2017 – What Does It Hold For Landlords?
With Christmas and New Year already seeming like a distant memory, now might be a good time to look at the coming year and ask what landlords might have in store. There have been some changes to legislation that are due to take effect this year, as well as outside economic factors that are bound to impact the rental industry. Here are some predictions and things landlords should look out for over the course of the coming year.
The Brexit Effect
Last June, the UK voted to leave the European Union, much to the surprise of many leading voices and experts. Britain’s decision to cut ties to the EU has naturally come with varying degrees of economic uncertainty. This has then, in turn, had an effect on the housing and property rental market.
A lot has been written and discussed on Upad about what landlords can expect to see once article 50 has been triggered, but nothing will be concrete until then, and all we can do is speculate. One thing that has been seen is the lack of confidence in the homebuyers market has contributed to the increased demand for rental properties.
Demand for Rental Property Has Risen
The term ‘affordability ceiling’ has appeared frequently in the press. This is in reference to the combination of more people looking to rent and the rising average rent. It has been reported that although the average rental rate is rising at a lower level than it was last year, some parts of the UK have experienced regional spikes.
As a result, the market is approaching the top rate that people are able to afford to pay for rent, better known as the affordability ceiling. With this in mind, it might be prudent for landlords to consider a pricing strategy that won’t deter tenants later in the year.
Buy-To-Let Market Closes Up
Thanks to a combination of changes to stamp duty, announced in 2016 and the Bank of England’s so-called ‘crackdown’ on Buy-To-Let mortgages, the market is becoming increasingly difficult for new landlords to enter. Existing landlords are likely to see tax increases on their properties as the government is set to squeeze the rental property market a little more. Critics have argued that these changes have effectively frozen middle class investors out of the buy-to-let market.
Unpaid Rent Increasingly Problematic
As reported on the blog, rent arrears are one of the biggest issues facing landlords this year. The increasing levels of taxation are creating a domino effect where increasing costs are getting passed on to landlords, and resulting in rent hikes for tenants. When the rate of rent increases dramatically, there is a greater likelihood of landlords experiencing rent arrears.
Using the information in the above blog post to approach your tenants should ensure that you’re well equipped to receive the money you are entitled to, should your tenants default on rental payments.
Property in the Capital
The term ‘the London housing crisis’ has been flouted about in the media so much in the last couple of years, it’s easy to overlook the massive impact it has had; not just on housing in the South East of England, but on the UK housing market as a whole. When we’re constantly being bombarded with hyperbolic headlines such as £480 to rent a shed, it’s easy to become somewhat numbed to the full situation.
The implications are massive to anyone within the property market as the demand for new housing, especially amongst young people, is so high. If the newly appointed London mayor Sadiq Khan is able to overcome the crisis by building more affordable housing, this will likely impact on the rental market in that region as more people attempt to buy their own home.
As you can see from some of the above examples, 2017 is set to be a big year for landlords, with many changes and external factors facing the market. In the case of the individual landlord, it’s important to know what steps can be made to improve your rental property to make it as attractive as it can be to tenants, who you’ll have a good relationship with, and will ideally settle for an extended period of time.
Once you have reliable tenants in the door, you can relax and watch the rent come in, whilst maintaining a top-of-the-range rental property.
About the author:
Chris Smith is a writer and blogger. On his site, Spend It Like Beckham, he writes about finance and a number of other topics. Over his career, he has written for high profile publications including The Telegraph, The Guardian and The Huffington Post.