The Pandemic & the Rentals Market

Zoopla has released its quarterly Rental Market Report which shows that following a fall in rents before the pandemic, in the wider commuter zones of some of the UK’s largest cities rents are increasing. This is due to a rise in demand from renters who are seeking homes with more inside and outside space in response to the restrictions we have faced over the last 14 months.

Since the market reopened last June, renters have been reprioritising their location and needs – with home working looking set to continue either full or part time for many, many people are seeking additional space to accommodate their ‘new normal’ with room for a home office. In addition, after being restricted to our homes and only able to socialise within the confines of our gardens for most of the last year, demand for outside space is at a premium – whether it’s a communal garden, balcony or roof terrace. Demand for rural properties close to green open spaces has also increased.

Small areas of demand and rental performance have been redefined across inner and outer cities with rents in well-connected commuter areas seeing the strongest growth and across the UK as a whole, and excluding London, rents are running at 2.3% which matches pre-Covid levels, with demand increasing 21% year-on-year.

Across the UK it is taking 30% less time to rent out houses and 2% less time to rent out flats as renters look for more space and as a result, many landlords are reducing their rents in order to attract tenants where there is less demand, although bucking the trend, demand in the City Centre and West End of Glasgow is seeing a stable level of demand.

According to Zoopla, the outlook for the rental market for the rest of 2021 depends upon how fast the rollout of the vaccine can reduce the impact of Covid. However, the ongoing reopening of offices, shops, leisure and entertainment venues is continuing (despite Glasgow staying in level 3) has meant that many businesses are starting to get back to some normality. Flexible working appears to be continuing into the summer months which is forcing a shift in priorities and this supports the market for larger 2/3 bedroom houses and flats.

Add to this the UK-wide lack of new investment in rented property by private landlords and the supply of rental properties is not rising, which in turn is supporting a general rise in rental prices.

Getting Your Rental Summer-Ready

Propertymark has released its guidance on how you can prepare your rental property for the summer lettings market.

It has been a challenging year for the property market with lockdowns, restrictions on movement and our ability to view or move into new homes. The residential and student lettings market is starting to get back to normal – with a significant easing of restrictions from Monday May 17th. As a result, a significant number of people are currently seeking a new home especially those who require more inside space to accommodate home working, and more outside space as overseas holidays are still out of reach for many.

If you are advertising to rent out your property in the spring and summer months, there are some steps you can take to make your property more appealing and to mitigate any danger of having to make repairs once your tenants have moved in.

Insurance

It’s essential that you have suitable insurance to protect your investment should anything happen. In Scotland in particular, we suffer from wet and damp weather that can take its toll on buildings. Check that your policy provides protection for any weather-related damage and find out if there are ways to reduce your premium such as more secure windows and locks, CCTV or a house alarm. You should also consider insurance against non-payment of rent as the economy still recovers from the pandemic.

Décor

Your best bet is to give your property a neutral décor so that they can envisage their belongings in your property and can picture themselves living in the space. Remove anything personal such as unique furniture, pictures on the wall, loud colours or patterned wallpaper. Keep the windows clean and use tie backs on curtains to maximise the natural light. Keep the décor simple, plain and tasteful so that they don’t feel they are living in someone else’s home.

Maintaining the garden

Over the last year tenants and homeowners have realised the importance of outside space as we were not only locked down in our homes but only allowed to socialise outside for a long period of time. This has led to a once-in-a-generation shift in priorities with tenants looking for homes with additional space to work from home and either a balcony or garden to enable them to enjoy the outdoors. These properties are high in demand can command higher rents. Now is the time to ensure your garden is well-maintained and that any gardening equipment is in good working order so that your tenants can continue with the upkeep. You could also consider elevating the garden space with nice furniture, lighting and a barbeque to make your property even more appealing to potential renters.

General maintenance

Falling leaves over the winter can cause a build-up of water in your guttering and over time cause water damage or broken gutters. Make sure they are cleared of all debris and ensure your property doesn’t have any cracks or holes in the facings or to avoid birds or squirrels nesting. Lastly make sure all of your utilities and any electrical items meet current regulations.

Tips for Novice Landlords

If you’re considering taking a step into the world of property investment, it’s important to understand what makes a sound investment. From finding the right property in the right location to calculating yields and finding a great letting agent, here’s what you need to consider:

Investment budget

When purchasing a buy-to-let property you’ll need a good deposit and a mortgage (unless buying outright without a mortgage). Buy-to-let mortgages are more expensive than residential mortgages with higher interest rates and arrangement fees, and you’ll need to put down at least 25% of the property value.

Before purchasing the property, talk to local agents to find out how much you can expect to rent the property for. Mortgage lenders typically request that the rent covers 125% to 145% of the mortgage repayments.

It’s also important that you have enough money for void periods and maintenance. Talk to a mortgage broker to work out what you can afford and to discuss the mortgage application process.

Rental yield

It’s essential that you buy a property in an area with strong growth potential as well as a healthy rental yield. The rental yield is the measure of return – or how much you’ll earn from your investment. It’s calculated as a percentage of the value of your property – and as a rule of thumb, you should achieve a yield of 5% or more. This will depend on where you buy, the type of property you invest in, and how much you can expect to rent out the property for.

A rental income of £10,000 per year on a property costing £200,000 gives you a 5% yield. A rental income of £20,000 a year on the same property gives you a 10% yield.

With property in Glasgow generally falling below the UK average, this means that your rental yield will typically be higher.

Investing in Glasgow property

Glasgow has the largest economy in Scotland and the fourth largest in the UK. Much of Glasgow’s shipyard areas have been regenerated including the SECC, SSE Hydro arena, Pacific Quay and the International Financial Services District with a large number of offices. It also has one of the largest student areas with 27,000 students at the University of Glasgow with the largest campus in the West End, the University of Strathclyde with 21,500 students and Glasgow Caledonian University with 16,500 students.

According to Hometrack, Glasgow is one of the cheapest cities in the UK to invest in property with a fast time to let and good rental yields especially in Glasgow’s West End where demand is consistently high.

The West End is one of the most popular areas in which to live – it’s ideal for young professionals due to its proximity to the city centre, with a large campus and plenty of great bars, restaurants and independent shops it’s extremely popular with students, and there are several good schools in the area along with some beautiful period properties making it a good location for growing families. With its unique character, beautiful architecture and green open spaces, demand for property here is extremely high. Byres Road is the centre of the West End and popular areas including Hillhead, Dowanhill, Kelvinside, Broomland, Anniesland, Yorkhill, Finnieston, Partick, Garnethill and Hyndland.

Yields for G11 and G12 postcodes are around 5%, while in G13 they are around 6%.

Property type

Consider who you want to rent your property to – students, families or young professionals – and what they will be looking for. For example, professionals will want to be close to transport links, students will want to be close to amenities and college campuses and families will be looking at school catchments. Make sure you talk to letting agents about whether the property is suitable for your target tenants.

Draw up a list of areas, take a look at area guides and the latest housing index, and current rental values.

Using an agent

A good letting agent will not only help you to set a realistic rental income, they will also advise on getting your property rental-ready and ensure you have all the documentation required. They will also advertise the property, vet potential tenants, draw up the rental agreements, handle the deposits and collect the rental payments each month.

Talk to us if you are considering property investment or would like advice on letting out your property in Glasgow.