Average Rents in Oxford set to rise

Back in the Spring of 2016, there was a surge in Oxford landlords buying buy to let property in Oxford as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1^st April 2016. Below are the property statistics for sales either side of the deadline in OX2:

Jan 2016       –  42 properties sold

Feb 2016      –  27 properties sold

March 2016  –  91 properties sold

April 2016     –  19 properties sold

May 2016      –  23 properties sold

Normally, the number of sales in the Spring months is very similar, irrespective of the month. This shows that Government policy does affect behaviour in the housing market.

During 2016 Oxford rents rose steadily is not likely to inverse any time soon, particularly as Government legislation planned for 2017 might reduce rental stock and push property values ever upward. The decline of buy to let mortgage interest tax relief will make some buy to let properties lossmaking, forcing landlords to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing growth in rental stock at a time of severe shortage in Oxford.

But it’s not all bad news for tenants. Whilst average rents in Oxford since 2005 have increased by 22.6%, inflation has been 38.5% over the same time frame, meaning Oxford tenants are 15.9% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets).  However according to Dataloft, Oxford remains the least affordable place to rent outside of London with average rents approaching 50% of average household income (assuming household income is 1.5 times Oxford’s average earnings).

Year	Average Rent in Oxford per month
2005	2030
2006	2077
2007	2123
2008	2193
2009	2227
2010	2196
2011	2249
2012	2300
2013	2334
2014	2369
2015	2421
2016	2490

However, looking at the rent rises over the last five years in Oxford following the Credit crunch (2011), rents in Oxford have risen by an average of just 2.4% a year way below the c6% per annum increases in house prices experienced over the same period of time.

The view I am trying to portray is that while renting is often portrayed as the unfavourable alternative to home ownership, many young Oxford professionals like renting as it gives them adaptability with their life. But, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents debunking the myth that landlords have profited from hiking rents above either inflation or the increases in costs in house ownership.  In reality, landlords have been prudent and cautious recognizing that their tenants have been living through an economic downturn.

However, there is a tightrope for landlords to walk balancing the preservation of stable income from known tenants vs. increasing rents above the long-term trend to re-balance their returns.