With Easter just
gone and considering we are a just over a third of the way through 2016, I was
talking to a local landlord the other day about what is happening to the level
of rents that are being achieved in the Hampstead property market.
In terms of rents being achieved in Hampstead, it appears
that for new rentals (i.e when the
tenant moves out and new tenant moves in) have risen in the order of 4.7% in
the last 12 months for high specification properties, yet remained static for
older Victorian terraced houses and converted flats. However, landlords with
existing tenants, irrespective of age are not increasing their rents, as most
landlords prefer to keep their existing tenant paying the same rent and have
the peace of mind that their tenant remains (thus reducing the risk of a void
period).
It must be remembered
rents rose by a meagre 0.2% over 2008/9, due to an oversupply in the rental market
in 2009.) A lot of the people who couldn’t sell their property in Hampstead in
2008/9 when the Credit Crunch hit decided to let their home out instead of
selling at a loss. In fact, the number of houses on the market for sale in Hampstead
dropped by 55.5% between September 2009 and February 2010, a large proportion
of which came on to the rental market instead. However, looking at the longer
term though, tenants have had it good
because since the turn of the Millennium, average wages have grown by
46%, but wages outside London have only
grown by 36% over this period.
I told the landlord
that there is a shortage of new rental properties in Hampstead coming on the
market. In fact, according to the Office of National Statistics, there are only
30 new rental properties coming to the market each month in Hampstead but the
population of Hampstead is rising by 126 people a month – something will have
to give soon! This is compounded by the fact that a number of landlords are
looking to sell their rental properties in the coming months, as the market in Hampstead
has improved. This is further compounded as tenants in existing rental
properties appear to be in occupation for longer periods of time and that there
are a good few buy to let investors that have fled the market as a knock on
effect of the recent spike in Stamp Duty on second homes.
Looking at the rents charged in Hampstead, historic evidence
in the UK suggests private market rents have moved in line with general
inflation. Government figures only go back as far as the year 2000, but looking
at other countries with similar housing markets (America, Australia, Ireland
and Holland) the fact is rents paid by tenants tend to rise in line or just
ahead of inflation.
As short term wage growth in Hampstead has eased off
recently, rising by only 1.3% in the last 12 months, taking average salaries in
Hampstead to £36,904 per annum. The tax breaks announced by The Chancellor in
the Budget, I believe, even though rents have kept pace with inflation in the
past, renting as an option has become more affordable, and is increasingly seen
as a lifestyle choice. With returning economic growth and expected increases
wages, above inflation rental growth is most likely.
If you want a chat about the local Hampstead property
market, pop in for a coffee at our office on Heath Street or email me on chris@ashmoreresidential.com
If you are looking for an agent with experience that can help you find the right tenant for your property, then contact us to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based on Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. The kettle is always on.
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