FixFlo is the UK’s leading software for online maintenance issue reporting and resolution used by hundreds of letting agencies throughout the UK. Every year, FixFlo carry out a survey of letting agencies and landlords and this year’s report has just been published comprising results of over 400 responses from UK letting professionals and more than 100 from private landlords. The report has produced some interesting findings that can help agents, landlords and tenants better understand the trends in the UK market.
Landlords Growing Portfolios despite Tough Treatment
The government’s assessment that the UK housing market is “broken” has led to an unprecedented level of new legislation being introduced in different forms by the Scottish Government, Welsh Government and the UK Government in Westminster. 72% of landlords think it has become harder of the last 12 months to be a landlord but despite this, 70% of landlords are looking to grow their portfolios. This suggests that despite the additional work and expense required in owning rental property in the UK, the returns are worth it. House prices continue to rise over time and rent levels are following suit. Increasing capital growth in property and rent value are due to a shortage of housing in the areas where populations are growing the most. The pipeline of new homes to be built is not matching the projected housing requirements (in fact, the gap between new homes needed and those being built is grower larger, not smaller) so indications are that house prices will continue to grow in the long-term with rent levels following suit.
Technology in Letting Agencies
The uptake of new technology and software solutions (such as FixFlo) is finally building momentum in the letting sector. The lettings sector has stereotypically a very traditional way of doing business and consequently, the sector has been very late to adopt new technology, but this seems to be changing. FixFlo have produced evidence showing that agencies that make use of new available technology can safely manage more properties per property manager. The average property manager without access to the latest tech solutions manages 110 properties compared to 153 properties by those agents who do.
Tenants Expect More
There has been an increase in the average number of repairs reported each year per property rising from 4.1 to 4.5. It is unlikely that properties require more repairs than they used to (the opposite is probably true) so this suggests that tenants need or expect more support than they did in the previous year. This is consistent with the trend of considering the tenants a customer and renting as a lifestyle choice.
The Landlords’ Perspective
The average landlord owns just over 2 properties and 70% of them are actively looking to increase this number of the next 2 years. Over 60% of landlords use a letting agency and this number is expected to rise as legislation continues to make things tougher for part-time landlords. The biggest factor in landlords choosing a letting agency continues to be word-of-mouth referrals.
The report provides a very insightful and broad view of the UK private rented sector. As we look ahead and think about what will feature in the 2019 edition, Brexit is sure to play a part and its effects on house prices. Whether house prices go up or down over the next 12 months, it’s hard to see what would discourage landlord investors given the strong appetite for portfolio growth. If houses prices drop, it creates an opportunity for investors to buy properties cheaper. If house prices continue to rise then BTL investment will carry on as a strong option for landlords already doing it successfully.
One thing is certain, it’s not going to be a quiet 12 months until the next FixFlo report.