The story of the Oxfordshire letting market over the last three years has been about the enormous imbalance between demand and supply. Since 2016 private rented housing supply has grown just 1%1, whereas the mid-pandemic ‘race for space’ saw many people moving out of London or to properties with gardens and room to work from home. Quarter 1 (Jan-Mar) this year has remained similar, with sustained high demand across our eight offices (Graph 1), and although the supply of stock feels as though it has eased slightly in some areas, it is still far below what is needed.
A return of overseas tenants
Oxford city has consistently attracted international students and professionals, whereas our county offices reported a slight reduction throughout the pandemic. This quarter, there has been a notable increase in overseas applicants across the county, which is a reassuring return to normality. Estimates from the ONS show record-high net immigration in the year to June 20222 which might go some way to explaining the continuing increase in demand.
Relocations adding to stock…
Not only are people relocating to this area for work, but we’ve seen some tenants not renewing tenancies due to work taking them away from Oxfordshire, which has brought those properties back to the market. We’ve also seen more homeowner landlords temporarily relocating overseas either for work or travel, and choosing to let their property out while they will be away.
…but many tenants stay put
When it comes to renewals, the vast majority of tenants are choosing to stay. Even those who initially hesitate are deciding to stay after researching what else is available on the market. There seems to be a lack of confidence that they will find the same (or better) for less, due to limited supply and increased rents.
Looking further afield
The Oxfordshire letting market felt frantic last summer. New listings were inundated with enquiries, and applicants were offering to take properties unseen. Although properties are still letting quickly, the feeling of desperation has dissipated, and applicants’ requirements have become more flexible. A need to commute less frequently has meant some applicants can expand their search area to get more bang for their buck, with areas such as Abingdon, Witney, and Kidlington proving popular. This appears to be a nationwide trend, with Rightmove reporting that the average spread of areas a renter considers having nearly doubled since February 20203.
The impact on rents
Demand levels will always impact rent levels, and it’s important not to remain tied to rents that were valued (or even achieved) in the height of 2022. There certainly was a point at which you could list anything at a strong rent and let it, but tenants are still discerning and if the property isn’t quite right (in terms of size, location, condition, amenities, or even energy performance – see below) then you may need to think about adjusting the rent. Our Banbury office was recently instructed on a 4-bedroom house in Bloxham. It had been listed with another agency that had set the rent too high and, as a result, had not had a single viewing. The client came to us, we advised adjusting the rent to what was achievable in the current market, and we then let the property on the second viewing.
Competition is high for 3-bedroom houses as they are popular with small families and couples looking for space for both to work from home. The family homes market typically gathers pace after the Easter holidays, and some offices have already seen some applicants anticipating high demand and securing ahead of time. Our North Oxford team listed a 5-bedroom house at £6,5004 (main photo) for a tenancy to start in May and agreed a let within a week, receiving multiple offers from applicants. Speak to us to get your property listed in time for the ‘family homes season’.
The importance of presentation
Although we think the rent increases we saw last year will slow, we do not anticipate a significant weakening of demand this year, so unless there is a major increase in supply, rents will continue to remain steady in 2023. However, to achieve this your rents need to be carefully set and your property needs to be well-presented. It’s important to maintain (or improve) property condition in order to appeal to the higher end of the market and achieve the strongest rents. Work with your agent to create a plan of what needs to be done this year – and in the coming years – within your own budget. They will be able to help you prioritise in order to keep your property competitive.
Let instead of sell
House prices have fallen slightly in recent months, and Lloyds have predicted a 7% fall in 20235. Whilst this doesn’t suggest a housing crash, the sales market has tempered and we have seen a small number of vendors choose to let their property instead. For example, a 3- bedroom house in Wantage at £1,650 which let to a professional couple; a 1-bedroom apartment in Oxford (photo above) at £1,350 which let to a single professional ; and a 2-bedroom house in Jericho (photo below) at £2,750 which let to a professional couple.
Minimum Energy Efficiency Standards
Following a Government consultation, the proposed deadline to meet new Minimum Energy Efficiency Standards (having a minimum EPC rating of C) was originally set to come into effect in 2025 for new tenancies (and 2028 for existing). However, the Government has failed to provide any response to the consultation since January 2021, leading to speculation that the deadline will need to be extended6.
Energy performance should still be a focus
The lack of clarity on MEES does not mean it won’t happen, and it should still remain a focus for landlords as energy performance remains important. Without exception, every office reported an increase in applicants asking about a property’s EPC rating this quarter. Whilst this has not been a deal breaker in any circumstance, it is clear that energy performance is growing in importance for tenants, not least in relation to bills. Where rent includes bills properties have let exceptionally quickly, for example a 1-bedroom luxury duplex apartment just outside of Oxford at £1,800 which let on the first viewing.
Published April 2023
For more information and an up to date view on the Oxfordshire letting market please email email@example.com.
1 Zoopla, Housing market outlook, March 2023
2 Long-term international migration, provisional: year ending June 2022, ONS
4 All individual rents in this report are pcm and marketing rents