Downward trend in UK rents 'ends'

ad9898_3

chucky wrote: »

at a guess Ad, you're based in the Midlands where unemplyment is worst and the recession will/has hit hardest. if you do it probably distorts your view of things as there are other areas that aren't doing as badly. am i wrong?

http://news.bbc.co.uk/2/hi/business/7789784.stm

Not wrong, only on where I live chucky, I live on the Staffs/Cheshire border, to be honest, I don't take a great deal of notice of the economy where I live, as I work for a multi-national and I'm on the road most of the day, away from where I live, but of course you have a point.

ess0two

chucky wrote: »

easy guys, you're getting yourselves all excited and starting to froth at the mouth and getting yourselves all excited again. all the headline says is that rents have stopped falling for the first time in many months.

just embrace and accept that fact... it's just one month

Its like treading on eggshells in here,any potential good news is quickly discredited.

Thrugelmir

julieq wrote: »

At the risk of repeating myself endlessly, everyone has to live somewhere, there isn't a lot of empty housing stock in this country, and yields for debt financed landlords are up significantly because interest rates are down.

The BTL market recently benefited from loan rates that were equal to mortgage rates. Therefore if a property could be rented out for an income that covered the mortgage (ie interest ) then the transaction was cash neutral. As any tax due on the rental income was offset by the loan interest.

In the past at best commercial loans for BTL were at the very minimum 1% more expensive than a standard mortgage. In addition lenders relaxed lending criteria for BTL mortgages.

BTL investors who have borrowed from say NR or Coventry BS, for example, are now faced with 6% plus borrowing rates. To maintain their borrowing they are most likely having to increase their rents to cover the additional cost and meet the revised criteria. I'm not saying that the properties are being let merely that the advertised rent has had to have been increased.

Increased yields because house prices are falling is irrelevant. As the loss of capital has to be accounted for, it can't be ignored. At the outset any leveraged landlord who didn't start with an initial yield of a gross 10% when the property was originally purchased could potentially be in trouble. As the rental stream may well not generate sufficent income to repay the capital as interest rates rise.

I am not anti property letting. It is a business like any other. Good ones will flourish and the badly managed ones go bust. The trouble is that too many people didn't take proper advice before diving in. We've yet to see the extent of the problem and its effect on the wider property market.

mewbie_2

Thrugelmir wrote: »

We've yet to see the extent of the problem and its effect on the wider property market.

Wilsons - 800 properties to sell.
Abbey National - gone. B&B gone. Alliance & Leicester gone.
Northern Rock.
Paragon.
Insidetrack - oh my aching sides.
1 million more unemployed coming this year. That's a lot lesss young professionals renting those oh so desirable cardboard boxes in every town centre.

Apart from the very dense on here, it is quite clear that for several years before the end of the boom the FTB's had been replaced by BTL's mewing the !!!!!! out of their own properties. They gambled and borrowed and gambled some more. Now take a typical twit with a 200k mortgage on a town centre flat bringing in 500 a month, with property dropping 10% minimum per year.

Time for tea. I'll enjoy mine.

Turnbull2000

ess0two wrote: »

Its like treading on eggshells in here,any potential good news is quickly discredited.

How the heck is rents not falling good news? Thousands could benefit from lower housing costs. With this being a money saving forum, it's no wonder people get angry when some pleb tries to convince other users that rising rents are to be welcomed :rolleyes:

Thrugelmir

mewbie wrote: »

Time for tea. I'll enjoy mine.

Don't get over excited.

But the mortgage defaults will be paid by us all. As the banks and building societies will recover the bad debt in one form or another.

Remember the UK Government holds the B&B and NR loan books.........

dopester

ad9898 wrote: »

This board isn't particularly sympathetic to over-leveraged LL's who are just about to hit the wall, and so we are only likely to see the guys who are doing ok like the OP, chucky...etc.

From some of the posts he's made, revealing a bit about his strategies and how he's gone about his investments, for me chucky rates as the smartest of the property-owning landlords here. He often makes points that I'll pause to consider.

I just hope, despite his caution and planning, he hasn't made fatal mistakes, nor is pulled down by the dead-weight of the not-so-smart borrowers who fuelled the boom, in the crash in values. Also, in other times Central London might have been expected to not suffer as much, or recover quickly. Now though?

ad9898_3

ess0two wrote: »

Its like treading on eggshells in here,any potential good news is quickly discredited.

I disagree, falling rents, falling house prices, the removal of easy credit, no 100% mortgages for FTB'rs, smaller LTVs, etc... all this is good news, and is championed on this board.

purch

for me chucky rates as the smartest of the property-owning landlords here

Well, thanks for that :rolleyes:

joolsybools

I think this headline is complete cobblers. IME rents in London have only just started to drop. I don't believe its going to stop any time soon.