Strong rental demand means a busy start to 2021
In Quarter 1 (January, February and March), the levels of applicant demand continued beyond the typical post-Christmas busy weeks while supply has struggled to keep up. According to Rightmove, national rental demand was 41% higher in February than in the same month last year. As people continue to work from home, indoor and outdoor space continues to be a priority, and we have let nearly 400 properties across our eight offices – many within a matter of days, some receiving multiple offers and some before they even hit the market.
Across several offices, demand for some properties has been so high that we have had to limit the number of viewings. However, there has been no trend in what is most in demand. Viewings had to be capped at a 1-bedroom semi-detached period cottage in a village just outside of Oxford at £1,0001 (Photo 1); a 4-bedroom semi-detached house at £1,750 in Bicester received a flood of enquiries and was let unseen; and a high quality 2-bedroom detached house at £1,100 North of Banbury (Photo 2) was listed on a Friday afternoon and by the Monday morning had received more than 100 enquiries.
Properties outside of towns and cities have been particularly popular this quarter, with the perceived benefits of the environment (garden, nearby park or village green, countryside walks) outweighing any perceived shortcomings. For example, a fabulous double fronted 4-bedroom home in the village of Aston Tirrold near Didcot (Photo 3) has traditionally taken longer to let as the village itself is quite remote. However, this year its rural location was its appeal and it let within a week of being listed at £2,300.
The family home market used to pick up in the spring/summer, but it has been extremely active across the county this quarter. Applicants range from families and those moving out of London to professional couples seeking space for both to work from home. Larger lets this quarter include:
- A unique 6-bedroom home just outside of Oxford with countryside views and a swimming pool – listed at £6,500 and let within two weeks (Main Photo)
- An immaculately presented 3-bedroom family home with garden in Headington – listed at £1,600 and had multiple interested parties at asking rent
- A high-standard, brand new 5-bedroom home in Summertown – listed at £7,000 and let to applicants moving out of London (Photo 4)
- A 4-bedroom, 3 storey family home with garden in central Oxford – listed at £2,050 and received four offers at asking rent
- A fantastic 4-bedroom home in Long Hanborough with views over open countryside – listed at £2650 with four viewings and four offers at asking rent (Photo 5)
Rents understandably plateaued in 2020, with many landlords happy to keep them the same to ensure their property was occupied. With a demand/supply imbalance we need to act accordingly, constantly monitoring the market to ensure the rent is appropriate for the size, location and quality of property as well as demand. We understand that things can change very quickly, so this proactive approach helps our landlords to achieve the best tenants at the best rents.
The stamp duty holiday encourages investors
We have seen a number of investors purchasing properties this quarter with great success. For example, a 3-bedroom Grade II listed cottage with garden in Bicester town centre (Photo 6) was purchased by a new landlord and we let it within a week to a professional moving out of London, giving the investor a 4.98% gross return. We also helped an existing client with the search and acquisition of a newly built 1-bedroom apartment in Oxford with off-street parking and a private garden, which let promptly giving a 4.89% return.
A number of tenants have also taken advantage of the stamp duty holiday to buy a property. Where this hasn’t tied in with the natural end of the tenancy some have ‘surrendered’ their tenancies i.e. terminated the contract early. Once negotiated with the landlord, these brought welcome supply to the market and we have been quick to secure new tenants. In Abingdon a 2-bedroom period townhouse at £950 was relisted on a Friday, had five viewings on the Saturday and received four offers on the Monday. Similarly, a 3-bedroom detached house in Bicester re-let on the first viewing and a 3-bedroom renovated terraced house (with garden office) in a village near Witney was re-let without a viewing.
Landlords contemplating upgrades
Across the county more landlords are considering property improvements. Doing so is a good investment; the best quality properties attract the best calibre tenants. It can also lead to significant rent increases: a 1-bedroom apartment in the centre of Oxford with two private balconies is being fully upgraded by Bricks & Mortar, our buildings and maintenance division, and will be furnished by Decorum Interiors, our furnishing division. The property was marketed at £1,400 and let quickly – an increase of 21.7% on the previous tenancy.
The coming months
The stamp duty holiday has seen some landlords try to sell their rental properties. Given the drop in buyer demand in the run up to the original end date (31st March), it is reasonable to assume the same will happen as we approach the end of June. If these properties were to return to the letting market, it would be no bad thing if rental demand continues to surpass 2020 (see Graph 1). Similarly, if you’ve failed to sell but have found your next home then letting could facilitate your onward move. Switching to letting now, while supply is low, could ensure you get the best tenants at the best rent before the market is flooded with failed sales.
Developments in Oxford
Outline planning consent has been granted for the Oxford North’s masterplan2, a 64-acre district which will see 480 homes built alongside new laboratories and workspaces for the biomedical industry as well as shops, bars, restaurants and a hotel. Oxford City Council has also launched a public consultation on the redevelopment of the West End. The project could see new homes and businesses being built, and could lead to the regeneration of areas such as the Oxford train station and Oxpens. The consultation runs until the end of April 2021.
Landlord licensing in Oxford
In our last report we mentioned the consultation of Oxford City Council’s two licensing schemes aimed at improving conditions in the private rented sector. These have now been approved, and there has been speculation about the costs of licences being passed on to tenants. Rents are set by market forces, so it’s not quite as straightforward as passing costs on. However, there is a risk that landlords may exit the market and a further reduction in supply of rental properties could lead to rents increasing due to the imbalance of supply and demand. We are ready to help guide our clients through the new scheme when it’s introduced.
1 All individual rents in this report are pcm and marketing rents