In one of our recent blog posts, we reported that the number of young people choosing to share a property, or to move back home with mom and dad, was significantly increasing due to second time buyers being "priced out" of the market.
This week, new figures have been released that suggest many people are potentially turning their backs on purchasing a house altogether. A survey commissioned by credit company, TransUnion, found that property managers and landlords were in a better position than they were in this time last year.
The survey asked 1,248 property managers across the USA about a number of factors including their rental prices, finding suitable tenants and amount of vacant possession. The survey showed this year is a profitable market for landlords; almost half (48%) of survey respondents said that rental prices on their properties had increased and 44% said that their rental prices had stayed the same. Compared with last year, just 39% said that their rental rates had increased, and 48% said that rates remained the same.
Not difficult to find a tenant
There appears not to be a shortage of tenants, and this is generally why rental prices are able to increase. The banks' persistent reluctance to lend money for mortgages continues to be a challenge for those looking to get on the property ladder. Now, with the added burden of the increasing price gap between first and second time homes, a new group of people - the would-be second time buyers - have been added to the pool of people looking for a property to rent, thus leading to this shortage of vacancies.
Subsequently, the results of the survey show that landlords are not having any difficulty in renting out their properties. Almost a quarter of all property managers (23%) surveyed said that they are not finding it difficult to find a tenant. What is particularly interesting is the comparison of that figure on that of last year; when asked the same question in 2011, just 67% said they were finding this task easy.
Shortage of vacancies
The survey was broken down into two groups of landlords and property managers; small property managers (those managing between one and 200 properties) and large property managers (those managing over 200 properties). Of the small property managers, almost three quarters of respondents said that they had no vacancies in their property portfolios.
Worry over "skip out" tenants
One negative implication for landlords from the TransUnion survey is that landlords appear to be more cautious than they were before. More than half of the respondents said that they have experienced "skip out" renters (those that leave a property with damages or unpaid rent). This worry could be good news for the property insurance industry; finding good buy to let insurance would be crucial for landlords, as would finding suitable tenants. Without adequate insurance, landlords could find themselves losing considerable sums through eviction procedures, damage and the non-payment of rent.
Of course, a healthy rental market for the landlord is not necessarily good news for the tenant. This will mean higher prices and more competition, as the results of the the survey show. There may be more properties around to rent - seen as less people are choosing to buy - but prospective tenants must also work hard to ensure they are getting the best deal on their homes. Tenants should try to view several homes before choosing one, but should also be prepared to pay slightly more for the one they want if there is competition.
Tighter credit checks
Due to the increased worry of landlords over "skip out" renters, tenants might also find themselves subject to more scrutinising credit checks and reference procedures. Landlords can afford to be selective in this market, so if you are a tenant looking to find a property, make sure you approach it with as less baggage or bad credit as is possible. Companies such as TransUnion now offer landlords more assurance though checks that include rigorous scoring systems. They also provide more advanced tools to property managers so that they can make quick and well-informed decisions over prospective tenants. Therefore, if you do have any credit issues, it is imperative to be completely upfront about them with the landlord before you start the application procedure.