Accidental Landlords are starting to sweat.

ad9898_3

Seems like the flood of people who thought the market was going to recover, and so let out their property are starting to sweat, with mainstream opinion starting to seep through that there is zero chance of a 'recovery' in the housing market in the forseeable future.

Average rents have dropped from £950 per month in May last year, down to £795 in Feb 2009. Low IR's seem to be the their only saving grace at the moment, but if they don't last, which of course they won't in the medium to long term, expect more carnage.

This time last year, as the skies began to brighten and the bulbs came into bloom, “To let” boards began to spring up across the country in the unlikeliest of places.
Homeowners who couldn’t sell their properties – at least at the price they would have fetched when the market was still booming – but were still determined to move, decided to let them out instead. Once the market recovered, so their logic went, they would put them back on sale.
Twelve months later, this strategy is beginning to look deeply flawed. Not only has the sales market not recovered, rents, too, are beginning to crumble. For many, the only consolation is that the interest rate on their mortgage has fallen. These accidental landlords are beginning to look increasingly like anxious landlords.
“The dramatic slump in property sales in the second half of 2008 has pushed the rental property available to new heights in 2009,” says Daniel Lee, chief executive of Globrix, a property search engine (part-owned by News International, parent company of The Sunday Times). It reported an 88% increase in the number of rental properties coming onto the market across the UK in January (53,547) compared to the previous month (28,489). As a consequence, rental values have fallen sharply: the average rent in February 2009 was £795, compared to a peak of £950 in May last year. The latest figures from the Royal Institution of Chartered Surveyors also confirm a fall in rents.

http://property.timesonline.co.uk/tol/life_and_style/property/investment/article5948641.ece

pickles110564

ad9898 wrote: »

Low IR's seem to be the their only saving grace at the moment, but if they don't last, which of course they won't in the medium to long term, expect more carnage.

What will make interest rates rise?

themanbearpig

Cue all the landlords rambling on about how much money they are making right now, and how everything is just perfect...

Things are going to become pretty dire for a huge amount of people pretty soon. I remember watching a program in mid-08 that was encouraging people to rent out their homes and move into cheaper rental accomodation because they overstreched themselves and could pay the mortgage.
Now the people that did this are in serious negative equity, and will lose their homes when interest rates shoot up.
You can't even blame them, because not once did this government or media give any indication that prices were hugely inflated, and very highly likely to fall. Only the people who were sceptical and thought outside the box saw it coming.

ad44downey

pickles110564 wrote: »

What will make interest rates rise?

Rampant inflation in a few years time for one thing

themanbearpig

pickles110564 wrote: »

What will make interest rates rise?

A conservative government.

ad9898_3

pickles110564 wrote: »

What will make interest rates rise?

Err, inflation, which is starting to seep into pretty much everything we buy at the moment, due to the devaluing pound. I don't know of anything that is deflating apart from houses.

Cleaver

ad9898 wrote: »

I don't know of anything that is deflating apart from houses.

Old bouncy castles?

ad9898_3

Cleaver wrote: »

Old bouncy castles?

Well, perhaps you could class a castle as a house, couldn't you.:D

amcluesent

I for one am putting some serious folding in a vulture fund to snap up the assets of distressed BTLers as soon as the margins calls start coming in.

Dan:_4

themanbearpig wrote: »

A conservative government.

The conservatives are in support of low interset rates whilst the UK remains in recession.

ukjoel

Erm maybe I am stating the obvious but someone with a 200k tracker mortgage may have seen their rent drop from 950 to 795 but wouldnt they have also seen an interest only mortgage drop from 4.5% down to .5% as well.

Thats a drop of about 10k a year down to 2k a year.

I bet they are really kicking themselves about losing £150 rental income when they are also saving £700 a month on the morgage.