Oxford Rents Set to Rise to £2,338pm in Next 5 Years

It’s now been close to 18 months since annual rental price inflation in Oxford peaked at 3.4%. Since then we have seen more humble rent increases. In fact, in certain parts of the Oxford rental market over the autumn, we have seen some slight reduction. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may be running out of steam?

Well, possibly in the short term, but in the coming few years, it is my opinion that Oxford rents will regain their upward trend as demand for Oxford rental properties outstrip supply, and this is why.

The only counterbalance to rental growth would be an increase in rental stock (i.e. the number of rental properties in Oxford). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning fewer new properties will be bought to rent).

Interestingly, countless market experts assumed at the start of 2017, that the number of rental properties would reduce throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords would look to serve notice on tenants, sell up and invest their capital elsewhere.

Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Oxford, that Oxford landlords are actually either re-mortgaging their Oxford buy-to-let properties instead or converting their rental portfolios into limited companies to side step the new taxation rules.

The sentiment of many Oxford landlords is that property has weathered economic shocks well in the past, and there is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currencies.

Remarkably, there is some good news for tenants, as the Government recently published the draft Tenants’ Fee Bill, which is designed to prohibit the charging of tenants lettings fees on set up of the tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth.  It really is swings and roundabouts!

Rents in Oxford over the next 5 years will rise by 9.2%, taking the average rent for a Oxford property from £2,141 per month to £2,338 per month.

Rents in Oxford over the last 12 years have risen by 21.5%. I don’t expect the future rise to be a straight-line either, because I have to take into account the national and local Oxford economy, demand and supply of rental property, interest rates, Brexit and other external factors. Please see the graph for my projections

In the past, making money from Oxford buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Oxford property market, as an Oxford landlord, you are going to need to work smarter in the future and keep abreast of information, advice and opinion to hand on the Oxford, Regional and National property markets.

Oxford landlords – don’t scrimp on an Inventory!

In a recent Bristol court case where a group of six student tenants claimed back in excess of £750 of deductions made by their letting agent.

The six took letting agency Digs to court after the firm - acting on behalf of a landlord client - informed the tenants that £756 would be deducted from their deposit to cover cleaning and reprinting. 

One of the tenants - Ed Straw - disputed the deductions and took Digs to court, using photographic evidence to support his case. Digs was subsequently ordered to repay the deductions in full, plus interest and court costs.  

In times when landlord costs are rising, it is tempting to look for places to save money, but comprehensive inventories protect both landlords and their tenants, ensuring that there is a detailed record of condition prior to a tenancy and following the end of a tenancy.  Tenants should be given the opportunity to review and make comment/amendments to the inventory on taking-up residency, and be given every opportunity to rectify any damage or cleanliness issues on departure.  Letting agents have a critical role to play, to ensure amendments are reviewed and agreed based on physical inspection, and to communicate any developing issues through the term of a tenancy – a ‘no surprises’ approach is critical as is a good working knowledge of how deposit protection agencies will adjudicate to ensure retentions are most likely to be seen as reasonable.