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Buyers can't buy and sellers can't sell; but it's a great time to be a tenant
carolt
Posts: 8,531 Forumite
http://www.guardian.co.uk/money/2008/nov/02/renting-property
You might not think it, but there are some people out there profiting from the current state of the property market: renters.
With the domino effect of buyers who can't buy, leading to sellers who can't sell, a growing number of landlords are being forced to put their properties on the rental market instead. This sudden glut in rental properties means that despite growing numbers of prospective tenants, the amount being paid in rent is actually going down.
Figures from the property-search website Globrix support this conclusion. June saw a steep increase of 13.8 per cent in the number of properties to rent, according to the site; by July there was a further increase of 0.8 per cent, and 4.6 per cent in August.
This has translated into clear falls in rent - in June the average UK rent was £950 a month; in July it dropped to £850, and then to £835 in August. Durham recorded the biggest drop, falling by 11.2 per cent from June to September, while Edinburgh recorded a 7.3 per cent drop over the same period, Leeds a 4.2 per cent fall and Newcastle a 4 per cent fall.
Hamptons International's latest house price tracker suggests rents have gone down 5.5 per cent in London in the past three months, compared with 4.2 per cent in the country overall. The agency also reports that in some London areas - such as Knightsbridge and St John's Wood - the amount of rental stock on its books has doubled compared with this time last year.
'We are experiencing an oversupply, which means we have seen a definite reduction in rent, and it's a huge surprise to landlords,'
says Emilie Dawes, lettings director for Marsh & Parsons. 'We had a property off the King's Road recently that was valued by another agency three months ago at £1,800 per week - it has just let for £995.
'We now suggest that clients renewing tenancy agreements ask for the same amount - or potentially accept a lower offer. People are still looking at the amount they pay on their mortgage and set their rent by that, but of course the market doesn't work like that.'
Agents working at the lower end of the market report falls, too. Peter Ford, regional director at Townends, which specialises in property in south London and the commuter belt, estimates that rents have fallen by approximately 5 per cent. 'The typical rents we deal with for one- and two-bed flats are around £900 to £1,500 a month, and we have seen areas - like Putney, for example - take a dip. All of a sudden, landlords are having to accept offers they wouldn't have considered a year ago. Both in the sales and rental markets, people are now able to consider living in areas they might have thought beyond their budget six months ago.'
Helen O'Rourke, who works in PR, bought a three-bed flat in Streatham Hill as a rental property in early summer. Since then she has only had three viewings; the flat has 'been absolutely empty ever since,' she says. 'When I bought I didn't expect to make a big capital gain immediately, but I was confident I would make a good rental return - at least cover the mortgage.' :rolleyes:
When she initially applied for her buy-to-let mortgage, local agents suggested she would achieve between £1,250 and £1,300 a month. That was in June, however. When she approached agents in August to rent it out, the market had already dropped significantly, with one telling her she would get '£900 tops'.
'The problem is that all these other Victorian family homes have come on the market for around the same price,' she says. 'I'm now resolved on spending £3,000 doing it up to make it the best flat in Streatham, just in order to get it rented.'
According to Catherine Manning, regional lettings director at Hamptons, 'the areas outside of London were more resilient, but are starting to suffer too. Six weeks after rent dropped in London, it hit the Home Counties; then after three months we saw places further afield similarly affected - places such as Wiltshire and Gloucestershire.
'Surrey and Berkshire were a couple of the first places to be hit, as they are so dependent on the City and corporate money. There aren't the companies paying their employees' rent any more - and people are unlikely to stump up £5,000 a week of their hard-earned money for the same places. You just don't want to pay for someone else's mortgage at that level, do you?'
You might not think it, but there are some people out there profiting from the current state of the property market: renters.
With the domino effect of buyers who can't buy, leading to sellers who can't sell, a growing number of landlords are being forced to put their properties on the rental market instead. This sudden glut in rental properties means that despite growing numbers of prospective tenants, the amount being paid in rent is actually going down.
Figures from the property-search website Globrix support this conclusion. June saw a steep increase of 13.8 per cent in the number of properties to rent, according to the site; by July there was a further increase of 0.8 per cent, and 4.6 per cent in August.
This has translated into clear falls in rent - in June the average UK rent was £950 a month; in July it dropped to £850, and then to £835 in August. Durham recorded the biggest drop, falling by 11.2 per cent from June to September, while Edinburgh recorded a 7.3 per cent drop over the same period, Leeds a 4.2 per cent fall and Newcastle a 4 per cent fall.
