Is the Gravesend Rental market sleep walking into disaster?
Tenant arrears climb as the cost of rent outpaces salary growth, whilst 40% of mortgaged landlords need to renew their loan in the next year, and a third of these may raise rents!
In the first three months of 2024 the percentage of tenants ending their tenancy with unpaid rent increased to 18% – up from 15.3% last year.
A recent article in The Negotiator confirmed that the cost of rent has outpaced salary growth by 5.2% over the past 10 years.
Average rent arrears claims climbed 27% in the first quarter this year (from £1,435 to £1,816) when compared with the same period last year, the highest figure yet!
Running in parallel with the above 40%, of mortgaged landlords must renew their loan in the next year, and a third may raise the rent. Whilst, the Bank of England announced last month that mortgage arrears jumped by 9.2% in the final quarter of 2023 and by 50% on the previous year.
With rental prices rising at a faster rate than earnings, the issue of rental affordability is only going to get worse. A tenant’s ability to put money aside for ‘emergencies is also becoming impossible which means they don’t have any savings for unpredictable events.
We are experiencing Landlords having to increase rents considerably to cover increased interest rates as their mortgages come up for renewal resulting in many tenants serving notice to leave.
The average rent and income requirements in Gravesend currently run at:
One bedroom - £1025pcm. Income required £30,750
Two bed is £1491pcm. Income required £44,730
Three bed £1719pcm. Income required £51,570
The average income for the South East is approximately £33,000 per annum.
So what should tenants and Landlord be doing now:
LANDLORDS
If you have a mortgage act now;
Step 1) Check when your mortgage comes to an end
Step 2) Talk to an independent financial advisor who can look at the best renewal deal for you.
Step 3) Talk to your agent or review your AST – when can you increase rent and how if needs be.
It is also worth considering the cost of a property becoming vacant. Before serving any notice to a tenant consider if they look after your assets and currently pay their rent on time. Any vacancy period comes with council tax costs (see article), bills and maintenance and a lack of rental as well as fees associated with finding another tenant.
TENANTS
Be prepared!
Step 1) Review your contract to see how & when your renewal is due. Its worth noting here that your landlord cannot increase the rent whilst you are within a fixed term contract (unless the contract specifically allows for this)
Step 2) Look at your monthly budget and spending and think about what you could reasonably afford in terms of an increase – this may well be nothing, however you are better to do the exercise early in your own time before your Landlord or agent contacts you.
Step 3) Look at what is currently available to rent – could you afford to move if you had too? What is the alternative?
Step 4) We are here to help. If you have any concerns contact the office for help and advice.
If you have any tenancy related queries please do not hesitate to contact the office. We are here and ready to help!
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