Tenant eviction and rent recovery service Landlord Assist is encouraging landlords to prioritise their efforts in 2014 on finding good, reliable tenants rather than go searching for high rents despite the unusual prospect of a buoyant sales and rental market taking place at the same time.
Over the past few years landlords have enjoyed attractive yields and have been able to set their monthly rent prices at record levels as demand for rented accommodation has outstripped supply.
But Landlord Assist believes that with many tenants now looking to make the move to home ownership, and Government initiatives making it easier to meet lending criteria, this could trigger the creation of an unusual scenario whereby both the sales and rental market are set to perform strongly and experience exceptional demand.
According to the company’s managing director Graham Kinnear landlords, when faced with these unique market conditions landlords should focus their efforts on finding the right tenants rather than risk void periods and the possibility of arrears by pricing themselves out of the reach of new tenants.
According to Kinnear, setting the price at the right level brings distinct benefits to landlords, most notably the reduced likelihood of arrears and secondly the possibility of longer tenancy agreements.
He says: “At the minute it is difficult to accurately predict what will happen in the rental market over the coming year because the property sector is faced with a real and unique prospect of both a buoyant sales and rental market taking place at the same time.
“We fully expect a growing number of tenants and first-time buyers to try and make the step on to the housing ladder. This could lead to a greater choice of properties to rent in parts of the country, and more competition between landlords for the best tenants.
“At the same time we still believe that there will be a great pool of tenants looking for quality rent accommodation who may be priced out of buying by hikes in house prices which are expected to rise by as much as 6 per cent.
“With the prospect of a buoyant sales and rental market taking place together this will create a lot of movement across the sector as a whole. Faced with this situation it is tempting for landlords to set their rent levels high but instead it’s better for landlords to focus their efforts on attracting the right type of tenant for their property at the right price as it is unclear how long both sectors can sustain these conditions.”
Stephen Parry commercial director at Landlord Assist: “Normally when the sales market picks up it has an impact on the rental market, however this year we don’t expect that to happen. This situation, although rare, goes some way to highlighting the severe lack of quality and affordable housing stock across the UK. If house prices continue to increase and rents remain at high levels but wages remain stagnant we could reach a point where an increasing number of people are simply unable to afford their mortgage payments or rent.
“It is critical that new housing stock becomes available in the rental market and that landlords are incentivised to increase their portfolios.”