Are rents going up in Glasgow?06 May 2016
Are rents going up?
Over the past few weeks I have been asked more and more about rents and whether they are going up. The truthful answer is – it depends on the property! Not just where the property is but whats it like decor wise, is the furniture suitable and in good order? If you want to increase your rent, the property needs to be able to reflect good value to the tenant.
Whats the truth about rents?
Most rents should be reviewed on an annual basis, inflation means the price of everything generally goes up – however, over the past couple of years inflation has been falling – from around 3% in January 2013 and its currently sitting at around 1.6%. So if inflation is falling why are rents going up in some places? The short answer is basic supply and demand. There is just not enough available rental properties in certain areas to satisfy the demand.
In Glasgow and the surrounding areas, different locations mean acheiving or attempting to acheive increased rental returns vary hugely from area to area.
- CITY CENTER and WEST END – rents have sky rocketed in the City and West end over the past 12 months especially for 1/2 bed properties. If they are well presented, demand is huge. Rents have generally increased for us by around 10-15%. A 2 bed in town might have acheived £750pcm in early 2013 and now we can easily expect to acheive £850-895pcm (click here for some examples) – assuming it remains in good order. Now we increase our rents as standard by 3.5% per annum, but assuming we give adequate notice to the tenant we might suggest a higher increase, probably on a staged basis so its fair for the tenant. We would NEVER suggest losing a great tenant for the sake of an extra £50 per month but if properly managed, we can acheive increased rent on a tenanted property, as long as its fair on the tenant and reflects the market rental rate.
- SOUTHSIDE- here is a slightly different story. Rents have gone up but not by nearly the same percentage as in the CIty and West End. A 2 bed in Shawlands would acheive between £550-£650pcm if its really nice and if your property is really well presented maybe £695pcm. Thats definetely an increase of around 5% on this time 2 years ago.
- NORTH of Glasgow – area to the North remain a really steady place to invest and although rents are staying pretty steady the yield here tends to be good so if you are a pure buy to let investor this can be a good option for you. Your rent is never goign to sky rocket like it does in the city in my opinion but you can justify a small rent increase year on year. Kirkintilloch, Stepps, Moodiesburn are all popular with commuters looking for good value for money rental properties. If you would like more information on good buy to let opportunities check out our investor section.
I want to try to get a rent increase from my tenant, how do I go about it?
If you are keen to try to negotiate a rental increase with a long standing tenant, tread carefully! Its best to let your agent negotiate on your behalf and any experienced agent will know how to approach the subject with the tenant but if you don’t have an agent, put yourself in your tenants shoes. Would you think it was fair if your landlord suddenly advised in 2 months time your rent was going from £650pcm to £750pcm? Probably not – so even if you feel a rent increase is justified think about possibly staging an increase and make it fair.
Think about whether you are willing to lose your tenant for an extra £50 per month, will you find a good new tenant quickly? Void period are expensive for landlords. Remember you can’t just increase the rent without giving notice, you need to give the right amount of notice.
In summary, get your agent to deal with it, they should know the market and whats a fair rent for your property. Your agent should always be working towards maximising your return so rent increases should be something that they do as part of a fully managed service.