Will Bournemouth’s Rental Market Boom Continue?
As one of Bournemouth’s leading landlord insurance brokers, we’re pretty sensitive to changes in the local rental property market. Since we founded the business back in 2015, we’ve built up a wide range of property clients – everything from retail investors with a single buy-to-lets through to property developers and professional landlords – and we know what’s happening in the local property rental scene. So, as we enter a new decade, we thought we’d look ahead to what the rental property market has in store for Bournemouth and the rest of Dorset and offer some insider’s advice on saving on landlord insurance quotes.
We hope you will find this of interest, but if you’d like some personalised advice on getting the cover you need, then please get it touch by calling us (01202) 929 141 or send us an email by clicking here and we’ll get back to you as soon as possible.
2019: Another Good Year For Landlords In Dorset
Landlords enjoyed excellent returns in 2019 as demand for rental properties continued to rise. The average rent is now over £1,350 per month, a 5% increase on 2018, and that takes the total increase since 2005 to 29% based on ONS figures. By anyone’s estimation that is a huge rise, and it’s a trend that looks set to continue as more and more would-be first-time buyers struggle to raise a deposit. Given the national average deposit is now over £28,000 it’s little wonder that renting has become so popular. This, and the scarcity of affordable housing, has led experts from the likes of Which? to say that despite the changes in the tax laws of 2016 that being a landlord can still make a lot of financial sense, especially in the long-term.
Demand Set To Grow In 2020?
For the property market as a whole, 2020 looks to be an even better year than 2019. The – at least temporary – removal of Brexit uncertainty is expected to give a major boost to the housing market. The Halifax, Rightmove, Zoopla and EY suggest that 2020 will see city property prices rise between 2-4%. In London agents are already reporting a surge of buyers and interest is at a 15-year high. This seems to be the result of a combination of professional investors’ regaining their confidence – they are now the dominant force in rental property following the 2016 tax changes – and a willingness by homeowners and first-time buyers to take the plunge. Whatever the specific reasons, 2020 has got off to a flying start.
It is worth adding a note of caution when it comes to Brexit. While we have officially left the EU, 2020 will be a year of transition in which nothing will really change. Come the autumn, however, when the whole deal/no-deal debate begins to loom large again, uncertainty will undoubtedly return. If they can reach a deal then the prospects for 2021 and beyond look pretty rosy. If they can’t then picture is somewhat mixed. The country as a whole will suffer an economic shock, albeit a potentially temporary one, and investors may take flight. On the other hand, a no-deal exit will doubtless cause Sterling to plunge and interest rates may need to fall further as the Bank of England looks to stimulate growth. Both these eventualities would make UK housing assets cheap and could actually prompt more investment. As we say, the picture is mixed and only time will tell.
One thing we can be more certain about – and something that will definitely drive demand – is continuing population growth. Like much of Dorset, Bournemouth has a fairly fast-growing population. At the 2011 Census, Bournemouth had an estimated population of 183,500, by mid-2015 that had swelled to 194,500 and by 2019 it had reached over 198,000. With its mixture of stunning local scenery and urban attractions, it’s easy to see why people are flocking to our shores. Much of the new population are younger people, people for whom the idea of buying a property is just that: an idea rather than a reality. This all means that there will plenty of customers for local landlords for some time to come.
Shortage Of Affordable Housing To Continue?
East Dorset as whole has long suffered from a shortage of affordable housing. The roots of the problem lay not in the price of properties which, with the exception of places like Poole Harbour, are broadly in line with the UK averages, but that wages are below the national average. The average salary in Dorset in 2018 was £33,000 according to HMRC figures – nearly 15% lower than the UK average. This somewhat troubling issue does have an upside for landlords. Being unable to buy but still wanting to have a place to call your own drives demand for rental properties and this has been a major factor in the consistent rise of rents in Bournemouth and Dorset.
The Council has been aware of this problem for some time and since 2009 it has had a Development Plan Document (DPD) in place in order to address it. Private developers are also looking to help. AJC Developments has announced its intention to build 400-500 affordable new homes per year in Dorset, while closer to home The Poole Housing Partnership been looking for more creative ways to ease the problem. These include the demolition of the old Cynthia House housing block to create 22 affordable homes.
Welcome as these schemes are, they are unlikely to ease the pressures on the housing market in the short-medium term and so landlords are likely to see demand remaining strong for some time to come.
How To Save On Landlord Insurance
So, the market looks set fair but as any property professional knows, the difference between profit and loss comes down to cutting costs. Now we can’t help you with finding bargain properties – especially in this market – but we can give you some insider’s tips on getting cheaper landlord insurance quotes:
- Use an independent broker – getting the best deal on your landlord cover requires market knowledge, the ability to access the best policies from the big insurers and shrewd negotiating skills. An independent broker, such as Coversure Poole, can do all this and find you the right cover at a great premium
- Check the policy – you need to make sure you’re adequately covered but you don’t want to be paying for cover options you don’t need. For example, flood cover won’t be much use if your property’s on a hill and who needs contents insurance for an unfurnished property?
- Don’t take your mortgage lender’s cover – this is the easy (lazy!) option but it will invariably cost you more and you won’t receive the same level of expert advice
- Pay for your cover annually – monthly payment schemes generally attract a premium, so if you can pay for your cover on an annual basis it may cost you less
- Be choosy about your tenants – nothing will push up your premiums like a claim so when selected tenants make sure you get several sets of references before handing over the keys
- Make sure you have enough cover – property underinsurance is a massive problem in the UK with 86% of properties underinsured according to Aviva. With prices rising its easily done and in the event of a claim having less cover than you need could cost you dear. This is another good reason to consult an insurance broker as they can advise you on how much cover you need.
Like Some More Landlord Insurance Help?
At Coversure Poole we’ve helped many property owners get the landlord cover they need. If you’d like some help or advice with any aspect of your landlord insurance needs, then please feel free to get in touch with us on Poole (01202) 929 141 or email Coversure Poole and one of the team will get back to you as soon as possible.