In The News Archives | Property Market News

Coventry Tenants face further rent hikes, as the number of available rental homes drops by 58%?

For tenants, especially over the last 12 months, it has become progressively more challenging to find a Coventry rental home, thus making the rent they must pay go up. This state of affairs in the property market isn’t showing an indication of getting any easier either, making for a hard time for Coventry renters.

So, what is the reason behind the Coventry rental property shortage, and what does this mean for existing Coventry landlords or those potential investors considering buying a Coventry buy-to-let property soon?

Several different components are making the perfect storm in the UK property market.

Firstly, the number of households in the UK.

The UK has not been building enough homes for the last 20 years. I appreciate that parts of Coventry seem like one huge building site, yet as a country, we are woefully undersupplied with property to live in. This has meant house prices continue to rise due to demand.

The government have known about this issue for decades. The Barker Review of Housing Supply published in 2004 stated that the UK had experienced a long-term upward trend of 2.4% in real house prices since the mid-1970s because of a lack of house building. The report stated that 240,000 houses needed to be built each year to keep up with demand.

The average number of houses built since the mid-1970s has been around

165,000 per year, meaning the UK is short of 3,375,000 houses

(i.e. 45 years multiplied by 75,000 missing homes per year).

Several years ago, the government set a target to build 300,000 new homes each year to address this issue.

However, in 2019/20, the actual number of homes delivered stood at just 243,770. In 2020/21, the number of properties built dropped to only 216,000 new homes. In a nutshell, there are fewer available homes to buy, meaning fewer available homes to rent.

Secondly, Coventry tenants are staying in their rental homes longer.

A Coventry first-time buyer’s average house deposit is £37,159

(the UK average deposit is £53,935).

The average rent of a Coventry property in November 2022 is £1,091 per calendar month (up from £879 per calendar month in February 2020) – quite a rise!

These numbers translate into Coventry renters not being able to pay the rent and be able to save for a deposit, or if they are saving, it is taking a lot longer to save for a deposit due to the cost-of-living crisis and higher rent costs.

Also, many Coventry tenants have decided to stay in their existing rental homes because of the rent rises. Many landlords are less inclined to raise the rent on an existing property when they have a decent tenant who keeps the property in good condition and pays rent on time. Anecdotal evidence also suggests that rent arrears in those properties are dropping as tenants know if they don’t pay the rent, the chances are they will have trouble finding another property, and if they do, they will have to pay a lot for their next rental home.

For Coventry landlords, this is all positive news – tenants are staying for longer in their Coventry rental properties, arrears are lower, and void periods are less likely. When it comes to the market there is less competition (because of the decrease in the availability of Coventry rental properties) so this makes the investment an even better bet.

Thirdly, landlords are selling up on the back of recently increased house prices.

It would be difficult for Coventry buy-to-let landlords to ignore the rising property prices in recent years.

The average property value in Coventry in the summer of 2022

was 12.8% higher than in the summer of 2021.

For some Coventry buy-to-let landlords, especially those who were classified as ‘accidental landlords’ (an accidental landlord is a landlord who never chose to become a landlord, it was just after the Credit Crunch of 2008/9, they found themselves unable to sell their property, so they temporarily let their own property out), they chose to ‘cash in’ on the higher house prices. This would have also contributed to the lack of available Coventry homes for rent.

Yet everything isn’t all sweetness and light for Coventry landlords.

Landlords have a few costs to consider before investing in buy-to-let, including everything from regular refurbishment costs, buildings insurance, letting agents’ fees, income tax, and, not forgetting, stamp duty.

Talking of costs, one issue some Coventry landlords are facing is their failure to plan financially for the recent mortgage interest rate rises. Some Coventry landlords may have become complacent to the ultra-low Bank of England base rates we have had since 2008 and, therefore, may need to sell their rental property, which, if bought by a first-time buyer, will remove another property from the Private Rented Sector.

