By Steve Roulstone
I recently wrote that a scheme being tried by a local Council in Staffordshire to encourage house sales was an excellent idea and one that if it worked be copied in other areas. At the time I wrote it I was aware that it may be difficult for some to understand why a Letting Agent should be happy to see house sales moving again when so many houses are entering the rental market purely because they cannot sell in this market?
Perfect answer!
Well one of our regular routine annual procedures has provided an answer as to why in a way far better than anything I could find to articulate my thoughts at the time of writing about the Council. The procedure is the annual rent review, which, because Landlords are able to increase rent once per year, we undertake in the spring because it is the most natural time for prices to increase in what is normally the time when the market shows its best increase through increased activity.
Hard task.
We do of course discuss each scenario with our Landlords so that they are both aware and happy with any proposed increase and I must confirm that it is good to see so many Landlords this year being realistic about both the market and the current Tenants capacity to pay any increase. But each eligible property has had to be reviewed carefully. As a rule, we would normally only recommend an increase that kept the rent below the current market price, an approach which rarely meets with anything but approval from our Landlords, but the numbers of available properties at present as meant that we need to have a very good picture of those very rates!
Large increase in numbers.
It is a fact that the number of properties coming to the market is still high and Tenants do have plenty of selection when looking for a home and are on average looking at far more properties than they would normally do (possibly twice as many if our viewing diary is anything to go by!) but this has of course had an effect on the achievable prices as more and more offers are made as Tenants try to catch a bargain. Of course we manage them in a way that reflects what we expect to happen so we are very aware of what rent we are liable to achieve still for our Landlords!
Less houses in this case will be better!
And this is the evidence that confirms my view of any scheme which encourages more movement in the housing market. There is also no doubt that we are seeing as many if not more Tenants as we would expect at this time of year, the problem for so many Landlords is that there are at least twice as many houses if not more on the market. It is easy therefore to see that should houses start to sell again; the rental market will also improve as what we consider normality would be resumed.
Competition will stay.
Estate Agents do of course still have and will continue to have the ability to speak to any owner of a property that is failing to be sold and will no doubt offer the rental option before the Traditional Letting Agent even gets the opportunity to speak to owners. So be it, it is a situation we have lived with for the last three years and we are still getting more than our share of the properties available.
Market share.
But what tells us this will not change even if house sales do make a dramatic recovery this year, is that the Private Rental market now accounts for over 20% of UK housing stock at current rising trends. (Figures will be confirmed next year) so we as Agents will learn to live with the increased competition, but I still see increasing sales as a good thing for Landlords and hopefully by the time we carry out our rent review next year, the new figure will be easier to calculate!
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