As a landlord, you’ll be eager to generate the highest possible rent you can whilst keeping in line with market rents and providing acceptable living conditions.
To this end, you’ll no doubt be keen to know which types of homes are experiencing the largest rental increases at present.
Well, new research from Hamptons has revealed that landlords with larger family properties are in the money when it comes to rent rises.
The longing for a greater amount of living space, which has become a key priority since the start of the pandemic, has helped to drive up rents on bigger properties faster than those on smaller homes.
Four-bed properties witnessed the strongest rental growth in October, the research found, with the average rent on a four-bed home across Britain increasing to more than £1,940 pcm. This was up some 10.6% on the same time last year and was almost triple the rate of growth of a one-bed, which – by contrast – grew only 3.7% year-on-year to stand at £875 pcm.
Nevertheless, strong and consistent rental growth – which hasn’t been impacted by the pandemic in any tangible way,– means that the cost of an average one-bedroom home in Britain is now the same as the cost of a two-bed in 2016.
The research found that the cost of trading up from a one-bed to a two-bed rental property has in fact doubled over the last three years.
In October, it was £144 (or 16%) more to let a two-bed-home. This was more than double the gap - £68 or 8% - seen in October 2018 and adds up to an additional £1,728 each year.
There has also been an increase in the price of moving from a two-bedroom abode to a three-bedroom house, with tenants now having to pay an additional £142 or 14% each calendar month to trade up from a two to three-bed home. This was £30 more than in October 2020 and will cost the average tenant an extra £1,705 each year.
Once again, the strong growth in rental prices was shown by the fact that the average two-bed property across Britain costs the same each month as a three-bed home did in 2018.
As you would expect, it’s the capital where tenants will pay the most to trade up, both in absolute and percentage terms. The average two-bed in the capital cost £567 or 42% more each month than a one-bed in October.
By contrast, the North East – famously one of the most affordable places to rent – takes the crown for being the cheapest region to trade up from a one-bed to a two-bed.
The East Midlands, meanwhile, has seen the biggest increase in the cost of trading up, setting tenants back 12% or £63 more each month to trade a one-bed for a two-bed home than in October 2020.
This comes as a result of a fall in the cost of one-bed properties in the region (down by 0.2% year-on-year), at the same time as rents for two-beds have increased by 9.7%.
Despite being by far the costliest region to trade up, the capital was actually the only region where it was cheaper to trade up this year than in 2020 – as a result of rents on one-bed properties in London growing quicker than two-beds.
Younger tenants – including students and young professionals – and pied-à-terre hunters returning to the capital post-Covid have helped to increase demand for one-bed homes. This, in turn, has helped to boost rents.
There has been an increasing trend in recent years for families to rent in the private rented sector, and there can be certain advantages to renting to this demographic. They may be more likely to stay for longer, for the stability and certainty that this provides, and also treat the home more like their own than, say students might – or more transient young professionals.
On the other hand, the prospect for more wear and tear and damage may rise with family tenants, especially if they have young children.
Such a demographic may also be more likely to desire a pet in their home, which could cause issues if you’re not willing – as the majority of landlords aren’t – to allow pets in your home.
But the trend is on the way up and there is definitely something to be said for targeting families with larger homes. It seems like the race for space will be one of the long-term, unintended legacies of Covid, and those landlords who take advantage of this could reap the rewards.
Here at RentOnCloud, we can help you to get the most from your tenancies in a smooth, hassle-free, streamlined way. Our online, cloud-based platform can help you to manage all aspects of your rental homes, all in one place.
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