Thursday, December 11, 2014
Rail infrastructure is a key driver of the UK rental market
Public transport links are a particularly important factor for tenants and landlords alike. Today, two-thirds of privately rented property in the UK is found within one mile of a railway or tube station, according to research by Countrywide Residential Lettings, the UK’s largest letting agent.
The connectivity that rail and tube stations offer is highly sort after by tenants, with the younger population of city and town centres where stations tend to be found, 40% less likely to own a car and more than twice as likely compared to the average working person living in the private rented sector.
The time to let a property, rather than its achieved rent, is the stronger indicator of the desirability attached to properties close to rail stations. A home within a mile, or 15 minutes’ walk, of a rail station takes an average of 39 days to let, six days quicker than a home more than a mile away. However, the uplift in achievable rent is marginal. An increase in the average time to let a property that is more than a mile from a rail station is a reflection of the furthest distance a tenant is prepared to walk.
In London, where levels of car ownership are lowest, homes in the least accessible locations take the longest time to let. This is equivalent to an additional £225 in lost rent due to the additional time to find a tenant every time a property becomes vacant.
However, rental properties directly next to rail stations are not the fastest to let. It takes an average of two extra days to let a property next to a rail station in comparison to an identical home half a mile away. This is a product of both desirability and planning policy. Planners are increasingly encouraging new high density housing schemes in locations close to transport links. Some areas closest to rail stations are heavily dominated by commercial uses, which can affect the amenity of local residents, making an area less desirable. Equally, in 2014 60% of new housing built in the UK was within a mile of a rail station. Such schemes have served to substantially increase the number of properties coming onto the market at a similar time and hence tenant choice.
In November 2014, the cost of a newly agreed let was 3.1% higher than the same time last year. There was a seasonal month-on-month reduction in the average price of a new let, from £916pcm in September 2014 to £889pcm in November 2014. With fewer tenants looking to move in the run up to Christmas, a reduction in the number of would-be tenants has the effect of allowing for a greater degree of negotiation between landlords and would-be tenants.
The figure for newly agreed lets is a leading indicator of rental growth for the UK tenant population as a whole. It reflects the market rate a tenant has to pay to access the privately rented sector. There is broadly a six-month lag between the uplift in agreed rents for new tenants. Some of this uplift is reflected in the rents of the entire tenant population. UK tenants as a whole, which includes both sitting and new tenants, have seen the rent they pay increase 1.7% over the last 12 months.
Commenting Nick Dunning, Group Commercial Director, Countrywide plc, said:
“Tenants have consistently shown they value homes in locations which are within walking distance of the tube and rail links. This demand is a not just a product of the access to other areas which rail stations offer but also the size of rental markets which surround these stations. Large rental markets where more tenants are looking for rental accommodation translates into homes being let much quicker.
“Public transport links are clearly an important consideration for tenants looking for a home. This means changes to transport infrastructure, such as the Crossrail project in London or extension of Birmingham’s Metro tram links can offer opportunities for first-time or seasoned landlords.”
Appendix to press release
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