Investing in Rental Flats and Houses: Keep Up to Date With Local Market Changes

When investing in rental flats or houses, it is important to keep up-to-date with the local rental market. Market conditions may change as time goes by and investment policy must change with them.

Different factors can affect the local rental market.

1 Local Companies

The success or failure of local companies has a major impact on the profitability of your rental property. If a town is dependent upon one or two large companies for much of its employment, then the closure or relocation of these companies can significantly decrease the number of prospective tenants that are seeking rental accommodation. Conversely, if a large new employer moves into the area, then the pool of potential new tenants is likely to increase.

In our local town, Ipswich, one of the largest employers is British Telecom. When the directors decreed that many of the local workforce should be replaced with subcontractors from India, this had a significant impact upon the rental market. A large influx of potential tenants came to Ipswich but, as most subcontractors did not hold a UK driving license, rental flats and houses that were on or near a direct bus route suddenly became easier to rent.

2 Universities

The creation of a university can significantly impact the local rental market. Large properties - or even three or four bedroom properties with a separate lounge or dining room - that are near the university can be converted into HMOs for the students. Properties that are on a bus route to the university can also be likewise converted, although they will not rent quite as quickly.

3 Property Development

Keep abreast of any large-scale property development within your local area, especially developments that are similar to your own investment property. If large estates or large blocks of flats are being constructed, then a proportion of these are likely to be bought by property investors and there will then be more landlords chasing the same pool of prospective tenants. Under these circumstances, rental prices are likely to decrease or, at best, not go up with inflation.

In Ipswich, our local town, flats were once very easy to rent. When we first entered the rental market ten years ago, the agents advised us that more tenants wanted flats than wanted houses and that a two-bedroom house would command a greater rent than a two-bedroom house. Since then, Ipswich has seen a mushrooming of flat-building with the result that our flats for rent Ipswich are now no longer as easy to rent due to the competition from other landlords.

4 Up-market or Down-market

Keep abreast of whether the local area as a whole is going up-market or down-market. If you can see investment in new supermarkets, cinema complexes and/or schools and nice little cafes and restaurants are springing up, then the chances are the area is on the "up and up" and your property investment could gain significantly in value. Conversely, if shops are shutting down, restaurants are closing and the area is getting more of a run-down feel, then reassess your rental investment.

5 Communications

A change in communications can significantly affect the pool of rental tenants. If a new station or tube station opens in an area, then this can open up your rental property to a whole new pool of potential tenants and also increase the property's worth.. Conversely, if a bus route is stopped or the train or tube services are significantly decreased, then this can have a negative impact upon your property's rentability.

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