George Osbornes war on landlords has had a powerful impact on the lettings market in this area in the last year. No longer do investors want to build letting portfolios and bring much needed stock to the lettings market. However, as our local sales market slows down and particularly the upper end of luxury homes, we are seeing increasing numbers of developers and private individuals who are unable to sell (at the price they want to!). Many will have lenders breathing down their necks and considerable sums to repay in interest each month. With no obvious light at the end of this sales tunnel some are turning to the idea of letting. Importantly, new build and well-presented houses are in short supply and getting snapped up by eager renters so this provides a win-win for tenant and landlord. The house can be refinanced on a Buy To Let to release funds and ease the pressure. Typically a 3+ year let should then wash its own face and bring the owner back to a better market. The theory for many is that the premium they have lost on not selling the house as a brand new product is paid back by the market having hopefully risen while its been let out. Having been in estate agency for over 25 years I’ve seen this cycle of bad sales markets creating reluctant landlords numerous times. They may start letting out of necessity but after seeing their investment paying for itself over many years they have then chosen to retain that property longer than expected and use it as leverage or pension plan.
This year is no different and we're doing an increasing number of deals like this and often off market. Being a company that specialises in lettings we often worry that we will miss out on these prospective landlords as we don’t have them on the sales market. However what we find is that discerning investors prefer to consult and engage us as we can give them honest and realistic advice, independently of a sales department.
The 2nd element to this market is developers realising now is an opportune time to buy. Why leave the property vacant while you wait for planning permission or for the market to pick up? Get it rented in the meantime and have it paying for itself for 6 months +.
The market needs more properties to rent and if the chancellor is intent on trying to strangle this, then we as agents, developers and sellers need to look at how we can make difficult markets work in our favour and come out winning.
If you would like to discuss any aspect of letting your property then please pop in or call us for a chat. We love to talk property.