Join The Flat pack
Mon 31 Mar 2014
Buy to Let is back, bountiful, big and getting bigger, says Graham Norwood
Analysis by the Chesterton Humberts estate and lettings agency shows the private rented sector has rocketed in size from nine per cent of all UK households in 2000 to 17 per cent. In London, growth has been even bigger - 15 per cent in 2000 to 25 per cent today.
Savills' researchers forecast the private rented sector across the country will hit 20 per cent by 2020, by which time in London it may account for 30 per cent of all households.
'We're seeing young professionals "renting up" to larger one-bedroom homes rather than saving for deposits to buy. The improved economy has eased anxiety in the City so the corporate lettings sector is a hot ticket. We expect the biggest rent increases to be in two-bedroom properties in Kensington & Chelsea.' says Peter Rollings of Marsh & Parsons in London.
Countryside lettings are different in nature but have also seen significant growth. 'Key for tenants are village facilities and proximity to schools. People may rent before they commit to the rural dream or find the right home. Some rent while they do up a house so typical tenant turnover can be high', says Edwards Stoyle of Carter Jonas lettings agency. So what are the five golden rules to making the best of Britain's growing rental market?
1 Choose your sector
Student accommodation in a university town, corporate lets in London or another big city, or pretty cottages for country renters are the obvious target. It is key to study the local market to ensure there is a shortage of rental accommodation.
2 Buy the right size and type
Most rental households are one - or two person, or three-sharers. Only in some rural areas and executive commuter belts, like Surrey or the M4 corridor, will there be significant demand for family houses to rent. Every tenant in every market wants to live close to good road and rail transport connections. Functional, attractive, well-located new build apartments, like these in Cheltenham are ideal.
3 Equip effectively
Whatever you buy and wherever it is, tenants today want modern equipment, a parking space, privacy and high quality furnishings, including plasma tvs, dishwashers, hi-spec bathrooms and easy - or no maintenance gardens or courtyards.
4 Budget properly
Mortgage lenders expect 130 per cent of your monthly payments to be covered by rent to allow for empty 'void' periods between tenants. Remember that tenants pay council tax and utility charges but landlords pay sevrice charges - so you may want to avoid flats with concierges or hevily landscaped grounds.
5 Always use a lettings agent
Find one with respected accreditation through the industry body ARLA. Without an agent you must find and vet tenants, answer late-night repair queries and tackle the thorny job of chasing up if the rent is overdue. Agents' fees can be up to 18 per cent of rental income but this can be offset against tax.