What's your market?
Who's your tenant?
If you're a landlord you should know your market quite well and if you're thinking about becoming a landlord for the first time, perhaps because your savings aren't making the returns you'd hoped for or you just want to rent your own property out, then you'll benefit from market knowledge.
The lettings market is changing quite a lot. There has been quite a lot of regulation over recent years governing how it operates and giving local government quite a lot of power to influence it so you need to be au fait with how your local council operates in that respect; some are very 'involved', some not. Expect more regulation including compulsory registration and qualification for agents and possibly for private landlords aswell. Why? Because the PRS (Private Rented Sector), currently accounting for 16% of the housing stock in England, is projected to rise to 20% or more over the next few years. More and more people are renting as a normal part of their lives and waiting longer to buy (lack of deposit, access to suitable mortgage products etc). Inevitably, as the PRS becomes more and more important to the UK housing market, so the government will regulate it more and more - it's the same with any business sector.
Private renters, tenants, are often in the 25-34 yr old age bracket so there is a good start point. This age group have grown up with modern tech and will expect contemporary décor and furnishing and good access to the internet - if there is fibre broadband in the area of your property, all the better. All the information you need is out there in one place or another - you just need to know where to look. The English Housing Survey 2011-12 identifies the ages of your tenants. 34.7% of them, or 1,334,000 households, are aged 25-34. In the other age brackets in order of volume we find: 35-44 yr olds make up 21.8%, 16-24 yr olds 15%, 45-54 yr olds 13.8%. Interestingly 6.5% are aged 55-64 but a higher percentage at over 8% are 65 or over and presumably retired. All in all those figures add up to just under 100% but are close enough for our purposes. So far as age is concerned, you would do well to aim at 25-34 year olds and in my experience in the East Midlands, nearer to the 25 mark. However if you have a suitable property for older tenants then there are potentially 311,000 households renting in the PRS who are 65 or over.
The survey shows that the vast majority renting in the PRS are in full-time work (2,270,000 households) and only 282,000 are unemployed and renting in the PRS. This is encouraging for landlords but we should also remember that those who are unemployed and receiving housing allowances often make excellent long term tenants. The effects of the recent changes starting to be rolled out to Housing Benefit by the government remain to be seen though.
Looking at household size we find that the numbers of single and two person households (by far the largest figures) are almost equal in size at 1,018,000 and 1,376,000 respectively with three person households at 734,000. Once we look at four or more person households we are down to 417,000 and falling. The bulk of the PRS is in 1, 2 or 3 person households. Bear in mind aswell, that HMO (Houses in Multiple Occupation) regulations may apply to any household where there are two or more 'unrelated' occupiers and that the rules are more stringent for landlords or managing agents in these cases. It is even the case now that under Article 4 Direction local councils can impose planning restrictions on those wishing to create an HMO or return and HMO to standard residential use perhaps for sale purposes - seek professional advice before entering the HMO market.
So, what's your market, who's your tenant? Hopefully this post has helped. The English Housing Survey 2011-12 quoted here is full of useful information for anyone involved in property. Also you can use the Land Registry to find out what's going on and it's possible to drill down to a much more local level. Do so, it's worth it, you need to know what's going on in your business environment.
As ever, if you want more info feel free to contact me.