For years, homeowners have come to expect that their property value will increase. But headlines predicting a housing slump are backed by figures that show a sustained slow-down of activity in the housing market and a dip in the rate of growth for house prices too. Could this also have a knock-on effect for rental prices? And what is a ‘fair rent’ for the average property?
Is the housing market really slowing down?
While the long feared property market crash actually hasn’t happened (and may just be the paranoid reporting of a nervous, post-Brexit market), house prices have in fact steadied, after a period of fire-sale style cost cutting. In November, property website Rightmove reported that more than a third of UK sellers have cut their asking price, the highest levels reported since 2012. In June 2017, official data from the Land Registry showed that the national annual growth in house prices was 5.6%, down from 8% the year before. And in London the picture was even cooler, with average price increases of just 2.5%.
And it’s not just prices that are showing signs of stalling. The Royal Institute of Chartered Surveyors (RICS) says overall activity in the property market is remaining stagnant.
There are a number of issues being held to blame. These include:
- Political uncertainty with Brexit looming large. This continues to make investors feel unsteady
- Low stock numbers – there simply aren’t enough houses and that’s the single point that could really affect the rental market over the next five years.
What knock-on effect could all have this have for landlords and their tenants?
House price rises (or falls) are naturally of key interest to buy-to-let investors. Landlords have recently been hit by other changes too, like the amendment to buy-to-let tax relief. Its introduction has resulted in some landlords selling their rental properties, and the number of new buy-to-let purchases has plummeted by nearly 50%.
That’s bad news for tenants, especially in high-price areas like London, who are faced with an increasing shortage of affordable property to rent. But the good news, for tenants at least, is that the reduction in supply is not yet causing rental prices to spiral out of control.
RICS predicts that while demand will still see rental prices increase in 2018, it will be only a modest rise of 2%. That’s because while there may be fewer rental properties out there, demand is not increasing. In fact, in seven out of 11 regions of England and Wales, rental demand has decreased in the last three months of 2017.
Legal solutions to help manage your buy to let property profitably
While you may have no control over the impact of the house buying market on your rentals, landlords can take a firmer grip over other aspects that can affect their income by seeking professional legal advice on:
- Tenancy agreement and guarantees
- Ensuring that any assured shorthold tenancy agreement is accurate and, if necessary, enforceable with the support of the courts
- Legal and justified evictions, whether for rental arrears or other reasons
- How to deal with Rent Act protected tenants (also known as ‘sitting tenants’)
- How to recoup rent arrears and money for property damage
- Assisting with boundary disputes or problem neighbours
- Challenging excessive service charges on leasehold properties
Legal support for tenants
If you’re a tenant, there are lots of places where you can seek legal help with housing issues like unfair rent increases or to ensure you have a more secure tenancy agreement. However, you may decide to seek the advice of a specialist solicitor. As tenant issues require specialist legal knowledge, it’s advisable to look for a law firm with a specialist housing law department.
Using a solicitor to negotiate a fair rent or reduced rent period, for example while work is being carried out, can quickly cover the cost of legal fees.
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