Landlords Need to Adapt to Changing Market

Rental markets across the country have experienced something of a boom in recent years, but the tides are changing...

Rental markets across the country have experienced something of a boom in recent years, but the tides are changing and landlords need to adapt. Townends estate agents claim the rental sector is currently going through a period of stability, despite regional variations and fluctuations. Rents are falling to more sustainable levels, but tightening of the market and price adjustments are making it difficult for landlords to justify re-investing.

Yields are also going through a tough time, as access to finance causes market changes. Rental prices fluctuate as demand levels alter, which can impact on yields. However, the number of tenants applying for properties hasn't waned, showing demand remains broadly strong.

Caroline Kavanagh, managing director of Townends Lettings and Management, said: "Landlords have had to be more realistic in the last few months and adjust their expectations and prices accordingly in order to maintain their competitive edge." Currently, tenants will dismiss properties and wait until they see a deal that gives them the best value for money. However, landlords aren't always in the position to give them the deal they seek. What's more, many are unable to make improvements to properties while rents aren't rising.

"To attract the best calibre of tenants and avoid a void period, landlords need to be reviewing their properties objectively to ensure that what they are providing warrants the asking price," Ms Kavanagh said, ensuring landlords that even small improvements can make a difference. This will increase the letability of properties and can help to keep tenants longer. "Shrewd landlords" should recognise this in their business model and are more likely to be sustainable over the long-term.

However, landlords' income is still well above what was being achieved two years ago and anything above a four per cent yield will offer a good rate of return. Depending on market conditions, yields of six per cent can be achieved in some areas. It is certainly a good time to be in the buy-to-let market and with housing supply well below demand levels, this doesn't look set to change.

- Friday 23 August 2013

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