The tightrope
of being a Stoke-on-Trent buy-to-let landlord is a balancing act many do well
at. Talking to several Stoke-on-Trent landlords, they are very conscious of
their tenants’ capacity and ability to pay the rent and their own need to raise
rents on their rental properties (as Government figure shows ‘real pay’ has
dropped 1% in the last six months). Evidence does suggest many landlords feel
more assured than they were in the spring about pursuing higher rents on their
properties.
During the summer
months, historic evidence suggests that the rents new tenants have had to pay on
move in have increased. June/July/August is a time when renters like to move,
demand surges and the normal supply and demand seesaw mean tenants are normally
prepared to pay more to secure the property they want to live in, in the place
they want to be. This is particularly good news for Stoke-on-Trent landlords as
average Stoke-on-Trent rents have been on a downward trend recently. So look at
the figures here...
Rents in Stoke-on-Trent on average for new tenants moving
in have risen 2.7% for the month, taking overall annual Stoke-on-Trent rents 2.4%
higher for the year
However,
several Stoke-on-Trent landlords have expressed their apprehensions about a slowing
of the housing market in Stoke-on-Trent. I think this negativity may be exaggerated.
The other
side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Stoke-on-Trent as well as the Stoke-on-Trent buy-to-let
landlords). I believe the Stoke-on-Trent
property market has been trying to find some level of equilibrium since the New
Year. According to the Land Registry…
Property Values in Stoke-on-Trent are 0.08% higher than
they were 12 months ago, and rose by 1.38% last month alone!
However, the
reality is the number of properties that are on the market in Stoke-on-Trent today
has dropped by 6.7% since the New Year and that will have an interesting effect
on short-term property values. As tenants have had less choice, buyers also have
less choice.
Be you a
homeowner or landlord, if you are planning to sell your Stoke-on-Trent property
in the short-term, it is crucial, that whilst you allow room for negotiation,
you must still realistically price your property when you bring it
to the market. Given that everyone now has access to property details, including
historic stats for how much property has sold for, buyers will be more astute
during the offer and negotiation stages of a purchase.
Even with this short-term decrease in the number of
properties for sale in Stoke-on-Trent, property prices will remain stable and
strong in the medium to long term. This is because the number of properties on
the market today is still way below the peak of summer of 2008, when there were
2,484 properties for sale compared to the current level of 957 (if you recall, prices dropped by nearly 20%
in Credit Crunch years of ‘08 and ‘09).
Compared to 2008, today’s lower
supply of Stoke-on-Trent properties for sale will keep prices relatively high...and
they will continue to stay at these levels for the medium to long term.
Less people are moving than a few years ago, meaning less
property is for sale. Fewer properties for sale mean property prices remain
relatively high and this is because of a number of underlying reasons. Firstly,
buy-to-let landlords tend not sell their properties as often than owner-occupiers,
consequently removing the property out of the housing market selling cycle.
Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs
more to move). Next, there is a dearth of local authority rental housing so
demand for private rented housing will remain high. Then we have the UK’s
maturing owner occupier population, meaning these older people are less likely
to move (compared to when they were younger). Another reason is the lack of new
homes being built in the country (we need
240k houses a year to be built in the UK and we are currently only building
145k a year!) and finally, the new mortgage rules introduced in 2014 about
how much a person can borrow on a mortgage has curtailed demand.
Some final thought’s before I go – to all the Stoke-on-Trent
homeowners that aren’t planning to sell – this talk of price changes is
only on paper profit or loss. To those that are moving ... most people that
sell, are buyers as well, so as you might not get as much for yours, the one
you will want to buy won’t be as much, (swings and roundabouts as Mum used to
say!)
To all the Stoke-on-Trent landlords – keep your
eyes peeled – I have a feeling there may be some decent buy-to-let deals to be
had in the coming months. One place for such deals, irrespective of which agent
is selling it, is my Stoke-on-Trent Property Blog ...
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