Residential property was never far from the headlines last year. But who were the winners and losers in the rented market? And with a major new national property portal launching AND a General Election coming, what lies ahead for 2015? Jamie Langley, MD of Red Key Properties gets out his crystal ball…
The media often like to portray landlords and tenants as being on opposite sides. Particularly when it comes to rising rents and the chronic shortage of housing stock in this country.
But here’s an interesting conundrum for you. Both landlords and tenants did pretty well in 2014 – at least here in Wales anyway.
The stats show that rents edged forward by the tiniest of margins during the year – helping to contain living costs for those renting properties.
At the same time, landlords still saw a net average return on their investment of 5% – tidy without being over the top – while capital values went up by some 7%. For anyone prudent enough to have put their savings into a buy-to-let property, that’s a total return of around 12%.
That knocked the socks off investing in the FTSE 100 for instance, which was barely into positive territory over the 12 months, and left traditional savings accounts way behind.
Not only that, any half decent, well marketed property offered for rent at a sensible price was snapped up in no time. The average time our properties spent between becoming available and being re-let was just a few days.
So what does 2015 hold for the rental market here in Wales?
Firstly, demand for rented accommodation will continue to outstrip available supply. That’s not just because getting a mortgage remains difficult for many (although that is certainly true). Or that the Help to Buy initiative has taken many potential new properties out of the equation (again, it has played a part).
The fact is that renting remains a popular and flexible option for many – and there is no sign that this is going to change in 2015.
Housing starts continue to grow – but still lag behind what the market needs to fulfil demand. At the same time, the economy is steadily, if tentatively, growing – so we see house prices – or capital growth – in high single digits over the next 12 months, although there may be a slight slowdown in the month or two before the Election. Most importantly, net returns here in Wales will almost certainly continue to easily outperform the expensive housing areas such as the South East.
But where we DO see a shift in the market is an increase in the numbers of “one off” landlords. The new regulations around flexible pension which cut in during 2015 should encourage many of those able to access their pension pots to invest in a buy-to-let property.
And there’s more one interesting development that will cause a flutter in the marketplace: the new property portal OnTheMarket.com, introduced to provide some competition to Zoopla and RightMove as well as reduce the costs to letting agents (costs which are then passed down to landlords and tenants).
Having a third major player in the sector wouldn’t – in itself – be an issue. Competition is usually good for customers. But because letting agencies will only be allowed to use two out of the three portals, it will mean anyone looking to find the perfect property for their needs won’t be able to rely on using just one portal any more but have to do a bit more digging.
Ideal? Not really. We’ve chosen to go with RightMove and OnTheMarket because we feel that will give us the “biggest bang for our buck”, along with most other local agencies. Will all three portals be there in 12 months’ time… now that’s a question for which I really don’t have an answer!
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