Southampton Rents To Rise Quicker Than Southampton Property Prices In Next 5 Years

The next five years will see an interesting change in the Southampton property market. My recent research has concluded that the rent private tenants pay in Southampton will rise faster than Southampton property prices over the next five years, creating further issues to Southampton’s growing multitude of renters. In fact, my examination of statistics forecasts that ..

By 2022, Southampton rents will increase by 23%, whereas Southampton property values will only grow by 17%.

Let me explain why I have come to those conclusions:

Over the last five years, property values in Southampton have risen by 31.6%, whilst rents have only risen by 16.3%.

Throughout the last few years, and compounded in 2016, tenant demand for rental properties continued to go up whilst the Press predicted some landlords expect to reduce their portfolios in the next couple of years, meaning Southampton tenants will have fewer properties to choose from, which will push rents higher. In fact, talking to fellow property professionals in Southampton, there appears to be privation and shortage of new rental properties coming on to the Southampton lettings market.

Landlords have some intriguing challenges ahead of them in the coming years most notably in that the Tory’s have changed the taxation rules for landlords in the way buy to let properties are to be taxed. On top of that, there is the ban on letting agent fees which is still to come into force (probably in 2018). When that happened in Scotland in 2012, Scottish letting agents passed on those fees to their landlords, who in turn increased the rent they charged to their tenants.

All I would say to Theresa May and Philip Hammond is that they must be wary about indicating both red and green lights at the same time to the private rented sector. They can’t expect the armies of small private landlords to continue to house around a fifth of the population and then tax the hell out of them. They didn’t invest in buy to let as a charity or to satisfy any philanthropic urges. Something has to give – and that will be significant rent rises over the coming few years (and before anyone gives me any derogatory comments about landlords … if it wasn’t for landlords buying all these buy to let properties over the last 15 years, I am not sure where everyone would be living today – because most the Council houses were sold off in the 1980’s!).

With the challenges ahead, with the ‘B’ word (that’s budget if you wondered!), house price inflation will be tempered over the coming five years in Southampton. As I have discussed in previous articles, the number of properties on the market in Southampton remains close to historic lows, which is both good as it keeps houses prices relatively stable, yet not so good as it impedes choice for buyers… and hence why I believe property values in Southampton will only be 17% higher in five years’ time.

Whilst on the other side of the coin, with the challenges facing landlords and the significant shortage of new homes being built, Southampton people still need somewhere to live. If those people aren’t buying houses and the local authority aren’t building council houses in there thousands (because they have no money), with the average rent for a Southampton rental property currently standing at £1,076 per month …

Over the next five years, I predict the average rent

in Southampton will rise to £1,323 per month

These are interesting times. There is still money to be made in buy to let in Southampton – Southampton landlords will just need to be smarter and more savvy with their investments. If you are looking for such advice and opinion to help you meet those investment goals, one place you can find more information is the Southampton Property Blog

If you are an existing landlord or someone thinking of become a first-time landlord looking for advice and opinion and what (or what not to buy in Southampton), one source of information is the Southampton Property Blog 

If you are looking for an agent that is well established, professional andcommunicative, then contact us to find out how we can get the best out of your investment property.

Email me on brian.linehan@belvoirlettings.com or call on 023 8001 8222.

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