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London rents falling faster than house prices
geoffky
Posts: 6,835 Forumite
Central London agents are reporting that rents have fallen faster than house prices because of the glut of properties available and falling corporate demand.
Rents are down 15% to 20% in some areas, while a survey by Douglas & Gordon shows rents are down by 10.6% on average since September, compared with an 8.9% drop in sales prices. Knight Frank broadly agrees, saying that rents are down 9.6% in the last three months.
Douglas & Gordon has seen a 22% increase in the number of homes offered to let in the space of a month, while Knight Frank says it has three times the number of rental properties on its books compared with a year ago.
Knight Frank says that central London rents have now fallen for three consecutive quarters.
Liam Bailey, head of residential research at Knight Frank, said the latest fall is by far the biggest drop yet recorded: “To put the figures in perspective, the drop of 2.1% recorded in September 2003 was the previous largest biggest decline on record in prime central London.
“While there has been an increased demand for rental property, the result of many people choosing to delay house purchase, this has been outweighed by the sheer amount of new stock coming on to the market, much of it from ‘forced landlords’ unable or unwilling to sell their property in the current market.”
He said that the higher value properties were far harder to rent out and landlords needed to choose between long voids or a “dramatic’ drop in rent. Knight Frank’s UK head of lettings, Tim Hyatt, said: “It is not easy to tell clients that they need to drop the price of their property by at least 15% (if not 20% to 25% for larger properties) as we are in the early stages of a global recession. However, the reality is that we have up to three times as many properties on the market than this time last year.
“Nevertheless, we expect the lettings business to continue growing next year. Renting has become an acceptable medium-term option for many people and its flexibility will continue to appeal as the economic downturn continues. The changing climate will also make investment more appealing for rental returns alone.
“Landlords can be cautiously optimistic but need to be very flexible as they enter the New Year if they are to prosper in this difficult market.”
http://www.estateagenttoday.co.uk/News/Story/?storyid=1407&title=London_rents_falling_faster_than_house_prices&type=news_features
Rents are down 15% to 20% in some areas, while a survey by Douglas & Gordon shows rents are down by 10.6% on average since September, compared with an 8.9% drop in sales prices. Knight Frank broadly agrees, saying that rents are down 9.6% in the last three months.
Douglas & Gordon has seen a 22% increase in the number of homes offered to let in the space of a month, while Knight Frank says it has three times the number of rental properties on its books compared with a year ago.
Knight Frank says that central London rents have now fallen for three consecutive quarters.
Liam Bailey, head of residential research at Knight Frank, said the latest fall is by far the biggest drop yet recorded: “To put the figures in perspective, the drop of 2.1% recorded in September 2003 was the previous largest biggest decline on record in prime central London.
“While there has been an increased demand for rental property, the result of many people choosing to delay house purchase, this has been outweighed by the sheer amount of new stock coming on to the market, much of it from ‘forced landlords’ unable or unwilling to sell their property in the current market.”
He said that the higher value properties were far harder to rent out and landlords needed to choose between long voids or a “dramatic’ drop in rent. Knight Frank’s UK head of lettings, Tim Hyatt, said: “It is not easy to tell clients that they need to drop the price of their property by at least 15% (if not 20% to 25% for larger properties) as we are in the early stages of a global recession. However, the reality is that we have up to three times as many properties on the market than this time last year.
“Nevertheless, we expect the lettings business to continue growing next year. Renting has become an acceptable medium-term option for many people and its flexibility will continue to appeal as the economic downturn continues. The changing climate will also make investment more appealing for rental returns alone.
“Landlords can be cautiously optimistic but need to be very flexible as they enter the New Year if they are to prosper in this difficult market.”
http://www.estateagenttoday.co.uk/News/Story/?storyid=1407&title=London_rents_falling_faster_than_house_prices&type=news_features
It is nice to see the value of your house going up'' Why ?
Unless you are planning to sell up and not live anywhere, I can;t see the advantage.
If you are planning to upsize the new house will cost more.
If you are planning to downsize your new house will cost more than it should
If you are trying to buy your first house its almost impossible.
Unless you are planning to sell up and not live anywhere, I can;t see the advantage.
If you are planning to upsize the new house will cost more.
If you are planning to downsize your new house will cost more than it should
If you are trying to buy your first house its almost impossible.
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Comments
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Thanks Goeff - no idea what to believe.
