In what could be considered good news for tenants but not necessarily for landlords, it was revealed earlier this month that rents are finally beginning to stabilise after several measures by the government to bring rent increases under control. At the end of 2015, most areas of the country saw drops in average rent. Landlord groups expect that most property owners will hold their rents through 2016 with some already applying cuts rather than increases.
Government Measures
The governments attack on concerning levels of inflation in the rental market, putting spiralling house prices and rocketing rents at the heart of their policy to ease the housing crisis, seems to be working. Finally, after years of increases, rents are beginning to slow to the same levels as the cost of buying.
Changes to stamp duty and mortgage tax relief have forced many landlords in the private sector to sell or invest in upgrades to their property. These reductions are good news for those concerned about the ever-increasing cost of living and rents becoming unaffordable in some parts of the country. The freeing up of some properties for sale as family homes has eased the housing crisis to some extent, but more houses will be needed to make buying and renting cheaper than it presently is.
What About the Student Market?
Concern about the increasing number of town centres being turned over to student housing, creating a possible shortage for couples and families, has meant that city and county councils are looking to put restrictions on the growth of student housing too.
In Southampton, the city council now requires landlords to apply for special consent and planning permission to turn what was once family homes over to HMOs – and this naturally includes student accommodation. Although Southampton is presently the only city to have enacted such measures, other towns and cities are concerned about “Student Ghettos” damaging their community and fabric. Plus, the expansion of student accommodation by the universities themselves are putting landlords of student properties under pressure. Reports since the beginning of the year expect student rents to plateau, mirroring what is going on in the rest of the market.
How Do You Stay Competitive?
The student rental market is a competitive market and in the last few years, increasing pressures have meant that landlords must keep up with current trends. Universities are offering more facilities and accommodation to second and third years, creating communities within communities in the centre of towns and cities. The profitability of student letting means that more and more people are investing in this area of the market.
There may be a danger of creating a glut of student houses that forces down prices through over-availability. To remain competitive, it may be wise to upgrade your facilities beyond an annual lick of paint. Also, keep a close eye on what your competitors are charging and adjust your rent accordingly with each passing academic year.