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Bath retirees turning to rental properties: what it means for landlords.

Posted on by prateek

Recent figures from the Office for National Statistics (ONS) revealed that across the UK, nearly half a million households are occupied by individuals aged 65+ living in the private rental sector. This represents 6.7% of all OAPs now renting privately.

Ten years ago, only 267,000 households were occupied by individuals aged 65+ who lived in privately rented housing. At the time, this represented just 4.39% of OAPs. So, it is clear from the outset that the dynamics in the market have changed significantly, with over a 50% increase. So, what does this data mean?

WHY ARE RETIREES RENTING?

A survey by The Prudential a few years ago shed light on this upcoming trend. Nearly 60% of older renters have always been renting. Around 20% have sold their homes to address debt challenges, and another 10% have sold their properties intentionally with the desire to rent in older age, often using the proceeds to fund their retirement or allow more freedom and less maintenance.

Financial stability is increasingly important. Men in Bath, upon reaching 65, have an average life expectancy of 19.6 years, while women can expect to live an additional 22.1 years. Interesting when compared to the national averages of 18.1 years for men and 20.6 years for women.

However, longer life expectancies come with the challenge of sustaining finances over an extended period, particularly as inflation, rising living costs, and low interest rates erode retirement savings.

THE RENTAL LANDSCAPE IN BATH.

30% of people who live in Bath and North East Somerset (BANES) are over 65 years old. A significant majority of over 65’s, 76%, own their homes outright. 6% own their homes with a mortgage and then social housing accounts for 12%. This leaves 5% of over-65s in the area being privately rented.

This figure, whilst small, is on the rise. Anecdotal evidence suggests that property professionals are seeing more retirees in Bath choosing to sell larger homes they own and downsize into rented accommodation. This reflects a desire for more simplicity and financial flexibility upon retirement. Selling a home with or without a mortgage offers up substantial equity which can then be passed down to future generations via better investments, funds and allow a more comfortable retirement.

Renting also offers predictability. With a fixed monthly expenditure that typically includes property maintenance and potentially even services like gardening, retirees can budget with confidence. This arrangement removes the financial and logistical burdens of homeownership, such as unexpected repair costs, allowing for a more carefree retirement. Renting also offers flexibility, enabling older tenants to relocate with ease if their circumstances change, such as moving into assisted living or care facilities.

OPPORTUNITIES FOR BATH’S LANDLORDS:

This shift presents a unique opportunity for Bath’s buy-to-let investors. Older tenants often seek properties that are low-maintenance and designed to suit their needs. Semi-detached bungalows, particularly those located near essential amenities such as bus routes, GP surgeries, and shops, are in high demand. These homes are often preferred for their accessibility and practicality.

For landlords, catering to this demographic can yield excellent returns. Retirees typically value stability, making them reliable, long-term tenants. Furthermore, if a property meets their needs and provides additional conveniences like included maintenance services, they are often willing to pay a premium rent for the right home.

The Bigger Picture for Bath Landlords

As the population ages, the demand for rental properties suitable for older tenants is likely to grow as the Centre for Economics and Business Research (CEBR) stated in the report this summer that they expected the number of OAPs privately renting to double in the next decade. This trend presents both challenges and opportunities for landlords in Bath. By understanding the needs of this demographic and tailoring their portfolios accordingly, landlords can not only secure steady returns but also play a role in supporting the housing needs of an ageing community.

For the private rental sector, this demographic shift highlights the importance of creating housing solutions that balance profitability with social responsibility. As leaders in the Bath property market, we must champion approaches that meet these emerging needs while promoting long-term sustainability in the rental sector.

The Future of Buy-to-Let

Posted on by prateek

Upcoming future legislation and the recent announcements in the autumn budget have stirred up some anxiety for the future of Buy-To-Let (BTL). The chancellor’s decision to increase the Stamp Duty Land Tax (SDLT) from 3% to 5% for landlords purchasing additional properties initially suggested a grim outlook for the buy-to-let sector. This move, coupled with the introduction of the Renter’s Rights Act, which proposes to abolish section 21 and effect a landlord database, poses new challenges for Bath Landlords but also opens doors to new opportunities. Despite these new hurdles approaching, looking in detail at market insights reveals reason for some optimism among property investors.

