What is happening in the rental market?

oldernonethewiser

RHemmings said:

oldernonethewiser said:

RHemmings said:

This doesn't apply to me, but what strategies can potential renters apply to try and find a property at the most reasonable price? Clearly location (e.g. further out of town), and type of property (flat instead of terraced house, terraced house instead of semi or detached) are the basics. But, with what I'm seeing, that isn't likely to be enough. 

I suspect I was quite lucky getting this house I'm in now as easily as I did just under two years ago. 

For many of the contributory causes listed in this thread, I was familiar with them already. However, I was just a bit shocked seeing the scale of the problem. 

jimbog said:

The future seem now to be heading to house shares rather than renting a separate flat or house

Which is comparatively moneysaving, I suppose. I wouldn't want to raise a family in a shared house. 

I know two people who, in the last six months, have been able to get properties through a friend of a friend of a friend.

Speaking to family, friends and colleagues to ask if they know of anything coming onto the market can help.

Everyone is looking for an advantage and if you wait for things to be listed you may well have missed that opportunity.

Your advice certainly sounds good to me.  

In Leicester it's very much a university city given the sizes of the universities compared to the size of the city. I see lots of houses advertised as student lets, where the per month rent is low based on a certain number of people sharing. I'm not saying this is a good option even if possible, but I wonder what would happen if non-students got together and applied for one of these properties during the summer when student lets are more likely to be empty. 

In Glasgow there are three universities and demand is high.  Rental legislation is different in Scotland from E&W (sorry don't know much about NI) and there is still a high demand for properties.

Can you specify "student only"? (when advertising I mean)

MikeJXE

oldernonethewiser said:

RHemmings said:

gether and applied for one of these properties during the summer when student lets are more likely to be empty. 

In Glasgow there are three universities and demand is high.  Rental legislation is different in Scotland from E&W (sorry don't know much about NI) and there is still a high demand for properties.

Can you specify "student only"? (when advertising I mean)

 

On Rightmove you can select MUST HAVE student accommodation

RHemmings

Emmia said:

RHemmings said:

oldernonethewiser said:

RHemmings said:

This doesn't apply to me, but what strategies can potential renters apply to try and find a property at the most reasonable price? Clearly location (e.g. further out of town), and type of property (flat instead of terraced house, terraced house instead of semi or detached) are the basics. But, with what I'm seeing, that isn't likely to be enough. 

I suspect I was quite lucky getting this house I'm in now as easily as I did just under two years ago. 

For many of the contributory causes listed in this thread, I was familiar with them already. However, I was just a bit shocked seeing the scale of the problem. 

jimbog said:

The future seem now to be heading to house shares rather than renting a separate flat or house

Which is comparatively moneysaving, I suppose. I wouldn't want to raise a family in a shared house. 

I know two people who, in the last six months, have been able to get properties through a friend of a friend of a friend.

Speaking to family, friends and colleagues to ask if they know of anything coming onto the market can help.

Everyone is looking for an advantage and if you wait for things to be listed you may well have missed that opportunity.

Your advice certainly sounds good to me.  

In Leicester it's very much a university city given the sizes of the universities compared to the size of the city. I see lots of houses advertised as student lets, where the per month rent is low based on a certain number of people sharing. I'm not saying this is a good option even if possible, but I wonder what would happen if non-students got together and applied for one of these properties during the summer when student lets are more likely to be empty. 

But student lets for September 25 will be getting let out now / well before September 25. Realistically you'd need to potentially commit to a place a year before it becomes available.

Over 20 years ago my 2nd year house share was arranged in January/February for a let that began for me in September... I think the girls I shared with and I started looking at places in November/December, having only met one another in September/October.

Yes, I see the problem with committing ahead of time. And, those houses being advertised now will be currently tenanted I presume. Also, are laws different for student lets and HMOs. I'm not up on the HMO rules, but I thought that 5 bedrooms and 1 bathroom wasn't allowed. 

This says H&S rules for HMOs are 1 bathroom per 4 tenants. https://hmo-architect.com/blog/hmo-regulations/hmo-bathroom-requirements

oldernonethewiser

What does the "must have" mean?

I tried the "student property" option in Glasgow and plenty of places were suggested but none exclusively for students.

There is a lot of student accomodation in Glasgow and more being built but those places are not available to non-students.

