In our everyday life many people speak about “supply and demand” and I am sure if you are a marketeer or an economist you can put an intellectual spin on this, but I come at it as a layman.
At City Lettings we focus purely on lettings and as such I think we are in a great position to not only monitor and react but also to influence the Norwich market.
I was swayed to write this piece by a phone call I took last night at about 5:30. The call went something along these lines:-
“I have seen a property on Rightmove that I would like to view” – Potential Tenant (PT)
“Which property is it you are interested in” – Me
“The one in River Heights, advertised for £675 per month” – PT
“ I am familiar with that property, but my colleague is currently at the property doing four viewings and I would be amazed if the property does not let. Rather than book you in please can I take your details and if it doesn’t let tonight I will ring you tomorrow. Would that be okay?” – Me
“Oh no, I keep missing out, I am relocating to Norwich in one month and I am visiting on Saturday but so far I have only been able to get one viewing as everything keeps disappearing.” – PT
………………hopefully you get the gist.
………………oh, by the way, out of the four viewings we got two offers & took money on it by 9:30 a.m.
Now, if this phone call is me monitoring the Norwich market then you do not need to be a rocket scientist to work out that there are not enough properties for the number of tenants.
So how should we react to this?
Well if you are a Landlord you would probably say that if we advertise a property and we get several offers on the first batch of viewings, then we haven’t charged enough and perhaps we should have charged £25 extra for it. Of course if you are a tenant, you will probably understand this stance but you will wonder why there are not enough available properties.
So let’s try to answer this point, why aren’t there enough available properties?
The government now charge landlord’s 3% extra on stamp duty when they purchase a buy-to-let property and they have reduced the tax relief on mortgage interest payments. These two measures have discouraged some new landlords from entering the market thus reducing the number of new available properties. Conversely, the population is increasing at an exponentially faster rate than new homes are being built and despite net migration figures coming down post Brexit vote, more people are being forced to turn to the private rented sector at a time when the rental supply chain is in decline.
So what should we do?
Well if you are a tenant, I would suggest you be as flexible as possible in the type of rental accommodation you are looking for, you make a quick decision when you see something that is suitable and you do everything possible to present your circumstances in a good light to the landlord or letting agent. In addition, sign up to property alerts with Rightmove and make sure that you are first in the queue when new properties are added that match your search criteria.
And if you are a Landlord or considering entering the buy-to-let market, then make the most of the currently low buy-to-let interest rates, choose your property wisely, do your homework so you know your potential rental yield and don’t forget to take into consideration capital growth when looking at your longer term returns.