The latest Propertymark Housing Insight Report suggests that tenant demand is on the rise again, with supply of property unable to keep up.
Reside’s local experts Chris & Lisa visit a thriving marketplace housed inside an historic building, right in the heart of Bath city centre.
Tucked away on the southern outskirts of the city centre, Bath City Farm is a wonderful, thriving community hub. Join the Bath’s Best Bits team to find out more…
or ‘how to avoid a rental property shortage again in 2023’.
In 2022, the shortage of rental properties simply couldn’t satisfy tenant demand, driving up rents to unprecedented levels. How can we avoid this happening again in 2023? Here are 3 good places to start…
As a proudly independent Bath business, we know the importance of supporting and investing in our local community – especially during such difficult times.
This is why we have a company tradition of donating a percentage of our annual profits to charitable causes in the Bath area.
Every year, the Reside team researches and discusses local charities, before deciding which to support. We are delighted to confirm that the team has chosen Off The Record and Bath City Farm as this year’s charities.
Reside has previously supported Off The Record, whose brilliant work improves the emotional health and wellbeing of young people in Bath and North East Somerset. We have always been struck by the energy and dynamism of their team, and the Reside staff unanimously voted to continue our support of their hard work.
“Reside Bath have been strong supporters of our work with young people in B&NES over the years and I am delighted that you have chosen to support us again. Your donation will help us to improve the mental health and emotional wellbeing of more young people through our community listening support services in Bath, Radstock and Keynsham.”
James Brown, Off The Record
Bath City Farm has been a feature of the city’s community for more than two decades, offering 37 acres of farmland with a café, adventure playground, amphitheater and allotments. They work with people living with poor mental health, learning disabilities and other complex needs, offering therapeutic wellbeing sessions and helping children to get closer to nature.
“My sincerest thanks on behalf of everyone at Bath City Farm. I’m so glad to hear that your staff know about us and support the work that we do, and that many access the site with their families. This means so much to us to know that there is support from within the business community. This donation has come at a very welcome time and will make a big difference.”
Brendan Wistreich, Bath City Farm
We are delighted to support these two charities who give so much to our local community, and wish them every success for 2023.
The final episode in our ‘Masonic Trilogy’. First it was The Circus… then the Royal Crescent… and now Queen Square!
We are looking for a motivated, approachable and conscientious Tenancy Manager to lead our busy property management team, overseeing our managed property portfolio. This is a varied and rewarding role, with support for professional development by obtaining an industry qualification.
In this role, you will:
Requirements:
Benefits:
Being a Bath landlord is undoubtedly a challenge. The glory years of making money from ‘any old property’ are certainly in the past. With increased legislation and taxation from Government and the cost-of-living crisis (which will result in some Bath tenants struggling to pay their rent), times are challenging for many landlords.
Then newspapers are full of stories of landlords being pushed into the red as mortgage rates continue to rise. A landlord last summer could have fixed their 5-year buy-to-let rate with a 25% deposit at 1.86%, whilst today the best 5-year deal is with Barclays at 4.36%. This increase will add more than £246 per month to the landlord’s mortgage bill for the average UK buy-to-let property.
Next, the press is reporting in Q2 2022 (when compared to Q2 2021), landlord possession claims for arrears increased from 6,997 to 18,201 properties (a rise of 160%), property orders from 5,431 to 14,319 (an increase of 164%), warrants from 3,786 to 7,728 (a rise of 104%) and landlord repossessions from 1,582 to 4,900 (a rise of 210%).
This is on the back of the Section 24 tax changes made a few years ago and ahead of expensive energy efficiency upgrades that the Government is expected to legislate for in the coming 12 months.
Doesn’t sound good for landlords.
Until you look past the headlines and look at the actual detail.
79.93% of UK buy-to-let (BTL) mortgages are interest-only mortgages (compared to 12.29% of homebuyers), meaning the repayments are considerably lower than typical homebuyer mortgages. Therefore, the rise in interest rates won’t hit landlords’ profitability as much as many thought initially.
93.21% of all new BTL mortgages agreed in the last two years have been on a fixed rate mortgage, and 73.27% of all existing BTL mortgages are on a fixed rate. So, the increase in mortgage payments will only affect one in four landlords on variable-rate mortgages.
Let us not forget that less than one in three landlords have a BTL mortgage, meaning two out of three landlords aren’t affected by these interest rate rises.
Those possession orders mentioned above look high until you realise that there are 4.4 million properties in the private rented sector. That means only 2.04% of UK rental properties had arrears bad enough for landlords (or agents) to start possession proceedings to evict the tenant. Also, only 0.045% of tenants were evicted through the courts in a calendar year.
Talking of arrears, recent studies using statistics from the Government and other letting industry sources show that …
Next, the potential cost of upgrading rental properties’ energy efficiency.
The proposed changes in the MEES regulations require a minimum energy efficiency (measured by its Energy Performance Certificate (EPC)) to a ‘C’ rating on new tenancies from 2025 and existing tenancies by 2028. That will cost, on average, £10,000+ per property.
Yet it cannot be forgotten when the rules changed in 2018 properties had to have a minimum EPC rating of E in England and Wales to be legally compliant. If a landlord of an ‘F’ or ‘G’ rated rental property could prove that it would cost more than £3,500 to make those improvements to their EPC rating, then that was the most the landlord had to pay. No doubt something similar will take place in the future proposed legislation.
Then there is the profitability of renting. Rental yields are the primary guide to profitability in buy-to-let.
The average yields being achieved in Bath today are …
Yet investing in buy-to-let isn’t just about the yield.
Demand from tenants plays a massive part in the success or failure of your buy-to-let investment, so other yardsticks, such as void periods, should be considered. There is no point in securing a higher-yielding rental property if that buy-to-let investment remains empty.
My research has found that the Bath overall void period average so far is 41.4% lower than 18 months ago, reducing from 29 days in April 2021 to 17 days in September 2022 (the void period being the time it takes from the date of an old tenant moving out until the new tenant moves in).
Finally, buy-to-let investment is also an excellent hedge against inflation compared to other investments. If you would like more information on that, drop me a line, as it’s too long to post here.
The next few years will be challenging for everyone. Still, with the advice and opinion of a decent Bath letting agent to guide and support you on your buy-to-let journey, buy-to-let will continue to be a profitable investment.
You need to review your rental portfolio regularly. See how your portfolio measures up against yield vs capital growth see-saw. Review your mortgage financing and EPC status of your portfolio.
If you would like a no-obligation chat with me to discuss your options as a new potential landlord or an existing landlord with a rental portfolio, then let’s talk.
