Revealed: revised attitudes to the private rental market
Whether it’s a stop gap, a stepping stone or a lifestyle choice, one thing is constant – the need for quality rental accommodation. With many aspects in the ascendency – and a very different landscape in terms of lifestyles and working arrangements – now is a good time to re-evaluate attitudes to renting.
The private rental market is an integral rung on the property ladder. For many, it is the first step when leaving the family home or going off to study. For others, it’s a safety net when life’s plan changes direction. Whether it’s a stop gap, a stepping stone or a lifestyle choice, one thing is constant – the need for quality rental accommodation.
A recent buy-to-let report suggested that mood in the buy-to-let market was nothing short of positive, with more than a third of landlords planning to buy a property in the next year, and two thirds feeling confident. Rents are rising, demand is rising and the value of the private rental sector is rising too. With many aspects in the ascendency – and a very different landscape in terms of lifestyles and working arrangements – now is a good time to re-evaluate attitudes to renting.
HMOs & student accommodation
Yields will remain the crucial factor when purchasing a first buy-to-let or expanding a portfolio. Once overlooked for their perceived level of hassle, HMOs (houses in multiple occupation) and student accommodation could be a valid alternative to the default choice of a two-bedroom apartment. Research shows that since 2016, student properties have enjoyed mean gross yields in England of between 6.15% and 6.6%, compared to the overall rental market yield of between 5.43% and 5.6%. Landlords who opt for a professional management service will enjoy a market-leading return with none of the day-to-day administration.
Targeting older tenants
At the other end of the spectrum, landlords could exploit the growing band of tenants that fall outside of the ‘home leaver’ and postgraduate age bracket. The latest English Housing Survey showed there was a generous rise in the number of 35-44 year olds living in privately rented accommodation, as noted between 2009/10 to 2019/20. The results also showed the number of 55-64 year olds with private tenant status has risen from 7% to 10% during the same ten-year period.
Longer terms & fixed rent
Post-pandemic attitudes to living are well documented and may bring about some ‘against the grain’ thinking for both tenants and landlords. While the ability to rent for short periods has always favoured the tenants – and the ability to raise the rent favoured the landlord – both parties may find mutually beneficial ground in the shape of longer tenancy agreements and fixed rents. Indications show the turbulent times of the last 18 months have left more people involved in the private rental sector seeking long-term stability and reassurance.
The ‘doubling-up’ property
Although Propertymark’s latest figures show a 30% decrease in void periods since the start of 2021, having a contingency plan is best practice. New research suggests 17% of landlords said they would look for a future property investment that could double up as a holiday let so they could counteract a void period. As well as a let that attracts holiday makers, some properties can easily double up as serviced accommodation or as an ultra-short-term rental aimed at professionals.
If you are a portfolio investor looking to expand the number of properties you own, or are a first-time landlord requiring advice, we’re here to chat all things yield, return and property management. Get in touch today.