More change is on its way: Marcus Arundell @homeletsbath
What are the prospects for Bath’s lettings market? With numerous changes on the horizon, Marcus Arundell of Homelets wonders whether the city’s housing could get even more expensive.
Change and disruption have been a consistent theme over recent years and months – in politics, business and, it seems, life generally. That’s just as true in the lettings market. But what’s really significant is that the changes just keeping coming.
Landlords don’t generally earn a great deal of public compassion, but the truth is that they have taken a battering in recent years. In fact it’s surprised many of us that more of them haven’t sold up and quit. Tax reliefs have gone down, stamp duty has gone up, and tighter new regulations have come into force.
And there’s more on its way – three key regulatory changes in particular.
A cap on tenants’ deposits. The cap isn’t fixed yet, but could amount to a limit of the equivalent of five weeks’ rent where the annual rent is less than £50,000, and six weeks’ rent over £50,000. Many landlords have got used to taking six weeks’ rent as a deposit, so this change will mean they have less of an insurance against serious damage. But it will make life easier for tenants.
Three year tenancies. This will give tenants longer term security, but make it harder for landlords to swiftly remove a difficult tenant.
A ban on tenants’ fees. This is a big change, as tenants currently pay substantial fees to landlords or lettings agencies for various tasks like carrying out an inventory or checking up on references – or just finding them a property. This work costs money, so someone will have to pay for it.
The upshot of these three changes? Most probably higher rents. In the case of the ban on tenants’ fees, it’s hard to see how it won’t lead to this. Letting agencies will need to charge someone for the work they do, and that will become the landlord, and many landlords will want to cover that extra cost – and the only person who can cover it is the tenant.
So: no fees is great for tenants. But higher rents isn’t.
How will this play out in Bath? Even here, change is a constant. Bath is evolving, and quite dramatically. New developments continue to emerge onto the skyline. New shops and restaurants continue to open. And new arrivals continue to arrive, particularly from London, bringing their London money with them.
As a result, rents, like house prices, have risen faster here than the UK average. That trend probably wouldn’t have changed even in the absence of the regulatory changes. But with the regulatory changes, the pressure for rent rises has gone up a couple of notches.
However… in times of uncertainty, with economic clouds on the horizon, rapid increases in rents may look reckless. So, although I expect to see considerable rises, I think they will be tempered by a general air of caution. Landlords can, after all, remind themselves that the value of their property has gone up, and many will ruefully swallow many of their extra costs.
But let’s remind ourselves. The only thing we can be sure about is that things won’t stay the same.