Edited article from The Manchester Evening News - November 12th 2008
Jill Burdett looks at how the change in the property market is affecting the letting sector
RENTAL agents desperate to get more city centre stock are wooing Manchester landlords with all sorts of offers.
From the business-like cut price management fees and free energy performance certificates, to the offer of a swanky £50 dinner, agents are trying to tempt the owners of an ever shrinking pool of new property onto their books. One is even offering to plant a tree in your name if you put your precious buy-to-Iet with them.
It is a clear sign of the seismic shift which has seen the city move from an abundance of places to rent to a shortage as young professionals, unable to get the finances to get a foot on the ladder, rent for longer.
This extra demand has come just as supply starts to fall. In the heart of the city only Crosby's greenquarter, Dandara's Spectrum and Persimmon's Leftbank are delivering new units to the market and with little new stock around existing tenants are staying put, unhappy to payout again for deposits and security checks. Jean-Paul Case manager at Penny Ashton Lettings on Parsonage Gardens, said: "Demand is currently far outstripping supply in the city centre”
'A real shortage of good quality apartments'
"Far from there being an oversupply we believe there is a real shortage of good quality apartments. We could rent 'true two bed apartments in central schemes for £700 a month all day long. The difficulty is stock that is that bit further out or where the second bedroom is very small.
"There is also a real shortage of one bedroom units with car parking. Developers had this blanket rule that one beds did not get parking, but the fact is that people want it and need it, particularly if it is a Monday to Thursday base."
And looking to the near future I can only see things getting worse. If you look to next year we would expect Potato Wharf at Castlefield to come on and Chips over at Ancoats, but that is all: "And the decision to hold back on major developments like Chapel Wharf and the failure of the Canopus scheme in Salford means that the delivery supply of new homes will grind to a halt."
The company recently launched its VIP card to reward both tenants who sign up to a new lease, and landlords. It gives access to all sorts of privileges, such as discounts at some of the best restaurants, including £50 off a meal at The Grill on the Alley, and will give access to some of the more exclusive city centre spots. Jean-Paul said: "We wanted to reward landlords and their tenants with something that makes living In the city that little bit more fun!"
Lawrence Copeland reports a record number of tenants deciding to renew existing leases In the last few months and he said: "It's an Indication of the market. When money is tight people do not want to Incur the moving costs or new credit checks and another month's deposit and the hassle of moving. Many are deciding to stay put. "From being a very transient place the city is stabilizing and there is little movement"
'There is a big demand for property in Manchester'
Laura Cabrelli owns four buy-to-let properties, three outside the city and one at Castlefield which she bought eight years ago. She said: "I have less voids now than 1 have had at any other time. There is a big demand for property in Manchester.
"But it is very price sensitive. I have had to reduce the rent from £650 to £595 to compete with units that have been bought recently at auction at a knock down price.
"I see some go to auction and wonder why when the rental demand is so high. Fortunately my rent still covers the outgoings and if I could I would be buying in Manchester right now.
And while It is frustrating for tenants trying to find a nice place right In the centre the lack of supply could have far worse consequences for the agents. 'No tenant movement means no fees and with sales at a stand still, agent's Income is being hit hard. So hard that It could see many shutting up shop.
Peter Gilmour of Shepherd Gilmour on Deansgate is so pessimistic he believes half the agents could be forced out of business. He said:
"Sales have been dead for the last three months so most companies 'are operating on lettings fees and management Income it is becoming more and. more of a squeeze as rents and rates and wages do not change.
And with development all but stopped and some developers now becoming their own lettings agents, there will be no new stock coming to the market which makes things tight all round If things don't Change quickly, I believe several agents will be going out of business, As far as I can see the only outcome will be consolidation.
We have already had approaches from two other companies wanting to join forces. We will sit tight and see what the New Year brings.