Emmia

RHemmings said:

Emmia said:

RHemmings said:

oldernonethewiser said:

RHemmings said:

This doesn't apply to me, but what strategies can potential renters apply to try and find a property at the most reasonable price? Clearly location (e.g. further out of town), and type of property (flat instead of terraced house, terraced house instead of semi or detached) are the basics. But, with what I'm seeing, that isn't likely to be enough. 

I suspect I was quite lucky getting this house I'm in now as easily as I did just under two years ago. 

For many of the contributory causes listed in this thread, I was familiar with them already. However, I was just a bit shocked seeing the scale of the problem. 

jimbog said:

The future seem now to be heading to house shares rather than renting a separate flat or house

Which is comparatively moneysaving, I suppose. I wouldn't want to raise a family in a shared house. 

I know two people who, in the last six months, have been able to get properties through a friend of a friend of a friend.

Speaking to family, friends and colleagues to ask if they know of anything coming onto the market can help.

Everyone is looking for an advantage and if you wait for things to be listed you may well have missed that opportunity.

Your advice certainly sounds good to me.  

In Leicester it's very much a university city given the sizes of the universities compared to the size of the city. I see lots of houses advertised as student lets, where the per month rent is low based on a certain number of people sharing. I'm not saying this is a good option even if possible, but I wonder what would happen if non-students got together and applied for one of these properties during the summer when student lets are more likely to be empty. 

But student lets for September 25 will be getting let out now / well before September 25. Realistically you'd need to potentially commit to a place a year before it becomes available.

Over 20 years ago my 2nd year house share was arranged in January/February for a let that began for me in September... I think the girls I shared with and I started looking at places in November/December, having only met one another in September/October.

Yes, I see the problem with committing ahead of time. And, those houses being advertised now will be currently tenanted I presume. Also, are laws different for student lets and HMOs. I'm not up on the HMO rules, but I thought that 5 bedrooms and 1 bathroom wasn't allowed. 

This says H&S rules for HMOs are 1 bathroom per 4 tenants. https://hmo-architect.com/blog/hmo-regulations/hmo-bathroom-requirements

They'll be tenanted already with a known date when the tenants will move out. The landlords with houses to rent to students will be on Uni lists of accommodation - the property won't go onto the normal rental market so if you're a non-student you'll never find it for rent.

Veteransaver

Who'd have thought getting rid of council housing and leaving the nation's housing needs in the hands of thousands of amateur landlords, who can decide to pack it in when the going gets tough or they want to retire, could have led to this mess.

hugheskevi

I have been renting out my house (primary residence) whilst I was traveling for 18 months. These were the approximate costs:

Regulatory compliance requirements 

• £69 - Energy Performance Certificate
• £159 Electrical Installation Condition Installation
• £178 Gas Safety Certificate (x2 during period)
• £475 Replacement fuseboard to meet latest regulatory standards (fuseboard was fairly new and if I was continuing to live there would not have been replaced).
• £881 Total 

Usual costs of renting

• £228 Boiler service (x2 during period)
• £99 Inventory at check-in
• £99 Inventory at check-out
• £79 Mid-term inspection
• £147 Tenant referencing
• £52 Key cutting
• £623 Landlord insurance for period
• £1,782 management charge (£99 per month), including rental protection (to cover non-payment of rent)
• £3,109 total

Taxation

• £5,111 tax on rental income
• £4,318 Capital Gains Charge (impact on tax due when I sell property in due course)
• £9,429 total

Gross Rental income

• £35,550

So the combined value of regulatory requirements and taxation was £10,340 and was a total of 29% of the gross income. That compares to £3,109 (9% of gross income) to cover the usual costs of renting. This shows the growing tax and regulatory burden, and how large it is compared to all other costs.

The net return over the 18 months as a percentage of the property value was 4%, and that doesn't include any repairs/decoration costs nor any value for the time I put in to arrange everything, nor any allowance for void periods. Currently, the interest-free yield on Premium Bonds is higher than this, as well as many cash ISA accounts.

It is the customer who pays all costs, both direct and indirect, so the more tax and regulatory costs imposed on landlords, either the higher the rental price or landlords will exit the market if the value isn't there.

