Guardian: Tenants sitting pretty as rents fall.

WTF?_2

http://www.guardian.co.uk/money/2008/aug/15/renting.property

Rents will fall by up to 10% this year, according to some of Britain's biggest letting agents, as a wave of properties that owners and developers can't sell have started to flood the rental market.
The fall in rents will bring welcome relief to tenants but will squeeze buy-to-let landlords who now face a triple whammy of falling property values, sliding rental income and rising mortgage costs. To add to their misery, the Law Commission this week issued proposals on "encouraging responsible letting" that are likely to drive up administrative costs for landlords.
The forecast fall in rents will bewilder landlords, given that many who would otherwise be buying are sitting out the property market woes by renting instead. Shouldn't that be pushing up rents?
The reality, according to property agents Knight Frank, is that although there is a big rise in the number of people wanting to rent, it has been more than offset by a surge in "forced landlords" who, unable to sell, are now placing properties with letting agents.


Oh dear - not looking so good for either those who paid too much for their property or for the amateur BTLers who now have equally numpty-ish competition.

Looks like the much anticipated (by some bulls here, that is ) 'rental ladder' as people rent out instead of sell and rent somewhere else themselves if they have to move or can't meet their mortgage isn't going to happen. Was it ever :rotfl:

rebeccaj

I concur with this. I STR'd about 18 months ago and have been in this rented house for that 18 months, renewing every six months since I started at the same rent (initially negotiated downwards from asking price by just under £100a month)

End of this 6 month period is due at end of September and the managing agents called up and said landlord wants a rent review but we have told him it's madness in this climate and in our opinion the rent on the property is at the highest it should be for now, but he is adamant he wants a rent increase.

Landlord thinks he knows better, so he gets in another couple of agents to give a rent valuation absolutely convinced that he is going to be proved right.

Next thing I know managing agent phones me and says he won't be increasing the rent because the other agents didn't feel it was worth more than it was being rented for at the moment. Ok, fine, but a bit of digging and sweet talking later and I discover that other agents valued it at less than current rent.

So I agree to stay on IF he lowers the rent to the current, as commissioned by him, rent valuations. He (reluctantly) agrees to a reduction to the rental value his two appointed valuers returned, £80 less per month than I had been paying. Hoist upon his own petard, I believe.

That's what happens if you get greedy, but also shows from first hand experience just what is actually happening to rents ATM.

Cranston_2

I am a LL and my letting agent has suggested raising the rent by 10% in September when our current tenant leaves. They claim to be experiencing increased interest in rentals.

Gorgeous_George

Another attempt to panic BTL LLs.

In areas where there are a lot of new build flats and houses then prices may well dip slightly. 10% is a nice sensational double digit headline.

In other areas, prices will hold their own or rise. I plan to increase my rent by 10% next April.

I wonder if these are the same experts who predicted 45% increases in house prices by 2012.

GG

neverdespairgirl

Gorgeous_George wrote: »

Another attempt to panic BTL LLs.

In areas where there are a lot of new build flats and houses then prices may well dip slightly. 10% is a nice sensational double digit headline.

Not just new builds, though. Rent prices are the same in WC1 as they were a year ago. I noticed one particular house (a large, 4 bed, 2 reception, garden) place which was let within days of going on a year ago at £700 a week. It then went up again recently, also advertised at £700 a week, and took a couple of weeks to go.

Microstar_2

Gorgeous_George wrote: »

Another attempt to panic BTL LLs.

In areas where there are a lot of new build flats and houses then prices may well dip slightly. 10% is a nice sensational double digit headline.

In other areas, prices will hold their own or rise. I plan to increase my rent by 10% next April.
GG

As a LL I dearly wish that this were the case. I was also planning a modest increase. Unfortunately I've witnessed a lot more properties coming onto the rental market in my area over the last 2-3 months. These are not new builds, they appear to be 'reluctant landlords' who can't sell their houses. There are a LOT of them though and the LA's are all stuffed with properties at present.

meester

Gorgeous_George wrote: »

Another attempt to panic BTL LLs.

Yes.

I wonder if these are the same experts who predicted 45% increases in house prices by 2012.

Yes.

Sorry, but that's the way markets, the media and people work.

They have a meme 'house prices going up £100/day' or 'house prices plummeting', and they report whatever they can that concurs with it.

And of course the public hears what's being said and believes it.

So I'm afraid it's a self-fulfilling prophecy, just as house price inflation was.

rebeccaj

Gorgeous_George wrote: »

In areas where there are a lot of new build flats and houses then prices may well dip slightly.

In other areas, prices will hold their own or rise.

the property I rent where the rental value has decreased, as mentioned in my post above, is not in an area where there are "a lot of new build flats and houses" and neither is its price "holding its own" or rising. As I described the rental value has dropped. My factual experience does not tally with your assumptions.

JoJil

We noticed that there is an increase in the numbers of rentals and asked our letting agent to send us other properties that are for rent in the area.

A few hours later, they phoned and said out landlady will give a reduction in rent if we sign for 12 months. We said we didn't want to tie ourselves in for 12 months, so he said the landlady would agree to six months then.

We are not sure if we want to stay with this landlady though as she was slow to fix the repairs.

dougs

JoJil wrote: »

We noticed that there is an increase in the numbers of rentals and asked our letting agent to send us other properties that are for rent in the area.

rents are certainly either stagnant or dropping round here, PropertyBee bears this out as well.

wolfplayer

These 2 landlord brothers in the clips below might now be feeling more of the heat.

http://uk.youtube.com/watch?v=htpjBOFgGoo&feature (late 2007)

http://uk.youtube.com/watch?v=5sFV6ZQP7pA (early 2008)

As a tenant I cringe at their bright sunny forecasts for the property market.

Their wafer thin margins - their reliance and full trust in continued capital growth - their attitude that a crash is unlikely to hit London - their apparent misunderstanding that HPI gains since 2005 can't be made liquid for "a lot of money to be made" until you've sold - their reluctance to sell any of their portfolio - their expectation that with higher interest rates they will be able to charge higher rents - and their statement that in 5 years time they'll probably look back at 2007 prices and say "Wow! Wasn't everything so cheap back then!"

Cringe attack!

Strangely they seem to have abandoned a buy-and-hold strategy and the house they bought in 2007, featured in the first clip, is now up for sale.

However maybe I'll be proved wrong and maybe they will be ok as they started building their portfolio in 97-98.