Last week I went to meet a landlord who found me through my blog. The property was a traditional end of terrace in north Walsall between Leamore and Coalpool. The landlord had the property with an agent from out of the area and wanted my opinion. Or at least that’s what I thought…
Quite often, when talking about the rental market, we talk about property, condition, area, location, amenities/ facilities etc. and seem to forget one of the most important parties to the equation… tenants.
Without tenants, there is no demand for the rental property. The profile of the Walsall tenant has changed and continues to change. Although this is in part due to the credit crunch, job mobility and the raising of deposits, an increased number of people in their twenties are choosing to rent rather than buy and have done so, even when they were in a position when they could have bought a property.
Since the credit crunch of late 2008, rents have been good value for money for most tenants outside London. Few rents (outside London) have kept pace with inflation as they tend to track wage inflation. In 2008, the average median gross wage according to Office of National Statistics in Walsall was £23,345. Latest figures for Walsall in 2016 show average salaries in the Town had risen to £26,920, an increase of 15.3%.
I was reading some research from the Bank of England which suggests with regards to inflation, goods and services that cost £100 in 2008 would cost £122 in 2016, making inflation 22% over those eight years.
Walsall tenants are paying less than both wage and goods inflation. Walsall rents are in fact still around 2.1% below the level being achieved in 2008 but the tenants are being paid 15.3% more. That is why we have seen a greater demand for Walsall rental properties with more and more people becoming tenants. So renting has since the credit crunch, on average, delivered good value for money for tenants and hence the healthy demand and lack of void periods for most property.
Now, as most of my avid blog reading friends will know, I am one who tells you what you need to hear rather than what you want to hear. It may not be palatable or sit with you comfortably but I would rather face something head-on and deal with it instead of burying my head in the sand.
So back to my landlord…”what opinion where they seeking”, I hear you ask…? Well, it’s not uncommon really and you and I are certainly no different (sometimes), but they felt that I could validate the wild rental value, which was obviously plucked from someone blind trying to play the party game of ‘Pin the Tail on the Donkey’. In this case any old price will do. I have been known to work miracles in the past but even this one was beyond me!!
Rents tend to move in line with wages as opposed to inflation and if something goes wrong with the property, inevitably landlords pick up the bill, so tenants aren’t hit with awful expenditure surprises as a normal home owner would be. Tenants being the important part of the equation will, ultimately, tell you what they are willing to pay or not as the case may be. Makes you wonder..who is actually setting the rental value…hmm?
With home owners it used to be buy, sell, buy, sell as one rose up the property ladder.. Now it’s buy, hold, buy, hold.
In addition, renting offers better mobility both from a location perspective, but also from a trading up or down perspective in terms of rent commitment which, in this tough job market, could be considered a wise move. From the landlords’ point of view, the consequence of this philosophy is a steady, solid market throughout the Walsall area, with good tenant demand, decent long term capital growth and average yields between 5 and 8%. I have been consistently finding such deals throughout the lifetime of this Blog and beyond.
If you wish to discuss any aspect of the local property market or any buy to lets you would like an opinion on, feel free to get in touch via phone or email.
Phone: 01922 311016