In my case, I wanted to rent out my house for convenience rather than return. If I wanted return, I wouldn't be doing it. The rent amount was set to be very competitive as I prioritised tenant quality over return and wanted a wide range of applicants to choose from.

Mr.Generous

theartfullodger said:

Tory government: Largely don't care about those who rent.

Others will hold alternative views.

Best wishes to all.

Scotland and Wales under different governments have slightly worse rental markets. Property Industry Eye reported YOY rent increases were highest in Scotland last year. Wales was second highest. I think the population growth outstripping new homes is the problem. Most new arrivals to the UK rent for at least 2 years. More people arrive than we have new homes for. Landlords set the rent, then take their pick of the best tenants.

Veteransaver

hugheskevi said:

I have been renting out my house (primary residence) whilst I was traveling for 18 months. These were the approximate costs:

Regulatory compliance requirements 

• £69 - Energy Performance Certificate
• £159 Electrical Installation Condition Installation
• £178 Gas Safety Certificate (x2 during period)
• £475 Replacement fuseboard to meet latest regulatory standards (fuseboard was fairly new and if I was continuing to live there would not have been replaced).
• £881 Total 

Usual costs of renting

• £228 Boiler service (x2 during period)
• £99 Inventory at check-in
• £99 Inventory at check-out
• £79 Mid-term inspection
• £147 Tenant referencing
• £52 Key cutting
• £623 Landlord insurance for period
• £1,782 management charge (£99 per month), including rental protection (to cover non-payment of rent)
• £3,109 total

Taxation

• £5,111 tax on rental income
• £4,318 Capital Gains Charge (impact on tax due when I sell property in due course)
• £9,429 total

Gross Rental income

• £35,550

So the combined value of regulatory requirements and taxation was £10,340 and was a total of 29% of the gross income. That compares to £3,109 (9% of gross income) to cover the usual costs of renting. This shows the growing tax and regulatory burden, and how large it is compared to all other costs.

The net return over the 18 months as a percentage of the property value was 4%, and that doesn't include any repairs/decoration costs nor any value for the time I put in to arrange everything, nor any allowance for void periods. Currently, the interest-free yield on Premium Bonds is higher than this, as well as many cash ISA accounts.

It is the customer who pays all costs, both direct and indirect, so the more tax and regulatory costs imposed on landlords, either the higher the rental price or landlords will exit the market if the value isn't there.

In my case, I wanted to rent out my house for convenience rather than return. If I wanted return, I wouldn't be doing it. The rent amount was set to be very competitive as I prioritised tenant quality over return and wanted a wide range of applicants to choose from.

Why is 29% of gross income so bad? Even a basic rate taxpayer pays 30%, and that's income they've actually had to go out and earn, and usually suffer travel costs etc to go to work as well.
As for a yield of 4%, well yes I've never thought buy to lets ever really stood up to the yield test in the last 15-20 years even when rates were really low, it was only the effect of gearing and house price growth that turbocharged it.
They certainly don't make a lot of sense now in a falling market.

hugheskevi

Veteransaver said:

Why is 29% of gross income so bad? Even a basic rate taxpayer pays 30%, and that's income they've actually had to go out and earn, and usually suffer travel costs etc to go to work as well.
As for a yield of 4%, well yes I've never thought buy to lets ever really stood up to the yield test in the last 15-20 years even when rates were really low, it was only the effect of gearing and house price growth that turbocharged it.
They certainly don't make a lot of sense now in a falling market.

I neither say that it is good or that it is bad - it is what it is and has a consequential impact on yield and hence on incentive to invest in the market.

You can't expect landlords to stay in a market where the levels of return - which are partly determined by tax and regulatory obligations that now form the large majority of costs - don't match up to alternative opportunities. Investing money into pensions, ISAs and suchlike is a much easier activity so it is no surprise to see landlords leaving the market and reducing supply - which is part of the answer to the OP's thread title "What is happening in the rental market." (along with provision of social housing and the demand side of the equation)

From my own perspective, pensions are very attractive, ISAs are desirable, Premium Bonds are okay for funds above ISA allowance, Venture Capital Trusts have some attraction, unwrapped investments are more trouble than they are worth with the recent slashing of capital gains tax and dividend taxation, savings accounts have such a low tax-free allowance to be unattractive whilst I am a higher-rate taxpayer, and rental properties aren't even on the radar.