Taxation Changes: Assessing the Impact

The Tory and now Labour government policy changes towards the BTL sector aim to cool an overheating property market. Raising SDLT aims to redirect investment opportunities toward first-time homebuyers priced out of the market. Although this policy aims to level the playing field, it has raised concerns among investors about shrinking profit margins and thus the overall attractiveness of investment in the property market.

Despite these concerns, maintaining the current (lower) capital gains tax rates has provided a buffer, easing investor anxiety and stabilising the investment climate. However, many landlords remain cautious, aware that the stability of these rates can change as part of broader fiscal adjustments.

The Renters’ Rights Act: A New Standard

The proposed Renters’ Rights Act will abolish section 21 evictions, which allows landlords to terminate tenancies without fault. This change aims to offer greater security to tenants and ensure that there is fair treatment across the whole rental sector. Whilst this move is a positive one for renters’ rights, it does require landlords to adapt to more rigorous property management and dispute resolution strategies. This potentially increases the cost and complexity of property management.

In addition to this, the act will likely introduce stricter property standards and tenant engagement protocol. These regulations will compel landlords to improve the quality of their offering and engage more transparently and effectively with their tenants.

Market Resilience – Looking into the local market in Bath

Despite the challenges posed by increased taxation and regulatory changes, the Bath BTL market remains resilient. Demand for rentals continues to grow in the city. The average rent in Bath in 2024 was £1,759 PCM a 29% increase from 2019. Meanwhile, the number of rental properties on the market has dropped by 41.7% between 2024 and 2019.

One might say that’s all well and good, but what will this extra 2% stamp duty cost the average Bath landlord? The average price of a Bath buy-to-let property in 2024 is £345,400, meaning:

The average Bath landlord will only need to pay an additional £6,908, which is only 3.9 months’ rent.

Adapting for Success in Bath

To navigate this evolving landscape, landlords need to adopt new strategies to conquer a changing market.

  • Diversification: Landlords can spread risk and tap into different markets by creating portfolios that include a mix of residential types and target different demographics.
  • Reduction of Rent Arrears: A study by Denton House Research a couple of years ago showed that landlords who don’t use a letting agent to find them a tenant have a 272.5% greater chance of that tenant being two or more months in arrears.
  • Rent Protection: The removal of Section 21 will mean Bath landlords will only have Section 8 to remove tenants if they aren’t paying their rent or being antisocial. This could mean that if the tenant decides they don’t want to move, there could be a good 6 to 9 months of no rent (if not more). Therefore, you must take on rental insurance.

Final Thoughts for Bath Landlords:

While the initial outlook for buy-to-let investments in Bath might seem daunting due to recent legislative and fiscal changes, the underlying market dynamics suggest a different narrative. The demand for quality rental properties will likely continue to remain strong and provide opportunities for those willing to adapt to new changes.

To view our latest Sales Properties in Bath, click here – Properties for Sale in Bath (residebath.co.uk)

To view our latest Rental Properties in Bath, click here – Properties – Reside Bath

For more from Reside Bath: Lettings and Estate Agency, click the icons below!

The New Stamp Duty Increase – Another hurdle for Bath Landlords.

Posted on by prateek

The last decade has been a relentless barrage of new regulations and tax changes. From the 3% stamp duty surcharge introduced in 2016 to section 24’s limitation on mortgage interest relief, then the new renters rights act slowly passing through the government and its removal of section 21 eviction notices and finally recent reductions in capital gains tax allowances –  it is fair to say that Buy-To-Let (BTL) investors have been under relentless pressure.

Now to add to this long list, the looming EPC regulation change, requiring properties to meet tougher energy performance standards, and the latest increase in stamp duty – raising its surcharge from 3% to 5%, there feels like another layer of financial burden on top of another, and it is no wonder that many landlords are feeling stretched to the limit and want to draw a line and sell up.

However, although these changes all seem daunting –  let’s take a step back and evaluate the bigger picture.

For landlords with a long-term view, this extra cost is unlikely to fundamentally alter the financial viability of their investment. This one-off expense becomes ‘lost in time’ when spread out of the lifetime of an investment. Yes, it is a higher upfront cost, and as with any additional cost, it is not welcome. However, for most BTL investors, this increase won’t dramatically change the fundamentals. In fact, it’s like when the initial 3% surcharge was implemented in 2016; back then, very few landlords were deterred, and the market quickly adapted.

