All the facts and figures on the rental market in Bath & beyond from August 2023, including a mortgage update from Doug Miller of Lansdown Financial Services.
The private rented sector for both Bath landlords and Bath tenants is facing immense challenges, with a shortage of available homes for rent putting renters under significant pressure.
And you can see why when the average UK rent in 2021 was £1,381 and in 2023 it has been £1,706, an increase of 23.53%.
Let’s look closer to home in the Bath area.
You can understand why people are accusing landlords of “widespread profiteering”.
But as always, the devil is in the detail.
A new tenancy is when a brand-new tenant moves into a home, whilst a renewal is when an existing tenant renews the lease with their existing landlord.
Government data shows that most landlords are not exploiting the mortgage crisis, with 64% of landlords maintaining and 4% decreasing rents to shield renters from the impact on renewal of their tenancy agreement, dispelling the notion that they are exploiting the situation.
Looking at the same Government data, of the landlords setting rents for new tenants, just under half of landlords (45%) stated they increased the rent compared to the previous tenancy with the old tenant, whereas a third (35%) kept the rent they charged at the same level, and surprisingly 1 in 12 (8%) decreased the rent.
And 4.6% is much lower than the rate of inflation.
Contrary to popular belief, landlords’ profit margins have significantly dwindled in recent years. The profits for private landlords are at their lowest since the Credit Crunch due to rising mortgage rates and limited tax relief. This demonstrates that private landlords are not profiteering during the cost-of-living crisis.
Now some of you will say, Bath house prices have risen in that time. Yes, that is the case, yet not by the rate of inflation, so in fact in ‘real’ terms, their investments have gone down in value.
Landlords face growing costs, including increased mortgage payments and the negative impact of a tax system that discourages investment in the rental market. These challenges are further exacerbated by ongoing uncertainty surrounding reforms to the law regarding landlords.
With limited options available, landlords must choose between leaving the private rented sector, increasing rents as a last resort, or absorbing mounting costs. However, the latter is nearly impossible for most individual landlords who lack deep pockets. To address these challenges, the Government must provide crucial support to the rental market.
To alleviate the burden on renters, the Government should reconsider current taxes which are designed to discourage landlords from providing more rental homes. It is vital to ensure that the supply of rental properties does not further diminish, as Bath tenants simply cannot bear the consequences of a dwindling market and it will lead to further housing hardship.
Housing is such an important thing (rather like the NHS), and I would urge all parties, to move beyond rhetoric and take positive action to support the private rented sector.
By fostering an environment that encourages investment and providing support to renters, the Government can help alleviate the strain on both landlords and tenants and ensure a sustainable and fair rental market for all.
All the facts and figures on the rental market in Bath & beyond from June 2023, including some really interesting information about the differing performances of houses and flat on the market.
Bath landlords came together for an evening of insightful discussions and valuable takeaways at the Bath Landlord Conference held on 26 July 2023, at The Francis Hotel. The event, attended by around 50 enthusiastic landlords, proved to be an engaging platform for industry experts to share their knowledge and expertise.
Toby Martin, the director of Reside Bath and West Country Regional Executive for ARLA Propertymark, hosted the evening and shed light on the intricacies of the local rental market, particularly focusing on the imbalance between property supply and tenant demand.
Michael Tatters, a Partner at Thrings Solicitors, captivated the audience with an in-depth exploration of the Renters Reform Bill and its impending impact on landlords. Attendees were given ample opportunity to raise questions and discuss their concerns, ensuring they were well-prepared for the legislative changes ahead.
Adding a dash of practicality to the conference, Ben Stokes and Michael Skeath from Elite Consultancy Group delivered an engaging presentation on landlord compliance. Their valuable tips and tricks provided landlords with actionable steps to fulfill their legal obligations, steering clear of fines and penalties. Their presentation sparked interactive discussions and left landlords equipped with tools to enhance their compliance efforts.
Attendees actively participated in spirited discussions and posed thoughtful questions to the expert panel, all of which were met with insightful responses.
