Reasons to be Cheerful

The is a public service announcement: Do not feel bad. Banish those January blues and forget about the grey skies, because 2014 is looking like a vintage year. Of course the property market will continue to be an unpredictable beast, which changes daily with the ebb and flow of global and local markets. But one thing is certain; whether you’re a landlord or a tenant, it’s never dull.

One of the key learnings that landlords can take away from 2013, is that rental yield is not set in stone. But that’s not necessarily a bad thing. This might sound like a strange thing to say, but it’s this movement that keeps the market alive and competitive, especially if the yield is going up.

However, that wasn’t the case last year in Fulham, or the year before that, for that matter. But first, a quick reminder on rental yield. At it’s most simple, this is the rental income for landlords and developers, divided by the property value. In the last two years, Fulham’s had an average rental yield of about 4.5% - a positive result when you consider that large areas of Greater London are currently returning an average yield of less than 4% - and on top of that, in 2013 specifically, we’re beginning to see some rents actually coming down, both in yield and absolute terms.
This is perfectly normal for this time of year – the market goes into a nominal slump across the board from the end of November through to the end of January, as everything is swallowed up by Christmas and New Year plans – but on a wider scale, in Hammersmith and Fulham, a buoyant buyers market means that people who would otherwise rent, are actually buying. In the rental market, the fact that there is more mortgage finance available, some from the governments Help to Buy scheme, will mean that there will be some degree of switching from renting to ownership.

This in turn means that the rental market is becoming more competitive as the numbers of people seeking properties goes down. Conversely, those who are renting, appear to be staying for longer as they aim to capitalise on cheaper rents. A prime example is the influx of foreign nationals to SW6, who may be working on 2-3 year contracts in the city, so are unwilling to buy, but still want the Fulham lifestyle.

With this in mind, landlords are being forced to be more flexible in everything from prices, to the furniture and white good they contractually provide. The two groups of people – those who have suddenly found themselves in a position to climb onto the property ladder, and those who aren’t quite there yet, but are savvy enough to spot the changes in the market and take the lead on rental negotiations – are now defining the rental market, not the landlords. But that doesn’t need to be a negative. If you’re flexible, smart, and willing to negotiate, you can land yourself the dream ticket:
A long term, high-earning, professional tenant.