Pricing within the housing market has always been subject to fluctuations, but for landlords getting it right has become increasingly important as costs and responsibilities have increased.
Variables such as location, property size, condition and amenities all have an impact on a rental valuation, but ultimately the agreed price will be determined by market conditions. Tenant affordability and competition for property will also affect the price reached.
The latest ONS data shows that rental prices for property in West Norfolk increased by an average of 9% year-on-year this May, but this is not to be taken for granted due to the variability of market conditions.
The upcoming Renters Rights Bill will potentially add further complexity to the situation, however. In a bid to eliminate bidding wars between renters competing for the same property, the Bill proposes to ban offers above the advertised price.
What does this mean for West Norfolk landlords?
In reality, outside of exceptional circumstances, bidding wars are rare within the King’s Lynn and West Norfolk markets.
However, when the listed price becomes the ceiling, smart pricing becomes more relevant than ever.
Conservative pricing in the hope of attracting higher offers will no longer be an option. Instead, it makes sense to price at the upper end of the market to leave room to negotiate down. The tenant then gets a fair price based on their capacity and what they’re willing to pay whilst the landlord gets the best rent for their property within the market.
Simple, right? Well, not quite…
Getting the maximum income from a rental property isn’t just a matter of negotiating to a place of mutual agreement, but also the time that this process takes. Overpricing could harm your income more than adopting a fair price from the start, due to impact of void periods.
Void periods are the silent profit-eaters. The longer a property sits empty, it’s not only costing you rent, but you’ll also be paying out on utilities, council tax and insurance. A month-long void can take months to recoup.
Take for example a property listed at £1,000 PCM. Sticking to that price and having a month’s void, a 12-month period would result in an income of £11,000. Reading the market and quickly dropping to £950 PM would result in an income of £11,400 over the same period. It would take a further 8 months for the higher rent to make up the impact of the void.
Position right with Brittons’ insight
Knowing how the property sits within the current market clearly pays dividends: smart pricing is the smart choice. With experience of the hyper local market in and around King’s Lynn and West Norfolk, Brittons can put you in the best position when it comes to marketing your property. We want to get you the best price, but we also appreciate the wider consequences of overpricing and not responding to market performance.
Maintaining the best price
The Renters’ Rights Bill also proposes that it will only be possible for the landlord to request a rent increase once every 12 months. Tenants will have the right to challenge any increases that they feel are unfair and applications to the First-Tier Tribunal will only allow for rents to be maintained or reduced rather than potentially increased as is the situation now.
The best advice to landlords is to ensure that increase opportunities are explored on a routine basis.
Data from the English Housing Survey last year showed that tenants are staying in their homes for an average of 4.3 years. Implementing annual rent increases helps keep a property in line with market rents whilst regular incremental increases on an annual basis are easier for a tenant to anticipate and consolidate into their costs compared with a sizeable jump after several years.
At Brittons we can have these conversations with you to ensure that you don’t miss the opportunity to maintain a balanced rent.
In summary
Fair pricing doesn’t mean you’re undervaluing your property. In a world where tenants can’t bid higher, but pricing too high risks extended void periods, pricing right within the parameters of the market, and then maintaining fair increases throughout the tenancy is your best bet for maximising returns on your investment property.
If you’ve got any queries about the rent you’re receiving for your property, we are always happy to talk to you about your options.
Brittons, 27-28 Tuesday Market Place, King's Lynn PE30 1JJ / 01553 692 828 / [email protected]
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