My thoughts on the future of the Southampton buy-to-let market

I was recently reading a report by the ‘Home’ website which suggested that hordes of Landlords are selling their buy-to-let investments due to increasing burdens placed on them within in the buy-to-let market. Their findings suggested that the number of new properties that came onto the UK market, for sale, jumped by 11% as a result.

Increasing burdens include new tax rules coming in over the next 3 to 4 years. In a bid to heighten standards in the private rental sector Westminster has also announced that all self-managing Landlords (i.e. Landlords that don’t use a letting agent to look after their buy-to-let property) will soon need to register with a compulsory redress scheme to resolve tenant arguments and disputes.

Interestingly, I was chatting with a self-managed Landlord from Chilworth when I was out socially over the festive period. He wasn’t aware of other recent legislation that has hit the private rental sector, including the ‘Right to Rent’ regulations which came into operation last year. Landlords have to certify that their tenants have the legal right to live in the UK. This includes checking, and taking copies of, their tenant’s passport or visa before the tenancy is signed. Of course, if you use a letting agent to manage your property, they will usually sort this for you, as they will with the redress scheme when it is implemented.

If you are a self-managed Landlord the consequences for non-compliance are severe; if you let a property to a tenant who is living in the UK illegally, you will be fined up to £3,000! That same Chilworth Landlord popped into my offices in the New Year, and I checked all his paperwork to ensure that he is on the right side of the law going forward. I offer the same to any Landlord in the Southampton area – if you want me to cast my eye over your buy-to-let matters there will be no charge – just bring in some chocolates for the office team!

But what of all these extra properties being dumped onto the market in Southampton? When I looked at the records the number of properties on the market in now, as opposed to a year ago, tells an interesting story…

	1st Jan 2017	1st Jan 2018
Detached	286	329	15%
Semi	240	264	10%
Terraced	118	146	24%
Flat	512	548	7%
Plots + Other	82	67	-18%
Total	1238	1354	9%

  

Overall, Southampton does match the national trend, with the number of properties on the market actually rising by 9% in the last year.  It was particularly interesting to see the number of terraced properties increase by 24%, yet the number of flats rise by just 7%.

However, speaking with my team and other property professionals in the city, the majority of that movement in the number of properties, and the types of properties on the market, isn’t down to Landlords dumping their properties onto the market. The whole property market has changed in the last 12 months, with the majority due to the owner-occupier market rather than Landlords - a subject I will write about soon in my Southampton Property Market blog. You see, for the last ten years, each month there has always been a small number of Southampton Landlords who have been releasing their monies from their Southampton buy-to-let properties, as is the nature of all investments!

Nationally, the number of rental properties coming onto the market to rent fell by 16% in Q4 2017 compared to Q4 2016. But that isn’t because there are 16% less rental properties to rent – it’s because tenants are staying in their rental properties for longer, in turn causing less properties to be put onto the market for RE-LET.

Nevertheless, some Southampton Landlords will want to release the equity held in their Southampton buy-to -let properties in 2018. All I suggest is that you speak with your letting agent first - putting a rental property on the open market often spooks the tenants to hand in their notice days after you put the property on the market because they don’t like the uncertainty and also believe they will become homeless! The result of this is that you could end up with an empty property, costing you money with no rental income.  However, some letting agents who specialise in portfolio management have select lists of Landlords that will buy with sitting tenants in. If you have a portfolio in the Southampton area and are considering selling some or all of your properties – drop me a line as I might have a portfolio Landlord for you, allowing you peace of mind that you won’t experience any rental voids. 

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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