Back in
the Spring, there was a surge in Harlow landlords buying buy to let property in
Harlow as they tried to beat George Osborne’s new stamp duty changes which
kicked in on the 1st April 2016. To give you an idea of the sort of
numbers we are talking about, below are the property statistics for sales
either side of the deadline in CM19.
Jan 2016
– 21 properties sold
Feb 2016 –
14 properties sold
March
2016 – 36 properties sold
April
2016 – 10 properties sold
May 2016
– 13 properties sold
Normally,
the number of sales in the Spring months is very similar, irrespective of the
month. However, as one can see, this year was a completely different picture as
landlords moved their purchases forward to beat the stamp duty increase. You
would think that even with a basic knowledge of supply and demand economics,
rents would be affected in a downwards direction?
However,
there appears to be no apparent effect on the levels of rent being asked in Harlow - and
more importantly achieved - and this direction of rents is not
likely to inverse any time soon, particularly as legislation planned for 2017 might
reduce rental stock and push property values ever upward. The decline of buy to
let mortgage interest tax relief will make some properties lossmaking, forcing landlords
to pass on costs to tenants in the form of higher rents just to stay afloat.
Even those who can still operate may be deterred from making further investments,
reducing rental stock at a time of severe property shortage.
… but it’s
not all bad news for tenants. Whilst average rents in Harlow since 2005 have
increased by 18.6%, inflation has been 38.5% over the same time frame, meaning Harlow
tenants are 19.9% better off in real terms when it comes to their rent (which
is a sizeable chunk of most people’s monthly household budgets)
Year
|
Average
Rent in Harlow per month
|
2005
|
974
|
2006
|
1001
|
2007
|
1022
|
2008
|
1051
|
2009
|
1057
|
2010
|
1043
|
2011
|
1060
|
2012
|
1079
|
2013
|
1087
|
2014
|
1097
|
2015
|
1123
|
2016
|
1155
|
I found
it particularly interesting looking at the rent rises over the last five years
in Harlow, as it was five years ago we started to see the very early green
shoots of growth of the Harlow economy. As
a whole, following the Credit crunch (2011), rents in Harlow have risen by an
average of 1.9% a year – fascinating don’t you think?
The view
I am trying to portray is that while renting is often portrayed as the unfavorable
alternative to home ownership, many young Harlow professionals like renting as
it gives them adaptability with their life. Rents will continue to rise which
is good news for landlords as buy to let is an investment but, as can be seen
from the statistics, tenants have also had a good deal with below inflation increases
in rents in
the past. It’s a win-win situation for everyone although on a very personal
note, it’s imperative in the future that tenants are not thwarted from saving
for a deposit by excessive rental hikes – there has to be a balance.
For more
thoughts and opinions on the Harlow Property Market, if you are a Harlow
Homeowner or Harlow landlord, please visit the Harlow Property Blog http://harlowproperty.blogspot.co.uk/