Buy to let: double whammy for amateur landlords as flat rents fall

chucky

penguine wrote: »

As unemployment continues to rise it seems inevitable that rents will keep falling, and in flats faster than in houses. Single people living in rented flats will be the first to move back home with family or to house share once they lose their salary or have to take a lower paid job.

totally agree they will fall more in the areas where unemployment is highest.

BritRael

ess0two wrote: »

Needs posting in mortgages/endowments also,just incase anyone misses it from here and in housebuying also.

I always use 'New Posts' rather than going to a specific board. See some real odd stuff on here doing that

julieq

Thrugelmir wrote: »

Leveraged BTL investors are going to face a problem once their current mortgage deals expire. Base rates may be low but banks and building societies are already pricing in further repossession losses from the downturn in the economy, the need to attract deposits and the higher levies that are required to fund FSA.

That's a slightly spurious argument. Unless rates really shoot up, rental income will cover repayments without the need for a remortgage, and rates won't shoot up unless there's some sort of economic recovery, so it's basically self regulating. It's inevitable that some BTL investors with high LTV will get burned, but they'll find it a lot easier to build a defensive position now than they would if there had been stagnation and highish interest rates, that would just have caused a cash haemorrage.

Not everyone can be rich without doing anything, that was the fundamental reason why BTL could never really work. But as things are, there is a structural redistribution of advantage towards the indebted and with property from those with cash and who are renting. The very most that article suggests is that there's a marginal drop in rentals in one sector, about 5%. Excuse me while I get seriously underwhelmed.

That provides breathing space for anyone who might otherwise have been in trouble, and opportunities for anyone with cash by moving from the disadvantaged group into the advantaged group (instead of bleating endlessly about how unfair it is). There won't be long to do this, because that's the way opportunities work, but it's one of the best and most obvious for years.

Not everything is about capital growth.

the_ash_and_the_oak

I expect rents to fall a little (mayb in line with wages and to a lesser extent interest payments) but really in London at least rents have been pretty static for the last decade not really rising so prob not falling that much either

for me rents are more tied to wages than anything else - kinda feeling not been that much movement in either - boom kinda went 'around' both of these imo

carolt

the_ash_and_the_oak wrote: »

I expect rents to fall a little (mayb in line with wages and to a lesser extent interest payments) but really in London at least rents have been pretty static for the last decade not really rising so prob not falling that much either

for me rents are more tied to wages than anything else - kinda feeling not been that much movement in either - boom kinda went 'around' both of these imo

I couldn't agree more - people don't get huge, cheap mortgages to pay the rent, and the govt won't bail them out if their wages go down, unlike homeowners in the same position.

That's why the wage deflation - let alone the unemployment - we're seeing HAS to translate into rental falls.

BTW, you're not quite right chucky - my rent WILL be falling because I haven't moved house yet.

penguine

julieq wrote: »

rates won't shoot up unless there's some sort of economic recovery

Not sure if you're right about this. Can you explain your reasoning?

Pssst

Are landlords often flexible about rents? I mean,if they had a potential customer who had a fully checkable and watertight history,might they negotiate down a little in exchange for a better quality tenant?

chucky

Pssst wrote: »

Are landlords often flexible about rents? I mean,if they had a potential customer who had a fully checkable and watertight history,might they negotiate down a little in exchange for a better quality tenant?

some anecdotal for you -

last month one of my flats let at just under the advertised price - tenant offered 15% under and we agreed at somewhere around 9% less.

he paid six months rent up front with no break clause on a one year tenancy agreement.

it works both ways - i'm happy with the deal and so is the tenant.

lemonjelly

I appreciate that a lot of LL's don't accept housing benefit, though some do.
Housing benefit in private lettings can be limited to what is a reasonable market rent for the area.
If market rents continue to fall, we could see an increased number of housing benefit awards being restricted, as the market rent in the area has fallen.
Does anyone think this will have any effect?

Dithering_Dad

lemonjelly wrote: »

I appreciate that a lot of LL's don't accept housing benefit, though some do.
Housing benefit in private lettings can be limited to what is a reasonable market rent for the area.
If market rents continue to fall, we could see an increased number of housing benefit awards being restricted, as the market rent in the area has fallen.
Does anyone think this will have any effect?

I hope so, otherwise we would be in the ludicrous position where the tax payer is paying more for tenants to be housed, than it would cost for them to house themselves.