Hamptons International's latest house price tracker suggests rents have gone down 5.5 per cent in London in the past three months, compared with 4.2 per cent in the country overall. The agency also reports that in some London areas - such as Knightsbridge and St John's Wood - the amount of rental stock on its books has doubled compared with this time last year.
'We are experiencing an oversupply, which means we have seen a definite reduction in rent, and it's a huge surprise to landlords,'
says Emilie Dawes, lettings director for Marsh & Parsons. 'We had a property off the King's Road recently that was valued by another agency three months ago at £1,800 per week - it has just let for £995. 'We now suggest that clients renewing tenancy agreements ask for the same amount - or potentially accept a lower offer. People are still looking at the amount they pay on their mortgage and set their rent by that, but of course the market doesn't work like that.'
Agents working at the lower end of the market report falls, too. Peter Ford, regional director at Townends, which specialises in property in south London and the commuter belt, estimates that rents have fallen by approximately 5 per cent. 'The typical rents we deal with for one- and two-bed flats are around £900 to £1,500 a month, and we have seen areas - like Putney, for example - take a dip. All of a sudden, landlords are having to accept offers they wouldn't have considered a year ago. Both in the sales and rental markets, people are now able to consider living in areas they might have thought beyond their budget six months ago.'
Helen O'Rourke, who works in PR, bought a three-bed flat in Streatham Hill as a rental property in early summer. Since then she has only had three viewings; the flat has 'been absolutely empty ever since,' she says. 'When I bought I didn't expect to make a big capital gain immediately, but I was confident I would make a good rental return - at least cover the mortgage.' :rolleyes:
When she initially applied for her buy-to-let mortgage, local agents suggested she would achieve between £1,250 and £1,300 a month. That was in June, however. When she approached agents in August to rent it out, the market had already dropped significantly, with one telling her she would get '£900 tops'.
'The problem is that all these other Victorian family homes have come on the market for around the same price,' she says. 'I'm now resolved on spending £3,000 doing it up to make it the best flat in Streatham, just in order to get it rented.'
According to Catherine Manning, regional lettings director at Hamptons, 'the areas outside of London were more resilient, but are starting to suffer too. Six weeks after rent dropped in London, it hit the Home Counties; then after three months we saw places further afield similarly affected - places such as Wiltshire and Gloucestershire.
'Surrey and Berkshire were a couple of the first places to be hit, as they are so dependent on the City and corporate money. There aren't the companies paying their employees' rent any more - and people are unlikely to stump up £5,000 a week of their hard-earned money for the same places. You just don't want to pay for someone else's mortgage at that level, do you?'
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Comments
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Sounds about right...
The place we just started renting is £850 per month.
Included in that we get the service charge paid (beautifully kept gardens, windows washed, swimming pool, gym, sky TV).
The place was bought for around 190k in 2003, so if you say they took out a mortgage of maybe 175k or something, they are no where near covering the mortgage (depending how much deposit, etc of course!). Add into that the service charge costs and it's an even bigger bargain!
But to be honest, while I was looking for a place to rent, it seemed like they were all being snapped up pretty quickly!0 -
already posted here - had seen the Helen O'Rourke story before -
Post 4 by Baby Boomer
http://forums.moneysavingexpert.com/showthread.html?t=1227809&highlight=Helen+O%27Rourke0 -
Not spotted that - good thread (I started it...;)) - but still glad I posted the article in full - it has so many, many delightful bits.
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In my rented house nearly two years now, paying approx 22% of my after-tax base salary in rent (have been making quite a bit in overtime). House prices in the area down by anything up to 30% in those two years, based on local EAs windows.
It's turned out nice again :money:--
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.0 -
Our rental house was the cheapest by far in the area when we agreed the rent back in June. Now it's sort of average. There are lots of places asking for higher rent, but they all appear to be empty.0
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Maybe the renters were overpaying before these alleged cuts.
Maybe they are still overpaying. Hardly translates as making a profit (if it did, the taxman would be interested).
Maybe 'making a smaller loss' would be more appropriate.
GGThere are 10 types of people in this world. Those who understand binary and those that don't.0 -
With all the money the Gruaniad readers will be saving, they will hopefully get their transgender ops that much sooner ;-)In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot:cool:0
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Do you know a lot of transgender Grauniad readers, then Jonbvn?
Tell us more - you clearly mix in far more exciting circles than the rest of us!0 -
Wow - you do mix in exciting circles then!
I know lots of Grauniad readers, but all boringly single-gendered, I'm afraid.
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