Is ‘Sell to Rent’ the New ‘Buy to Let’

I don’t know about you but since the winter hasn’t really kicked in yet, I can still remember quite clearly the lofty temperatures of 32 degrees Celsius and it being too hot to sleep at night! As the temperatures remained inordinately high for the time of year in October and November the Derby property market appeared to be doing the reverse and was already starting to cool down.

I want to look at home movers in the first part of the year so I’ve gone back to the first part of 2018 for my comparisons.

6.51% less people moved home in the Derby area in the first part of 2018, when compared to the average number of people moving home in the same time frame between 2014 and 2017

The average number of households who sold and moved locally between 2014 and 2017 in the winter and spring months was 279 homes a month.. yet in the same time frame in 2018, only 261, on average, sold and moved.

So, what is the issue? Many have cited Brexit as the issue and it still rumbles on now! However, I think its deeper than that.

Brexit has been the “go to excuse” for everything in recent times – my neighbour even blamed it for the potholes! Anyway, I was out at a family get together over Christmas in another part of the UK when one of my extended family said that they were planning on buying their first home in early 2019. Most of those present said they were stupid to do so because of Brexit. Nonetheless, half an hour later, another cousin said to the same family crowd that they were planning to sell their home; to which most said they were also daft to do so because of Brexit.

Both sides of the argument can’t be right! So, what exactly is happening?

Well, if you have been reading my blog on the Derby property market over the last few months, I have been discussing the threats and opportunities of the current state of fluidity in the Derby property market, including the issue of OAPs staying in homes that are too big for them as their children have flown the nest, interest rates, inflation, lack of new homes being built and the long term attitude to homeownership.. yet I have noticed a new trend in the last few months.. the emergence of the ‘sell to renter’.

Sell to Renter?

I have seen a subtle, yet noticeable number of Derby homeowners that have been selling their Derby homes, renting and wagering that, in the next few years, the Derby property market will tumble by more than what they spend on their short-term rental home, before they buy another Derby home in a couple of years i.e. a ‘sell to renter’.

This type of ‘sell to renter’ is mostly predominant at the middle to upper end of the Derby property market – so I’m not too sure if it will catch on in the main ‘core’ market?

So, what does this all mean for Derby homeowners and Derby Buy To Let landlords?

Well, in the short term, demand for middle to upper market Derby rental properties could increase as these ‘sell to renters’ demand such properties. I would however give a note of caution to Derby landlords buying in this sector of the Derby property market as yields in this sector can be quite low. However, for homeowners of middle to upper market Derby properties, you might have less people wanting to buy your type of property, as some buyers are turning to renting?

Like I have always said, Derby properties are selling if they are realistically priced realistically for the market – not a rose-tinted version where someone will pay 10% over the odds because everyone has access to the market stats with the likes of Rightmove and Zoopla!.

One last thing… notice the spike in the graph, where the number of property sales jumped to 509 in the month of March 2016?

That was all the Derby buy to let landlords snapping up buy to let properties before the stamp duty rules changed!

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