Anyone in the housing market knows that the past few years have seen big changes in the UK property market. In particular, asset prices have continued to grow at levels far above wage-growth for the average earner. In 2015 alone, house prices rose by an average of 6.7% across the UK. In the Capital and the South-East alone, house prices grew by an average of almost 10% – the average house price in the capital is now around £536,000!
It is, therefore, unsurprising that first-time buyers are struggling to get onto the property-ladder with such high entry barriers to buying property. Without an extremely healthy injection from the most charitable bank in the world – the Bank of Mum & Dad – most potential buyers in their twenties are unable to buy a property until later in life. This is worsened by the fact that regulatory changes since 2008 mean that actual retail banks are far less likely to lend to first-time buyers unless they have a sizeable amount of capital to meet the deposit.
The reasons for the movement away from buying houses is two-fold. Firstly, the housing crisis, which is fuelled by a lack of supply in the Capital and the South East, has meant that property prices have risen at accelerated rates. Secondly, wage-growth has been relatively weak, meaning that demand increases have been unable to keep up with supply. This problem does not seem to be relenting.
With a generation of first-time buyers now unable to get onto the property ladder, particularly around the South East, they have transformed into “generation rent”. Indeed, recent news has informed us that the number of private renters in the capital has surpassed mortgage buyers for the first time. In 2003/04, around 405,000 households rented in the capital. Now, some 898,000 households privately rent. This is almost double the amount in just over ten years. Meanwhile, the amount of mortgaged home has fallen from by 17%, from 1 million to around 883,000.
Rental demand is now at far higher levels as there are far more potential renters. Even though landlords are experiencing some issues due to the government campaign on buy-to-let, it should not make them leave the market. It would be a mistake to leave a market when it is experiencing levels of higher demand.
What all landlords should consider, however, is ways to improve their property portfolio. The first and simplest way to do this is by improving the management processes of their properties. A lot of landlords fail to recognise that buy-to-let should be treated with the same work ethics and vision as any other business. By being entrepreneurs, improvements can quickly be made. By implementing property management software systems, such as Arthur, then landlords can reduce their workload and time spent managing their portfolio.
By being able to track work orders and message tenants/contractors/letting agents through the app, then it reduces the amount of work for landlords. All Arthur customers tell us that after they implement the system, they notice a radical reduction in their workload. There were various reports in 2015 which illustrated how much of a landlord’s time gets taken through property management. A recent study by one property company found that 67% are more stressed than they were last year. Notably, 53% of landlords spent a fifth of their annual leave dealing with tenant-related issues. That’s a lot of holiday time! By using Arthur, this stress can be reduced and holidays can be enjoyed.
In turn, this frees up a large amount of time to concentrate on new projects and increasing their portfolio. Expanding a property portfolio should be a landlord’s longer term objective. Although this takes more time, using a property management software system, such as Arthur, can enable a time reduction. Notably, many people run a portfolio as a secondary income to their main occupation. This makes earning that secondary income far less stressful, so more focus can be put on the main occupation.
The market now is in a very good state for landlords. Regardless of the media frenzy saying that the government is attacking the buy-to-let sector, the economy is now orientating towards a rental property sector. This provides a very good opportunity. In the short-term, landlords should consolidate and improve their property management systems. By doing this, landlords can focus on their long-term objective of successfully expanding their property portfolio.
Come and try Arthur’s 30 Day Free trial – see if we can help you improve and expand.