24th February 2022
The landlords in Wolverhampton really started to embrace Lettings in 1990 after the change to the Housing Act in 1988, which introduced the Assured Shorthold Tenancy that we all operate under today, so what’s changed this year?
At that time, the Private Rented Sector was sitting at just 7% (7% of all properties being privately rented), but since then the market has grown fast.
Currently, 21% of the total housing stock is privately rented, which has come around due to an astounding level of growth, but in the last 2 years, this seems to have taken growth to an entirely new level.
We have seen masses of investors wanting to buy in the area, rents rocketing in price, and properties prices increasing to an unprecedented rate.
So, what does all this mean for Landlords in the PRS now?
As you can imagine we get asked a lot of questions daily, so we decided to answer the most common questions and put them here for you.
We also decided to look at our stats over the last 2 years (2020 and 2021) and interview Ali Durrant, our Branch Manager on the ground in our Wolverhampton branch on what he has seen over the last 24 months and in particular the beginning of this year (2022).
Here are our findings on the Lettings Market in Wolverhampton in 2022...
Where are the biggest demand areas in Wolverhampton from tenants right now?
We are seeing the biggest demand we have ever seen in history for rental property, in January, we were getting upwards of 50 pre-applications per property, it was crazy! So much so we had to build an automation system to deal with the hundreds and hundreds of tenant calls coming inbound to the office every day, it was chaos!
With that in mind, it seems any property right now rents fast, but if we had to select the best areas (the most commonly asked for areas) it seems North and East Wolverhampton is winning (2022), being the WV10 and WV11 postcodes (Oxley and Wednesfield).
It’s also worth mentioning the close follow-up areas being asked for are Penn, Bilston, and Willenhall too.
What type of property is there a shortage of right now?
In these strange times, there is a shortage of all types of property at the moment, which means it really is a landlord’s market, but there does appear to be more flats and smaller properties on the market than the larger 3 and 4-bed homes.
This is probably due to our experience of lockdowns. Many tenants are looking for that little extra space now than they would have probably accepted before because we all craved more space in the lockdowns of 2020 and 2021.
Which area is attracting investors right now?
It seems a real mixed bag right now, probably due to the level of activity being higher than we are used to seeing. HMO investors are trying to find pockets where article 4 isn’t in operation and are picking up already active HMOs near the hospital (WV11).
We also have people looking for the cheaper areas to buy to try to maximise cash flow, as well as quite a few more professional type investors that are looking to opt for more quality professional areas, which would normally attract higher capital appreciation.
How much have the average rents gone up in the last 2 years?
Properties in the UK (outside of London) have on average gone up by 12.6% year on year, and we are certainly able to confirm this increase and in some cases more. We have had a lot of landlords reviewing their rents, albeit some may have not been reviewed for a couple of years, with some increasing by as much as £200 per month (25% increase). In some cases,
our system shows rents have increased for us locally by nearly 15% over the last 12 months on average.
How much have property prices gone up in your market?
The average property price in the West Midlands region is £262k. The average price of a property, however, has increased by £23.4k (10%) over the last twelve months. The average price of an established property is £261k. A point to note; the average price of a newly built property here is £301k.
Is there a market for furnished or all unfurnished now?
We tend to find that with smaller properties, yes furnished still works as long as the furnishings are of good quality, however, for the larger properties (2 bedrooms or above), normally unfurnished is preferred.
What’s the most asked for feature in properties now by tenants?
Generally, the most common thing people seem to want now other than more space is en-suites in HMOs, they seem to have become an essential item, and as a result, are actually becoming very difficult to let without these, and for single lets, parking and/or driveways go a long way too.
What would you buy now if you were buying Ali?
I would buy a 3 bedroom home in an average to the above-average area, such as WV6, WV4, or WV8. We see high rent return in these areas, longer tenancies with families, which means fewer voids and less maintenance. With that in mind, I would also consider a modern 2-bed flat within a couple of miles of the hospital subject to lease, etc to get into the contracted NHS worker market.
Are the landlords that are buying 1-time landlords or multiple investors?
We seem to be getting a lot of portfolio buyers at the moment, adding to their existing portfolio and seeking opportunities from the older 20-year landlords that are selling now due to their mortgages expiring and retiring.
What gives the best return in your area?
We find modern 2-bed flats can be picked up for a good purchase price at the moment as the bulk of demand is in freehold, you need to be aware of shortening or expiring lease terms or have a plan/allowance for that, but it does mean better purchase prices can be negotiated
Also, there are a lot of 3-bed semis that generate £800 - £900pcm which can still be picked up for around £175,000 in mid-range areas, giving around a 6% gross yield, easy solid rental units, longer-term tenants, and decent capital appreciation too, so good all-rounders which should stand the test of time.
If you have any queries, want to discuss anything in this article, or want to discuss buying property, just email me at email@example.com