March 2009
Rental prices in the UK dropped dramatically in the last quarter*, by as much as 6% in some areas, as the knock-on effect of falling house prices and low interest rates sparked a market saturation of properties to let and an influx of a new type of landlord.
Dubbed the ‘unplandlord’ by leading property website Gumtree.com, this new type of homeowner has turned to renting as an interim solution while they hope the property market returns to previous levels. Research commissioned by the site to coincide with Gumtree’s Q1 2009 Rental Index found almost a third of homeowners (29%)** now rent out property to tenants, a massive 57% of whom have only done so in the past two years.
This means UK properties are increasingly managed by individuals who are worryingly unaware of the processes involved in being a landlord. For instance one in two Landlords surveyed had failed to draw up a legal contract for their tenants and only 42% had taken out home insurance.
Gumtree’s Q1 Rental Index, 2009
The figures show this surge in supply has resulted in a 2.2% average decline in rents across the UK, with a 3.6% dip in London, and a massive 6% plunge in Oxford, according to the Gumtree Rental Index. Manchester (2.9%), Belfast (2.9) and Brighton (2.7) experienced dips just short of 3%, with Birmingham and Stockport faring slightly better, dropping 1.5% and 1% since November 2008. This sees rental prices finally catching up with the property sales market, with yields reverting back to 2007 levels.
Three to four bedroom properties recorded the sharpest fall, suggesting renters are choosing to downsize from houses to flats to save money. London’s more prestigious boroughs including Kensington & Chelsea and Islington took the most rapid and forceful hit. Behind Oxford, the biggest casualties were Glasgow, Nottingham and Leicester where it is widely known there was rapid growth in the buy-to-let market over the last few years.
TV property expert Sarah Beeny explains: “In the past two years more and more people in the UK are becoming landlords, whether it’s because of recent redundancies, expanding families or an inability to sell at a level people wish to. Current unbelievably low interest rates also means people are not having to sell and can afford to move and rent out their current property to cover their mortgage instead. The property sales market is not going to ‘bounce back’ as some imagine anytime soon and whilst interest rates stay low even though the rental market is slower than it has been, I suspect we will see more and more ‘unplandlords’ emerge.”
The increase in supply is mirrored by a 19% hike since last quarter in rental posts on Gumtree. This surge across the UK backs up the fact that more increasingly, new or ‘unplandlords’ are not in the profession out of choice. Nearly a quarter (23%) of all landlords questioned admit they are renting out because they wanted to move but couldn’t shift their property for what they felt it was worth, and a massive 81% claim they did not want to become one in the first place.
Missing A Trick
The new property professionals admit to serious gaps in their knowledge, posing risks to both themselves and their tenants. These include:
• 46% who did not get a legally required gas safety certificate
• Less than half (47%) installed a smoke alarm
• Less than half requested references from tenants (46%)
• Nearly two thirds (64%) failed to draft an inventory
In response to these findings, Gumtree has produced an online guide with Sarah Beeny to help ‘unplandlords’ settle into the job. To help those who have found themselves in this situation the guide covers everything from what is required to prepare homes for tenants, what price they should be charging and how to find suitable tenants.
Beeny continues: “We are clearly still a nation of homeowners but many are now in the situation where they have chosen to also take on this new role. There is an influx of new landlords into the market unprepared for what comes with it. The law is more on the tenants’ side so it is really important landlords are well prepared so the process runs smoothly for them. Gumtree’s guide will give these people the knowledge and confidence to manage their properties more efficiently.”
Gumtree spokesperson Claire Whitehead comments: “Our previous Rental Index, released in November, pointed to a perceived stability in the rental market, so it will be interesting to see how the rest of 2009 will pan out. Our research shows this new trend is likely to continue, as half of homeowners (50%) we questioned said they would rather rent out their property than sell if they couldn’t make back the money they had put in to it.
“We hope the Gumtree Guide for the Unplandlord will prove useful to all those who are new to renting and worried about where to start.”
Landlords can download the Gumtree Guide to the Unplandlord now, and listen to advice from Sarah Beeny at www.gumtree.com/rentalindex.
For more information, case studies and video content please contact the Gumtree press office at Lexis Public Relations on 020 7908 6589 or email gumtree@lexispr.com
Notes to editors:
*Comparison of Gumtree listings data between Q1 2009 and Q4 2008 across 30 London boroughs and 30+ UK cities. Analysis by Fat Planet.
** Omnibus research carried out by Redshift Research among 3,191 homeowners in February 2009.