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Rents rise as house prices fall

IveSeenTheLight
IveSeenTheLight Posts: 13,322 Forumite
in Debate House Prices & the Economy
From BBC website
http://news.bbc.co.uk/1/hi/business/7404947.stm
:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:
«13

Comments

  • MissMoneypenny
    MissMoneypenny Posts: 5,324 Forumite
    From your link

    "Forecast for 2008/9

    House prices: down 20%
    Rents: Up 10-11%

    Source: Capital Economics"

    From a LLs point of view they seem to be saying that you will get an extra 10%-11% over the next two years (only in certain areas as rental oversupply in other areas) while your property drops 20% in value.

    Then the rents drop again as demand goes and people buy houses (and voids I assume for many LLs) and your property portfolio has one fifth of the value wiped off it.

    I thought you were a LL, so why is this good news for you?:confused:
    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.


  • WTF?_2
    WTF?_2 Posts: 4,592 Forumite
    IveSeenTheLight wrote: »
    From BBC website
    http://news.bbc.co.uk/1/hi/business/7404947.stm

    So looks like rents will increase somewhat in line with inflation.

    Not really a surprise; Less people buying houses, people selling to rent, amateur BTLs not being able to subsidise their tenants in light of higher mortgage repayments. All that equals more demand and more pressure on some landlords to get higher rents. Very predictable.

    People who knew what they were doing when they bought property should enjoy a mini boom for a year or so. However, it's what happens when the actual recession hits that will be interesting and not as predictable.

    Unless there's wage inflation to match general increases in the essential costs of living, pressure on rents will most likely be downward. If there is wage inflation the LLs should do OK.
    --
    Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    My prediction for quite a while has been that rents will rise as people stop buying and then fall back as economic hard times start to bite.

    It looks like I'm only half right at the moment.
  • IveSeenTheLight
    IveSeenTheLight Posts: 13,322 Forumite
    MissMoneypenny wrote: »
    From your link

    "Forecast for 2008/9

    House prices: down 20%
    Rents: Up 10-11%

    Source: Capital Economics"

    From a LLs point of view they seem to be saying that you will get an extra 10%-11% over the next two years (only in certain areas as rental oversupply in other areas) while your property drops 20% in value.

    Then the rents drop again as demand goes and people buy houses (and voids I assume for many LLs) and your property portfolio has one fifth of the value wiped off it.

    I thought you were a LL, so why is this good news for you?:confused:

    I post this link as many has said that rental prices are not going up.
    I'm sure they may not be in some area's but generaly they are.

    Regarding my properties, I have already increased the rent by 22% and 14% in just over a year, so this helps my rental yield and I personally put it towards reducing the LTV, so is good news for me.

    If the valuation of the property drops, I am not concerned.
    This is a long term investment and over the long term if it drops (on paper it hasn't yet) it will recover and surpass the current high.

    If rental demand drops, then I may have to re-assess my plan, however I already have a very good market strategy which has resulted in only 2 weeks void on 2 properties since I started leasing out, so my startegy may hold out to be good, even in a lowering demand for rental properties.
    In my area, rental demand has always been strong for a number of reasons and I do not foresee this changing much.
    If anything, rental demand may get stronger with a chance that the rental periods shorten
    :wall:
    What we've got here is....... failure to communicate.
    Some men you just can't reach.
    :wall:
  • IveSeenTheLight
    IveSeenTheLight Posts: 13,322 Forumite
    !!!!!!? wrote: »
    So looks like rents will increase somewhat in line with inflation.
    .

    If inflation is 10-11% then my rents will go up higher than my wages ;)
    I've already raised my rents 22% and 14% in the last year and I'm still renting below the matket value
    !!!!!!? wrote: »
    Not really a surprise; Less people buying houses, people selling to rent, amateur BTLs not being able to subsidise their tenants in light of higher mortgage repayments. All that equals more demand and more pressure on some landlords to get higher rents. Very predictable.
    I do not believe the majority of LL's are subsidising their tenants, maybe a minority but definately not the majority.
    Lets put this one to bed now.
    I rent out two properties and both are surpless 125% mortgage to rent on capital and interest mortgages. So the tenants are subsidising my capital payments ;)
    !!!!!!? wrote: »
    Unless there's wage inflation to match general increases in the essential costs of living, pressure on rents will most likely be downward. If there is wage inflation the LLs should do OK.