“We’re thrilled to witness such enthusiasm and engagement from the local landlord community,” said Toby Martin, reflecting on the event. “Our aim is to provide a supportive space for landlords to learn, connect, and stay ahead in the ever-changing private rental landscape.”
Plans for the next Bath Landlord Conference later in the year are already underway. Stay tuned for updates on the next Bath Landlord Conference by visiting www.bathlandlordforum.co.uk.
All the facts and figures on the rental market in Bath & beyond from May 2023, including a close look at how long it takes to let a property and what that tells us about the current market.
Reside’s local experts Chris & Lisa visit one of the city’s most recognisable Georgian terraces.
The Bath Landlord Forum hosted a successful event at The Francis Hotel, Bath on 15 March 2023, which focused on energy efficiency considerations in rental properties. The event was hosted by Reside’s Toby Martin and featured guest speakers who provided valuable insights on this important topic.
The event was attended by a large number of local landlords, property managers, and industry experts, who were keen to learn more about the latest developments in energy efficiency and how they could apply them in their own rental properties.
Toby Martin started off the event by giving a lettings legislation update. He summarised a range of recent and upcoming regulations, including the importance of complying with regulations related to energy efficiency.
Olly Meyer, a domestic energy assessor from Meyer Energy, was the next speaker. He spoke about how Energy Performance Certificates (EPCs) are recorded and what constitutes a good or bad EPC. Olly explained that EPCs are a legal requirement for landlords and that they need to be renewed every ten years. He also highlighted some of the factors that can impact the rating of an EPC, such as the age of the property, the type of insulation, and the heating system.
Sonia Pruzinsky from the Centre for Sustainable Energy was the final speaker. She explained the funding options that are available for landlords looking to improve the energy efficiency of their properties. Sonia discussed the different schemes that landlords can take advantage of, such as the Energy Company Obligation (ECO) and Home Upgrade Scheme. She also highlighted the importance of taking a holistic approach to energy efficiency and encouraged landlords to think about ways to reduce energy usage beyond just making physical upgrades to their properties.
The event was highly informative and provided valuable insights into the latest developments in energy efficiency for rental properties. Attendees also had the opportunity to network with other landlords and share best practices.
“We were delighted with the turnout for this event and the engagement of our speakers and attendees,” commented Toby Martin. “Energy efficiency is an important issue for landlords, and we hope that this event has helped landlords to better understand how to deal with the government’s proposed regulations.”
The Bath Landlord Forum plans to host more events on important topics related to the rental property industry in the future. For more information about the Bath Landlord Forum and future events, please visit their website at www.bathlandlordforum.co.uk.
The latest Propertymark Housing Insight Report suggests that tenant demand is on the rise again, with supply of property unable to keep up.
Over the last five years, life has become a little trickier for Bath landlords, with changes to their taxation status, mortgage interest relief and an additional 3% stamp duty for a buy-to-let property and has made lots of Bath landlords ask themselves:
Regarding taxation, in 2016, the Government added a 3% supplement in stamp duty on all buy-to-let properties. Then, in 2017, the Government started to reduce mortgage interest by stopping landlords from deducting the interest they paid on their mortgage before paying tax on the rental profits and replacing it with a flat rate tax credit based on 20% of the interest they spent on their mortgage.
There would be no effect if a Bath landlord were a basic rate 20% taxpayer. Yet Bath landlords who were higher-rate (40%) or top-rate taxpayers (45%) saw an effect as their tax relief was cut in half.
The response to this question is much more significant than the issue of taxation.
To a large degree, as with all investments, it depends on why you are investing and what your final objective is. Let me expand.
You can earn money two ways with buy-to-let.
The first is the rental income from the property.
This rent is expressed as a yield and is described as a percentage figure that’s calculated using the annual rental income and dividing it by the value of the buy-to-let property.
Landlords and buy-to-let investors use rental yield to judge and measure the value of their rental investments and portfolios. E.g., rent is £1,000 per calendar month (pcm), which means the annual rent is 12 x £1,000 = £12,000. If the property is worth £180,000, the rental yield is £12,000 divided by £180,000, which, when expressed as a yield percentage, is 6.67%.