Another hurdle to jump is the proposed new regulations requiring better energy efficiency for rental properties. It is proposed all new tenancies must have at least a minimum of a ‘C’ rating for their EPC (Energy Performance Certificate) from 2025 (and 2028 for all existing tenancies).

Therefore, as a buy-to-let Coventry landlord, it is wise to do your research to make sure the buy-to-let opportunity is correct for your rental portfolio, particularly when it comes to weathering any impending financial storms.

Landlords need to consider the returns from their

Coventry buy-to-let investments.

Landlords can earn money from their buy-to-let investments in two ways. One is the property’s capital growth, and the other is the rental return (often expressed as a yield). In 96% of buy-to-let investments, there is an inverse relationship between capital growth and yield (i.e. properties that tend to go up in value quicker will have lower yields 96% of the time – and vice versa).

Getting the best balance of yield and capital growth depends on your current and future needs from your Coventry buy-to-let investment.

If you would like me to review your portfolio and ascertain if your existing portfolio will match your current and future needs for the investment – whether you are a client or not, feel free to drop me a line, and we can have a no-obligation chat and possibly organise a review.

What does all this mean for the Coventry rental market?

The continued shortage of Coventry rental properties means it will be more difficult than ever to find a Coventry property to rent, and so rents will continue to grow.

Unlike in Scotland, England and Wales do not have rent controls, with Westminster ruling out the possibility of introducing rent control here to deal with the cost-of-living crisis.

You would think rent controls would be a no-brainer, yet economists from around the world have proved for the last 75 years that rent controls might help tenants in the short term, yet ultimately it drives landlords to sell their investments in the long term, thus reducing the stock of available properties to rent out (not great for future tenants).

Therefore, it is highly likely that Coventry rents

will continue to rise for tenants.

Landlords who persevere with their Coventry buy-to-let properties or become a Coventry buy-to-let landlord are set to benefit because they have an asset in very high demand.

The housing shortage, not to mention the other issues discussed above that are affecting the supply of rental properties, is unlikely to be fixed anytime soon!

In conclusion, the Coventry rental market is a constantly changing picture. What is known is that the supply of rental properties is far from what is needed, which can only be to the benefit of buy-to-let investors rather than of tenants renting.

I see buy-to-let as a long-term investment. Everyone reading this knows that the real value in your buy-to-let investment is playing the long game, allowing your Coventry buy-to-let investment to grow over time. Like the crypto or stock market, getting sucked in by get-rich-quick schemes that are selling ‘apparent quick wins’ in property investment is very easy.

I regularly highlight the best buy-to-let deals for Coventry landlords with all the estate agents (not just my own). You don’t need to be a client of mine either to receive that information. Drop me a line or call (without any cost or obligation) if you are interested in making your first Coventry buy-to-let investment or considering adding to your existing Coventry portfolio.

Landlords – Are you ready for tighter regulation?

Just as you thought it was safe and the government couldn’t bring in any further red tape for Landlords, think again!

With ever increasing regulation, the burden on buy to let property investors seems to be never ending and increasingly arduous. Are you a Landlord worried by regulation and concerned whether your property will shape up in the coming months and years?

One major piece of legislation that looms on the horizon is the minimum EPC requirements for all privately rented residential property. Currently a property must have an Energy rating of A-E. However the government is proposing to change this to A-C by 2025. This would represent a major shift and leave a large proportion of the current rented stock and landlords out in the cold and unable to let their properties, in just 3 years time.

To put this requirement into perspective, some new build properties are only scoring a Grade C so if you have a Victorian or Edwardian property, the task of bringing this up to a C in order to comply with the regulations is considerable, and in many instances will be impossible or simply not viable.

There will be exemptions to the rules of course. Listed properties will not need to comply and if you can prove that the work is not ‘financially viable’ then you may also be exempt, but this will not be an easy thing to prove.