Another reason to stay positive is the remarkable growth in the rental sector seen over the last few years. In the last few years, rents have risen by 8-10% (Largely fueled by wage growth and continued supply/demand imbalance in the market) and are set to continue growing thanks to minimum wage rises, further bolstering the case for long-term BTL investment.

Furthermore, capital gains tax, though perceived as a deterrent, was reduced last year for higher-rate taxpayers, from 28% to 24% on residential property, which helps retain more of the gains made on property sales. Labour has made no change to that.

In real terms, UK house prices are now 15% cheaper than three years ago, another boost to the incentive to invest in BTL. So, ultimately, for savvy investors, now is potentially a more favourable time to secure a good deal for long-term gain. There will be a higher upfront cost that will have to be absorbed, but with a long-term vision, your investment can definitely be profitable.

While landlords are certainly facing pressures from the new EPC regulations in the coming years, history shows that when the government mandated the EPC rating to an “E” in 2018, it tempered the impact to avoid a market disruption with a maximum of £3,500 maximum spend to reach that level. We’ll likely see a similar approach this time if it risks an excessive withdrawal of rental properties from the market.

Ultimately, the buy-to-let market remains one of the few investment avenues where one can achieve both income and capital growth.

Bath landlords may need to consider this stamp duty increase when negotiating purchase prices, but for those with a long-term perspective, this is simply another bump in the road.

While change is inevitable, BTL still represents a sound investment – especially for those who are in it for the long haul.

To view our latest Sales Properties in Bath, click here – Properties for Sale in Bath (residebath.co.uk)

To view our latest Rental Properties in Bath, click here – Properties – Reside Bath

For more from Reside Bath: Lettings and Estate Agency, click the icons below!

BATH PROPERTY MARKET OVERVIEW – OCTOBER 2024

Posted on by prateek

Are you a homeowner in Bath? Perhaps you’re an individual or an investor planning on moving, buying or selling a property in the next six to twelve months, or maybe you’re on the lookout for your next home, perfect for the family, but not up against any time scale. Either way, having a clear understanding of the current state of the market here in the city of Bath is vital to making an informed decision and the right one for you or your family.

By reading our blog you can stay up to date on the latest market trends and activities which will help you plan effectively.

WHAT KIND OF PROPERTY MARKET DOES BATH HAVE RIGHT NOW?

One of the best ways to determine the current state of the market is to determine whether the market currently sits in a ‘buyers’, ‘sellers’, or balanced market. We can achieve this by looking at the ratio of properties marked as ‘sold STC’ or ‘under offer’ compared to the total number of properties available for sale.

For example, if 41 properties are marked as “Sold STC” out of 100 available, then the market is operating at 41%. This ratio isn’t just a random figure – it’s a reflection of the overall sentiment in the market.

Here is how the percentages breakdown to determine the market –

  • Extreme Buyer’s Market (0%-20%): Buyers hold all the cards.
  • Buyer’s Market (21%-29%): Buyers have the upper hand but not as strongly.
  • Balanced Market (30%-40%): A stable equilibrium between buyers and sellers.
  • Seller’s Market (41%-49%): Sellers begin to gain the upper hand.
  • Hot Seller’s Market (50%-59%): Strong competition among buyers.
  • Extreme Seller’s Market (60%+): Sellers dominate, with properties moving fast.

These benchmarks play a critical role, influencing everything from listing prices to negotiating leverage.

THE CURRENT SNAPSHOT OF THE BATH PROPERTY MARKET:

  • Oct-16 – 51%
  • Oct-17 – 44%
  • Oct-18 – 37%
  • Oct-19 – 38%
  • Oct-20 – 46%
  • Oct-21 – 65%
  • Oct-22 – 64%
  • Oct-23 – 50%
  • Oct-24 – 51%

As is expected, it was a stronger market for Bath sellers in the post-Covid years, yet things have settled down now to levels seen before the pandemic, this current percentage of 51% puts us just into a hot sellers’ market.

