To let or not to let?
PUBLISHED: 15:36 13 July 2009 | UPDATED: 15:14 20 February 2013
The property letting business is well and truly booming at the moment. Carey McKeown of Maitland Rachel, Hereford, weighs up the pros and cons.
Over the last six months we have seen a marked rise in the lettings market, as the sales market has slowed down. We have received a record number of instructions from investors; but most have come from vendors who have been unable to sell their property during the winter months and have therefore decided to let it in the hope that the sales market will improve. This has given us our supply; and in turn we have had a very high demand.
There are a number of factors contributing to this high demand, not least the recent interest rate increases which have once again reduced first time buyers' chances of getting a mortgage. There are also many families who need to sell their homes and go into rented accommodation.
There are also many Eastern European migrant workers who are looking for rented accommodation, not just in the cities but in market towns and rural areas across the region, paving the way for a strong market and a rise in lettings during the summer.
Over the last six months we have also observed that tenants are now staying longer in their rented homes. The usual pattern in recent years was for many landlords to have new tenants every six months. However, with the cost of moving so high and with rentals continuing to rise each month tenants are realising they are better off staying put; and we are now seeing tenants staying in properties for years, which is clearly beneficial to investor landlords.
With the recent slowdown in the selling market, landlords have been very cautious when thinking about selling their investment properties. If a property sits empty whilst the selling agent endeavours to find a purchaser this could cost the landlord a great deal in lost rent; and so in turn many landlords are offering their tenants a renewal tenancy in the hope that the market will improve.
The introduction of The Tenancy Deposit Scheme in April 2007 has been quite controversial for Herefordshire landlords, some feeling it is unfair that they have to be penalised for the odd rogue landlord amongst us. This new government legislation has made it much harder for the private landlord to continue managing a rental agreement without the help of an agent.
The legislation requires every landlord to have an inventory and schedule of conditions for their property which consists of written and pictorial evidence of its condition at the start of the tenancy. It is for the landlord to prove that the tenant has caused damage, not the tenant to prove otherwise. However this new legislation does give Herefordshire tenants peace of mind that while they are in a rented property their deposit will be protected. Any landlord who does not comply with the legislation could be fined up to three times the amount of the deposit.
Another piece of legislation that all landlords will need to comply with comes into effect on October 1st this year. It is a legal requirement for all rented properties to have an Energy Performance Certificate. This will advise landlord and tenants where the property is falling down on energy efficiency, and will give recommendations on how to improve it. In addition it will give tenants an idea of the yearly energy costs, and they can use this information when deciding which property to rent. In reality, however, it is unlikely that an Energy Performance Certificate will be a deal breaker when a client is choosing a place to rent.
So there will be yet more legislation for Herefordshire landlords and tenants to contend with. But despite this we are confident that the buoyant lettings market will continue.