Thu 19 Dec 2019
Looking Back at Our 2019 Lettings Market Predictions
by naomi fiddes-baron
by naomi fiddes-baron
In January 2019, our Oulsnam Letting team made their top 5 predictions for what would happen in the rental market throughout the year. As we come to the end of 2019, we reflect back on whether our team were right!
A New Focus on Lettings
We predicted that with a government focus on keeping estate agency standards high, more agents would put increased focus on their lettings arm of the business.
Well, we’ve definitely seen a lot of changes in government legislation aimed towards improving tenant rights, standards and reducing their costs. Therefore, there’s been a lot of focus within the industry to keep up to date with changes which has absolutely meant that letting agents have had to keep up with improved standards and really ensure their lettings operation is at the top of their game.
More People Will Rent Property
We suspected that a lot of people would be more hesitant to make a house purchase decision until Brexit had reached a conclusion. As these discussions have been more drawn out than we anticipated at the beginning of the year, we have definitely experienced an increase in people choosing to rent for longer, whilst Brexit is reaching a conclusion. This Summer saw one of our busiest periods to date, and this was reflected across the country.
With the introduction of the tenant fee ban in June, we thought that combined with overall higher demand for rental properties, monthly rental costs could increase. Figures from the Office of National Statistics, indicated that rents in the private rented sector in the UK, increased by 1.3% in the 12 months to May 2019 which was an increase of 1.2% in the previous month. We haven’t seen a dramatic increase, but overall perhaps it’s fair to say that rent rates have gone up.
Smaller Agencies Could be at Risk
With legislative changes that included the tenant fee ban, we thought that smaller letting agencies that deal with one-off, let-only services may have struggled in 2019. It’s probably fair to say that letting agents operating at the less than optimum standards that relied heavily on overly inflated tenant costs have paid the price. The rest of the letting agents that operated with fairly proportionate fee costs have been able to adjust their business plans to accommodate these changes. Therefore, we’re left in a stronger position where the agents that continue to thrive are operating at a high customer satisfaction level.
Landlords will Increase their Portfolio
We thought that with house sellers offering their properties for sale at lower prices due to Brexit, landlords would capitalise on this and increase their rental portfolio. Whilst this may be the case for some landlords with an already significant property portfolio, we think the government legislation concerning tax implications for landlords has possibly put off some people thinking of investing.
Our Oulsnam Outlook
Overall, the lettings market remained buoyant in 2019 and there’s no reason to think that 2020 will be any different. There is a potential shift towards long term rental trends, with more people choosing long term rental as a first option rather than looking to purchase a house. This is largely fuelled by an increase in 25-35-year olds spending their money on experiences and travel before looking to fund a house deposit slightly later than a few years ago. We think that 2020 will share some of the successes of 2019, but of course the political climate will undoubtedly have some impact on the market as a whole.