WHAT THIS MEANS FOR BATH SELLERS:

If you’re looking at selling your property in Bath, the current market conditions require more patience and flexibility than in 2021. The days of the stamp duty holiday and properties flying off the market within days are behind us and this means that sellers need to focus on their property marketing and prepare for longer periods on the market.

A crucial step in getting your property sold in this market is to make sure that the property is priced correctly. Now that supply is outstripping demand, it is crucial that you price your property correctly to attract demand and not deter potential buyers.

This month, 57% of properties that came to the market sold STC and to completion. The rest left the market unsold. Nationally there has also been a downward trend in the number of properties selling. This is likely due to the impending budget and potential buyers wanting to secure a lower mortgage rate if inflation continues to fall.

In light of these changes, your marketing approach should be one that is well thought out and gives your property the best chance of selling. Utilising digital tools such as virtual tours, video marketing and social media posts can give your property a competitive advantage, and help gain more serious buyers in a market where securing interest is becoming increasingly challenging.

WHAT THIS MEANS FOR BATH BUYERS:

For buyers, particularly in sought-after areas in the city, the competition remains fierce. Securing a mortgage agreement in principle will give you a significant advantage over others in such a competitive environment.

In less competitive areas, buyers have more room to negotiate. You’ll likely find more flexibility on price and even some extras, such as fixtures, fittings, or other incentives thrown in by sellers eager to close a deal. The pressure to make quick decisions is reduced, allowing you more time to thoroughly consider your options.

It’s also worth remembering that most sellers are also buyers, so any loss you may experience on the sale side should be offset by a better deal on your next purchase.

External factors such as global economic trends, events, inflation, and interest rates will continue to influence the Bath property market in the coming months. Keeping an eye on these trends is essential for buyers and sellers alike.

Final Thoughts

As we enter November 2024, the Bath property market presents both opportunities and challenges for buyers and sellers. Understanding the subtle shifts in market dynamics is crucial for anyone planning a move, whether you’re a seasoned investor, a first-time buyer, or looking to relocate within the area.

Staying flexible, informed, and prepared will make all the difference in navigating this market. The experience of moving is as much about the journey as it is about reaching your destination.

RENTERS’ RIGHTS BILL UPDATE – WHAT BATH LANDLORDS NEED TO KNOW.

Posted on by prateek

On Wednesday, Parliament had the first hearing of the Renters’ Rights Bill, the revision by Labour of the previous government’s Renters Reform Act. There was a lot of information given during the hearing so let’s take a moment to take a look at what this could mean for your investments in the future.

Let’s begin by reassuring you that nothing groundbreaking was heard in these proposals that will catch you off guard. Most of what was heard was already in the previous bill by the Conservative government. Regardless, let’s break down what was involved and what might affect you as a Bath Landlord going into the future.

THE END OF SECTION 21 (‘NO FAULT’) EVICTIONS:

The big headline in the news outlets was the abolition of Section 21 evictions. For years now, landlords have been able to issue a section 21 notice, which gives tenants two months to leave the property through no fault of their own. Many have viewed this as unfair, particularly when they have been used to displace tenants who challenge landlords’ provision of poor living conditions or challenge rental increases they deem unfair.

Landlords won’t be without power. You will still be able to evict tenants who break rules under Section 8 of the Housing Act. This will cover situations such as failure to pay rent, damage to the property, and antisocial behaviour. The main difference here between a section 21 and a section 8, is that the latter requires a court order. The concern here is that in recent years these court orders have faced significant delays. However, the government has assured us that they will work to clear the backlog and streamline the process.

RENT INCREASES AND BIDDING WARS:

Another important point heard on Wednesday’s hearing was the ban coming in on bidding wars. Over recent years, some cities have seen an influx in rental bidding wars. This has been caused by over-demand and under-supply, which has then led to two people trying to offer more than the other over the asking rate of rent and leading to ‘a bidding war’. This new piece of legislation will make it illegal to ask or accept any offers from potential tenants over the advertised rent. This may stabilise the market, but it is something to keep in mind when setting rent prices for your Bath rental property.

In addition, in-tenancy rental increases will be limited to once a year and will no longer be allowed during the period of the fixed term of a tenancy. Whilst this ban may seem restrictive, it does provide a sense of stability for tenants and in turn may encourage longer-term lets.

