Total tenant demand across the UK was up 6% in Q1 while available properties were down 50% year-on- year1 and the letting market in Oxfordshire has continued in a similar vein throughout April, May and June. Increased competition has led to applicants being very clear about what they want and very decisive when they see it. Across our eight offices properties are still letting off-market or within a matter of hours at very strong rents, though our focus remains on matching the right tenant with the right property.
The vast majority of applicants have experienced this highly competitive market and, as a result, are more determined than in previous years, picking up the phone rather than emailing (Graph 1). Our letting teams are still inundated with enquiries when they list a new property and so have adapted their processes to be more efficient, block-booking viewings (like an open house) and securing a let from there.
International relocation increases
After two years of restricted travel, overseas applicants are very much returning to Oxfordshire. Our North Oxford office has seen a continued stream of applicants relocating from Hong Kong, and our Witney office has recently let properties to families relocating to the UK for their children’s education, for example Photo 1, a stunning four bedroom detached property in Minster Lovell at £3,5002. On the other side, there has also been a small uplift in the number of home owners relocating overseas and letting out their property for the period that they are away.
An increase in investors
According to the latest English Private Landlord Survey Report, 11% of landlords that responded plan to bring more property into their portfolio. Since the start of the year we have seen a steady increase in the number of investors acquiring properties, which is adding much needed stock to the market. For example, a 2 bedroom apartment in Kidlington, which was listed at £1,050 and let immediately and a 3 bedroom home just outside of Witney which was listed at £1,275 and let to a family relocating from overseas.
The demand for space to work from home is not as much of a priority as it has been over the last two years, though with fewer than one in 10 employees wanting to return to the office full-time3 hybrid working is still on the list for some. Requirements that have moved up the list include:
- Energy efficiency: we are starting to see more applicants considering a property’s EPC rating, with one office reporting some applicants only wanting to view properties rated C or higher.
- Bills included: properties with bills included in the rent are popular as they provide more certainty of outgoings. For example, a small development in Kidlington saw 7 of its 15 en suite rooms (with shared kitchen) let in 10 days to young professionals keen to have more certainty on their outgoings.
- Pets: A recent survey of tenants by the Deposit Protection Service found 30% moved home to accommodate a pet4. As lifestyles changed over the last two years, we have also seen an increase in those searching for pet-friendly properties.
- Walking distance: being able to walk to the shops, workplace or transport links is a focus for some applicants.
The right tenant is still key
While rental demand is so high, and strong rents are being achieved it could be tempting to enter into bidding wars to achieve the highest rental income. However, there is a balance to be struck between getting a top rent versus getting the right person who will pay the rent and look after the property well. It is part of the reason in-person viewings are so important. Some applicants have still wanted to view properties virtually rather than travel to physically view, but our preference is always to meet the applicants as part of our qualifying process.
Tenants staying to avoid a costly move
Many tenants are staying for longer to avoid re-entering a competitive rental market with higher rents. However, there has been a lot more negotiation required both on the rent increase and on flexibility. Although very few are requesting short renewals, many are requesting break clauses and some others are seeking to agree a rent increase and commit to a longer tenancy. We are advising landlords on a tenancy by tenancy basis.
Refreshing properties to remain competitive
Across the offices our property management departments have seen landlords agreeing to refurbishment works, whether that is freshening up the décor or carpets, or upgrading kitchens and bathrooms. Though it could be tempting not to in the current climate, reinvesting in your asset will often lead to increases in rental income (see table below).
The coming months
We have, as ever, been advising our clients on the current market and managing expectations for the future. Rental growth is likely to stabilise as the cost of living bites, but property remains a great long-term, income-producing investment. Furthermore, this county consistently experiences strong rental demand and while supply continues to lag behind we do not foresee a sudden large drop in rents. The Rental Reform white paper – first proposed in late 2019 – was finally published in Q2, and did not include many surprises, as most of the points – such as the abolishment of Section 21 – have been talked about several times over the last three years. We await further amendments to the white paper as it embarks on its journey to becoming legislation in the coming years, but rooting out rogue landlords and professionalising the sector should be viewed as a positive.
Oxford Selective Licensing
In April Oxford City Council received government approval for their Selective Licensing Scheme, coming into force from September. The five year licence will apply to privately rented properties within Oxford city, and accredited landlords (or landlords who use an accredited agent, such as Finders Keepers) will be charged a discounted fee. We are awaiting full details from the council and will liaise directly with our landlords.
1 Rightmove Rental Price Tracker, Q1 22
2 All individual rents in this report are pcm and marketing rents
3 ONS Opinions and Lifestyle Survey, May 2022
4 Mortimer, R (2022). ‘I’ll be forced to move to Scotland if a landlord doesn’t let me keep my pets”, The Telegraph 11 May
Written 5th July 2022
For more information and an up to date view on the Oxfordshire letting market please email firstname.lastname@example.org.