As mentioned in our last report, the prolonged imbalance between rental supply and demand continues, though it is narrowing. Nationally, rental demand is slowing, but from a high starting point and, according to Zoopla (see graph), the average number of homes for rent per agent has increased year-on-year but supply remains a third lower than pre-pandemic levels. Applicants coming from overseas for work and study and fewer tenants moving out to buy in Quarter 2 has meant that our nine offices across Oxfordshire have seen demand remain higher than supply, though not as intense as recent years.
% change 4 weeks to 28.05.24 compared to 2023 and between 2017 & 2019
Graph: Zoopla UK Rental Market Report, June 2024
A less committed approach
Whilst many properties are still letting promptly, some applicants’ sense of urgency has waned and been replaced with slower decision making whilst they search for value for money. In a few cases, people have agreed a let in principle at a viewing but then the offer never materialised. Two of our offices have even had applicants pay a holding deposit to secure a ‘backup’ property but then continue to look elsewhere.
Anything Goes? Not in 2024.
Across Oxfordshire, 1- and 2-bedroom properties remain popular whereas demand for larger family homes has weakened compared to previous years. Where the property is in good condition, the rent achieved on lets remains strong. However, we are no longer in a market where properties of all sizes, locations and conditions will let due to the overwhelming rental demand. In some areas, we are starting to notice a disparity in rents based on property condition. This is echoed in the student market where applicants seek the best quality properties and traditional rooms to let in shared houses are competing with new, purpose-built accommodation.
Lets with pets
Whilst location for work and schools remains a priority, the most common requirement this quarter was a property that accepts pets. If you are letting a larger home, interest is very likely to come from a family with pets, so we strongly advise our landlords to consider them. It is possible to charge a slightly increased ‘pet rent’ to help protect your property, and this has led to successful lets recently. For example, a 4-bedroom period house in Bampton at £3,5001 which let to high calibre, overseas tenants with cats (main photo) and a 4-bedroom cottage just outside of Banbury which let at the asking rent to a great family with a dog.
A price sensitive market…
Where landlords have not taken our advice on rent setting, the property has taken longer to let. A good agent will advise you on a reasonable, realistic rent based on demand and the condition of any specific property. It is always possible to test the market with a strong rent, but it is important to be flexible and not become anchored to the high rents of recent years.
…though strong rents are still being achieved
To attract a good, long-term tenant who is prepared to pay a higher rent, the property needs to be the right standard. For decades we have found that a property in great condition will generally be well looked after by a tenant. Several landlords have seen impressive rents this quarter following upgrade works to their properties. For example, a 2-bedroom house in Bicester which had been fully refurbished was listed at £1,500 and let on the first viewing; a 2-bedroom apartment in Summertown which had new furniture, carpets and redecoration let at a 22% uplift in rent; and a 3-bedroom cottage near Chipping Norton had a large upgrade following an 11-year tenancy and achieved a 68% increase in rent (photo below).
Supply of property
Overseas trips for job relocations or sabbaticals have brought welcome stock to Oxfordshire’s rental market. For example, a 3-bedroom house in Summertown at £3,250, a 4-bedroom house in Clifton Hampden at £2,500, and a 3-bedroom townhouse in Wolvercote at £3,300 (photo below). In Woodstock, a change to parking permits has resulted in properties from the Airbnb market coming to the longer-let market. For example, a 3-bedroom house in the town centre at £1,800 which let after receiving multiple offers.
Failed sales
The run-up to an election normally leads to some stalling in sales market activity which may be why most of our offices have seen failed sales coming back to the lettings market. In each case, the property let within days of being listed. In some cases, the landlord wanted to continue to market the property for sale, which was agreed with the incoming tenants.
Waiting on the sales market
As mentioned, there is continued rental demand from would-be buyers waiting for mortgage rates to fall. Interestingly, our Banbury office has noticed a small increase in applicants who are selling their property and moving into rented accommodation for 12 months while they wait for mortgage rates to fall further. Clarity around future plans from the Labour Government should follow in the coming weeks and increased confidence from this and anticipated base rate cuts may bring a boost to the housing market later in the year.
Labour and the PRS
While Labour staked their claim as being the party of home ownership, and pledged to see through rental reform, there is detail lacking around addressing the chronic shortage of rental property. As well as building more housing, incentivising investment in buy-to-let would bring more stock and ultimately help to lower rents for tenants.
Although the Renters (Reform) Bill had passed through the House of Commons before the general election, Labour had proposed changes to the Bill, which will require a period of consultation before restarting its parliamentary process which, as we know, can take months. They had also committed to abolish Section 21 “immediately” if they won, however all legislation needs to follow this procedure and, with the House of Lords retaining a Conservative majority, we hope that they will again insist on court reform before introducing this ban.
As we have stated previously, landlords need robust grounds for possession in legitimate circumstances, and they need the system to operate quickly when they do. Of course, reforms to protect the millions of tenant households is a positive thing, but if this drives landlords out of the sector the improvements will be ineffective for tenants who continue to struggle to find a home to rent.
1 All rents are marketing rents and per calendar month.