It is conceivable that government will back down on this between now and 2025, however this is a major part of their strategy towards net zero and without schemes like this working, they have little chance of meeting those goals, so it would seem that there may be some small concessions but tighter regulation is definitely coming and now is the time to start preparing if you are (or want to be) a landlord.

For further information on the current landlord responsibilities and future legislation speak to our Lettings Manager Carol, who will be delighted to assist.

Will a Heat Pump add value to your home?

The government will offer landlords and other homeowners grants of £5,000 from April next year to install heat pumps and other low carbon systems.

The first thing to say is that you’re not going to be forced to remove your gas boiler any time soon, or even in the future. Having just installed a brand new one at my own house just last year this came as a big relief following yesterdays announcement.

Heat Pumps aren’t a new technology, they have been around for many years, however uptake has been very slow due to the burdensome costs of installation. Ground source heat pumps are only practical if you have plenty of land on your property so most people would be looking at air source heat pumps. These typically look like a large air conditioning unit stuck on the side of the house, so again for practical reasons many people have discounted them, especially perhaps if they live in an apartment or a terraced property.

As uptake increases with the implementation of the grants over the next few years, home owners and buyers will become more familiar with this type of heating system, perhaps starting to see them as adding value to the property. Or perhaps not?

At present, the vast majority of homes in the UK either use gas boilers (or modern electric heaters to a much lesser extent) and this is what the majority of buyers expect to find and see value in. With the cost of an air source heat pump ranging up to around £18,000 compared to a gas boiler system at around £5,000 it will take a big shift in price and lots of encouragement from the government to make heat pumps main stream.

So for now, spending the £18,000 on a new Kitchen and Bathroom will add a lot more value to your home. Let’s hope as time goes by, costs come down and we can all work towards a carbon free housing stock and economy.

Landlords – Are you worries by void periods?

Lettings Are At An All-Time High!
No Landlord should be facing void periods at a time when the rental market is booming. Demand has stayed strong and showing no signs of slowing down.

As lockdown restrictions continue to ease demand for quality rental homes has increased and this is likely to continue in towns and cities such as Kenilworth, Warwick, Leamington Spa and Coventry as offices and amenities start to open up further.

With rental demand at such high levels and supply still low this is causing average rents to increase and the average time it takes a property to let has fallen.

Snapshot figures for our Lettings department from Summer 2021:
10 available properties for rent ranging from 1/2 bed apartments to 2/3/4 bedroom family homes
Average enquiries per available property 26
Average viewings 15
Average days void 3

If you have or are about to have a property that will be available for Let don’t delay. Contact us today and avoid those void periods. We specialise in quality rental properties across Warwickshire. Call 01926 298 298, 02476 010105 or 01789 549 549.

2021. Here we go again…

Happy New Year! And what a year 2021 is set to be. After the miserable annus horribilis of 2020 that many folks will be delighted to forget, the new year brings a fresh feel and invigorated spirit with feelings of joy and optimism for better things to come.

With hospitality able to start up again in the near future and people happily returning to work after months of misery, this will give a welcome boost to the economy and start to get everything back on track. It will also mobilise a large chunk of the workforce, when times are hard people follow the work trail and this will mean additional demand for housing in many areas either through purchase or rental.

Whilst 2020 was one to forget generally, the property market did receive a big boost because of the stamp duty holiday and although this (at time of writing) is still due to end after March, it has meant that property prices remained firm and confidence was retained. It’s still not inconceivable that the Chancellor will extend the SD holiday, he will want a healthy property market to bolster the economy generally. Extension or not the current trajectory of the market has already been set, add to that the stubborn shortage of homes nationally, increased demand due to workforce mobility, and ever-present record low borrowing rates, the outlook looks solid for the foreseeable future.

And with ‘Brexit Done’, whatever that means, business will have more certainty giving more job security and certainty for mortgage payers and renters alike. So in summary, the future looks bright!

