Thursday, 24 April 2014
Ilkeston rents .. ask too much?
For instance in Ilkeston, the sheer number of 2 bed terraced houses on the rental market stops prices moving significantly. If you ask for an extra £50, it's fairly easy for a tenant to find a landlord who doesn't. In Eastwood, the average income of tenants restricts prices - there's no point raising the rent to a level where your tenant can't afford to pay.
Some landlords have enjoyed an increase though - houses are generally trading at £25 or £50 per month more than they were a few years ago, which is good. The inherent danger here is that landlords come to expect these levels of rent - just as a few years ago people assumed property prices could only rise, the mistake they will make now is assuming that rents can never fall. They can. And at some point they will.
But although I sound negative, there's no reason to be concerned! Just be realistic. The long term demographics of the rental market remain VERY good - a chronic shortage of housing, a growing population, large funds needed to purchase property, etc etc. I chose to open a lettings agency and am a landlord myself which shows that in the medium to long term I think investment property is good place to be.
My advice to all landlords is hence to charge the best rent you can, but fundamentally to AVOID THE VOID. I have one large landlord who for a number of years has insisted that his properties are marketed about 5% under the market value - going against the advice I initially gave him.
However when we look back at his portfolio over a number of years, we see his average void between tenancies is less than 7 days - his properties are hardly EVER empty.
Compare that to the landlord of a property who let it sit empty for 3 months because the previous rent was £700 and he wanted to wait until he was offered that again. He did get it eventually, but he's lost £2100 by the time he did. Had he accepted our advice to market at £650 from day 1, he would have lost a lot less. Incidentally, he doesn't think he lost - he's happy that he won because he got his £700!
It's also worth remembering that if we're managing your property, we're on a cut of the rent you receive. As such it's in our interests to charge a tenant as much as we can, as well as yours. Hence if we're recommending not moving a rent, or even dropping it, we usually have a valid reason for suggesting this.