Rental prices have since then climbed more gently, and fallen in some parts of reading in the autumn. To housing experts, the question is, is this trend likely to continue?
The slow climb of annual rental prices is very likely a short-term phenomenon. The long-term likelihood is that rental prices will resume their steep climb. This is backed up by the fact that the demand for housing in reading in growing faster than the supply.
A slowdown in rental price increase would have been seen if there were more rental properties investments in Reading. But this is not happening mainly due to the fact that the government has introduced taxes on landlords that will be in place 2017-2021. The effect of these taxes will impact heavily on the buy-to-let property market. Fewer people will be willing to buy units to let out, the effect being fewer available rental units in the long-term.
As early as 2017, real estate experts had warned that as these taxes started to take effect, many landlords would be looking to divest from their rental properties in Reading. The immediate effect of this would be a rise in rents as the number of rental units would be less than the demand.
While this has not happened, landlords have reacted to the new taxes in two ways. The first option has been to re-mortgage buy-to-let properties in Reading. The second option has been to convert rental portfolios into limited companies, which helps avoid the impact of the new taxes.
The property market in Reading has shown resilience in the last 50 years. Real estate investment has always been viewed as a more solid investment than other investments like the stock market, or the latest interest in cryptocurrency investments.
But tenants can expect some relief from the recent Tenant’s Fee Bill that will restrict landlords charging tenant fees on set up of the tenancy. However, tenants looking for long-term leases will still be hit the hardest, as seen in Scotland, as landlords raise rents in compensation. This can be expected to be an additional increase on top of the organic increase. The upshot of it all? Tenants should brace themselves for higher rents!
Looking at the rise in rents in Reading, one can see a rise by 21.5% in the last 13 years. This can give a fair basis for a prediction on the climb in the future while taking into account factors like demand and supply of rental property, local and national economic performance, and national factors like interest rates and Brexit.
For landlords in Reading, making money from the buy-to-let property will become harder but not impossible. Changes in rental tax law and regulations call for smarter investments by relying on information of what is happening on both the local and national property scene.
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