ENERGY EFFICIENCY AND PROPERTY STANDARDS FOR BATH LANDLORDS:

 This proposed act introduces a stricter regulation on the quality and energy efficiency of rental properties. By 2030, landlords will need to ensure that their properties are given an Energy Performance Certificate (EPC) rating of C or above. (For more information about EPC Certificates see this article: How will the new EPC rules affect Landlords? (residebath.co.uk)). This is a long-term requirement, so although it may require investment at first, there is plenty of time to plan these changes, check the regulations, and plan accordingly.

The introduction of the Decent Homes Standard into the private rental sector means that Bath Landlords will also need to ensure their properties and maintained to a certain standard. This will particularly look at hazards such as dampness and mould, a common issue among Bath properties in particular. It is a move that is aimed at improving the overall quality of rental accommodation and whilst it may mean more responsibility for more landlords across the city, most landlords will already be meeting these standards.

GOING FORWARD:

If any one of these proposed changes is causing any concern then do not hesitate to get in touch with our team, we would be happy to help you understand these changes further. Being a team in Bath affiliated closely with the governing body, Propertymark, we are continuing our professional development and are constantly keeping up to date with the latest changes. Do also keep an eye on this blog page which is continually updated with all the latest news in the property industry here in Bath and beyond.

Bath Landlord Conference: This is your invitation

Posted on by prateek

Well, with the election just on the horizon, understanding the impact of the outcome will be crucial for any landlord and property owner.

This month’s event will take place on the 17th of July, starting at 6:30 and hoping to wrap up by 8pm.

At this conference, we have three incredible speakers lined up for the evening.

Tim Thomas – Propertymark’s Policy & Campaigns Officer, a role in which he regularly digests new legislation, liaises with government departments and attends government and industry working groups. Tim will share his insights into what the newly elected government has in store for the housing sector.

Jacqui Swann & Shaz Sarfraz – Is your tenancy watertight? Do you have every safety certificate? Have you served every mandatory document? If you’re not sure, you could have missed something important that will pose problems further down the line. In this session, Shaz Sarfraz and Jacqui Swann from Battens Solicitors will explain how to ensure you are not at risk of fines or failed notices.

Toby Martin – our very own Bath lettings expert will be presenting an up-to-the-minute summary of the local lettings market, along with some simple tips for landlords to ensure a successful tenancy

So, what are you waiting for? If you are interested in coming to hear what these incredible industry professionals have to say about the local market at beyond, then do order your tickets here: Bath Landlord Conference Tickets, Wed, Jul 17, 2024 at 6:30 PM | Eventbrite

Rental Market Update: May 2024

Posted on by prateek

With an election just announced, the latest trends in and the summer holidays fast approaching…Toby is here to catch everyone up with the most recent trends from the rental market here in Bath!

As always, the YouTube video is below. Let us know what your thoughts are in the comments. Until next month folks!

A Bath Landlords Perspective on Recent Trends.

Posted on by prateek

Between 2020 and 2022, demand for properties in the UK far exceeded supply. This drove rents to unprecedented levels.

Here in the southwest, for example, the average rent has risen from £913 per calendar month (PCM) in 2016 to £1,339 PCM year to date in 2024.

Despite this, the last 12 months have seen a slight increase in the number of properties available for rent, both nationally and regionally. This is lending to a more balanced market. This article will explore these trends and see if the same is happening within Bath.

NATIONAL AND REGIONAL TRENDS IN BY-TO-LET:

Nationally, the rental market has witnessed a notable shift in the last 12 months. During the pandemic, many factors contributed to the surge in rental prices. There was a migration of people seeking a larger living space and avoiding the disruption of new housing developments. As restrictions eased, the rental market began to show signs of stabilisation. In a bid to help mellow the rising rental prices, there has been a slight uptick in the supply of rental properties.

In April of 2023, the average rent achieved for a new UK rental property was £1,641pcm. By April of 2024, this has increased by 8% to £1,772pcm.

This is a positive sign for rental prices levelling out, as only 12/18 months ago, the increase was in the mid to late teens.

The southwest continues to be ahead in this national trend of rent increases. In April of 2023, the average rent of a new property coming to the market was £1,166pcm. This increased 12.3% in April of 2024, to £1,309pcm.

