UK Lettings market starts to cool - but Cambridgeshire remains strong!

Tue 25 Apr 2017

New statistics released this week from Rightmove show how the UK lettings market may finally be starting to cool down (all charts courtesy of Rightmove).

Landlords and Agents in the lettings arena have seen a large raft of changes to the sector in the past 18 months. We’ve experienced increased regulation (Right to Rent, anti-money laundering, smoke alarms), tax changes (3% extra SDLT on second homes, wear and tear allowance, section 24 of finance act) and the proposed ban on tenancy fees, to name just a few things.

And if you throw article 50 and a snap General Election into the mix, it’s fair to say we are experiencing an increasingly unsettled market.

If we look at the data published by Rightmove, it’s easy to spot the current national letting trends:

Supply: New lettings properties coming to market

Changes to stamp duty on second homes created a big surge during Spring 2016, as investors clambered to purchase investment properties before the April cut-off. The graph shows how this new stock flooded the market throughout last Summer – and subsequently fell away sharply after August. Crucially though, new stock remains buoyant.

But are properties letting as fast? If we look at the number of home still available, we can conclude the answer is no, they’re not.

Supply: Available properties on the market

The graph shows how the amount of un-let properties across the UK is significantly higher in 2017, when compared to previous years. This means that nationally, properties are taking longer to let and as such are getting closer to their void dates than previously.

Locally, we have noticed a slight shift in time taken to let – however we feel by monitoring rent levels carefully, this can be counteracted.

So, aside from higher stock level, how else can we explain the graph above? Has demand from tenants dropped? Lets see

Demand: New property enquiries from potential tenants

The stats above demonstrate how the lettings market has grown over the past 7 years as demand from tenants has gradually risen. However this does, for the time being, appear to have cooled nationally. This can in part be attributed to

1.Longer tenancies. People are generally staying longer in each property, as renting has become a much more credible long-term option in recent years.

2.First time buyers. Despite high property prices, the number of people getting onto the property ladder for the first time is now at an all time high – as they leave the lettings sector behind.

On a local level however, demand seems to have remained consistent over the past 12-18 months, as Cambridgeshire continues to offer good value for money for renters when compared to nearby Herts, Cambridge and London, where rents are sky-high.

Rents

OK, so what’s happening to rents, nationally?

Unsurprisingly, with a purge of available stock and a drop in tenant demand, the UK has just experienced a drop in rental asking prices, for the second consecutive quarter, however this still represents an increase, annually (see below):

In our areas, rents have definitely been rising over the past 18-24 months. This has started to plateau slightly in the past 8 weeks, but we do not expect this to slide at all as we are not seeing the decline in tenant demand, experienced in large parts of the rest of the country.

In summary, it is clear that we are seeing the rental market slow down a bit from the past few years of rapid growth. However the extent to which this is occurring tends to vary regionally. We’re pleased to say that Cambridgeshire remains a very attractive proposition for renters, and as such this is reflected in the performance of our team here, in delivering the best possible service for our clients.

Our feeling about the upcoming General Election is that it won’t have a particularly marked effect on the property market this Summer. We sense a general air of election fatigue in the UK at present, with people of the opinion that life goes on, regardless!

"I have always found Lovetts to be very responsive to any concerns I have. The monthly statement and my rent are always produced on time and they send out an annual statement for tax purposes which is invaluable. Of the 4 letting agents I have used over the past 10 years Lovetts are by far the best!"
Ros George