Lettings an industry in growth
Changes in home ownership have created a booming lettings market. With two thirds of tenancies now involving a letting agent, Nick Cooper, Managing Director of Northwood, takes a look at the current growth within the industry and explains why there is significant new business still be gained.
The private rental market has never been so buoyant. Approximately 3.4 million households now live in rented homes, which represents a 30 per cent increase since 2005.
First time buyers are struggling to get on the housing ladder and prospective first time buyers now have to wait until they are 30 years old, according to Simply Business, before they are in a position to buy. ‘Generation Rent’ is a reality and is here to stay.
Today’s landlords represent a cross-section of society:
Since 2009 there has been a 33 per cent increase in ‘grandlords,’ who invest in buy-to-let schemes to boost their pensions.
The market is also seeing a sharp rise in stay-at-home mothers who become landlords.
Expats and Second Steppers:
As the world gets smaller, the amount of expats, who rent out their UK homes from abroad, is on the up. Also, ‘second steppers’ who buy and move into a larger property while renting out their original are becoming more prominent in the lettings market.
We’re seeing a growing number of divorcees using their settlements to fund a buy-to-let deposit.
Then there are the ‘accidental landlords,’ who rent out their homes out of necessity rather than choice. ‘Accidental landlords’ now make up 30 per cent of all private rental landlords and includes those that can not or will not sell their homes based on the property price crash in recent years.
Whatever the circumstance, the responsibilities of a landlord should not be underestimated. It can be like having a second job, what with finding tenants, managing the paperwork, keeping up with legal requirements and maintaining the property. Indeed, two of the biggest worries for landlords are rental arrears and void periods (when the property is vacant). If the landlord isn’t receiving a rental income and doesn’t have a contingency pot available, it could spell disaster in the form of the worst-case scenario – repossession. It has become clear that many landlords have not taken into account the full picture that comes with owning a rental property.
Letting agents, like Northwood, provide a valuable service for landlords. A good letting agent will not only have expertise in property management, but also substantial knowledge of local and national rental trends. They will find tenants, collect rent and manage the property. In short, they bridge the gap between landlords and tenants and ensure the smooth running of every aspect of the rental process.
Northwood offers the added benefit of its Guaranteed Rent service. This is a 12-month contract whereby Northwood becomes the tenant so that the landlord receives reliable rental income every month. It can help to overcome the problem of rental arrears and empty periods and it’s a winning formula that over 13,000 landlords nationally currently enjoy.
This increase in the number of tenants and landlords in the UK shows no signs of abating. Due to continuing demand for letting agencies, they are very attractive franchise opportunity propositions.