Finders Keepers

The widely-covered slowdown in the sales market has intensified the Oxfordshire letting market in Quarter 2, with increased numbers of newproperties and applicants.

However, while rents are robust, do not assume that “when sales struggle, lettings boom.” The reality is more complex and localised, and landlords need to anticipate the factors at work to maximise rental income later in 2008.

In more detail, these are some trends reported by our 8 specialist letting offi ces across Oxfordshire from 1st April to 30th June:

Incredibly busy, profiting from failed sales enquiries

New business enquiries rose 15% for April and May, year on year. About 50% of total enquiries were from 'failed sales'. Some owners agonise over letting, others believe that the sales market will struggle for up to 2 years and prefer secure income to a lower sales price. Our research indicates current sales prices at 10-15% below summer 2007 levels.

We let 200+ homes in May, and are 10% up year on year in June as we go to press, including 60 lets in one week

A standard 'failed sales' example is a 3 bedroom central Oxford house, let in a week at £1450, or a 2 bedroom Bicester home let at £825. Another Oxford landlord wants to sell, so we lower the rent in exchange for allowing sales viewings and fl exible end-date. Where clients are selling, we manage the situation to increase the likelihood of the tenant staying if the sale falls through.

High value country homes letting well

Summer is the time for family homes, such as a dramatic Banbury barn conversion let for £1600 (Photo 3), and a postcard-perfect cottage in Weston-on-the-Green, let for £1500 (Photo 2). The sidebar to the right has more examples.

Demand robust for Oxford's 'glamour' apartments and large family houses

We have matched excellent applicants with significant properties.

Negotiating these tenancies is a different ballgame to letting a standard two bedroom fl at for £800 a month. If the tenant is committing either side of £100,000 then the letting agent must have a fi rm grasp of rent review policy, break clauses and right-to-buy exemptions, not to mention diplomacy and commercial insight. Photo 1 is a case in point, just on the market: 3500 sq ft of luxury in North Oxford with swimming pool.

Two bedroom Foundry and Fettlers apartments in Jericho have let for high rents: £1500- £1700. Photo 4 is a 2 bedroom Oxford Castle apartment, let well at £1750. A Headington 2 bedroom apartment achieved £1400, far above its peers. The secret: the landlord furnishes cleverly and it always looks amazing.

Developers choosing to let

As Quarter 2 has progressed, and especially in June, a number of our developer contacts are opting to let well rather than sell below par. We have gained instructions of groups of 4 properties at a time. Two 5 bedroom show homes in Marsh Gibbon and Sutton Courtenay let for £2250 and £2500 respectively.

Some estate agents over-valuing lettings

In leaner sales times, estate agents dust off their tenancy law books and explore the less glamorous and less lucrative world of letting. Inexperience and hunger can lead to overvaluing. Example 1: a cottage in Leafi eld, near Witney, sitting unloved at £1695 a month with another agent. Our valuation: £1195. Example 2: the Shutford conversion overvalued chronically by a Banbury estate agent, let by us for an impressive £1600 (Photo 3).

Some price sensitivity creeping in outside Oxford

Combine petrol and food prices with job insecurity – three major Banbury employers have quietly shed jobs this quarter – and you have “people being so canny” in the words of our Witney offi ce. While the market is positive generally, we see hints of oversupply forming in Witney, Bicester and Banbury. For example, we have a couple of Banbury fl ats let above the market rate, at £625 against an estimated £595 today. And, yes, on re-letting these fl ats it may mean diffi cult conversations with landlords who have seen rents rise for 5 years.

However a 'market' is an equilibrium of opposing forces. No amount of letting superskill, hard work, or changing agents will make people pay a high rent when they can pay less for an identical property nearby. Good letting is about maximising rents relative to the market. If applicant choice grows, the key is to ensure each property is not ʻidenticalʼ and creates some sort of impact – 'wow factor' is the cliché. Your letting agent should be advising you in these situations.