With all the uncertainty that legislative changes, such as the Renters’ Rights Bill, bring to the rental market, many landlords are currently reconsidering their portfolios.
Some are selling up and leaving the market, while others are reevaluating their processes and perhaps deciding it’s easier to hand over the daily responsibilities of their rental properties to the fully managed service of a letting agent. Others, meanwhile, are seeing opportunities and taking advantage of the shifting market to expand their portfolios.
Taking a moment to reconsider your portfolio given the legislative changes, market trends and the financial market is vital to ensure that you continue to optimise property investments and reduce risk. But what should you consider?
Legislative changes
The Renters’ Rights Bill will significantly change the private rented market, and landlords will need to adjust to stay compliant. The new responsibilities are wide-ranging. They will alter how rents are set and increased, how tenancies are implemented and how evictions are handled, as well as many other changes. The penalties for non-compliance will mean that landlords must ensure that they are aware and prepared for their new responsibilities.
Meanwhile, changes to energy efficiency requirements will also require investment from landlords to get properties ready for the obligations of the future, as well as to attract tenants who are increasingly demanding environmentally friendly homes in which to live.
Market trends
Legislative changes may be tough but more generally the rental market looks buoyant. Demand remains high while supply is still limited, especially as some landlords choose to leave the market which shrinks supply levels further. In its first quarter rental roundup, published earlier this year, Rightmove said that the number of tenants looking to move was 10% higher than pre-pandemic 2019, while the number of available properties was 33% lower. A typical rental home receives 12 enquiries.
Focusing on high growth areas brings the best returns so understanding the local market is essential. Although growth has slowed, rents continue to rise. In May, the average rental price for the UK was £1,307, up 0.7% on the previous month, according to HomeLet’s Rental Index. In London the average rent was £2,088 for May.
Financial market
The financial market is also improving as the base rate, and therefore mortgage rates, continue to fall. This is helping to reduce landlords’ general maintenance and upkeep costs as well as making investing in additional properties more affordable. The same influences will make it easier for renters to leave the market and become first-time buyers instead, but this is unlikely to have much impact in the short term.
The outlook
For those landlords wanting to expand portfolios further, 2025 could be the year to do it, despite the many changes coming. Mitigating risk and maximising investment will remain crucial, however.
We Can Help
At Progressive Lets, we are experts in the rental market in the Peterborough area and help landlords find and manage properties within a 50-mile radius. Get in touch to find out more.
