Swansea

The rental market in and around Swansea and Gower is diverse, which may surprise people from outside the area. This already vibrant market is set to grow considerably with the construction of the brand new Swansea Bay Campus, coupled with the announcement that planning consent has been granted to build a £1billion tidal lagoon in Swansea Bay, both of which will see an influx of professionals and student tenants. These two projects alone are already changing the demographic of the Swansea rental market, with former residential areas slowly changing into more HMO-led areas and vice versa.

Some traditional student areas have already seen a shift over to the professional market and none more so than the Uplands area of Swansea. The demand from professionals in this area has increased significantly over the last three years due to a cluster of wine bars and restaurants springing up in a condensed area, which is also conveniently close to the city centre and two major employers in the area; Singleton Hospital and Swansea University.

A number of landlords have tapped into this tenant demand and converted large three storey buildings into, for example, three executive apartments with commercial premises on the ground floor. Conversions such as these can generate up to £30,000 in rental income annually. The more traditional rental areas in Swansea still remain strong, as do the affluent areas of Mumbles and Gower, which is where we opened our second office earlier this year.

Swansea is certainly on the rise and we are hoping that it will truly fulfil its potential of being a fantastic European coastal city. This confidence is not misplaced as there are a number of major developers who have built – and continue to build – new homes in Swansea, especially in the SA1 Postcode, which encompasses the city centre, marina and riverside developments such as The Copper Quarter.

In our agency we are dealing with a marked increase of buy-to-let investors, which can be contributed to the fact that landlords, both novice and experienced, can see excellent returns with some of our landlords receiving up to 10 per cent yields.

August 2015 was a superb month for us, reflecting the fact that 2015 has been an excellent year for the company, but we predict that 2016 will be even better.

Stats
Number of instructions of brand new city centre student  apartments: 22
New individual rental instructions: 11
Volume of re-lets: 19 Number of new move-ins: 34
Number of new lets: 37

Key issues facing the residential letting industry in Scotland at present are the Scottish Government review of the private rented sector, including increased security of tenure for tenants; more industry regulation and the case for rent controls; the extent to which lack of housing supply is pushing up rents; and forced landlords who came into the market on the back of the financial crisis that are now looking to sell.

I can report that, having first ventured into the world of residential letting in 1985, demand for rented property here in Scotland’s capital is the strongest that I have seen to date. The challenge for all agents is therefore obtaining more stock. In terms of our own new business, especially when it comes to landlords who take up our management services, year-to-date figures show that initial contact via online search has now overtaken referrals – a first for us.

A lack of housing stock is of course also pushing prices up. Our average monthly rent currently sits at £770 per calendar month. Concerns therefore about sky high rent levels are understandable, however in response to third sector voices calling for a better deal for tenants we would say, be careful of what you wish for. If the underlying problem is one of lack of supply, removing landlord options will have two key effects.

It will make landlords more cautious and push the rented sector up-market and it will make some landlords throw in the towel.

Both of these effects will be very damaging for lower income households. We are therefore arguing for more than one form of tenancy and incentives to encourage landlords into challenging sectors of the market.

Locally, the financial recession saw a number of sales-only agents move into letting. By contrast, the recovery has seen a number of letting-only agents now move into sales. Accurate figures are difficult to obtain, however our experience would suggest that currently more than 70 per cent of current city centre property purchases are for investment rather than owner-occupation.

Stats
Number of lets agreed: 10
Average price of properties let last month: £1,063pcm
Average rent of all managed properties: £770pcm
Average sales asking price reduction: 7%

In the last year we have noticed significantly fewer properties coming to the market as owners are just not moving. Meanwhile, there is increasing buyer demand for Milton Keynes, it has tripled compared to just one year ago – is outstripping supply and this divergence is growing. The consequence is that house prices are up 7 per cent annually to an average £230,498.

Buyers from London make up a growing proportion of the market as families are attracted to local high achieving schools. The pockets around the schools are particularly popular and there is a very low level of turnover in these enclaves.

London buyers are attracted to Milton Keynes because they can get significantly more for their money here. A small one-bedroom flat in London can come in at £400,000, the same price as an executive four-bedroom detached home in Milton Keynes. An annual season ticket from Milton Keynes to London costs £5,000, for this small cost you can save £150,000 on your home. First time buyers are drawn to the town for the same reason, taking advantage of comparatively low pricesto get on the property ladder.

Milton Keynes is just a half hour train commute to London, but the town is known for lucrative career opportunities. It was recently voted one of the top five places to earn a living in the UK when considering factors like mortgage repayments, the cost of living and the job market. Many businesses are setting up in Milton Keynes while others are moving their head office here – including prominent players in the car, retail and food and leisure industries.

There are a number of new developments in Milton Keynes, the largest of which is the Western Expansion Area between Stony Stratford, Two Mile Ash and Crowhill where 6,500 new homes will be built by 2030. The area will feature its own high street, a supermarket, schools, sport and leisure facilities, a library, a health centre and a variety of large open spaces and play areas.

Watch this space. Milton Keynes is on the up but there is a great deal of local economic activity in the pipeline which will keep the buyers coming and new and second-hand homes are crucial to satisfy the rising demand. Besides, who wouldn’t want to live alongside the famous concrete cows?

Stats
Average house price: £230,498
Average percentage annual increase in house prices: 7%
Annual rise in number of applicant registrations: 307%