Seasonality in the Private Rented Sector and Institutional Investors in Private Renting

In this blog post, I look at “Seasonality in the Private Rented Sector”. Plus, I look at one example of “Clueless Institutional Investment in Private Renting”

Seasonality in the Private Rented Sector

Does the time of year affect the rental income you can achieve and the speed of letting?

Oh yes it can!

I first wrote about this in the very first edition of my book, “Successful Property Letting – How to Make Money in Buy to Let” and I incorporated the concept in both my second book for landlords and my guide book for tenants too. (For details of all these books and how to buy them, see the links at the bottom of this post).

Seasonality varies by town and city a bit. Towns whose rental population is very dominated by universities and colleges have particularly defined peak months. The strong demand in these months will filter out to the whole private rented market, so even non-student properties will let out faster and at higher rents.

So, what are the peak periods?

Well, in many towns and cities there is a peak of activity in January and early February when people sense the spring coming and look for a change of home. This is also the same time, in university cities, when returning students are actively out looking to secure accommodation for the academic year starting eight months later, in September or October.

So demand is always more brisk in Jan and Feb.

Other busy times of year are late August, September and early October when there is a last minute rush for accommodation from students. This is also the time when many new jobs start – so once again, lots of people are out looking for a suitable new home to rent.

Seasonality in the Private Rented Sector and Holiday Markets

In towns which have lots of holiday lets, the summer season and Easter can be busy periods – and this demand can also filter into longer term lets too. (In many places, landlords have a choice of letting to long term tenants or tourists, so the two markets are interlinked).

Otherwise, in non-holiday dominated markets, high summer and also November / December in the dead run-up to Christmas are the quietest periods.

Our properties are mainly in London and we have regularly seen demand pick up in January and February.

Sometimes, where possible, e.g. where your existing tenants have given notice, it can even be worth persuading them to stay on, if that is at all possible. You could even consider offering discounts off the rent if they stay on for a month.

This will allow you to market during periods of high tenant demand, allowing you to let faster and at a higher rent.

We are certainly seeing a very strong uptick in demand in London right now, with rents hitting new high levels, after a quiet 2018. It will be interesting to see if this trend shows up in formal data, when it is released in a few months’ time.

Demand in Private Rented Sector Picking Up

Of course, long-time readers of this blog will know we have long predicted that the exit of private landlords following the George Osborne initiated “tax attacks” on buy to let (non-institutional) landlords would inevitably backfire – and would lead to higher rents, as demand outstripped a shrinking supply.

We are perhaps now starting to see the first signs of this.

Of course, buy to let landlords have to be on the ball. We have to start marketing our properties as soon as our existing tenants give notice and in the last month of their tenancy. Void periods are anathema to the small private landlord.

Clueless Institutional Investors in Private Renting

But it seems the big institutional investors, so beloved of this government, are not so smart at reducing their void periods.

An example; My wife’s niece went to study from abroad to Aberdeen University. Due to suffering a sudden mental illness, unfortunately she was not able to come for the final year of her studies and duly notified the university authorities last summer.

But the clueless Canadian pension fund, (don’t ask!), who run the student accommodation where she was due to live in Aberdeen have only just, in late January, cottoned on to the fact that she did not pick up the keys to her room back in September – and the fact that her room was empty ever since.

Post piling up in her mailbox did not seem to seem to make them think anything was amiss. Despite having an address in her home country to write to, they did not think to write there, or ask the university’s admissions officers what was going on. Instead they kept writing to her empty room, where the post kept being returned back to themselves.

Eventually, one of her friends happened to pass by the accommodation block, saw all the post piled up and alerted her parents back in her home country. One of the items of post was a final demand for £1500 in accommodation costs, which, of course, she has not used.

Can you imagine a small buy to let landlord being as clueless as this – and allowing a room to sit empty?

With such a clueless approach to sweating their assets, they will struggle very hard to compete with the small landlord.

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