Outlook weak for the East Midlands rental sector

There is a huge crisis in the East Midlands rental sector currently. Government legislation regarding tax changes, evictions and now EPC grades mean that many landlords are exiting the market, add into the mix higher mortgage rates and you have a perfect storm. There is a shortage of supply of buy to let homes and tenants are sometimes offering excessive, unsustainable rents to secure somewhere to live.

House prices are certainly dropping, using a local example, a bungalow next door to our Grantham rental was sold for £215k last year. The buyer pulled out and it is now on for £199k as the agent recognises the weakness in the market, but an identical bungalow is for sale round the corner for £170k and has just sold. Mortgage lenders are also tightening their belts on affordability checks making it harder to obtain a mortgage and forcing many would be first time buyers down the rental root as they seek independence from the parental home.

This problem has been created by Westminster, doesn’t matter who is in government, the policy will be the same. Their focus is Build to Rent which works wonderfully well in bigger cities such as Nottingham, Derby, Leicester and Peterborough. These are modern build apartment blocks often with gym facilities on site and coffee shops. The EPC is great as it is new build and is sold to the market almost as an investment bond with great yields. The higher yield is driven by the lack of supply of housing coincidentally!

Many of the banks, national corporate landlords and also the likes of John Lewis and Ikea are converting their unwanted commercial properties to apartments in order to help the government hit their housing stock targets as well as benefitting from great yields. The big issue here is that in cities the demand is massive so many of these corporates know they will fill these sites, but no-one will be interested in Grantham, Newark, Boston, Melton etc. as they will not get the planning, nor will the mass demand be there. Hence the East Midlands rental sector has so many issues with many market towns spread across the region. The issue of a lack of supply will be felt greater in towns and villages and that is the problem, unless the government cuts some slack to landlords, which seems a long way off.

As the parties in Westminster seek support in whatever form that may be they will always dance to the tune of the major corporates and Build to Rent ticks many boxes for both parties. The vast majority of landlords own less than five properties so will never have the lobbying power to make material change.

If you are a landlord seeking a solution to the issues of the day then contact us for a obligation chat to see if we can tick some of your boxes.

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