    People renting need a roof over their head. Any pressure downward will be on non essentials i.e. cigaretts, beer, going out, iPods, Plasma Tv's etc etc etc before there is pressure on rents.
    The only thing that puts a pressure lowering rents is lack of demand (unable to rent out)
    :wall:
    What we've got here is....... failure to communicate.
    Some men you just can't reach.
    :wall:
  • poppysarah
    poppysarah Posts: 11,522 Forumite
    On breakfast bbc they said "rents rise apart from in areas with oversupply of flats"

    So that's every city centre and a lot more towns too.

    There are tons of empty places.
  • brit1234
    brit1234 Posts: 5,385 Forumite
    Thats true, cities such as Manchester, Leeds, Cardiff, Liverpool and now parts of London rents are falling.

    Its still early days yet, we have only had 8 months of falls. It will be the next 4-5 months where we will see big falls in prices as the reduced lending filters through to the figures.
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
  • dannyboycey
    dannyboycey Posts: 1,060 Forumite
    People can only pay what they can afford. Renters will not be able to take on their landlord's mortgage defecits as their repayents increase. Instead, we will see a sharp rise in reposessions from those landlords who were sailing too close to the wind and were too thick/greedy to jump ship while they had the chance. A widespread increase in rents by anything more than a few percent simply wont happen anyway as tennants are legally protected against this as far as I understand.

    Possibly a small increase in the short term but this will soon fall back and perhaps we may even see rents reduce in the longer term. That's my prediction FWIW.
  • IveSeenTheLight
    IveSeenTheLight Posts: 13,322 Forumite
    poppysarah wrote: »
    On breakfast bbc they said "rents rise apart from in areas with oversupply of flats"

    So that's every city centre and a lot more towns too.

    There are tons of empty places.
    brit1234 wrote:
    Thats true, cities such as Manchester, Leeds, Cardiff, Liverpool and now parts of London rents are falling.

    Its still early days yet, we have only had 8 months of falls. It will be the next 4-5 months where we will see big falls in prices as the reduced lending filters through to the figures.

    There is a conflict in the article, it states
    "There are exceptions to all this. Where there has been an oversupply of new flats, such as in the centre of Leeds, the cost of renting is actually falling."
    and also
    "Mr Pank says rents in Leeds have gone up by 5% in the last six months alone. "

    I guess the article is referring to an average. Of course there will always be properties that are renting for more and others which are dropping
    :wall:
    What we've got here is....... failure to communicate.
    Some men you just can't reach.
    :wall:
  • Snooze
    Snooze Posts: 2,041 Forumite
    1,000 Posts Combo Breaker
    IveSeenTheLight wrote: »
    I post this link as many has said that rental prices are not going up.
    I'm sure they may not be in some area's but generaly they are.

    Yes, and I was one of the ones that's said they're dropping - and they are here in Leeds and have been for some time.

    I think the problem here is more to do with "paper" landlord's putting their properties up for rent when they haven't done anything to them since they bought them 8 years ago at auctions for £2.50 each. I've no problem personally in paying top dollar for a nicely presented 1-bed flat in a good area of Leeds (Adel/Roundhay/Shadwell etc) with nice decor, modern kitchen, GCH etc, for £450/month - and they do exist - but the vast majority of them are in bad areas, haven't seen a paint brush in the last decade, no DG, no GCH and have kitchen units and decor out of a 50s council house, and yet they still expect people to be knocking at the door to rent them and be happy to pay £450/month :rolleyes: .

    They need to get real I'm afraid..

    R
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