Making predictions for the next few months seems fraught with risk. I feel risk, and attitudes towards it will be a dominant theme in the housing market for the foreseeable future. Including houses for rent.
There is only one certainty – and that is that there will be more uncertainty!
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A Growing Rental Market
There are around 8.5 Million people privately renting, who spend on average 41% of their income on housing.
The Office for National Statistics (ONS) recently reported a median figure for the private rented sector rents in England reached a record high of £700 a month.
It reported London to have the highest median monthly rent at £1,425; more than double the median monthly rent for England. The North East having the lowest median monthly rent at £495.
Given all the problems caused by the pandemic, this is now a very delicate situation, affecting both landlords and tenants.
The Impact on Renting
Earlier this month the government extended their suspension to eviction policy until 23rd August. That will have been 5 months helping renters with certainty and security.
Mortgage holidays for landlords have also been extended. It’s important to remember that unless the situation is handled delicately problems may unknowingly be stored up for the future.
My recommendation is that landlords, agents and tenants all need to keep regular lines of communication open. Honest communication will mean they can help one another access the relevant support schemes, agree flexible payment plans and agree mortgage holidays etc.
Many people will have lost jobs or income. Although government support is vital at this time, if a wave of homelessness is to be avoided then we need to be mindful of a ‘stop-gap’ situation developing.
If rent arrears and buy-to-let mortgage debt continue to rack up, its not going to be a pretty picture.
Renting Offers Flexibility
During a downturn rental values do tend to be much more resilient than capital values.
Rents only fell -2% following the financial crisis in 2008, whereas house prices fell a whopping -18%. It was from the recession that the rental market saw growth as a result.
Although I began by saying making predictions is fraught with risk, when the world begins to settle down surely more people will be interested in the flexibility offered through renting?
The demand for rental properties is likely to increase.
However, just at the same time, any landlords who have had tough times may need to restructure investment portfolios, and consequently reduce the number of potential properties available for rent. And so, we might see previous rental houses now for sale.
If this happens, it means we are looking at a period of sustained competition among renters.
To get ahead, renters are really going to have to keep on their toes.
In Need of Help Renting a Property
Whether you’re viewing a rental property, about to commit to a tenancy or your tenancy is coming to an end, we’ve got heaps of advice and guidance to ensure you’re on the right track every step of the way. Our comprehensive guide to renting covers it all.