Buy to Let - is it still viable in south London?
An interesting question this week - I had a long standing client phone me and discuss why rents were on the slight decrease throughout his portfolio. It would seem the aftereffects of Brexit, stamp duty changes and many more things are still lingering in the south London rental market - he had to reduce some of his rents by £10pw or so. It's not massive, but a sign of the times still.
First time buyers
Some may say that renting is less popular now than it was 12 months ago; more tenants are flocking to purchase their own home and stop spending (wasting?) money on rent. Let me tell you that this isn't true. Research suggests that the average age of the first time buyer has stayed fairly stable through the years, as the graph will illustrate. My common sense also tells me that tenants haven't suddenly saved enough for a deposit to go out and buy a property.
What?So what has caused rents to stagnate? Well firstly we find ourselves in late spring-ish time, which is not quite peak letting time. As you'll know from my previous articles the best time to let your property is in August/September time; a time where students flock to London and the big firms are commencing their graduate programmes (and yes, of course housing is left til the last minute, creating the "gold rush"). This could have a part to play in a low/same rent being achieved on a new let, but we're talking renewals here. My client's tenants must have done a bit of research to ascertain they could get same/similar value elsewhere. They must see value elsewhere, so perhaps still a hangover from last year's new buy to let investors, all quick to offer a competitive price to entice tenants. Hardly professional is it, competing on price?
ImportantOn a new let therefore, it is crucial to differentiate on quality. I have always found it is crucial to dress the property like a show home. The old school of thought is "but they're tenants, they'll wreck it anyway" does not apply anymore (if it ever did!). Quite simply if you provide a quality product you will get better rent and in turn this better rent will more than likely be paid by someone who takes more pride in their home, ensuring that your property and its fixtures and fittings last longer, a win-win. Taylor Wimpey doesn't build show homes because they have nothing better to do, it works! So next time you are letting or selling an empty shell, think again. I have very good links with furniture suppliers and can help you furnish your rental or sales property in order to achieve the maximum price and more crucially achieve a quick transaction; after all, time is money!
Alas there is little that you can do if you are finding that your tenants are reluctant to pay a higher price for your product. Perhaps it's time to be honest with yourself - is your property up to scratch? Is it offering the best quality it can? Can you not viably improve it any more? If you answer those questions honestly you will probably predict your rent level for next year...!