Shifting to Short-, or Mixed-Lets to Counter Effects of Rental Deflation in the UK
Despite the fact that most cities in the UK have seen a steadily increasing monthly and annual rental fee in recent years, in some regions rental prices have actually decreased. Whether this is due to the increasing competition for long-term letting, the demand or desirability for a specific location, or even Brexit’s economic uncertainty, we have seen an increase in the number of property owners shifting to short- and medium-term lets to account for this deflation.
While the reasons for rental price deflation in areas across the UK vary widely, HomeLet provides some insight into each region’s specific reasons for such decreases. HomeLet’s report specifies the rise and fall of rental price rates across various regions, breaking them down into both monthly and annual statistics.
HomeLet identified three regions in the UK that saw the most significant rental rate decreases throughout 2017, including Scotland, London, and the south of England.
Scotland, with long-term let rental hot spots Glasgow and Edinburgh, saw an average rental price decrease of 1% from November to December 2017.
In London, considered to be the UK’s most populous region, long-term let rental price drops averaged 0.4% in the same time period.
In the south of England, in cities such as Oxford and Brighton, the average rental price decreased by 1% between December 2016 and December 2017, signifying the most sustained and significant drop.
The Royal Institution of Chartered Surveyors (RICS) predicted this slump, due to the London housing market’s decrease in property asking prices. While these decreases are not attractive to the long-term let market, property owners would be justified in looking at the potential for medium to short-term lets as a means to increase profit.
Because some regions are impacted by tourism, landlords should look at mixing their rental portfolio’s availability, guaranteeing a continued income through long or medium lets during low season, and maximising income during high tourist season with short-term lets. At Air Angels Management we are seeing an increase in clients looking to further maximise their potential by engaging our service, which offers hassle-free property management services in London and Portsmouth.
If rental prices in Scotland, London, and the south of England continue to fall, landlords could experience a significant hit to their income. A growing number of landlords and property owners are logging onto the internet and typing in ‘rent my house in London’, or ‘rent my house in Portsmouth’, looking for the best way to maximise their rental income.
In order to combat the possible decrease in rental income as rates continue to decrease, without increasing the workload associated with property rentals, especially nightly rentals, landlords are relying on short-let and mixed-let management services such as ours. The mixed strategy of short, medium, and long lets can make up for any decrease in rental deflation, and may even in result in higher profits, as it is possible to charge more on average for nightly rentals than monthly rentals.
Property owners should contact us to help identify the best mixed-let strategy and maximise their rental potential.