Let’s talk about the B word. Not BREXIT but budgets. Clients will increasingly be looking for budget-friendly relocation packages but the cost of renting a property in the UK is getting more expensive.
In fact, per calendar month rents are rising across the whole of the UK, with HomeLet’s latest lettings index showing that average rents across the country rose by 2.1% in October 2018, when compared to the same month in 2017. The average UK rent is now sitting just below £1,000 per month, while the average rent in London is £1,618 – up 4% in the last 12 months.
When in talks with clients, it’s prudent to be able to justify why there has been an increase in rental costs. Recent changes to the lettings industry are a good place to start. Landlords are lamenting a triple whammy of punitive measures of late: higher second home stamp duty, the limiting of a landlord’s mortgage interest tax relief, and detrimental changes to the wear and tear allowance.
Unable to make a profit, break even or, increasingly, cover costs, many landlords have decided to exit buy-to-let already, with more to follow suit, as highlighted in a Simple Landlord Insurance survey that revealed a third of landlords with just one rental property are planning to sell up. The byproduct is a drop in the number of homes to rent – illustrated by a recent Ministry of Housing report that showed the number of privately rented homes available has fallen for the first time in 18 years. This stock reduction is being felt especially keenly in the capital. Knight Frank’s latest figures reveal a 7% drop in new letting listings coming to market in prime Central London, with an even bigger decrease of 10% in the prime outer London areas. The simple supply and demand equation explains why rents are rising.
Landlords that do keep faith in lettings may also look to raise rents when the tenant fee ban comes into effect – anticipated some time in 2019 – especially those who use a letting agent’s property management service. It is widely expected that lettings agents will replace lost fee income by inflating charges to landlords who, in turn, will pass costs on to tenants in the shape of higher rents.
It is, therefore, more important than ever to work with relocation professionals to find and secure rental properties as a tightening, fluctuating market is harder to read for anyone outside of the immediate industry. In addition, the restricted supply means having influential contacts that are privy to off line properties and first-refusal deals represents the difference between securing a rental at the right price or compromising and paying an inflated rent. If your biggest B is budget, then you’ll need all the negotiating powers and leverage available.
Klippa Relocation offer an accurate snapshot of the UK’s rental market at any one time, with relocation agents working with suppliers across the country. If you’d like advice on current rental values so you can budget accurately, please get in touch for the latest advice and figures.