Abbey Independent Inventories
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Business not as usual
Property Intelligence 2019
Findrs Keepers - published October 2019
Renewals – a new normal
Across all offices we have seen an increase in the number of tenants renewing. In Quarter 1 we reported a change in behaviour with tenants negotiating more on rent or length of tenancy. With the same thing happening in Q2 and Q3 it’s safe to say that this seems to be the new ‘normal’. As with new tenancies, the landlords who are being sensible and flexible are the most successful ones. It can be better to keep a good tenant than risk a void.
Enterprising time to invest
Nationally, landlord confidence is low following Government intervention and uncertainty over the economic impact of Brexit. However, opportunities have emerged for committed investors. Where sales properties are sitting on the market longer, some vendors are willing to accept a lower offer in order to agree a sale. Recent research by Zoopla found that buyers in Oxford have been able to negotiate discounts of up to 5% on average in the first quarter of this year. This is higher than the UK average of 3.9%5.
It may feel an overstatement to describe 2019 as ‘extraordinary’, but it really has been an uncharacteristic year in terms of the Oxfordshire letting market. Across the county we’ve had weeks with lets into double figures followed by a week of little commitment from applicants. However, our letting teams continued to work hard to update and advise their landlords on a weekly basis, which has resulted in 627 lets this quarter – an increase of 4.7% on 2018. Here we look at trends from our eight offices across the county:
The ennui of uncertainty
Last year the Governor of the Bank of England stress-tested the banks for a worst-case scenario of a no-deal Brexit. Limits were set beyond anything seen before and the banks all passed – good news. However, the media headlines treated this more as a prediction of what would happen (“House prices would crash by a third in no-deal Brexit”1) which resulted in many people holding off making decisions for months. This quarter we have definitely seen applicants being more decisive, perhaps fed up waiting for something that may not happen.
Falling behind on supply
Although demand is picking up, supply remains an issue in Oxfordshire. In 2017 the Government announced their housing plan to build up to 100,000 homes in Oxfordshire by 2031. This equates to just over 7,100 homes each year, but according to recent stats only 7,730 permanent dwellings have completed over the last two years2. On top of this, South Oxfordshire District Council has delayed its Local Plan3 so the imbalance of supply/demand is unlikely to stabilise in the near future.
A different family market
The family market usually reaches its peak between Easter and the summer holidays. This year there has been steadier demand, with large houses in Banbury letting as early as February and traditional 1930s semi-detached houses in East Oxford letting as late as September. In Oxford in particular we noticed more families committing outside of the typical ‘busy summer’, and also more renewing their tenancies, meaning that many 3 bedroom homes which would have typically been rented by families were going to professional couples instead.
It’s been an unusual year so we can’t predict exactly what will happen over the next three months. It feels like there is still a bit of pent up pressure of people waiting for the outcome of Britain leaving the European Union and we have already started to see signs of people beginning to make decisions so this may continue. No matter what happens, Oxfordshire is well-placed to thrive with a strong economy, a predicted population increase6, many globally recognised companies and multiple science and research facilities all expected to continue to deliver growth across the county.
4 All individual rents in this report are pcm and marketing rents
6 ONS subnational population projections
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