When should i start thinking about raising the rent?

Following on from my recent article about rental values since the recession, (where I’d found that rental values in the city are around 4.8% lower than they were in 2008) I’ve now looked into the forecasts for the next 12-24 months, to decipher when landlords should consider price increases on their rental portfolios.

As with all parts of the economy, the rental market is all about supply and demand. On the supply side, 1,550 rental properties have come up for let in the last 31 days in Nottingham. This sounds like a lot - until you consider there are around 28,500 rental properties in the area. Therefore, around 5.4% of the rental stock is coming onto the market each month (the UK average is about 5%). However, when you strip out the student properties, which account for around 15% to 20% (since the same student properties are rented out to a new batch of undergrads each year), of the remaining rentals, the percentage of stock available each month is much lower than the norm.  

So, could it be that the reason for this lack of new rental properties coming on the market is that professional tenants seem to be staying in their properties longer?

With a lack of supply, newer tenants have to pay more to secure the property they want. Poorly maintained homes, which may still retain 70’s décor and green bathroom suites have seen their rents drop. However, swish apartments with all the mod cons and refurbished Victorian terraces are still being snapped up – and tenants are willing to pay for the privilege. In fact, these types of homes have seen rents rise by 0.4% in a month, which just goes to show that good quality property will always rent the fastest.

Interestingly, looking at property values, the Land Registry has just released their latest set of data. For the most current figures, property values rose in Nottingham by 0.9% in the month, meaning they are now 6.5% higher than they were a year ago.  When one looks at the regional picture, the East Midlands average rose by 1.4% for the same period.

Looking forward, after considering all the statistics, I expect sale prices in Nottingham to rise by 3% to 5% over the coming 12 months.  Similarly, unless something drastic happens in the economy, the demand for rental property is unlikely to fall any time soon and therefore rental prices will follow suit.

Therefore, if you are a landlord, or are considering becoming one, it would be my advice to spend a little money on redecorating your buy-to-let and / or buying some new furniture to beat the competition. If you’re property is already in good nick, now might be the time to consider a rent rise – although I’d think carefully before doing so if you’ve got reliable tenants! An extra £25 per month isn’t worth the hassle if you’re replacing great tenants for poor ones.

If you would like further information on investing please email me on jaclyn.bartlett@centrickproperty.co.uk