A buoyant property market has seen a resurgence in activity in the private rented sector – with its total value reaching an all-time high.
But there are still areas where landlords might want to pay particular attention if they are to maximise the potential for earnings – especially when it comes to the pet-friendliness of their let properties and some of the hidden costs of becoming a landlord.
Let’s take a brief peek behind the latest property news headlines.
Demand for pet-friendly homes soars by 120% amid pandemic puppy boom
Stealing a prominent spot on tenants’ wish lists post-pandemic is the ability to keep a pet in their rented accommodation, according to a story in London’s Evening Standard newspaper last week.
Citing statistics gathered by the Pet Food Manufacturers' Association (PFMA), the BBC recently reported that an estimated 3.2 million households in the UK had acquired a pet at some point during the recent lockdowns. A story in the Guardian newspaper on the 12th of July revealed that nearly half (42%) of those owners now also expected to be able to bring their pets into work with them.
Against that background, it might be hardly surprising that the number of prospective tenants in the private rented sector who put the pet-friendliness of their landlord at the top of their list has grown by 120% since this time last year.
For the sake of comparison, the next three most important features on tenants’ wish lists were: a balcony, parking, and a garden – which have grown 70%, 48%, and 39% respectively in importance since July 2020.
New landlords beware - hidden charges trap the inexperienced
If you’ve spent any part of the recent lockdowns dreaming of the earnings you could make as a buy to let landlord, an article in Landlord Today on the 26th of August might provide a much-needed note of caution and realism.
The story warns any prospective new landlord – and reminds those who are already in the business – that any earning from the rents received must also be balanced against several major costs:
- probably the most important of these, of course, is the monthly mortgage repayment – with buy to let mortgages typically granted at between 125% and 145% of rental income (according to L & C Mortgages), that means monthly mortgage repayments will account for between 80% and 69% of rental income;
- another major expense comes from the need to maintain and repair the let property – costs which clearly vary from one property to another;
- in addition to those obvious ongoing expenses, Landlord Today reminds would-be landlords that they will also need to pay around £35 to £90 for the annual gas safety inspection and certificate required for all let property;
- a further £200 for the electrical safety inspection and certificate that is required every 5 years;
- from £60 to £120 to inscribe the property on the Energy Performance Certificate register;
- the cost of the local authority licence required for many landlords of Houses in Multiple Occupation (HMOs); and
- the landlord insurance that any prudent landlord will arrange to safeguard the building, its contents, and business liabilities.
To these costs, of course, must be added the time and energy expended by any landlord in the management of let property – costs which are likely to be impossible to calculate.
UK house sales tumble in July after stamp duty holiday deadline
The phasing out of the Stamp Duty tax break on the 30th of June heralded a marked slump in the volume of house sales during July, reported the Guardian newspaper on the 24th of August.
Whereas June saw a record number of 213,370 house sales, that volume was cut back to just 82,110 in July – a reduction of some 62%.
A final flurry of rising prices may be expected in the housing market shortly before the end of September, when the final phase of the Stamp Duty tax holiday comes to an end – and when the zero-rated band of duty returns to the standard allowance of just £125,000 (instead of the £250,000 in place between the 1st of July and the 30th of September).
Private rented sector grows to £1.4trn
Great fanfare has recently been given in the media to the surge in house prices following the easing of pandemic restrictions and thanks to the encouragement given by the tax holiday on Stamp Duty.
Less has been made of the corresponding increase in value of the private rented sector – which a story in Property Wire on the 26th of August has now revealed to have increased by an estimated 5.8% to a grand total of £1.4 trillion for all let properties in England, Wales, and Scotland.
Demand remains high among tenants in search of rented accommodation – 42% of landlords are reporting more enquiries than at this time last year.
This is all even though rising property prices also encouraged some landlords to sell up and leave the buy to let market, the size of which has diminished in absolute numbers.
