instantly cleanse and suppress your files. You get a free sample report and prices start form £35. It’s as simple as that. Clean, compliant, and clutter-free data.