Take a look at the below from the same site on the same day
http://www.estateagenttoday.co.uk/News/Story/?storyid=18940824&title=Winkworth_sales_plummet_but_rentals_increasing&type=news_feed
"Sales at London-based Winkworth estate agents have plummeted by 50 per cent since 2007, but rentals are up by 30 per cent, it has been reported."
or even this one from the Friday before
http://www.estateagenttoday.co.uk/News/Story/?storyid=1404&title=Chips_down_on_mortgages%2C_but_rise_in_tenancies&type=news_features
"The number of tenants committing to new leases rose 1.3% in November, driven by would-be property buyers signing up for short leases while they wait for property prices to fall further, says Your Move."
I guess it just depends where you get your info from and what attention you want to grab when you start a thread
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Neither of your links chucky, mentions what level of rents are being achieved.
I'm just outside zone 6 and what I have seen is lls trying to keep the rents up, but when they are the ll taking the hit of a void, then they are dropping the rental asking prices. This is having a knock on effect and rental prices are dropping.
I'm also noticing that a lot of rental 2 up 2 downs terraces with on street parking, are standing empty. A few months ago, I saw semis with off street parking, being offered at the same price as these these terraces and now the terraces are having to drop, but still not low enough it seems in a lot of cases. Lots of flats empty too as they seem to be asking the same rental prices as the houses.RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
Read the sticky on the House Buying, Renting & Selling board.0 -
MissMoneypenny wrote: »Neither of your links chucky, mentions what level of rents are being achieved.
I'm just outside zone 6 and what I have seen is lls trying to keep the rents up, but when they are the ll taking the hit of a void, then they are dropping the rental asking prices. This is having a knock on effect and rental prices are dropping.
I'm also noticing that a lot of rental 2 up 2 downs terraces with on street parking, are standing empty. A few months ago, I saw semis with off street parking, being offered at the same price as these these terraces and now the terraces are having to drop, but still not low enough it seems in a lot of cases. Lots of flats empty too as they seem to be asking the same rental prices as the houses.
Moneypenny - I never said that they were being achieved, just highlighting the fact that there was contradictory information coming out from what Geoff had posted and what was on the same web-site on the same day no less.
From Winkworths "rentals are up by 30 per cent" then from the other article "The number of tenants committing to new leases rose 1.3% in November"
I live in Zone 1 and rents are less than thay were last year. Any landlord with any sense will reduce his asking price. For every week that the property is empty that is 2% of his annual rent that he loses out on - so a 10% drop in asking price is quite reasonable.
I've just let a 2-bed in 2 weeks in November by dropping ht price 10% (for a 2-year period) due to the seasonal factor (December is a very quiet month) and also of the above 2% loss per month if it is empty.0 -
I live in Zone 1 and rents are less than thay were last year. Any landlord with any sense will reduce his asking price. For every week that the property is empty that is 2% of his annual rent that he loses out on - so a 10% drop in asking price is quite reasonable.
You are right 10% down is very reasonable, I think tenants can even negotiate up to 25% discount off the rent and in 6 months it will be down a lot lot more.
Rents are falling faster than HP drops at the moment, but HP drops will catch up with the falling rents and next year eventually they will overtake.
At the moment rents haven't fallen enough to make enough of the amateur BTLers not be able to afford their repayments. But soon we are going to see the market flooded with repossessions especially in London. Most of the buyers going to these auctions will be the buyers with enough cash to actually buy out right. Because getting a mortgage will be nigh on impossible, even more so the lower the Gov drops the base rate.
In Japan the base rate is 0.1% but that doesn't mean you can get a mortgage for that. They advertise mortgages for 2% in the bank of Japan but that's only for 2 yrs then it goes up to 7%.
It will be similar offers for those lucky few that can get a mortgage approved. The banks are in such a situation right now that to be able to stay afloat is going to be very difficult. They are going to get even more Ruthless on people who already borrowed and new mortgage applicants.
So if you have enough cash next year (like 100K) to buy out right, you are going to be in a lovely position. My wife and I are going to take out time looking at really nice places and putting in very low offers or going to auctions and not bidding too high until we get something that we can call a home for the first time.0 -
I think its clear that rents are ABLE to fall faster than prices because there is no such thing as "I'll just wait till the market recovers and rent it out then"
With unemployment rising and increasing supply of rental properties it is also no surprise that this is happening. Must point out that my own (zone 2 4bed houseshare) actually rises by 5% in feb (for first time since 2002). Wonder if this type of property (static in terms of rent throughout bubble) will be less subject to downward pressure than 1bed and 2 bed flats and top end houses not rented to houseshare sector?Prefer girls to money0
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