One of the most popular trends of recent years is “Rent To Rent” or room letting.
We are often asked by landlords if we “do rooms” and whilst we do, we have always taken the line that it isn’t that easy to fill entire properties and we feel it is getting harder.
Many landlords and some entrepreneurs have even taken a different view on property investment in finding original ways to make a profit from letting. Their principal is simple if you can find a landlord willing to do a “deal” usually with terms of a normal family size rent over long periods such as 3-5 years. The profit comes by letting multiple rooms at reasonable rents. The 4th or 5th room rents being the margin.
However having met with local room expert Neil McCoy Ward, he explained that whilst there is still a profit to be made, it has become significantly more difficult than years before. We discussed at length the changes in the City, with tenant requirements and the upsurge in buildings specifically aimed at this market as well as the increase in landlords looking to profit from the same.
He referenced 230 properties (3 bed, 2 reception) and potentially 4-bed houses in the CV5 area incorporating one of Coventry’s rental hotspots, Earlsdon.
Since 2013 the following has occurred.
House price rents are up 25%
Room rentals are up 5%
But the Supply of rooms is up by 230%
This is why it’s a tough market for room rentals, so it’s not just agents who are struggling to let rooms. Everyone is in the same position, as the tenants now have more choice. Five years ago they would do one or two viewings and take the room because they were scared of losing it. Now, a tenant does an average of 5 to 6 viewings before taking a room.
The odds are massively stacked against room rentals right now. We believe that we (Foster Lewis & Co) are making the right decision in informing landlords of the potential pitfalls.
If you are thinking of letting your property or even a room, please call 02476592929 to speak to Glenn or Jez your local property experts.