How to increase profits and reduce rents30 Aug 2023
Embrace the Property License! We at Rent Happily help landlords take advantage of the property license, offering more rooms and increasing their revenue, whilst reducing rent per tenant, so that all parties benefit.
Reality check: The rental market is under pressure. Rents are reaching new heights whereas landlords are quitting the market, against all odds. Read below to see how we got there and what we can do about it.
The reasons for rents going up
Rising costs is the first culprit for rent going up. With interest rates soaring tenfold in less than two years, it's no surprise that landlords need to adjust rents to match increased mortgages costs. Yet, rents have not surged as drastically as mortgages, leaving many landlords grappling with diminishing profits and pondering their place in the market.
A dwindling supply further fans the flames of rising prices. Several factors are pushing the supply of rented properties down, but how does this happen?
- Consider the licensing scheme, where the regulation forces landlords to apply for a property license if they want to rent to 3 or more individuals. As a result, unlicensed properties are only available to two sharers, reducing available capacity and creating a ripple effect on prices, as explained in my previous article. Any letting agent in Easton, Montpelier, Southville, Totterdown, Redland, Bishopston or Filton amongst others will confirm this.
- And then, there’s a pattern of landlords exiting the stage. As if facing shrinking profits wasn’t enough, landlords are also wrestling with tightened regulations and mounting uncertainties. This is drastically depleting the housing supply, meaning that tenants are losing their homes in Bristol. In this unfolding narrative, the looming shadow of the Renters Reform is casting unease over the sector. Adding to the saga, stringent Energy Efficiency rules are pushing landlords away and deterring further investments in the sector.To top it off, the siren call of higher house prices beckons landlords towards alternative investments, and who can blame them if they leave all this behind in search of greener pastures?
This is a complex scenario, where tenants seeking affordable housing find themselves squeezed out, as the Council waiting list increases dramatically, leaving them with little options but to rent privately.
Beliefs and expectations also come into play. We know that herd behaviour can lead to a chain reaction of instability. Should we raise rents simply because others do? Not necessarily, and here is where our story takes a hopeful turn. There are still some steadfast landlords who resist the urge to raise rents, even in these tumultuous times. Yet, the question remains: Can their resolve alone rekindle market confidence? Let’s see what else can be done.
The way forward for Bristol
Bristol's vibrant rental market stands at a crossroads. Tenants need houses to live in, and landlords need a profitable business in order to supply the required homes.
As an online letting agency, here's how we're making a difference:
- We champion the cause of property licenses in Bristol, which expands housing options for sharers, as discussed above. For instance, converting a 2nd reception into a room.
- This also opens the door to sensible rent increases in shared houses, restoring balance to landlords' financial sheets.
- The magic ingredient? Rent shared among more occupants, meaning tenants pay less individually, fostering a sense of community and affordability.
The outcome? Landlords can breathe easy again and enjoy steady incomes, whilst fostering a thriving market that benefits tenants with lower individual rents. It's a symphony of success, attracting more landlords onto the market and making more properties available to tenants. An unequivocal win-win for Bristol.