In the blog about the rental market and the affects of the cost of living crisis, we shall be looking at:
- Local stats for the rental market in Cambridgeshire
- What are the drivers?
- How do we source the right resident for your home?
We hear daily reports on how the cost-of-living crisis is affecting us all. This week we have had three prospective landlords asking about this and whether it is worth investing in property.
But onto the affect of the cost-of-living crisis – at the moment we are not seeing any effect and are not seeing a slowdown in the market.
Are we kidding ourselves or using stats?
You guessed it! It is pure figures – which confirms why we are a little busy at times!
For the average property that we market (value at £975) we receive an average of 30 enquires. This has increased by 65% when we compare to 2020 figures.
The driver for this figure is the lack of supply of properties being advertised.
The new Housing Minister, Felicity Buchan, has admitted to MPs (Jan 2023) that the private rental sector has seen a reduction of over 260,000 homes compared to a high point in 2016/2017. Rightmove and Zoopla indicate that there are 37% less properties being advertised for rental in the Cambridgeshire area over the last 12 months.
This means there is a huge demand and a real lack of supply. However, there is always another driver in the background.
What people can afford will always be dictated by salaries
In Cambridgeshire we are in a very fortunate bubble. With a diverse range of high-tech employers who are growing, you only have to look at the Cambridge Biomedical Campus and Science Park to see that! This means, to attract the right people, household incomes are increasing. For example, the average household income in PE27 is £50,100. which has increased by 5.7% * in the last year.
With all the choice, how do we find you the right resident to give you the longest tenancy?
The first moment of contact is always important as we need to find out as much as we can about your prospective resident. That is why at this stage, questions are based around financial background:
- We are looking for the household income to be 2.5 x the annual rental of a property. We get approximately a 7% drop out at the stage.
- We enquire about credit scores – most people don’t know their score, but do know if they have a CCJ (county court judgement) against them.
- We ask if they can give us proof of funds ie. 3 x bank statements and 3 x payslips,
- If they are starting a new role, we ask for a signed employment contract or an employment refence
- We look for a proof of address ie utility bills
- Most importantly we would need proof of ID for Right to Rent checks. Any concerns we can check with the Home Office if required.
- Lastly, we ask for a landlord reference – but to be perfectly honest this is not something we take as read as, unfortunately, we have found that some landlords and, sadly agents, have had a strange relationship with the truth.
- These are the basics, and I haven’t covered how we help people who would need a guarantor or are self-employed or have a pet.
It all sounds very onerous when you look at a list like that! But just think about the hoops you must go through if you wanted a mortgage!
However, most people have all of this information to hand, which explains why 87% of the agreements we set up after viewing go through to moving into a new home. In order to make the process as seamless as possible everything we do it online – which gives regular reminders if we have not received certain documentation. We have always aimed to make the process as easy as possible for the end user.
Have we seen a kick back due to the cost-of-living crisis?
In short no. In fact, we are now getting more information than we have ever asked for since people understand there is a shortage.
What about residents who have been in their home over 12 months?
- Our average tenancy length is now 37 months.
- This year we have seen the average rental increase for renewal of tenancy agreements at 7.72%.
- We have achieved rental increases in 97% of tenancies.
Now that might sound a bit greedy, but you need to bear in mind that most landlords made no changes to the rent from the beginning of the pandemic to the end 2021. Therefore there was a bit of catching up to do as mortgage payments increased. Also 82% of our longer tenancies are still below the rate that could be achieved if the landlord where to remarket. Unlike the media coverage we find the landlords we work with to be very mindful of their resident’s situation. Which is good as it is a mutually beneficial relationship.
The local market is very buoyant but rentals, no different from having a mortgage, will always be dictated by what an individual’s salary is.
If you would like any more information on what we do for our customers just give us a call on 01480 494939