Even when the financial crash of 2008 rocked almost every aspect of life as we know it a steady co-relation was maintained between rent and average earnings growth but mid 2010 all of that changed; as rents rose the average rate of pay fell and vice versa. Now, as this unpredictable game of cat and mouse looks set to continue what does that mean for renters and landlords?
In 2015 it is forecast that rent will rise by only 2% while average earnings will have increased around3.5% from the year before which effectively means the majority of people will be better off after bills have been paid.
This is very good news Londoners who already enjoying the highest rate of disposable income in the UK despite the capital’s notorious monthly rental costs but in less affluent areas of the country the positive effects will be even more apparent.
In Wales a shocking 16% of those questioned said that after bills (including rent) each month their disposable income was less than £10 so as average rates of pay rise more quickly than rent these people will inevitable have slightly more left in their pockets.
But what happens if it decides to go the other way in the years following in the same way as 2013 when rent was up by 3.5% on the year before while wages barely changed with a measly 0.5% rise; that would be bad news for everyone including landlords.
What would you do if the economy took a turn for the worst again and your tenant was no longer able to afford to pay their rent? Would you cut them a better deal or would you oust them in search of another tenant? And if it’s the latter how long would your property be empty for before you found a more affluent tenant? Either way you will lose out on rental income so what’s the solution?
With erratic mortgage interest rates, and an unpredictable relationship between rates of pay and costs of living, owning a rental property always comes with its element of financial risk which is why guaranteed rent schemes are becoming more and more attractive to Landlords.
Rent Guarantee Schemes are provided by specialist agents who will draw up a contract with you to ensure that get expert property management for the duration of your agreed time frame while you receive guaranteed rental income each month for the length of the contract; it’s a safe new alternative to traditional letting that is making landlordship more profitable.
If you would like to protect yourself from loss of rental income due to void periods or economic change then contact us. We are based in South West London and work with landlords throughout London and the South East.