Residential Market Update
As 2021 drew to a close it was interesting to look back and take stock of the year we had experienced in the residential rental market.
Up to the end of October 2021 we at Hazells had found strong demand from prospective tenants despite the constraints of lockdowns and restrictions on life-style. This was matched by a constant supply of stock so business was brisk as landlords experienced low voids and over the months increased rents were achieved.
In November and December demand continued but stock availability was markedly reduced. As a result properties which came to the market commanded rents at the upper end of the anticipated range and landlords have experienced increases in yields.
As the New Year arrived so rental stock has been increasing gradually but it is still below the levels seen 12 months ago. Demand has held up well. Assuming the asking rent is priced correctly lettings are generally swift. However, there are examples in the market where asking rents would seem to be at an historic high as landlords take advantage of what is likely to be a rent bubble. As stock levels increase so new lettings rents are likely to drop back slightly.
While some landlords have decided to sell taking advantage of the buoyant sales market largely due to the general shortage of properties available for sale, robust demand and the threat of a rise in the cost of borrowing our experience is that other investors continue to buy. See a recent article on this subject:
The imbalance between high tenant demand and low rental stock is supporting asking rent rises and has led to competition between applicants for the rental property available.
Our view at Hazells is that investment in residential rental property remains a sound decision to form part of an investment portfolio and we would encourage investors to consider
Investors in residential property continue to be very much in evidence despite the challenging statutory requirements for holding this type of investment. For example compliance with energy efficiency regulations (EPC), and the Electrical Installation Condition Report (EICR) legislation.
It is interesting to note that in a recent publication it is highlighted that although National yields have dropped between 2020 Q4 and 2021 Q4 this trend has been countered in East Anglia where there has been an uplift of 1.4%.
Link: https://propertyinvestorpost.com/east-anglia-yields-surge-despite-national-falls/
Our analysis of the sales and rental markets in the area has found that gross yields in the historic core of Bury St Edmunds are in the range of 3.5 – 4.5 %. On the edge of the town such as Moreton Hall and Lark Rise 4.0 – 4.5 % and the Marham Park development seems to yield 4.5 – 5.3 %.
Yields in the Mildenhall/Lakenheath/Feltwell area are in the range of 4 – 5.5%. And in the new build parts of Thurston such as Thurston Park 4 – 4.5%.
As with any analysis there are exceptions to the range of yields set out above but the figures given illustrate the geographical differences in yields found at present in Bury St Edmunds and surrounding areas.
If you would like specific advice on any aspect of lettings please do contact either Andrew or Chris on 01284-702626.
