So it looks like I was wrong...
Those of you who have closely followed our Newsletter updates, will be well aware of the issues we have had in regards to Selective licensing and the pressures facing us as landlords over the past few months.
I said to you all at the beginning that besides the initial upset, there will be a hidden benefit to Selective licensing and I predicted that would be an investment increase of circa £50pcm but the reality of that is that actually I was wrong.
We are now seeing unprecedented valuation increases in Nottingham and for those properties that are becoming available we are seeing rent increases of up to £100pcm.If we take the below examples as a current cross-section;
A two bed terrace in Forest Fields last year would have let for a maximum of £500pcm today the same property is renting at £575 within our normal 2 week period or less.
We have a two bed Terraced property in Sherwood currently on the market for £595 whereas again just 6 months ago the same terrace property would have achieved a maximum of £525pcm
We have also just let a 1 Bed Apartment in the city centre at £695pcm - again within two weeks and to a great standard of tenant, where as last year the same property would have achieved a value of circa £550-£600pcm and this is just a snap shot of a few of the properties that are actively being marketed at the point of writing this article.
November is historically Insurance month, whereby the majority of landlord's policies come up for renewal and although I appreciate that there is likely to be a lot of landlords licking their wounds at the minute - and personally I am no different - but there may also be a tendency to recoup some of the recent expenditure in a bid to scale back on cover - particularly in regards to Rent and Legal or Rent guarantee policies.
My advice would be that although the information above all points to a very positive upswing in rental income for landlords, the other side of the coin presents a significant pull on tenants finances and with it the increased risk of rent arrears. Whether you decide to take our own Rent guarantee cover with buildings cover or obtain this through a third party, my advice is that you ensure you have a policy in place. Insurance works best when there is no scapegoats and if all parties are insured by the same underwriters there is no opportunity to pass the buck.
The next 12 months are likely to be the greatest test for our tenants ability to maintain their rental obligations and there is the protection available to ensure that you are not detrimentally effected regardless your tenants ability to pay.
Our role as your agent
Part of our role as your agent is to act as investment managers; It is within our duty and joint interests to ensure that we are tracking current market values and that your investments are working as effectively as possible and this goes far beyond just effecting a rent increase, but we do this using a multitude of measures ensuring that you save on contractor and maintenance charges, have proactive portfolio management so things are addressed in their infancy and when they are cheapest as well as having access to the best advice to mitigate any potential risks and regulations and this brings me up to date.
Reviewing rental portfolios
As an industry we review rental portfolios at two points in the year, the first in spring, the second at a change of occupancy and this is because legally we can only affect a rent increase once within a fixed term or once within a 364 day periodic tenancy. We were aware of the pending changes and its potential impact and now with the results of that becoming evident, there would be a very good argument for us to raise the rental values of all properties throughout our portfolio. However this would be great from the agency perspective, for higher rental income plus any re-let fee's if the current tenancies were to vacate upon receipt of the increase, but from a landlords perspective it is often more important to way up the pro's and cons of retaining a good tenancy over the prospect of a higher rental income as well as taking in to account the costs incurred for providing a new tenant together with any refurbishment works necessary to best present the property to the market. This is a fine balance that cannot be attributed to a 'one size fits all' approach and this is something that we are in reviewing as we speak so please do expect a call from us to review each property on an individual basis.
There has never actually been a single property within our portfolio that has ever suffered a rent reduction, despite the impacts of the housing crash, personal income levels, Brexit and any other political agenda that has ever impeded the market or changes in demand and this is the epitome of why investment in property is so highly regarded, however I am glad to be writing to you on a positive note which feels long overdue and please do take my advice with regards to rental income protection. This has always been a recommendation but in light of the information above please do ensure that you have sufficient cover in place.