I’ve been looking this week at the rental market, especially rent levels, following a surge in tenant enquiries after the latest ‘unlocking’ of the Government’s roadmap out of the pandemic.
We were listing an average of 1.07 tenants on our books in February. That rose to 1.80 per day in March, 1.96 in April and in the past week we’ve been averaging 2.83 tenants per day. This is a sudden rise in tenant enquiries, without there being an equal increase in available stock.
Lettings remain positive, with 49 properties let through my office in past 3 months. We’ve already let another 4 in the first 6 days of May, showing a 22% acceleration in the number of properties let.
Rental values have seen increases across most property types although with some upgrading to the properties our clients are seeing extra-ordinary returns. A flat on Otley Road let for £850 pcm which was an increase of £85 pcm on the previous letting. This followed an £8,000 refurbishment programme, the capital spent returning nearly 13%.
A comprehensive refurbishment of a semi detached bungalow in Leeds 17 saw the rent hit what we believe to be an ‘all time record’ for one of these properties. We achieved £1,100 pcm, with similar bungalows with basic fittings letting for around £850 pcm. The estimated £20,000 refurb’ will show a return of around 15%.
A flat we have managed for sometime in Gledhow Hall, between Chapel Allerton and Roundhay, has just let for £120 pcm more than the previous tenant was paying. We had not pushed for rent increases during the pandemic, but this represents a 17.7% increase, substantially ahead of the national average of just over 3%. We believe this increase has been stimulated by tenants moving out of the city centre into the leafy suburbs.
According to the latest figures from home.co.uk there are currently 4,869 properties for rent in Leeds, 610 having been listed in the past 14 days.
The average rent in Leeds is currently £1,096 pcm, with the majority of the properties (1,905) in the £500 to £1,000 pcm bracket. These are mainly (1,027) two bedroomed properties with an average rent of £857 pcm, followed closely by the one bedroom market where rents are averaging £672 pcm. The average rent for a flat is £890 pcm and for a house £1,354 pcm, although these figures are skewed by some very high-end properties, with the median rents respectively at £775 pcm and £1,170 pcm.
There has been a significant shift in tenant demand in the past 12 months, towards properties with more space/floor area, especially a spare room for home working, and access to green space or outdoor areas. We are seeing many tenants currently renting one bedroom flats, now seeking two bedrooms. Couples in two bed properties now want a spare room or a basement, ideally with a garden. We’ve not yet seen a negative impact on the rent levels of the smaller properties or those without outdoor space. Whether this will follow remains to be seen, although with an overall shortage of housing for the population I suspect we’re not likely to see rent levels diminish anytime soon.
The market appears to be prepared to pay for properties in good condition with quality fixtures and finishes. Investing in your buy-to-let will generate returns significantly in excess of any interest rate you can generate in a bank or building society, and with refurbishment costs being tax deductible, the real return is considerably higher than the basic rent v. capital spent.
If you have a buy-to-let that isn’t generating the returns you’d hoped for, or you’re unsure about what to invest in when next refurbishing your buy-to-let, contact myself or Angie Wright. We’d be glad to help.
– A Newsletter Editorial by Director Michael Moore FNAEA, MARLA.