Some areas in Bath can achieve a 5.5% to 7% yield, sometimes even more, depending on your choice of property and type of tenancy you wish to have.
If yield is your number one focus, the highest average yield in the UK can be found in Bradford City Centre, where it is 12%, Hyson Green and Radford in Nottingham at 9.6% and Pontypridd at 8.7%, while other areas in the UK can be as low as 2.2%.
So indeed, is the best strategy to go for high-yielding properties?
The problem with pursuing high-yielding Bath buy-to-let properties is that you usually must compromise on the property’s capital growth to attain that high yield.
The second way to earn money with buy-to-let is capital growth as your Bath property increases in value.
A reasonable return in anyone’s books.
Of course, this all depends on the rent coming in, yet you can buy landlord insurance to cover against loss of rental income, tenant damage and legal costs.
Interestingly, using Government data and Industry data, Denton House Research has found that in the first lockdown landlords who managed their rental properties themselves were 272.5% more likely to be in arrears of 2 months or more (compared to those who utilised the services of a letting agent to manage their property).
Your tax bill is higher today than a few years ago, but isn’t everyone’s?
If Bath property prices fall, the capital you invested will reduce, yet if it sat in the bank, it would decline in value anyway.
Being a landlord is a big responsibility, with over 170 pieces of legislation and orders to comply with. That’s where a suitable letting agent can help you with your rental property to ensure you remain compliant.
I recommend Bath landlords consider all options to maximise their rental income whilst reducing their outgoings concerning their rental property.
Rents are rising in Bath (as mentioned above), and many Bath landlords appreciate the demand-led increases in their rent. And let me ask you, why shouldn’t they, as they have been exposed to many legislative and taxation changes over the last five years?
Ok, last point and the elephant in the room.
A house price crash conjures up a big event that makes house prices go down, and it certainly happened like that in 1988 with the removal of dual-MIRAS tax relief on mortgages and the Credit Crunch in 2008. Yet this time, it’s different.
As there is more normality and balance in the Bath property market at the moment (compared to 2021/early 2022), the price that is being paid today on most houses in Bath is not as extreme or as extravagant as what was being paid in 2021/early2022 (when people were outbidding each other).
Therefore, if you were to look at the house price indexes going into the spring and summer of 2023, then there will be a reduction. The doom-mongers and newspaper editors will call that a house price crash, yet I see it as the market easing back to normality.
There is always newspaper (and now social media) attention when house prices explode. This means people quickly feel pressure to enter the ‘property market’, as everyone is making money, yet they aren’t.
The problem is that during the previous boom phases (the late 1980s and early/mid-2000s), house prices increased quicker than some people could save money for their deposit (for a house purchase). They saw their friends and acquaintances snapping up buy-to-let deals and they were missing out on the spoils of house price growth. As a result, many of these excluded house buyers judged that a house price correction was foreseeable, inevitable, and sometimes even needed. Not with any rational economic argument, but classic FOMO (Fear of Missing Out).
‘House price crashes’ virtually never drop house prices to reasonable levels, and in fact, they have a lot of additional effects that make house buying even harder.
Investing in buy-to-let is a long-term investment. Remember what I said at the start. It would help if you decided why you’re getting into buy-to-let investment and when you will get out (and what you want to get out of it). Buy-to-let has advantages and disadvantages, but it is something tangible and something that investors can understand.
The heady days of the early 2000s, when anybody could make money from any property, though, have gone. With increased legislation and taxation, you need the advice of a great agent to guide you on what to buy (and not to buy) for an excellent yield, incredible capital growth or a balance of the two. That agent should be able to find you a great tenant who will pay the rent on time and look after the property to ensure that when they leave, your investment is returned to you in the best condition possible.
If you would like to pick my brain, whether you are considering becoming a landlord in Bath, an existing landlord (irrespective of which agent you use) or even a self-managed landlord, do not hesitate to pick up the phone to me. I will tell you what you need to hear, not necessarily what you want to hear.
