The Bexley Rental Market
It’s fair to say that in the Sidcup area, a lot of properties are owner occupied. When you look at the entire Bexley Borough however, there is a large demand for rental properties. The last few years have seen a slow down in the explosive Buy to let market with changes in stamp duty and the way landlords are taxed having large implications on the number of new buy to let homes bought and the number of these landlords leaving the sector, not to mention Brexit. With reduced supply, surely rents will increase?
The government has just banned the charging of fees to tenants from letting agents and landlords with many people believing these costs will be recouped through increased rents, as it is unlikely landlords will take the hit of these charges from letting agents on an asset which they have solely to make money from. Within recent days, the government has also proposed the banning of the use of the Section 21 notice or the no-fault eviction. This allows landlords to regain the possession of their property without having to give a reason. From my experience, this is mostly used when landlords want to sell up or move back in but does offer the security that if a tenant is causing problems, they can get them out. With this gone, will landlords want to take the risk of an ever increasingly harder system to get their property back.
So in what direction are rental prices going to go over the coming months?
If we take a look at a standard 2 bedroom flat in the Bexley Borough, you would be looking to achieve a rental amount of £1067 per calendar month. For a tenant to rent this home, Zoopla tells us that the average income needed is £49250. If we split this between two tenants on the living wage in London working full time, there is a shortfall of over £6000 as it is. If rents increase as supply reduces, tenants will have no choice but to move to more affordable areas. This could help bring rents down if enough people move further out but it is unlikely to have any major effect as more people will be migrating from areas further in to London.
I do not personally believe with the current circumstances there is anyway for rents to decrease. The government is hurting the buy to let sector which provides a large part of the rental accommodation in our area. One way to make things more affordable for tenants is to get landlords buying again by reversing some of the tax changes and removing the extra 3% stamp duty. More transactions in the market place means more properties for tenants, better options and hopefully lower rents.
Let us know what you think.