When it comes to renting out property, it pays to know the local area in which you have invested.
You can get a feel for the local areas, the main renting demographics, the types of rents that are typically charged, the typical time properties spend on the market, and how high tenant demand is.
This can influence which part of town you invest in, who you rent to, and how much you can charge in rent – which, in the end, will determine how good your rental yields will be.
With this in mind, Balgores Property Group takes a closer look at the rental market in Dagenham…
Dagenham, which straddles the borders of East London and Essex, is probably most famous for its Ford car plant and its National League football side Dagenham & Redbridge FC.
But it’s also a very popular base for commuters working across the capital, with three London Underground stations (Becontree, Dagenham East and Dagenham Heathway, all on the District Line), as well as c2c services from Dagenham Dock.
Furthermore, there are TfL Rail services (the pre-cursor to the Elizabeth Line) from nearby Chadwell Heath. When Crossrail 1/the Elizabeth Line is finally operational, now expected to be late 2020 or even March 2021, transport links from in and around Dagenham will be even better, with a number of stations – including Seven Kings, Ilford and Romford – providing fast journeys to central London destinations, Canary Wharf and the Heathrow Terminals.
These excellent transport links inevitably make Dagenham an appealing location for renters, given the more affordable rents at play on the eastern outskirts of the capital when compared to more central areas.
It was recently revealed that the government has approved plans to introduce a new licensing scheme for private rented homes in Barking and Dagenham.
Under the terms of the new borough-wide, five-year property licensing scheme, expected to cover approximately 20,000 homes, every privately rented home in Barking and Dagenham must be licensed and comply with strict conditions. This is to ensure that each home is safe and properly managed.
At present, Barking and Dagenham council runs a private rented property and additional House in Multiple Occupation (HMO) licensing scheme, but this is set to end on August 31 2019. The new scheme will replace these from September 1 2019.
Some 27% of the borough’s housing stock is currently accounted for by privately rented properties, with the current licensing schemes so far helping the council to instigate 70 prosecutions and serve 570 enforcement notices requiring properties to be made safe.
Landlords who have properties in Barking and Dagenham have been warned to prepare for this licensing change.
In a previous blog, we explored property prices in Dagenham, revealing how a relatively low crime rate coupled with an average house price of around £300,000 (one of the most affordable in London) makes it highly appealing to potential buyers. And that includes buy-to-let investors, who can look forward to high tenant demand and the chance to achieve decent rental yields.
These rental yields will be less squeezed, too, as the cost of initial investment in Dagenham will be lower than central parts of the city.
Those with one eye on capital gains will also be pleased, with recent figures from the ONS revealing that the average homeowner in Barking and Dagenham has seen their property rise in value by approximately £125,000 in the last five years.
High tenant demand, of course, relies on good levels of affordability – and Barking and Dagenham offers that to tenants as well, with the average room rental standing at just over £550 according to research by Ideal Flatmate.
While you won’t be able to charge central London rents in Dagenham, the upside of this is that tenants are likely to be more attracted to more affordable areas – particularly students, lower-income families and young professionals just starting out in their working lives – and this drastically reduces the chances of void periods being an issue.
Additionally, if tenant demand is high, you can afford to be pickier when it comes to choosing the tenants who occupy your rental properties.
Recent research found that Barking and Dagenham is the second-best London borough for buy-to-let landlords when it comes to recouping your investment on both property price and stamp duty costs based solely on annual rental return.
The findings showed that it would take a landlord 22 years to recoup their investment in Barking and Dagenham from yearly rental income alone (at an average of more than £14,300 per year).
Meanwhile, the Landbay Rental Index earlier this year revealed that Barking and Dagenham had witnessed rental growth of almost 30% over the last seven years, higher than any other borough.
At our Balgores Property Group Dagenham branch, we have the local knowledge and expertise to ensure you are complying with your licensing obligations, as well as staying within the law when it comes to new regulation such as the Homes (Fitness for Human Habitation) Act 2018 and the Tenant Fees Act 2019.
We can also ensure you fill your rental homes with ease, reduce the length of void periods, achieve solid rental yields and keep your tenants safe and well-housed throughout their tenancy.
To find out more about what we can do for you, and where else we operate in East London, Essex and Kent, please get in touch on 02085 921 038.
You can also use our free lettings valuation to give you an idea of how much rental income you could be generating from your rental property.