The increased supply of rental properties has brought relief to tenants, who had been grappling with 20%+ increases in rent per annum for some types of properties over the last few years.

So, landlords, what does this mean for you?

Despite this rise in supply, the demand for rental properties continues to remain very robust. This ensures that yields continue to be attractive for landlords.

THE BATH RENTAL MARKET:

On a local level then what is going on?

Well, a similar trajectory can be seen here in Bath. Post-pandemic, rents have been surging due to that imbalance in supply and demand for rental properties.

For this analysis, we are looking at the first four months of 2023, versus the first four months of 2024. In 2023, 1,227 properties came to market in the Bath area (For this the postcodes are BA1/2) and attained an average rental value of £1,684pcm.

IN THE FIRST FOUR MONTHS OF 2024, 1,158 PROPERTIES HAVE COME ONTO THE RENTAL MARKET ACHIEVING AN AVERAGE RENTAL VALUE OF £1,860PCM, A RISE IN RENT OF 10.5%.

So, for landlords present and future, is buy-to-let a savvy scheme to invest in, in 2024?

Despite recent market adjustments, Bath remains a compelling investment for several reasons. They are as follows:

  • Strong Rental Demand:

Bath’s rental market continues to benefit from strong demand. The city’s attractive location, good transport links, and quality of life make it a desirable place to live, ensuring a steady stream of potential tenants.

  • Affordable Property Prices:

Compared to other regions, Bath offers a relatively affordable price. This combined with solid rental yields and long-term, stable, capital growth, makes it an appealing option for buy-to-let investors.

  • Economic Growth and Development:

Bath continues to experience solid economic growth. Ongoing developments within infrastructure and amenities are not only increasing the quality of life for residents but it is also boosting the rental market by attracting more people to the area.

  • Long-Term Investment Potential:

Recent stabilisation in the rental market suggests a move towards long-term stability. For landlords, this means the potential for consistent long-term rental income and growth over time.

WHAT ABOUT OUR TENANTS IN ALL OF THIS?

Tenants may be feeling concerned about all of this. Burdened by the recent increases in rent, it is important to note that these rent rises have aligned with the rise in inflation over the medium term since 2016. So, in real terms, the cost of renting has not disproportionately increased. However, some tenants are still continuing to struggle due to a lack of rise in wage rates.

There is a glimmer of hope for those tenants wishing for a more balanced market and reduced rate of rent. With more supply leading to more opportunities for renters to find a home that suits their needs and their budgets, it is likely there is more place for tenants to get their rent down.

THE FUTURE OUTLOOK FOR BUY-TO-LET IN BATH:

Looking ahead, the market here in Bath appears poised for continued growth and stability. This is due to the combination of strong demand, affordable prices, and the city’s continued economic growth. Mixing this all together leads to Bath remaining a valuable investment opportunity for potential Landlords.

Now is an opportune time for those sitting on the fence about the buy-to-let market to enter. The local and national stability of rental prices indicates a mature and sustainable market that has reduced risk and volatility.

The Great British Garden

Posted on by prateek

This week we wanted to reflect on what can make or break a property for prospective tenants when viewing or searching for a new rental. Time after time we are given requests that the property must have a good garden for the kids, or for couples to have their friends round for a meal in the summer and enjoy a good British BBQ, yes I am talking about the ones where we all go and sit outside in our garden, beers and drinks in hand, to then have to run inside to hide from the inevitable downpour.

So with that being said, the great British Garden, a green sanctuary that reflects the homeowners’ personality and style. Our love affair with our gardens is more than an aesthetic preference; it’s a testament to the value we place on our outdoor space. Whether it is for the kids to run around, families to enjoy a relaxing bathe in the sun, or for the dog to lie on the patio and get a well earnt rest, we all enjoy our time in the garden (at least when it isn’t raining).

As a letting’s agent in Bath, we see firsthand how a well-presented garden can have a significant impact on the appeal of a home to prospective tenants. A beautifully landscaped garden not only captivates potential tenants, but also can be what provides a tranquil retreat away from the hustle and bustle of the 9-5 or the often-stressful times that family life gives us.

These green havens can be the deciding factor when tenants are looking to rent. So, as a landlord, investing time and care into your homes garden can not only be a labour of love, but a savvy decision that will pay dividends when letting out your home.