It’s now been a good 12/18 months since annual
rental price inflation in Huddersfield peaked at 2.3%. Since then we have seen
increasingly more humble rent increases. In fact, in certain parts of the Huddersfield
rental market over the autumn, the rental market saw some slight falls in
rents. So, could this be the earliest indication that the trend of high rent
increases seen over the last few years, may now be starting to buck that trend?
Well, possibly in the short term, but in the coming
few years, it is my opinion Huddersfield rents will regain their upward trend
and continue to increase as demand for Huddersfield rental property will outstrip
supply, and this is why.
The only counterbalance to that improved rental growth
would be to meaningfully increase rental stock (i.e. the number of rental
properties in Huddersfield). However, because of the Government’s new taxes on
landlords being introduced between 2017 and 2021, that means buy-to-let has
(and will) be less attractive in the short term for certain types of landlords
(meaning less new properties will be bought to let out).
Interestingly, countless market experts assumed at
the start of 2017, that the number of rental properties would in fact drop throughout
the year. The assumption being as the new tax rules for landlords started to
kick in, landlords looked to kick their tenants out, sell up and invest their capital
elsewhere. (Although ironically that would lower supply of rental properties,
decreasing the supply, meaning rents would increase again!).
Anecdotal evidence suggests, confirmed by my
discussions with fellow property, accountancy and banking professionals in Huddersfield,
that Huddersfield landlords are (instead
of selling up on masse), actually either (1) re-mortgaging their Huddersfield
buy-to-let properties instead or (2) converting their rental portfolios into limited
companies to side step the new taxation rules.
The sentiment of many Huddersfield landlords is
that property has always weathered the many stock market crashes and runs in
the last 50 years. There is something inheritably understandable about bricks
and mortar – compared to the voodoo magic of the stock market and other exotic investment
vehicles like debentures and crypto-currency (e.g. BitCoin).
Remarkably, there is some good news for tenants, as
Tory’s recently published the draft
Tenants’ Fee Bill, which is designed to prohibit the charging of tenants
lettings fees on set up of the tenancy. However, looking at evidence in
Scotland, I expect rents to rise to compensate landlords, thus hammering
faithful tenants looking for long-term tenancy agreements the hardest. This
growth will be on top of any usual organic rent growth. It really is swings and roundabouts!
So, what does this all mean for landlords and
tenants in Huddersfield? In my considered opinion,
Rents
in Huddersfield over the next 5 years will rise by 8.9%, taking the average
rent for a Huddersfield property from £764 per month to £832 per month.
To put all that into perspective though, rents in Huddersfield
over the last 12 years have risen by 19.4%. In fact, that rise won’t be a
straight-line growth either, because I have to take into account the national
and local Huddersfield economy, demand and supply of rental property, interest
rates, Brexit and other external factors.
In the past, making money from Huddersfield buy-to-let
property was as easy as falling off a log. But with these new tax rules, new
rental regulations and the overall changing dynamics of the Huddersfield
property market, as a Huddersfield landlord, you are going to need work smarter
and have every piece of information, advice and opinion to hand on the Huddersfield,
Regional and National property market’s, to enable you to continue to make
money.
One place for that information is the Huddersfield
Property Market blog https://huddersfieldproperty.blogspot.co.uk/
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