The MMR has had a dramatic effect in the ability for residential buyers to obtain mortgages and some estate agencies advise it has impacted in the number of new buyers reporting a fall of 20% in new buyer registrations between January and June. The lettings and sales markets in the Uk have a somewhat converse relationship with agents reporting an increase and in some cases record levels of interest from new tenants. So for those interested in buy to let property are these headlines not good news as it may lead to a better choice of properties and indicates a growing and sustainable demand for rental property. Also with headlines if up to seven tenants competing for each property in certain areas then is this not music to buy to let property investors ears as with increased demand and tenants competing for rental properties then rental prices should increase.
In the first quarter of 2014 some agencies reported increases in tenant applications approaching 30% when compared to the same quarter last year rental properties appear however, have not increases at the same level leaving to increased completion for properties and therefore better occupancy levels and less voids another important consideration when looking at buy to let property. As we head through September we will come to the end of the peak season for lettings and it will be interesting to see whether this pattern has continued.
Connells is a nationwide estate agency with sequence as their lettings division and their Q2 report indicates a mode average of applicants registered per new rental property in the first half of the year of 7. To put in simpler terms there are 7 tenants competing for each rental property and they have also confirmed rental prices increasing
“The rental market across the UK is increasingly competitive with demand rising at the same rate at which supply is dropping [while] activity in London’s rental market is even more abuzz,” said Stephen Nation, Sequence’s head of lettings. “This severe shortage of rental properties coming onto the market means that rents in the Capital have increased by 6pc annually to £1,515 per month.”
These statistics are encouraging for those looking at investing in buy to let property however some caution is still advisable. Tenant demand is driven by demand generators such research parks, universities and popular areas for commuting to major cities such as London. Other factors may also be important accessibility to key employers in the certain areas as well as general points such as good transport links and access to amenities. So if you are considering buying buy to let property some homework is recommended to check out the demand generators in your area sometimes they are not that obvious but some good research should identify them. Investment Property Consults have expertise in helping buy to let property investors to identify properties with excellent potential and attractive predicted rental yields and return on investment.