Rightmove has released its latest analysis of the 2016 rental market and what they expect in 2017 to look like.
In 2016, outside of London recorded rental increases of 3% with inner London seeing a 5.2% drop in asking prices and outer London seeing a more modest 2.5% decrease in asking prices. The decrease in London was due to more availability of stock as around 32% more properties came onto the market when landlords rushed to beat the stamp duty hikes that came into force in April.
The main winners for 2016 in rental increases were Swansea with an 11.4% annual increase in asking prices, Gillingham with 11.1% and Bath with 10.5%.
2017 predictions are akin to guessing how long a piece of string is as there are more factors than usual coming into play. With higher stamp duty on purchases, tax to be paid on mortgage interest, tighter mortgage lending rules and the Brexit factor, it is hard to say how rents will react. If there are less landlords leading to a diminishing amount of stock, there will be an upward pressure on rents.
Of course house building also plays a part. According to research think-tank Civitas, there are only enough homes being built to meet 80% of the predicted demand in England for housing of this Parliament with London only building 55% of homes that are estimated to be needed there. Bad news for children and parents stuck living together but good news for landlords!
In 2017 Rightmove forecasters are looking at a 4% growth in rents outside of London with London itself looking to remain flat for the year.
If their predictions are correct, in a flat or decreasing rental market, it is necessary for Landlords and agents to price their property realistically. Although it is important to achieve the maximum for your property, if it is overpriced and tenants are not taking it, a month or two void period will easily cover the increased rent you may have been asking for and then you’d have to drop the rent anyway; possibly by more if the market is decreasing.
If you have a property coming available for rent or are looking to purchase one, please feel free to contact one of our branches to find out what to expect from your investment in 2017 and how the local market is performing.