The lettings market
Lettings and Martin & Co
There was a gap in the market to offer a dedicated and specialist lettings service. A need for a letting agent that existed on the high street and was not an ‘add-on' to an estate agent, offering a business model that worked from Truro to Aberdeen, and in every major city including London.
Lettings v Estate Agency
The UK property sales market is highly cyclical, and the market can react adversely to short term economic triggers. The 1990's and 2000's saw a renaissance of the private rented sector, which used to dominate UK tenure and may again. House prices are currently driven by owner occupiers but could be driven by landlord investors in the future. Investing in the UK property market remains a good long term bet, but if you want to build a business then the income from an estate agency is more volatile and less predictable than the income from a letting agency.
Letting a property happens far quicker than the sale of a house. On average a property takes 3-4 weeks to rent from the point of instruction (compared to a house sale of approximately 3 months.) Though individual house sales have a high transactional value, letting property generates a repeating and rising income from business start-up. The stock of tenanted properties builds up over time - whereas each time a house is sold a new one has to be found.
Why has lettings prospered?
- Housing is a basic necessity of life - everybody needs somewhere to live, its a 'non-discretionary' item of expenditure.
- The lettings market is recession proof and not subject to ‘fashionable trends' or at risk from technological innovation. The market continues to grow whatever happens in the wider economy.
- The pensions crisis has worsened and many people are looking to supplement or replace their personal pension plans or as an alternative to shares or conventional savings. By investing in property they benefit both from rising rental income and capital growth.
- Increased pressure from migrants with 1.2million people officially reported to have settled in the UK (2005-2006).
- People are getting married and buying homes later in life, living longer and divorcing more often leading to an increase in single households.
- Renting is no longer 'second best' but is seen as a natural choice for professionals with busy lives and for people from other cultures with a different attitude to property ownership.
- House price inflation which has exceeded wage inflation means that the affordability gap is widening for first time buyers, who have to rent.
- The law protects the interests of both landlords and tenants, and provides a stable framework for investment in the sector.
- The London Olympic Games in 2012 and all other major infrastructure investment projects always stimulate rental demand because temporary workforces need to be relocated into an area. Business relocations also result in a surge for temporary rental accommodation.
- The growth in tertiary education has blurred the lines between 'traditional' student lettings, and professional lets as many city centre apartments are now attracting student tenants, particularly foreign nationals.
