The next five years will see an interesting change in the Rotherham property market.
My recent research has concluded that the rent private tenants pay here will rise faster than the property prices over the next five years. This will create further issues for Rotherham’s growing multitude of renters.
My examination of statistics forecasts that:
By 2022, Rotherham rents will increase by 22%,
whereas Rotherham property values will only grow by 16%.
Let me explain why I have come to those conclusions:
Over the last five years, property values in Rotherham have risen by 12.4%, whilst rents have only risen by 7.8%.
Throughout the last few years, and compounded in 2016, tenant demand for rental properties continued to go up. The press have predicted some landlords will reduce their portfolios in the next couple of years but this means Rotherham tenants will have fewer properties to choose from. The result is that rents will be pushed higher. In fact, talking to fellow property professionals in our town, there appears to be a shortage of new rental properties coming on to the Rotherham lettings market.
Landlords have some intriguing challenges ahead of them in the coming years most notably in that the Conservative government has changed the way landlords are to be taxed for buy-to-let properties. On top of that, there is the ban on letting agent fees which is still to come into force (probably in 2018). When that happened in Scotland in 2012, Scottish letting agents passed on those fees to their landlords, who in turn increased the rent they charged to their tenants.
All I would say to Theresa May and Philip Hammond is that they must be wary about indicating both red and green lights at the same time to the private rented sector.
They can’t expect the armies of small private landlords to continue to house around a fifth of the population and then tax the hell out of them. Something has to give – and that will be significant rent rises over the coming few years (and before anyone gives me any derogatory comments about landlords… if it wasn’t for landlords buying all these buy to let properties over the last 15 years, I am not sure where everyone would be living today – because most the council houses were sold off in the 1980s!)
With the challenges ahead, house price inflation will be tempered over the coming five years in Rotherham.
As I have discussed recently, the number of properties on the market in Rotherham remains close to the historic low, which is both good and bad – it keeps house prices relatively stable, yet it impedes choice for buyers.
As a result, I believe property values in Rotherham will only be 16% higher in five years time.
On the other side of the coin, with the challenges facing landlords and the significant shortage of new homes being built, Rotherham people still need somewhere to live. If those people aren’t buying houses and the local authority aren’t building council houses (because they have no money), the average rent will rise.
The current the average rent for a Rotherham rental property currently stands at £471 per month.
Over the next five years, I predict the average rent
in Rotherham will rise to £575 per month.
These are interesting times.
There is still money to be made in buy-to-let in Rotherham. Rotherham landlords will just need to be smarter and more savvy with their investments. To help, I’ve put together information on some of the best properties on the local market that could prove to be shrewd investments for buy-to-let landlords – check them out! I’ll be updating this regularly. In addition, free to follow me on Twitter and on Facebook for my latest insights and opinions. Finally, if you would like my personal advice please get in touch. I am always happy to help.