If you need to move home this year or release equity in your investment portfolio, call our office for further advice about going on the market. Likewise if you have a rental property that is empty or coming up for renewal, our experts are on hand to help out. Call us today and get the ball rolling for 2021!

BUSINESS AS USUAL – YOUR SAFETY FIRST

July has seen record activity levels at our Warwickshire branches. The number of viewing requests, new valuations and properties coming onto the market is currently eye watering. Good news if you’re a buyer as there is going to be more choice with more properties available for sale. At the same time there also appears to be more buyers searching.

The Stamp Duty holiday announced 2 weeks ago certainly seems to have had a big impact and with the clock already ticking, many people have taken the decision to move home in 2020 and take advantage of the huge savings on offer from the Chancellor, Rishi Sunak. Purchasing a property at £500,000 prior to March 31st 2021 will save you a cool £15,000. Normally this money is simply deducted upon completion of purchase, you get nothing in return, not even a receipt! Wouldn’t you rather spend the money on a brand new luxury Kitchen or even a couple of dream family holidays?

If the answer is yes then give us a call today for further advice about selling your property. If you are located in Kenilworth, Leamington Spa, Warwick or surrounding villages then we are here to help and offer professional advice.

Of course your safety is paramount and all of external appointments are now conducted with face masks, gloves and proper social distancing. If you arrange an appointment to come into our office then rest assured there are screens at all of our desks to protect you and your family.

We look forward to working with you.

PENT UP DEMAND SEES HIGH LEVELS OF PROPERTY ACTIVITY

After several weeks of paralysis, the property market has returned with a bang. Activity levels have quickly reached those achieved during early March and the 2 preceding months.

Sales completions have begun again, those sellers that were unable to finalise their sales prior to the lockdown are now able to get moved, buyers who previously couldn’t get removals services can now do so again and solicitors who were furloughed during April and May are now back and getting the legals finalised on outstanding property transactions.

So it really does seem to be “Business As Usual”. The “doom-monger” media predictions seem to have got it wrong yet again. Their stories of a collapse are nowhere to be seen, the reality on the ground is strong buyer demand (pent up in many cases after weeks of inactivity) coupled with sellers keen to get moved. Mortgage rates remain at record lows and the sales agreed over the last couple of weeks reflect stable prices, the majority of sales agreed through Elizabeth Davenport have been for full asking price or even higher.

Safety measures remain paramount of course, if you wish to view a property that we are advertising there are now strict procedures in place at all physical viewings. All of our properties have “Video Viewings” available for you to watch online first, this has avoided many wasted viewings where the property perhaps wasn’t suitable for the prospective buyer, reducing potential risks to all concerned. If you are selling then this means only the most suitable buyers will be looking around your home.

If you do have a property to sell and want expert advice on the current market conditions then call our office and we will be delighted to assist on 01926 298 298.

Elections, Brexit & the Property Market

As election fever grips the nation, you may be wondering how the property market will be affected, either positively or negatively? House supply and demand don’t seem to be at the top of the political agenda, falling well below Brexit, the NHS and other big issues in the debate.

Directions to a polling station for a UK general election, European election or local election. — December 12th General Election.

However, here are some interesting policy proposals which would directly affect property owners and tenants alike depending upon the outcome of the December 12th vote. Labour are proposing a shake up of Council Tax which will see the property owner be liable, not the resident. So if you own an investment property you would be liable to pay the CT all year round, even when it’s tenanted. On the other hand, if you’re a tenant then you wouldn’t have to pay at all.

Labour also published a paper this year that hinted at removing private residence relief on Capital Gains Tax. If implemented, this would mean paying Capital Gains Tax when selling your primary residence. CGT would also be hiked up on second homes and investment properties, in line with income tax rates as a base line.

