Rents Paid By Tenants In Nottingham On The Rise

With roughly a third of the year already gone (scary isn’t it?!) I was talking to landlord from Burton Joyce the other day about what is happening to the level of rents that are being achieved in the Nottingham property market.

It appears that rents being achieved for ‘new’ rentals (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 Nottingham 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 Nottingham dropped by 56.7% between April 2008 and March 2010, a lot of which came on to the rental market in Nottingham. However, looking at the longer term, tenants haven’t had it too bad as, 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 indicated to the landlord that there is a lack of new rental properties coming on the market, in fact according to the Office of National Statistics, there are only 83 new rental properties in Nottingham each month, but the population of Nottingham is rising by 322 people a month – so 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 Nottingham has improved. This is 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 Nottingham, 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 Nottingham has eased off recently  (rising by only 1.3% in the last 12 months - taking average salaries in Nottingham to £22,639pa) and with the tax breaks announced by the Chancellor; 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 Nottingham property market, pop in the for a coffee or email me on jaclyn.bartlett@centrickproperty.co.uk