Buy to let and the myth of rising rents

WTF?_2

MrDT wrote: »

I'm guessing that non-mortgaged landlords are few and far between. There's quite a few round here, but I think it comes from land in a ruralish area being in the family for generations etc. City centers saturated with poxy new build flats probably have a much much higher density of amateur, highly leveraged, mortgaged to the hilt landlords. In my opinion these are the guys that will try passing on their increased costs to the tenants, and when they fail, get repossesed.

Agreed: Always best to deal direct with the landlord to cut out the worthless agency (who will do sweet FA for you anyway) and if possible either go for a pro who's been in the letting game for years or someone who has paid the mortgage on the house already. If you can prove that you are a good tenant (rent on time, not bothering LL every 5 mins with trivial problems, take care of the place) you can get a better deal on rent rises too as a smarter LL will recognise your value.

A lot of renters are going to get stung by their amateur BTL landlord getting repossessed.

Dithering_Dad

My Landlord is a company based in the Isle of Man, much better than some bloke who's ploughed his life savings (or more likely, the equity from his family home) into a couple of BTLs and is now feeling the pinch, and considering selling up.

If I rented long-term, I think I'd check with the estate agent/letting agency that the accomodation was held within a limited company framework. It just seems to put it on more of a proper business footing.

kingkano

Snooze wrote: »

I agree. Mate of mine has just told his LL to sling his hook because he's announced a 10% increase from August. That's nearly £120 a month extra he has to find! LL says he has no option because his mortgage has gone up!!! :rolleyes: :rolleyes: :rolleyes: :rolleyes:

In fact, there was a thread on here about some female LL increasing her rents 10% not long ago - this could easily fit the situation with my mate, but obviously as the tenant. He is the ideal tenant and has been there for 4 years now and not caused the LL any hassle whatsoever; even doing small repairs himself to save troubling the LL, and this is how the LL repays him!! F*** them is what I say. Many LL's are getting too big for their boots these days and it needs everyone to vote with their foot to put them in their place leaving them with empty properties due to their silly prices or them being repaid by getting in tenant's from hell.

Rob

Actually I find that a fair rise. Your mate has had a sweet deal for 4yrs with his rent not going up with inflation. 4 yrs of (if you believe the govt) 3% inflation = 12.5%. If inflation is really more like 6% a year then its a heck of alot more really!! And the landlord is only passing on 10% of it! Sounds good to me.

I can see first hand looking around me that rents are indeed rising. Actually properties just aren't staying empty at all. About a week at most in my immediate vicinity. I guess this means landlords can push the rents a bit especially short term.

Generali

I think rents are rising. I also think they'll be falling by this time next year due to the change in housing benefit that means that it pays claimants to get a lower rent. There will be a lot more HB claimants in a year IMO.

We'll see what happens. I did predict rent rises though (too lazy/busy to find the link).

baby_boomer

To me it makes complete sense that there will be a surfeit of renters over the next 12 months, and therefore upward pressure on rents.

While prices fall, people will be prepared to pay decent rents - higher than an equivalent mortgage - because they don't want to make a huge capital loss that will hang like a millstone around their neck for the rest of their lives. This is far more important than whether rising utility/fuel/food bills make paying a higher rent more difficult.

In 12 months time the rules of the game may be back to normal as it could be time to start comparing rents & mortgage payments once again.

But while house prices are nosediving the normal rules are suspended.

monkeymaster

Gorgeous_George wrote: »

For years we have had renters saying that their rent was good value because mortgage interest would cost more than rent. Amateur landlords were subsidising tenants.

Many LLs set rents based on costs and not house prices. The cost of mortgages has increased and therefore rents need to rise. Would be buyers need larger deposits to secure mortgages with higher rates. Since the alternative to renting costs more (or is further out of reach) , it makes sense that rents can rise.

GG

Nonsense. If people's disposable incomes are falling (which they are) rents will not go up.

Round here (South Yorks) rents seem to be falling - property bee. Certainly my personal experience backs this up. My landlord said he was putting my rent up by 5%, I told him to think again and he backed down rather than risk a long void. :beer:

Gorgeous_George

I suppose it depends on how close to market value your rent is already and how good a tenant that you are.

I look at asking prices on Rightmove to assess the level to set my rent. A typical three bedroom property has risen from £325 to £475 since 2001. I currently charge £420 for a four bedroom property - well below market value. I intend to raise the rent to £460 next April (just under 10%) and I do not expect much argument from my tenant. Of course, if the market falls I will reconsider.

GG

IveSeenTheLight

Gorgeous_George wrote: »

I currently charge £420 for a four bedroom property - well below market value. I intend to raise the rent to £460 next April (just under 10%) and I do not expect much argument from my tenant.

I'm wondering which area your property is in and what its valuation is.

I too rent out a 4 bed property, also well under market rate, but at £1100 pm its almost 3 times your rental. I increased this 18 months ago (between tenants) from £900 pm (22% rise)
A quick search shows that currently the average rent price in the area for a 4 bed is £1600 pm. 18 months ago it was approx £1250.

I dont intend to increase the rent while I have my tenants in, but if there was to be a change of tenants, maybe I could factor in a further 15% rise and still be 20% under the market rate, but then also, I would rather not be too greedy and ensure I have little or no void periods

neverdespairgirl

I think GG is in the north-east, perhaps York?

JonnyBravo

Gorgeous_George wrote: »

I suppose it depends on how close to market value your rent is already and how good a tenant that you are.

I look at asking prices on Rightmove to assess the level to set my rent. A typical three bedroom property has risen from £325 to £475 since 2001. I currently charge £420 for a four bedroom property - well below market value. I intend to raise the rent to £460 next April (just under 10%) and I do not expect much argument from my tenant. Of course, if the market falls I will reconsider.

GG

Spot on.

All these "hard ball" tenants are no doubt already paying close to the market rent. Good for them if they do manage to persuade their landlord to cancel a rent rise. Personally, as a landlord, I decide what rent my tenant will pay not them. But then as previously stated my tenant pays under market value so is happy to accept nominal rises (£10/yr each of the last 3 years).

What's the point in nominal rises you may ask? Well it sets the precedent that I look at the rent once a year and assess "the market".