The Tenant Fees Act may now be in place, but landlords can still make a profit from investment opportunities, according to a new report from The Daily Telegraph.
It has been speculated by many in the industry that this ban on fees will simply be recuperated by increasing rent prices. However, in some areas across England, affordability is making this not possible.
Specifically, this report highlights that London and the South are already stretched thin with the limit of rent prices, but landlords should look further north for new investment opportunities. According to these statistics, Barrow-in-Furness, in Cumbria, and County Durham are home to the least squeezed renters in England, paying an average of £5,895 and £5,327 per year respectively. For Barrow-in-Furness, this is 22% of their earnings, and for County Durham, it’s 23%.
In comparison, tenants in Kensington and Chelsea are paying an average of £34,678 per year, which is 95% of their earnings, and Camden renters are not much better off at £27,088, eating up for 78% of their earnings.
Leading up to the ban, HomeLet’s chief executive, Martin Totty, commented on the issue of rising rent prices. He said: “Whilst the aim of the Tenant Fees Act is to reduce the costs that tenants can face, landlords still need to cover the costs that are incurred when setting up a tenancy.
“With landlords already feeling the impact of taxation changes, the expectation is that costs will be passed back to tenants through higher rents, particularly for new tenancies.
“Landlords’ ability to increase rents will largely be determined by local market dynamics of supply and demand for property.”
In response to The Daily Telegraph’s report, Fionnuala Earley, from rental agency Rent My Home, commented: “The extent to which a landlord can raise rents is restricted by how much people are able to pay.
“In some areas, there’s higher demand for rental properties and people are able and willing to pay more, yet in others, they simply can’t, which is going to put pressure on certain buy-to-let owners.”
So, if you are looking for new investment opportunities once the fees ban settles down, you may want to consider the aforementioned Barrow-in-Furness and County Durham, as well as the following:
- Ribble Valley
- West Lindsey
- Stoke-On-Trent (we had to add this one)
Average rent prices in these areas are recorded to take up no more than 25% of a tenant’s income.