After another tumultuous year in the property market, we thought it would be interesting to bring you the direct views of Nick Miller, Regional Director and the Managers of our Tucker Gardner offices in Cambridge, Great Shelford and Ely. With many years’ experience between them, they present a detailed insight into the lettings market.
Q: What demand are you seeing and what impact is this having?
Here at Tucker Gardner, we are seeing a picture that is probably being played out across many areas of the country. With property demand substantially outpacing supply, properties for tenants are limited. Consequently, many tenants are having to compromise, renting properties which may not tick all of their boxes. Interestingly, there are things that really seem to be necessities still – for example broadband speed seems to be one important factor that tenants are not willing to budge on, with many renters still working from home.
Rising concern regarding supply also means that many tenants are choosing properties based on watching a video tour alone, as a means to get that property first before someone else beats them to it. In fact, many applicants are offering rent in advance or offering over the advertised price in order to secure a property.
Q: Have you seen a change in rental prices?
As you might imagine, with such extreme inequality between supply and demand, rental prices have increased by around 10-12%, when compared to the previous year. We've seen our average monthly rents increase to £1,305 this year - more than £250 above the national average*.
Q: So, it seems that buy-to-let property could still be an investment opportunity. Any up and coming local areas suitable for investing in?
Over recent years we have seen, and we are continuing to see, a high volume of new build developments in both central Cambridge and many of the surrounding villages.
The demand in the rental market is driven by the high calibre work force that become tenants. Areas like Histon and Milton are easily accessible to work-places like the Science Park employing around 5,000 people. Also the nearby A14 provides a corridor to US Air force bases at Mildenhall and Lakenheath that again would ensure a favoured tenant.
More central Cambridge locations can draw on demand from staff at the world renowned Addenbrooke’s hospital and companies such as AstraZeneca. Employees from arm limited head for Cherry Hinton which also makes a suitable location for staff at the previously mentioned employers. The demand for more central accommodation is going to be boosted by the influence of staff at the soon to be occupied Apple headquarters on Station Road.
We have helped a lot of investors that have bought in the central and village areas to let their property quickly and easily, with our tenant marketing capability. There may be a lot of people looking to rent but being able to check, reference and make the right match for a property is a real skill in such a crowded tenant marketplace.
Q: Could you share an example of how you have helped a customer this year?
We work very closely with our investment buyers. Even before them viewing a potential investment property to purchase, we have given them advice on the anticipated rental yield and market conditions in that location. They can then make the best decision and receive the best return on their investment. We have then gone on to support them through the purchase of the property and successfully sourced a tenant for them in advance ensuring they have a tenant in occupation as close to sale completion as possible. This enables them to reduce the void period and receive the best rental return.
We also strive to ensure landlords are achieving up to date rent across their portfolio. The financial side of their investment is key, especially if the rental income is servicing loans and service charges.
As an example, we recently carried out a financial health check for a landlord across their portfolio of 11 properties. We looked at the current rents being achieved on their units and then reviewed what the monthly rents should be in-line with current market conditions.
Rent increases were implemented by way of a section 13 notice or in some cases, when the property became available for re-let. Across their portfolio the total monthly rent increases equated to over £2000 per month.
Q: What do you expect to see from the lettings market in 2023 and what can Tucker Gardner do to help?
In 2023 we can predict a higher uptake of applicants looking for newer properties or properties with better EPC ratings in order to keep bills manageable and sustainable within the current climate. Whilst less environmentally friendly or efficient properties (for example those that use oil or have low EPCs) will be less desirable. In addition to this, tenant applicants have shown a large interest in properties with bills included. In fact, Rightmove recently shared that ‘bills included’ was the number one requirement at the time of writing. In addition, as sale prices slow, we also predict an increase in rental supply, which could take the heat out of rental price growth and help tenants.
Q: What will Tucker Gardner be doing to help tenants and landlords alike as we head towards the new year?
At Tucker Gardner, we have changed our marketing style to reflect the current market. This involves having pre-qualified tenant applicant lists and using digital marketing to draw in more tenants. This will help not only find the right tenant for a property and ensure a property stays let, but also will provide both tenant and landlord with a long-term stable let. We also have our own mortgage advisors who can help landlords get the best rates and who understand market conditions to ensure that they can help landlords achieve a good yield. We also offer Rent & Legal Protection cover to give landlords peace of mind and financial security during the current economic climate.