Each month, we take 5 minutes to ask a lettings industry expert 5 things. This month we are lucky to be talking to Naveed Salim, Director at Martin and Co – Balham & Clapham Lettings & sales.
Q. Hi Naveed! Thank you so much for your time today. I know you’re super-busy so I’ll just get started. I was reading an article just last week that really interested me. Apparently, a recent study has suggested that around 75% of tenants in the UK are happy to just continue renting, and are not looking to actually purchase a property. The research had appeared to suggest that more and more tenants today are saying that they just don’t want to make the financial commitment to buying a home – and that they enjoy the flexibility and lack of responsibility that renting gives them. Thinking about this – there has been much more of a focus on home ownership in the UK than many other countries. Do you think there is a possibility that we might see a move towards home ownership becoming less sought after?
A. Yes and no. We have certainly seen this thought process and almost sort of acceptance that home ownership is simply out of reach for many, a situation aggravated by the challenging youth labour market, rising student debt and welfare reforms all of which make it more difficult for them to fly the nest and set up their own home. millennials have been labelled “generation rent”, as growing numbers of young people are renting their homes for longer periods of their lives than their parents’ generation. It’s interesting to note that the average millennial gets married at the age of 29. That’s nearly a decade later than their parents did, so one could argue that they will buy at some point but a bit later than what people did in the past.
Q. That’s so interesting. So you don’t think it’s a movement of thought as such; but more a lack of opportunity. That makes sense actually. So whilst we’re on the subject of options being lacking; another survey has suggested that there could be a rented housing supply crisis looming. It looks as though more landlords are selling than buying, whilst the demand for rented accommodation continues to increase. This shortage of private rented housing, coupled with an increased demand from tenants is leading to rent increases – and this trend is expected to continue over the coming years. What are your predictions on this front?
A. We have seen an influx of Landlords exiting the market, mainly due to the tax changes that have come in to effect over the past couple of years, and also due to the fact that they have seen major capital increases in the value of their investment and have simply decided to cash in. Rents have been steadily increasing over the past few years, due to the supply and demand of housing stock. As we were just speaking about, – there will always be demand for rental properties as many buyers cannot simply afford to buy, what with high stamp duties in London and the deposits that first time buyers need. When the supply of rental stock drops you have more tenants going for the same property with limited choice. I can only see the rental upward trend continue unless the government decides to reverse the tax changes to landlords or if housing stock increases and becomes more affordable for first time buyers.
Q. It’s definitely a difficult time for landlords. There are so many legislation increases too. Now… I know Halloween is well and truly over, but I stumbled on some interesting research this week about paranormal or superstitious issues that commonly put potential buyers off purchasing or renting a property. Apparently its really common for people to be put off by unlucky house numbers, someone having died in the property, rumours of a haunting or creepy neighbours! Is this as common as the article made out? Do you have any personal experience of this?
A. It is quite common in some cultures, we had one buyer who did not want a North facing house as it was deemed to bring bad fortune to the family. We also had a seller only accept £888,888 on their house, even though the buyer offered more!
Q. That’s insane! People are so funny! That reminds me actually; did you see the news story recently about the letting agents in Brighton that had to apologise for advertising what looked like a tiny prison cell as a ‘fantastic size bedroom with a double glazed window to the front and en-suite wet room area’? It was a really small room with just a bed, and a toilet right next to the bed! It was really expensive too! It made me laugh to be honest, but there is obviously a more serious side, in the sense that people are increasingly trying to market less as more. Working in the industry yourself; have you come across anything on a par to this?!
A. That’s funny. And no.. not really. I mean nothing to that extreme! Landlords are always looking to maximise their income, and especially in London. Every sq. ft. comes at a premium, there is nothing wrong with maximising space as long as the place of residence is safe, complies with housing legislation and is a comfortable place to live in.
Q. Yeah I guess. But within reason though! So here’s something many have considered unreasonable (or certainly unrealistic). Sadiq Khan has recently proposed an aim to introduce rent controls in London – and this has been met with some criticism. Kath Scanlon, an assistant professional research fellow at the London School of Economics for example has predicted that far from making London open to everyone, rent controls would actually “close off London to new residents and divide the city’s renters into winners and losers”. I’d be really interested to get your take on this?
A. Well my opinion is that It’s just another politician looking to make headlines for gaining a populist vote. The reality with any sort of rent control in London, is that it would simply drive landlords away from the market, and lower the standards on existing stock. What Mr Khan should be looking to do is to build more homes in the capital.
Thank you so much to Naveed for taking the time out of his busy schedule to do this for us. If you want to work with Property Inventory Clerks who truly understand the sector, get in touch with us.