Meanwhile, whoever wins the election, a swift and decisive end to the Brexit impasse would certainly help the property market (and no doubt the economy as a whole), whilst most of our clients have decided to “get on with it” during 2019, the delays and dithering have put a small number of people off. In reality though, a high percentage of property sales are driven by necessity, people moving for work related or family reasons, people who are retiring or downsizing, as well as distressed sales and sales of estates. None of these sellers have the luxury of “choosing the perfect time” to move. End Result: a housing market that keeps moving forward. Overall, 2019 has been a good year and we expect 2020 to carry on in the same manner.

A majority government with a sensible approach coupled with a swift resolution on Brexit could be the beginning of something special….

THE KENILWORTH MARKET IS RUNNING WELL!

Brrrr it’s starting to feel like winter! As my daily alarm goes off its pitch-black outside, cold, wet and hardly the most inviting time to go out on a run. I’ve set myself a target of 4 miles a day, I thought this would be a realistic target to try and get myself back into running. Last year I ran two marathons and have had lots of niggling injuries since and a little loss of motivation. What a few weeks it has been for professional running though, seeing Eliud Kipchoge run a marathon in under two hours was just incredible and so inspirational! It’s certainly given me encouragement to get back out on the pavements again!

In Kenilworth over the last full month of October, the market indicators were very positive with the total number of homes sold above year on year data for the second month in a row. We have been very busy improving our offering with a great balance of modern and traditional marketing methods which have, without doubt, contributed to our recent success.

One of the things we are very excited about is the recent launch of our ‘5-step Strategy to Sell Your Home’. A proactive guide that has been designed to remove all obstacles that can get in the way of a successful sale. This will soon be available to download form our website with the aim of being a genuinely helpful guide to anyone marketing their home.

As the chosen agent for the Guild of Property Professionals for the Kenilworth Area, we have access to the London Property market via our associated office on Park Lane. This has proven invaluable particularly to the upper end of the market as we have an interactive window display in the heart of Mayfair!

We’re all really hoping for a great end to the year and if anyone out there has any questions or would like any help or advice be sure to get in touch at nick@elizabethdavenport.co.uk. For any keen runners out there, feel free to connect with me on Strava!

Nick Luntley MNAEA – Director Elizabeth Davenport.

Remember, Remember The SECOND of November!

What a fantastic time of year Autumn is; the Football and Rugby seasons are in full flow; the housing market is busy and yes Bonfire night looms on the horizon!

October has been a surprising busy month for property transactions in the Kenilworth Area, I for one predicted a slow down as the much-debated Brexit deadline came ever closer. In actual fact the opposite has happened. Although or data sample is by no means representative of the whole region, our data shows an annual increase in buying activity from last year. Could it be the case that people are ‘getting on with it’ and taking advantage of continued low interest rates and stable market conditions? Who knows but one thing is for certain it is becoming harder to predict which way the market will go next. Soon we will be into November, one of my favourite months of year mainly due to bonfire night!

We are very lucky in Kenilworth to have one of the best annual Bonfire Firework displays in the country. What a backdrop, the castle beautifully illuminated, the warmth from the bonfire drifting across the field! I have a huge personal affection for this special night, I have been a regular attender for almost thirty years! I was first taken by my grandparents as a toddler and I now help run the show in my thirties as part of Kenilworth Round Table. I have literally grown up with this magical community event. If anyone reading this hasn’t made that trip down Castle Road on a chilly November evening, I would strongly recommend it! The benefits of doing so are two-fold; being part of such a great community event is one thing but by doing so you are actively donating money that is put to excellent use. All of the money raised goes directly to local charities and worthy people living in the Kenilworth area.

Now I am involved with the organising I fully appreciate how lucky we are as a town to have such great local people who give up a huge amount of their spare time for free to help make this event truly special for children and adults alike. The display is held on Saturday 2^nd November with tickets available online and in a number of local businesses in the town.

If anyone reading this is attending be sure to say hello, I’m on the road closures around Castle Hill but I’m hoping to make it into the castle just in time for when the show starts!