Brighton is an attractive place to live, but its population boom, high property prices and lack of space to build have created a housing crisis.
This classic case of demand outstripping supply could, on the face of it, be great news for landlords. Rents are certainly on the increase, but dig a little deeper and you may find that the city’s current housing crisis may, in fact, be a double-edged sword for property investors.
Let’s take a closer look at Brighton’s housing crisis.
At a recent meeting of Brighton and Hove’s Housing Committee it was stated that an additional 18,038 affordable homes are needed by 2017. That is a tall order indeed, especially as high land values have raised the cost of building, making it difficult to profitably develop such housing.
Brighton has one of the highest average house prices outside London, and high rents are making it difficult for many to find adequate housing. These difficulties are compounded by a situation in which, according to the Committee, a third of the city’s housing stock still remains ‘non-decent’.
So this is the crisis: existing social housing that is inadequate, high private rents, prohibitive costs to buy and prohibitive costs to develop new housing.
It’s certainly not simply boom time for landlords who are enjoying higher rents. The housing crisis is actually a double-edged sword for those who let property.
On the one hand the lack of housing, coupled with the prohibitive entry costs of homeownership, has driven more people to rent. This is why the private rented sector has now overtaken the social sector in terms of its share of the housing market. This greater competition from tenants has led to an inevitable increase in rent.
Yet, on the other hand, the housing crisis is undoubtedly affecting landlords negatively too. The demand for new housing and rental opportunities is outstripping supply. It’s becoming increasingly hard for landlords to expand their portfolio profitably, as the prices rentable property can command gets higher and higher.
The great news is that there remain plenty of opportunities for landlords in Brighton and Hove.
It’s just that it has never been more important to completely understand the market, where it’s going and what is working.
That’s what we are here for at Khalil’s: to act as your ear to the ground and your first port of call for advice.
We never make a drama out of a crisis.