We all knew that 2016 was going to be an important year and it certainly didn’t disappoint! Many of us were surprised at the decision to leave the EU and as with anything of this magnitude, Brexit has created a challenging period of uncertainty which has naturally had an impact on the property market.
The local rental market remains buoyant
However, despite all the alarmist headlines, the local rental market has continued to perform well and has remained busy throughout. Demand continues to rise as the number of people in the private rental sector increases, and we are negotiating more new tenancies than ever before. Last August and September were record high months for new tenancies, both nationally and for Gibbs Gillespie Lettings and the overall picture going into 2017 remains positive.
Tenants continue to look for security with 79% choosing to renew beyond their original tenancy term. Landlords are also seeking consistency and we have seen a shift in pattern with only 50% looking to increase their tenants’ rent at renewal. The remainder are opting to prevent the risk of a void period rather than hold out for a rental increase.
What does 2017 have in store for the rental market?
The progressive restriction of tax relief on mortgage interest rates is being phased in from April, 2017.
From April, 2017 the higher-rate tax relief can still be claimed on the first 75% of mortgage interest costs. The remaining 25% will have the basic rate of tax relief applied.
From April, 2018 the amount of tax relief you can claim at the higher rates will reduce to 50% of your mortgage interest costs. The remaining 50% will have the basic rate of tax relief applied.
From April, 2019 the higher-rate tax relief can only be applied to 25% of your mortgage interest costs. The remaining 75% will be at the basic rate.
From April, 2020 you will only be able to claim tax relief at the basic rate level.
At a time when landlords have been unfairly targeted by being deterred from entering the market; and with seasoned investors about to be hit with the changes mentioned above (which will undoubtedly have an effect on their profit margins); ARLA have predicted that we could see a fall in the supply of rental property. Therefore, the demand for rental property remains favourable for landlords, mainly due to the chronic shortage of new homes being built, and we, like many experts, believe that rents will continue to rise in 2017, albeit at a slower rate.
We let, you relax
History and over 25 years' of experience has taught us that the property market is resilient and adapts to change. We finished 2016 on a positive footing and we remain optimistic going into 2017.
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Renting a property offers a solution for a large proportion of the population i.e. moving to a new area to start a new job, separation/divorce, moving out from the family home for the first time, affordability in saving for a deposit for a first home, etc. These scenarios are always going to be applicable and the private rental sector will continue to meet the needs of changing lifestyles as it offers a flexible form of tenure that suits the requirements of many people.
To find out more about how Gibbs Gillespie can help you let your property in 2017, contact the team at your local branch or pop along and speak to one of our property experts in person.
We look forward to speaking to you.