While looking at a property with a landlord in Colchester last week we were chatting about the Colchester property market and he mentioned a report, published by the Royal Institution of Chartered Surveyors (RICS) and PricewaterhouseCoopers (PwC), that stated almost 1.8m new rental homes are needed by 2025 to keep up with current demand from tenants. He was interested to learn how I thought this would impact on the demand for private rented properties in Colchester.
It was only last winter some commentators said the new stamp duty changes, and the way mortgage tax relief will be calculated, would be the end of the buy to let property market. Other commentators said that in the 12 months after the new stamp duty rules came into force on the 1st April 2016 landlords would flee the rental market leaving a flood of 500,000 rental properties nationally. That hasn’t happened so far but if the owners of any private rented properties in Colchester would like to put them on the market I have both existing and new landlords still keen to invest in properties in Colchester.
If the RICS and PwC report is correct we, as a nation, are facing a serious shortage of private rented properties. The higher stamp duty tax on buy to let purchases is something the government should take another look at because this can only increase the pressure on the rental market.
Colchester, one of the UK’s fastest growing towns, is already building thousands of flats and houses right across town but there will still be a shortfall.
How Do Private Rented Properties Affect Colchester?
Of the 50,100 households in Colchester, currently 26,000 tenants live in 11,000 private rented properties. If we spread those 1.8 million households equally around the Country that would mean, in nine years’ time, the number of rental properties in Colchester needs to rise by 4,700 (i.e. 42.8%) taking the total number of rented properties in the town city to 15,700.
This means Colchester landlords need to buy around 500 properties a year between now and 2025 to meet that demand because, according to my calculations, an additional 11,100 people will want to live in all those ‘additional’ Colchester rental properties. Certainly penalising landlords isn’t going to help the situation.
On a positive note Teresa May’s new housing minister, Gavin Barwell, has shifted the current administration away from focusing on just home ownership to solve our housing issues stating “we need to build more homes for every single type of person needing a home and not focus on one single tenure”.
With increasingly unaffordable house prices in Colchester the bottom line is the majority of new households will be looking for private rental properties in Colchester to meet their housing needs. Any legislation that doesn’t allow the rental sector to flourish will inevitably push up rents which is bad news for all Colchester tenants, whether they’re struggling to make ends meet or saving for a deposit to buy their own property.
If you have any comments or insights into the future of private rented properties in Colchester or would like an informal chat about any aspect of the Colchester property market please give me a ring on 01206 862288 or email firstname.lastname@example.org.