With Easter just gone and considering we are a quarter of the way through 2015, I was talking to landlord from Wootton the other day about what is happening to the level of rents that are being achieved in the Northampton property market.
In terms of rents in Northampton, it appears that rents being achieved for new rentals (i.e. when the tenant moves out and new tenant moves in) have risen in the order of 3% in the last 12 months on top of the range modern properties, yet remained static for older Victorian terraced houses and converted apartments. However, landlords with existing sitting tenants, irrespective of age are not increasing their rents, as most landlords prefer to keep their existing tenant paying the same rent and have the peace of mind that their tenant remains, paying the rent (thus reducing the risk of a void period).
It must be remembered rents dropped by 7.7% over 2008/9, due to oversupply in the rental market, as a lot of the people who couldn’t sell their properties when the Credit Crunch hit in 2008, decided to let their house out instead of selling at a loss. In fact, the number of houses on the market in Northampton dropped by 55.2% between October 2007 and April 2010, a lot of which came on to the rental market in Northampton. However, looking at the longer term though, tenants have had it good because since the turn of the Millennium, average wages have grown by 46%, but rents outside London have only grown by 36% rental growth over this period.
I told the landlord that there is a lack of new rental properties in Northampton coming on the market, in fact according to the Office of National Statistics, there are only 65 new rental properties are coming to the market each month in Northampton but the population of Northampton is rising by 146 people a month – something will have to give soon! This is compounded by the fact a number of landlords are looking to sell their rental properties in the coming months, as the property market in Northampton has improved. This further compounded as tenants in existing rental properties appear to be staying in properties for longer periods of time.
Looking at the rents charged in Northampton, historic evidence in the UK suggests private market rents have moved in line with general inflation. Government figures only go back as far as the year 2000, but looking at other countries with similar housing markets (America, Australia, Ireland and Holland) the fact is rents paid by tenants tend to rise in line or just ahead of inflation.
As short term wage growth in Northampton has eased off recently, rising by only 1.3% in the last 12 months, taking average salaries in Northampton to £26,509pa, with the tax breaks announced by The Chancellor in the Budget, I believe, even though rents have kept pace with inflation in the past, renting as an option has become more affordable, and is increasingly seen as a lifestyle choice. With returning economic growth and expected increases in the rate of growth of wages, above inflation rental growth could rise.
If you want a chat about the local Northampton property market, pop in for a coffee or email me on Northampton@northwooduk.com