Rents set to rise in Harrogate!

The next few years may well see some significant changes in the Harrogate property landscape. Our belief is that rents in the towns private rental sector will increase at a faster rate than property prices rise.

Let’s explain why we’ve have come to this conclusion.

Put quite simply we’re talking about the laws of supply & demand. The current supply of new homes (new builds) for sale locally (3,000 or more have already been directed from Whitehall) is considerable and growing exponentially year on year. The five biggest mass market builders in the UK including Barratt (David Wilson), Persimmon, Taylor Wimpey, Bellway & Redrow are building or about to build here, along with a good number of other smaller builders to include Charles Austin, Briahaze, Kebbell, Linden, Newby, Miller and several more.

Taking into account the above together with the recent, large scale town centre developments such as those at Winsor House on Cornwall Road, Back Dragon, Fawcett Mews etc will continue to feed our market and at the same time stabilise property purchase prices. Meanwhile the demand for accommodation from aspiring home owners who are saving for a deposit to buy a house has surged at a time when supply of decent quality rental property in Harrogate is limited.

A decline in the availability of rental properties in the town and increased demand could coincide with a further reduction in the number of private Landlords locally as the effect of the Governments tax demands on private Landlords bite more deeply.

increases in rent prices

Again put quite simply, the new 3 % surcharge on SDLT (Stamp Duty) on BTL (Buy to Let) properties coupled to tax reforms under Section 24 (the end of the ability of a Landlord to offset BTL mortgage interest payments against income tax) have bruised the attractiveness of property investments even in Harrogate. On top of these reforms, all of the main political parties are now promising a ban on fees for tenants in a new parliament.

It appears that some of our politicians believe that transferring rental costs , such as referencing fees, from the tenants to the Landlords is a good idea. Squeezing Landlords & Estate Agents may well play well in the popular press but when this reform was introduced into Scotland in 2012 it resulted in increased rents for tenants.

Simple logic suggests that if landlords reduce their portfolios because new taxes & regulations are diminishing their investment yields then tenants will inevitably have fewer properties to choose from and the rents are almost certain to be pushed higher on the available stock.

It seems to us that flashing both red and green lights at the same time into the private rented sector is not a good idea. Governments cannot expect small private landlords to continue to house around a fifth of the UK population and severely tax them at the same time.

Almost no landlords invest in rental property as a charitable undertaking as more often it’s a real business for them and is their retirement pension. Something has to give and the question is this:  if it wasn’t for private landlords where would 20 % of the population be living today given that a great deal of our Council housing stock was sold off in the 1980’s.

In summary we believe that high house price inflation will be gently restrained over the coming few years in Harrogate. Sadly a good number of potential buyers especially FTB’s (First Time Buyers) will not be able to afford to buy a house even with help from the bank of ‘mum & dad’ and the sad fact is that local authority aren’t building enough council houses. More families will need to rent and rents are likely set to significantly increase.

All in all these are interesting times in the property market in Harrogate. Investing in BTL property currently still makes very good financial sense in terms of rental income and capital growth over time and we do believe that yields will increase. By the same token those buyers securing a good house locally are also very well placed.

If you wish to discuss the above or are interested in the Property market in Harrogate then please come along and see us and enjoy a free no obligation chat about the services we provide.

Charles

About Charles

This blog follows the residential Sales and Lettings market in Harrogate, Knaresborough and surrounding villages.You will find information, analysis and guidance here along with news about Harrogate. I’m Charles Myring working in the Myrings Estate Agents Ltd business alongside my son Simon , daughter Gemma and dedicated sales teams. If you're thinking of Selling / Buying / Letting / Renting property locally Myrings would be happy to assist.