It may seem counter intuitive, but the never ending increase in rental levels across Milton Keynes over the past few years is not necessarily a good thing for landlords and property investors – why is that and how does it affect you?
For at least 2 years, rent levels across most properties locally have risen above inflation, in some cases around 20% in this time frame for the more popular and highest in demand 1 & 2 bed houses, but they are now starting to hit a limit due to salaries not keeping pace with rent increases, and there is no point out pricing yourself by trying to let a property for a figure higher than the target market can reasonably afford. We ALWAYS undertake a credit check and affordability check for all applicants, and we are now seeing an increasing number of otherwise good applicants being priced out of the market, effectively reducing your pool of candidates. Similarly for larger properties, the target market is a little more discerning and competitive, and they won’t typically accept an above inflation rent rise, nor should you always apply one, as you will scare away your otherwise long staying tenant family.
Resale house prices are also rising rapidly, creating yet more demand from ‘generation rent’ as they can’t generally afford the deposit for a mortgage, yet ironically rents are also rising beyond their means, and that is if they can find a property in the first pace as rental supply has become more restricted as the year progresses. If a landlord was to sell a tenanted property to another investor then a good strong rental income will certainly make the deal financially viable, but the new owner will expect to be able to receive such high rents in the future as his financial model will inevitably be built around those figures. This could leave them potentially facing void periods or even a loss at some point as the market is dynamic and ever changing – there is more than one direction and it is not always up.
The rises we are now used to WILL correct themselves at some point – maybe next month, maybe next year – so any investor would be wise to not over leverage themselves or borrow beyond a safe repayment level, just in case the market falls or finding a tenant suddenly becomes difficult. By all means, they should take the strong rents that are achievable now, but these shouldn’t be relied upon as any sort of guaranteed level of income for the future. There is also no point in blaming the agent if the market falls, because this will occur more than once during the ownership of any property (typically 15-20 years), so one should always be prepared to review and re-assess the market with the letting agent and work together to achieve the best results under the prevailing conditions.
None of this means that you should resort to under selling yourself either, so don’t swing too far away from the market and give your property away just to secure a tenant – price it competitively according to other similar properties currently available, keep it in good condition and all repairs up to date, where you can keep it in a modern, neutral decorative style and above all keep it very clean. The key to getting the best rent in all market conditions is to make the property itself always work hard to appeal to the wider market and stand head and shoulders above the competition. You can’t make tenants dislike other properties that they may see, but you certainly can make them fall in love with yours.
If you would like to discuss letting your property with us at Belvoir! Milton Keynes please call us on 01908 562582 or email us at miltonkeynes.enquiries@belvoirlettings.com
