Rents Falling - FT

fatgit

Generali wrote: »

Where London leads today, the rest of the country will follow tomorrow.

b**locks

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Generali

fatgit wrote: »

b**locks

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Pithy and eloquent.

dopester

Generali wrote: »

The problem with loans of larger multiples of joint salaries is what happens if/when you want kids? Potentially, the loan the goes from 4.5x to 9x salary!

Or increasing unemployment, paycuts, less hours...which this forum seems to be in mass-denial is coming, and ISTL has already dismissed unemployment as having any bearing on house prices, as "people will just walk in to a new job."

I exaggerated yesterday about there* being people who'll soon be grateful to earn the same as Indian tea-leaf-pickers.... but we'll see soon be seeing how the £25K average salary that some people believe to be an absolute right, holds up to downward pressures.

KPMG: One in two UK firms plan job cuts
Written by Doug Woodburn
CRN, 29 Jul 2008

Bleak economic conditions have prompted 53 per cent of organisations to examine their wage bill, survey reveals
More than half of UK organisations are planning to make job cuts and freeze recruitment over the coming months, a new KPMG survey has found.

Malcolm Edge, regional chairman for KPMG in the North, said the widespread redundancy programmes seen recently in the financial services and housebuilding sectors may be a harbinger for other sectors.

WTF?_2

dopester wrote: »

Or increasing unemployment, paycuts, less hours...which this forum seems to be in mass-denial is coming, and ISTL has already dismissed unemployment as having any bearing on house prices, as "people will just walk in to a new job."

I exagerated yesterday about their being people who'll soon be grateful to earn the same as Indian tea-leaf-pickers.... but we'll see soon be seeing how the £25K average salary that some people believe to be an absolute right, holds up to downward pressures.

I think the nominal value will hold up. The real problem will be price rises on the essentials squeezing disposable income and eroding their worth with little chance of getting more pay to compensate.

dopester

!!!!!!? wrote: »

I think the nominal value will hold up. The real problem will be price rises on the essentials squeezing disposable income and eroding their worth with little chance of getting more pay to compensate.

Maybe so !!!!!!.

However that hasn't stopped my friend's mortgage jumping from x4.5 (or thereabouts) to x9 (or thereabouts) after his missus just lost her job... all without wanting/planning for kids to up the multiple.

Fancy house now much at risk, and they won't be the first or the last.

carolt

That said, they're better off than one individual in the same boat. At least it's only 9 times one salary, not say 50 times one person's benefits....

IveSeenTheLight

lynzpower wrote: »

Ive seen the light,

Do you fear that as you put rents up, your chances of not getting the money increase- after all are your tenants finding the same probles as the rest of us for rising prices- fuel/ food costs/ lay offs etc

Absolutely not.
I have tenants in my properties and as I said, I market under the going market rate.
The 4 bed I rent out is currently 27% under the market rate. It was 9% under when I let out to my tenants.
Only today, they contacted me about signing a new lease to gaurantee their future rental. They initially signed a 6 month AST but have been periodic for the last 13 months. I told them they are happy to stay as long as they want.
They have advised they plan to stay for another 12 - 18 months and then re-assess whther to buy or not, so I have happily agreed to draw up a new contract for 12 months with them on the existing terms.

I have another property that i have recently re-let out.
It's a two bed flat.
The previous tenants were very happy with the place and said they would have stayed longer if their personal circumstances had not changed (new member to the family).
The new tenant has signed up for a 12 month AST. this is actually leased to a professional company and the tenant is on a 12 month rolling secondment, so in a years time the tenants may stay on for a further year or the company may replace the person with another employee. If neither of these happens then I would re-advertise the normal way.

So my two BTL's are effectively secured for the next year.

Happy tenants and a happy landlord. good news all round I think

IveSeenTheLight

!!!!!!? wrote: »

3.5 was settled on as it generally allows a margin of safety when it comes to repayment. ie. At that level, the borrower has enough spare cash to allow savings and hence cover repayments for emergencies (or should be saving some cash) and the bank's total exposure is lower.

On what basis are 4.5x loans suddenly sensible? The same rules of risk and disposable cash apply. What factor has now changed that makes a higher loan multiple suitable for the bank and the borrower?
.

like I tried to explain in this post
http://forums.moneysavingexpert.com/...1&postcount=34

Properties now have a higher rate of multiple incomes than previously. This affects the disposable income

I think the way of the world today, if 3.5 was to return, you could see more people having second properties as multpileincomes could afford it.

dopester

IveSeenTheLight wrote: »

So my two BTL's are effectively secured for the next year.

Happy tenants and a happy landlord. good news all round I think

Congratulations on your 1 year-reprieve.

carolt

Interesting discussion on this from the Motley Fool today - the comments are particularly enlightening:

"I am a landlord in London and this sudden craze for tenants attempting to negotiate rents downwards is a nightmare for everyone. In the present climate the landlord too is experiencing soaring mortgage costs and has set thre rent to cover those. You would be surprised to learn that the majority of landlords do not make much profit on their rent because if they do they have to pay it out in tax anyway. The landlord has to include the cost of maintaining the property in the rental calculation and this can prove very expensive. The property has to be refurbished each time the tenancy changes which also costs a lot of money. I can see the attraction of a cheaper rent for a 2-3 year contract but with mortgage rates rising so quickly even this is very risky. What will happen if interest rates suddenly rise to 10%, the landlord will then make a loss and the property will be repossessed and the tenants will be in the street anyway. It was much easier when the tenants just paid the asking rent. There is a lot of choice out there so why dont they pick a property at a rent they can afford instead of causing everyone loads of hassle. I have had three different offers on a property in the space of as many days, and the ones at the lower rents had bad references not the ones prepared to pay more. Just because you pay less does not mean you are a good tenant."