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Professional & Surveying Services

Commercial Property Services

 

At Caxtons, our residential property lettings and management teams can help, whether you are just starting out as a landlord or already have an extensive portfolio of properties. We will undertake the administration and ensure you are up to speed on all the regulations ensuring your property is compliant with the myriad of legal requirements associated with renting out property.

 

At a time of uncertainty, resulting from a concoction of issues including confrontational Brexit negotiations (both at home and abroad), a government with no working majority* and interest rates rising for the first time in a decade, the lettings' market is finely balanced with affordability being a key component for both landlords and tenants.

Landlord returns are being steadily eroded, but if they try to redress the balance by increasing rents the level of demand from tenants will fall.

However, on the positive side the government has announced that letting agents are to be regulated and new proposals will require that they join a professional organisation and meet 'certain minimum standards'. The Association of Residential Letting Agents (ARLA) and various other bodies have been lobbying for many years for this to happen.

In addition, while letting agents already have to be part of a redress scheme, this will now be extended to all landlords to enable tenants to complain about poorly managed properties and rogue landlords.

Alan Stewart, Director & head of Residential Lettings & Property Management says: "The buy-to-let sector is still very challenging for landlords who have had to contend with changes in regulations and legislation with investment having been curtailed - particularly amongst the more short term speculative landlords - by the restriction of income tax relief on mortgage interest payments and the introduction of more stringent mortgage affordability tests. 

"Pressures on the residential investment market and achievable yields will certainly continue next year with many local authorities introducing selective licensing controls on some properties plus the effect of new Energy Performance regulations, which will increase the financial burden for landlords."

Legislation will be introduced next year to prevent tenants being charged any fees in connection with the letting of a property. This will impact significantly on letting agents

who may potentially look to renegotiate their terms of business with landlords - who in turn will have to decide whether to reflect these additional costs in higher rents.

According to latest figures from the British Property Federation the build-to-rent sector is continuing to grow and play an important part in increasing the supply of homes. Combined with this, the Prime Minister has just unveiled a major council house-building programme that will see the release of government owned land and the goal of providing homes at affordable rents.

In the student housing sector investment demand is buoyant. In a recent survey it is estimated that there has been a 24% increase in transactions in the first half of 2017 compared to the same period in 2016. Purpose built student accommodation continues to offer attractive returns, particularly for overseas investors.

Alan continues: "Our region has seen a period of rental stability with tenants now very focussed on achieving value for money when selecting properties. If the accommodation is not well presented we are finding that prospective tenants are looking elsewhere or seeking a reduction in the asking rent.

"I believe that during the course of 2018 we may find that some accidental landlords look to sell their properties and larger investors take the opportunity to restructure their portfolios, but overall demand could be sustained by first time buyers who still cannot afford to purchase a property and there will be more choice in the rented sector with the completion of a variety of build-to-rent schemes.

"At Caxtons we are keen to promote the benefits of engaging a good letting/managing agent who can steer a landlord through all the complexities of letting residential property."

For further information on residential lettings and property management in Kent contact Alan at This email address is being protected from spambots. You need JavaScript enabled to view it. or telephone 01474 537733.

* The Conservative Party has formed a minority government and has signed a "confidence and supply" agreement with the Democratic Unionist Party.

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Alan Stewart

A recent story in the Daily Telegraph raised the question of whether the 'student housing bubble' was about to burst. Duncan Reeves, Associate Director and head of Student Lettings in the Caxtons' Canterbury office responded to some of the messages promoted.

The journalist's position was that the student sector had seen an upsurge in the availability of expensive, luxurious alternatives to traditional accommodation. It is true that developers large and small have invested in purpose built student accommodation (PBSA), whether converting existing buildings or building off plan. It is also true that students are now spoilt for choice and the oversupply is affecting all areas of the student accommodation market.

Duncan agreed that a key point raised, relating to a drop in demand from students, does resonate.

"With the big PBSA providers now firmly established in Canterbury, it will be interesting to see what effect this will have long term on the existing student accommodation."

The first wave of PBSA in Canterbury, which began over 10 years ago, are located on the outskirts of the city – not as convenient for study or socialising. These properties may begin to suffer as students gravitate to the newer blocks in the city centre. There is also a murmur amongst agents that communal house living is still in demand as hard-up students look to save money, so some of the studio apartments that are favoured by developers may not be such a hit with the students.

Duncan continues "I don't believe that student property in Kent is very different from other university towns and with less than a week until terms starts, we have half-a-dozen studios on our books and landlords are accepting discounted rents to attract tenants.

"A large proportion of tenants who have rented purpose built studios are overseas students and money is less of an issue than for UK students. Even so, with the increased competition it has put pressure on some of the developments on the outskirts of the city."

So - have we reached saturation point with the number of student studios in Canterbury?

Duncan's opinion was "Where there are still sites available within walking distance of the University of Kent, or in the city centre, it may make out-lying student properties more challenging to let - as evidenced with the new CRM block at the moment."

An alternative view is that the continued development of PBSA may free up much needed housing stock as landlords of traditional HMO's are forced to sell up. This does not appear to be the case so far this year and Caxtons increased their stock of traditional HMOs, which have let well.

Whilst there has been a desire – even a necessity - for PBSA in recent years, for the majority of UK based students, the pressure of increased tuition fees has meant they are looking for better value over outright exclusivity and facilities. Whilst it is possible that HMOs, just like PBSA, located on the outskirts of town or cities or in poor locations will struggle and may be sold on, there is still strong demand for this traditional student property in Kent. The argument that first time buyers or families would be interested in buying this high turnover letting stock is definitely not guaranteed.

For further information or advice on student property in Kent contact Duncan at This email address is being protected from spambots. You need JavaScript enabled to view it. or telephone 01227 788088.

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Duncan Reeves