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Addressing an exodus 

The latest Propertymark Private Rented Sector report included statistics that revealed some trends currently being seen in the Welsh buy-to-let market. While Buy-to-Let Direct’s UK-wide coverage means that my work doesn’t particularly focus on Wales, being located there, this naturally interested me.

The membership body highlighted how those operating lettings businesses in Wales are exiting the sector at twice the rate of their counterparts across the rest of the UK. This was evidenced with figures revealing that per Propertymark branch, five landlords were listed as selling their properties, compared to an average of two elsewhere.

Without knowing if other landlords are buying these properties, the resulting impact on available stock for rent is unclear but the imbalance between supply and demand that has been widely reported for some time now, does appear to be particularly acute in Wales.

While I’m not sure if all of these landlords are exiting the sector altogether, I imagine that some could also be modifying their portfolios, this does appear to be something that we should be discussing and seeking to address.

This is because the report also revealed that, compounded by this apparent sell-off, demand is high with an average of 318 new prospective tenants per Propertymark branch in Wales, compared to 118 across the board.

I feel that one influence could be the stricter regulation that buy-to-let landlords operating in Wales face.

Commenting on an article on the shortage of available PRS properties, one landlord asked if it was fair that ‘in Wales it now takes a whole year to gain possession of a property, whilst the tenant must only provide the landlord with 4 weeks’ notice’, before rhetorically questioning who would invest in a property in Wales.

From July this year, changes will come into force as part of the Renting Homes (Wales) Act update.

Landlords will need to ensure that properties are fit for human habitation which will include things like electrical safety testing and ensuring working smoke alarms and carbon monoxide detectors are fitted.

The majority of landlords are responsible and already ensure that their properties are safe and maintained to a high standard. Other changes covered by the Act are to documentation so the change of law, in practice, shouldn’t have too much of an impact on landlords.

I feel that perception is important, however, and I can see how landlords could perceive the lettings industry as offering diminishing returns on time and money invested as a result of growing tax and regulatory requirements.

There is plenty to counter this though and, using Wales as an example, we see how a brokers’ knowledge of current market conditions can help to give landlords more of a complete picture and assist in their decision making.

We have seen some changes to work life and tenant behaviour over lockdown and whilst some of that might be returning to more pre-Covid times, I think the desire to live closer to the country or coast will remain to a degree for those whose work will remain flexible.

Wales excels here; the West coast has miles of beautiful coastline and holiday villages, which for anyone considering holiday lets or coastal rentals is an excellent consideration, whilst mid and North Wales offer the opportunity to purchase in the country and get the added value of rural property and more space.

Despite this, I feel that the view of Welsh property to the rest of the UK is potentially a little backdated, with pictures of industrial areas and mining towns. However, regeneration in the last couple of decades has transformed many of these areas and some of the more rural areas are now far more accessible.

Property prices are still low relative to other parts of the UK, meaning that strong yields can be achieved. With a number of indices highlighting how these are growing at pace, however, there is potential for capital appreciation over the longer term, something smaller landlords are often looking for.

This shows that in addition of brokers benefitting from a good grasp of prevailing market influences, it is also valuable to have regional knowledge, understanding the nuances of the areas in which they operate.

We are living through a time of extraordinary economic uncertainty so the advice industry professionals can provide is as important now as it has ever been.

Buy-to-let Direct @ Twitter

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Buy-to-Let Direct Limited: registered in England no. 06664758 : Regus House, Malthouse Avenue, Cardiff Gate Business Park, Mid Glamorgan, Cardiff, CF23 8RU. Buy-to-Let Direct is an Appointed Representative of The Business Mortgage Company Services Ltd, which is authorised and regulated by the Financial Conduct Authority (No. 302764) to transact regulated mortgages and registered as a Consumer buy to let arranger. The FCA does not regulate some investment mortgage contracts.