Back in the Spring, there was a surge in landlords buying buy-to-let property in Rotherham as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1st April 2016.
To give you an idea of the sort of numbers we are talking about, below are the property statistics for sales either side of the deadline in S60.
Jan 2016 – 27 properties
Feb 2016 – 53 properties
March 2016 – 67 properties
April 2016 – 44 properties
May 2016 – 42 properties
Source: Land Registry
Normally, the number of sales in the Spring months is very similar, irrespective of the month. However, as you can see, this year was a completely different picture as landlords moved their purchases forward to beat the stamp duty increase.
Usually, you would think that rents would be affected in a downwards direction.
However, there appears to be no apparent effect on the levels of rent being asked in Rotherham (and more importantly achieved).
This direction of rents is not likely to inverse any time soon
This is particularly due to legislation planned for 2017 that might reduce rental stock and push property values ever upward. The decline of buy-to-let mortgage interest tax relief will make some properties lossmaking, forcing landlords to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing rental stock at a time of severe property shortage.
It’s not all bad news for tenants.
Whilst average rents in Rotherham since 2005 have increased by 16.7%, inflation has been 38.5% over the same time frame. This means Rotherham tenants are 21.8% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets).
I found it particularly interesting looking at the rent rises over the last five years in Rotherham, as it was five years ago we started to see the very early green shoots of growth of the Rotherham economy. As a whole, since 2011, rents in Rotherham have risen by an average of 0.9% a year. This is fascinating!
The view I am trying to portray is that while renting is often seen as the unfavorable alternative to home ownership, many young Rotherham professionals like renting as it gives them adaptability with their life.
Rents will continue to rise which is good news for landlords as buy-to-let is an investment but, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents in the past. It’s a win-win situation for everyone. Although on a very personal note, it’s imperative in the future that tenants are not thwarted from saving for a deposit by excessive rental hikes – there has to be a balance.
Rotherham landlords, property owners and those looking to get on the property ladder, please get in touch. For more thoughts and opinions on the Rotherham property market, please visit my Twitter and Facebook pages! Leave me a message and join in the conversation about the future of the Rotherham’s property market.