As we approach the end of Q3 2024, landlords face a landscape marked by significant challenges, including the rising costs of property maintenance, repairs, and legislative changes. A recent report from Dataloft has illuminated these concerns, underscoring the importance of strategic investment decisions in the rental market. Amid these challenges, the pursuit of finding and retaining quality renters remains paramount, emphasising the critical nature of fostering positive landlord-tenant relationships.
Interestingly, the Dataloft report reveals a nuanced approach to rental strategies among landlords for the upcoming year: while only a quarter (25%) plan to increase rents, a substantial majority (68%) intend to maintain current levels, and a notable 7% are considering rent reductions. This data suggests a strategic calibration among landlords to balance profitability with tenant retention in a shifting market.
Key Takeaways:
- Just one quarter (24%) of landlords intend to increase rents in 2024, while 68% intend to maintain them at current levels and 8% plan to reduce rents.
- Rents have risen rapidly over the past few years. With an average increase of £135 extra per month since Q4 2022 and £450 per month since the same quarter in 2019, financial pressure on tenants has risen.
- Finding and retaining good quality renters is a key priority for landlords and highlights the importance of a good relationship. This may explain why the majority of landlords are looking to maintain existing rents.
- The main challenges anticipated by landlords as we move through 2024 were the cost of maintaining, repairing and running properties, followed by legislative changes. Source: #Dataloft, Zero Deposit, TwentyCi.
The Strategic Advantage of New Homes
New homes present a compelling investment opportunity for the 24% of landlords eyeing rent increases in 2024. The appeal of new constructions lies in their ability to command higher rents due to several key factors:
- Modern Amenities and Design: New homes, with their modern amenities, energy-efficient designs, and compliance with the latest building standards, offer tenants the comfort, convenience, and sustainability they demand.
- Lower Maintenance Costs: The initial years following the construction of new homes typically see reduced maintenance and repair costs, directly impacting landlords’ net income positively. This reduced expenditure can support a strategy of rent increases while mitigating the primary concern of maintenance costs highlighted in the Dataloft report.
- Legislative Compliance: With legislative changes posing a challenge, new homes offer peace of mind through built-in compliance with the latest building codes and regulations, including environmental safety standards. This compliance reduces the risk of expenditure on modifications to meet regulatory requirements.
Likewise, minimising the cost of repairs, maintenance, and running costs associated with owning an older investment property could also support the vast majority of landlords looking to maintain or even reduce rent.
Supporting Landlords in Transitioning to New Builds.
As agents operating within the residential lettings market, there is a significant opportunity to support landlords in strategically incorporating new build homes into their portfolios. Here’s how both our Lettings and New Build teams can assist landlords:
- Education and Information: Providing landlords with comprehensive information on the benefits and logistics of investing in new homes, including potential returns on investment, tax incentives, and appeal to quality renters.
- Market Analysis: Offering insight into emerging market trends and the demand for new homes in different regions, helping landlords make informed decisions about where to invest.
- Portfolio Management Advice: Assist landlords in evaluating their current portfolios and developing a strategic plan for gradually replacing older properties with new builds, balancing financial implications and investment goals.
- Tenant Matching Services: We use our expertise in finding and retaining quality renters by offering targeted marketing and tenant vetting services tailored to new homes, emphasising the benefits to prospective tenants.
- Navigational Support Through Legislative Changes: Keeping landlords informed of legislative changes impacting new builds and existing properties, offering guidance on compliance and optimising their investment strategy accordingly.
In conclusion, as we move into Q2 of 2024, new homes stand out as a strategic asset for landlords facing the dual challenges of rising maintenance costs and legislative shifts. By focusing on new constructions, landlords can enhance their portfolio’s appeal and profitability and align with tenant preferences for modern, efficient living, support, and services landlords need to make informed investment decisions and succeed in the evolving rental landscape.
How Can Our New Homes Team Support Housebuilders During This Transition?
Our New Homes department is uniquely positioned to support housebuilders navigating the dynamic landscape of the ever-changing rental market.
We can offer unparalleled reach for your new build homes by utilising our extensive database of landlords and investors.
Our expansive network is further bolstered by the expertise of our in-house lettings team, ensuring that every property is presented to the market with a comprehensive understanding of its rental potential.
Whether you’re aiming to highlight several focus plots across various developments for your half-year or end-of-year forecast, our team is equipped to showcase these opportunities directly to our bulk-purchase investors. This collaborative approach complements your existing sales efforts and significantly enhances the likelihood of securing sales by connecting you with serious, ready-to-invest buyers.
Housebuilder? Diversify Your Marketplace.
Further to our in-house delivery, we have partnered with the team at ‘The Partnership Gateway‘ who focus on delivering opportunities to those active in the South and South West of the UK. Having worked with a number of affordable providers, we know the benefit of low maintenance and reduced repair and running costs is not just a ‘must have’ for private landlords.
Affordable Housing should be more than fulfilling a S106 requirement. Strong partnerships with Affordable Housing providers will enable you to stay ahead in a changing market; but that’s just the beginning.
Both Complete and The Partnership Gateway believe growing solid relationships in this sector should support housebuilders’ wider strategy. Together, we can take an entrepreneurial approach to Affordable Housing when working with housebuilders to support:
- Alternative strategies for developments
- De-risking forward sales
- Consider land-led deals/package deals that enable growth and competitive land acquisition
- Ensure your S106 bids are competitive and reliable
In a changing market place our aim is to ensure you have access to a wide range of prospective purchasers, whether that be private landlords, or Affordable providers.
By partnering with our team, housebuilders can expect a strategic and supportive relationship that maximises exposure and sales opportunities for new build homes. To explore how we can assist in elevating your sales strategy and achieving your development goals, get in touch with our New Homes Director, Lucy Griffin.