As a landlord you need to understand what is happening in the wider rental market in order to make the right decisions. We have the data to help you with this.
This month we are particularly looking at:
- Comparisons between PE27/ PE29 compared to CB23/ CB24
- What homes have seen the biggest rental yields year-on-year
- How the markets changes are affecting behaviour
The main take out is that due to lack of supply the rental market is extremely buoyant. As we have said many times before what would put a ceiling on prices would be household income – we look for a minimum of 2.5 x the household income compared to the rental. Therefore, for a rental of £950 per month we would be making sure the household income was no lower than £28,500. Given that salaries in the area are on average £51,400 (property data) we are in a good area.
April rental data
One interesting take out is that 3 beds in CB23/ CB24 have not increased as much as those in PE27/PE29. My personally opinion is that we saw an above market increase last year so we are just seeing a levelling out of the market.
The average rental yield in the local market ranges between 4 – 5% with not much difference between PE and CB. However, these figures are based in rents/purchase price and do not take into account a difference between leasehold and freehold. Our own data shows that the average yield our landlords are achieving is 8.2% with highest being 26.9% But the property was bought in 1996 – as they say, when is the best time to plant a tree?!
How the lack of supply is changing tenant behaviour
From these graphs, we can see that the biggest year on year increase is in PE27 for four bedroom homes – which is the same as February. Again, this is due to lack of supply.
It will not surprise you that once a property goes on the market it is very quickly snapped up. However, because competition is so strong people are agreeing to take several properties with different agents. Since we are only allowed to take the equivalent of a week’s rent (see tenant fee ban!) at the point of agreeing, there is very little cost to agreeing to take a property. We are keeping a close eye on this to make sure that your void period is not increased.
If you want to hear about other figures in Cambridgeshire just ask – we have tons of data!