Peterborough is already a popular city for investors and it’s not surprising considering the potential for buy to let returns of 7% and the huge potential for capital growth from ease of access to London within 45 minutes; massive investment in city centre regeneration; a state of the art new hospital opening in 2010; plans for a new university and plans to create 20,000 new jobs in the area.
Supply and demand back to pre 2008 levels;
- fewer “accidental landlords” ie owners being forced to rent their properties
- signs of “accidental letting agents” struggling some disappearing with landlords exposed to £’000’s of losses!
Rents starting to show a little strength; 2010 looks brighter. Annual rent reviews are now back on the agenda again albeit increasing from a low point. It is still a tenant driven market so you must make sure your property(s) look attractive if you want to let quickly for maximum money
During 2009 we have seen rents weaken by around 10%; apartments seeing the greatest fall some up to 20%. Current stock of advertised rental property has now reduced to normal levels owing to a very busy letting period between July and October. Buy to Let interest has emerged again and deals are being done with new stock coming to the market. We expect rents to increase very marginally over the next 6 months.
2008/9 saw a large increase in property to let and a large increase in unregulated letting agents. Peterborough has too many unregulated lettings businesses with unqualified, untrained lettings staff. The slow down of house sales in 2008 and much of 2009 has created many new lettings businesses including estate agents not previously practicing and estate agent staff having been made redundant now working from home, so called “accidental lettings agents”. Most of these new starts are born out of the need for business survival thinking it would be easy to let a house and gain immediate income.
Since the banking crisis and start of recession we have seen more properties on the letting market which has lead to lower rents, longer voids (periods when the property is not let) and the need to invest in a property’s presentation which has all put pressure on cash flow. With the new agencies offering lower management charges (some not charging VAT) it is understandable why some landlords chose to work with them.
What is the concern using an unregulated letting agent? Or ‘What are the downsides of using an unregulated letting agent?’
Ask the landlords of three local letting agencies that have closed this year and listen to how much they have lost! By trying to save a few percent in management fees which equates to around £132 per year (or £2 per week!) on a monthly rental of £550, many have lost thousands of pounds!
These loses occur if a tenant has paid rent to the agent but the agent has not paid it to the landlord. The rent is legally paid but not in the landlord’s bank! In this case the Landlord must seek recovery of this loss from the agent (however they are unlikely to pay!).
If the tenant has paid a deposit and the agent has not registered the deposit you, the landlord is exposed to paying the tenant three times the value of the deposit. One agent is even on record having a different tenancy agreement with the tenant to that the landlord has seen with the tenant paying more rent than the agent is declaring to the landlord!
Did you know less than 25%* of Peterborough letting agencies are voluntarily regulated or members of a professional body.
Only four local agents are members of Safeagent the National Approved Scheme (voluntary central government funded accreditation scheme for lettings agents) and 10 local agents are members of the National Federation of Property Professionals (combining ARLA & NAEA of which three of these are members of Safeagent)
• By being members of these organisations, landlords and tenants benefit from working with professional regulated agents who have to:-operate under a strict code of practice
• hold client account bonding
• have fully audited client accounts
• hold professional indemnity insurance
• have a formal internal complaints procedure
• be a member of the Property Ombudsman
(* 43 listed letting businesses on yell.com operating in Peterborough 01.11.09)
So in conclusion we are seeing some signs of recovery in Peterborough, but landlords really need to be careful and seek advice from professional, accredited, Peterborogh lettings agents.