I was talking to a landlord from Cropwell Bishop the other day about what is happening to the level of rents that are being achieved in the Bingham property market.
In terms of Bingham, it appears that rents being achieved for re-lets (ie when the tenant moves out and new tenant moves in) have risen in the order of 3% in the last 12 months on top of the range modern properties, yet remained static for older Victorian terraced houses and converted apartments.
However, landlords with existing sitting tenants, irrespective of age are not increasing their rents, as most landlords prefer to keep their existing tenant paying the same rent and have the peace of mind that their tenant remains, paying the rent (thus reducing the risk of a void period).
It must be remembered rents dropped by 7.7% over 2008/9, due to oversupply in the rental market in 2009.) A lot of the people who couldn’t sell their property in Bingham in 2008/9 when the Credit Crunch hit in 2008, decided to let their house out instead of selling at a loss. In fact, the number of houses on the market in Bingham dropped by 77.1% between March 2008 and April 2010, a lot of which came on to the rental market in Bingham. However, looking at the longer term though, tenants have had it good because since the turn of the Millennium, average wages have grown by 46%, but rents outside London have only grown by 36% rental growth over this period.
I told the landlord that there is a lack of new rental properties in Bingham coming on the market, in fact according to the Office of National Statistics, there are only 24 new rental properties are coming to the market each year in Bingham but the population of Bingham is rising by 36 people a year – something will have to give soon! This is compounded by the fact a number of landlords are looking to sell their rental properties in the coming months, as the property market in Bingham has improved. This further compounded as tenants in existing rental properties appear to be staying in properties for longer periods of time.
Looking at the rents charged in Bingham, historic evidence in the UK suggests private market rents have moved in line with general inflation. Government figures only go back as far as the year 2000, but looking at other countries with similar housing markets (America, Australia, Ireland and Holland) the fact is rents paid by tenants tend to rise in line or just ahead of inflation.
As short term wage growth in Bingham has eased off recently, rising by only 1.3% in the last 12 months, taking average salaries in Bingham to £34,010pa, with the tax breaks announced by The Chancellor in the Budget, I believe, even though rents have kept pace with inflation in the past, renting as an option has become more affordable, and is increasingly seen as a lifestyle choice. With returning economic growth and expected increases in the rate of growth of wages, above inflation rental growth could rise.
If you want a chat about the local Bingham property market, pop in to my office in the Market Place, or email me at Katie.firstname.lastname@example.org