New tenancy fundamentals drive spectacular passive income

Are you ready to escape the rat race?

You’re bored of the daily routine, the treadmill of working harder every day for lower reward. You’ve considered property investment, but you’re concerned about void periods crashing your income. Well, we’ve got news for you. The rental market is changing. And for property investors, it’s incredibly good news:

  • Property investment income stability is often considered better than stock market income.
  • There’s more demand for rental properties than ever.
  • This market is growing. Equally importantly, renting is the norm today.
  • More people want to rent, and they want to rent for longer.

As a passive investment, when you buy in the best places to invest in property UK, buy-to-let has the real potential to offer rising passive income with fewer and shorter void periods.

Property investment for long, unbroken passive income

The latest English Housing Survey has found that the average length of a tenancy in the private rented sector has increased again. At 4.3 years, tenants are staying in the same property for four months longer than they were 12 months ago. Other findings of the survey show that as a buy-to-let property investor you have:

  • A 67% probability that your tenant will remain in your property for more than three years
  • A 50% probability that your tenant will remain in your property for more than five years

Void periods, when they occur, are falling. A 2016 survey by Direct Line for Business found that the average void period is around three weeks. Investment property management company Ezytrac re-let almost half the properties they have under management in less than a week after a tenant has left.

This decreasing length of void period is a direct outcome of the growing competition in the market. There are around 5.7 million households who rent in the private sector today. PwC forecast that this will rise to 7.2 million households by 2025. The private rented sector is already finding it difficult to keep up with demand.

People want to rent for longer

Longer tenancies don’t appear to be a blip. Research conducted by the Residential Landlords Association has found that four in ten tenants expect to rent a property for as long as ten years.

What does this mean for you as a property investor?

These rental market dynamics should have a very positive effect on property investment income. As a property investor, you’ll benefit from:

  • Longer tenancies
  • Shorter periods without rental income
  • Rising monthly rental rates

So, you could benefit from rising, stable income, from tenants who want to rent for longer.

Do tenants with families provide the most stable rental income?

One question we’re often asked about the buy-to-let market is which tenants provide the most stable income for investors. The English Housing Survey sheds some light on this, too.

The percentage of families renting (those with children) has grown from 30% in 2005/6 to 36% in 2015/16. That equals an increase of around 945,000 families in the private rented sector in ten years.

The research suggests that families with children provide more stable income. Parents don’t want to keep moving their children from one home to another, one school to another.

Most families in the private rented sector have at least one parent at work: 62% in full-time employment and 12% part-time. A quarter of families has been in the private rented sector for more than 10 years.

Renting to families with young children, in which at least one parent is a professional (very much like yourself, perhaps), could provide the best and most stable rental income from your property investment.

Prospects for capital growth are great, too

Meanwhile, the inability of UK property developers to keep pace with the demand for new homes continues to put upward pressure on house property prices.

In the Budget 2017 release, the latest OBR house price predictions were highlighted. The OBR expects residential property prices in the UK to rise between 4% and 6% every year for the next five years. If this forecast proves correct, a property bought for £200,000 today will be worth more than £250,000 at the beginning of 2022.

Are you ready to invest for stable income and capital growth?

You don’t have to work like a dog every day of the week to stand still (or even go backwards). Property investment could be your way out of the rat race. Buy-to-let property investment is just one of the property strategies that could help you break out of your humdrum life.

For more information about how Gladfish can help you become a successful property investor and benefit from life-changing passive income, contact one of our team today on +44 (0)207 923 6100.

Live with Passion,

Brett Alegre-Wood

Brett Alegre-Wood
March 28, 2017

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