Rents to "Rise Sharply"

chucknorris

the_ash_and_the_oak wrote: »

While I see where you are coming from imo the difference is in the comparing rent w mortgage interest not with full mortgage. comparing with the interest section only is a utility-comparison, comparing with the full mortgage is comparing with a saving dimension also

totally hypothetical example
rent 600
mortgage 900 of which 700 is interest

to rent is cheaper by 100, not 300 - because 200 is going towards a form of saving/investment. the rent may go up and the interest down of course (or vice versa in a shorter timeframe). if the renter is putting an equivalent 200 (and the extra 100) into a different form of saving/investment then they are building up extra cash in a different form (it is only if that money is being squandered that they are losing)

For the reasons you stated, I do not include the capital payments in such an appraisal which is why I only referred to mortgage interest. I would have assumed that the person I was answering would have been able to see that obvious point too, if he didn't then tbh I am lost for words.

Although thinking back I did suprisingly have to point this out to one of my friends a few years back when he was thinking of buying his own place.

mr_fishbulb

Where is the extra money going to come from for tenants to pay the increased rent?

Rents up. House prices up. Wages remain flat. Am I the only one confused there?

chucknorris

mr_fishbulb wrote: »

Where is the extra money going to come from for tenants to pay the increased rent?

Rents up. House prices up. Wages remain flat. Am I the only one confused there?

Wages will not remain flat over the next 25 years, rents and wages will rise with inflation, mortgage interest will however merely fluctuate with interest rate changes (i.e. not necessarily rise)

kd1975

[QUOTE=HAMISH_MCTAVISH;26322227

Given that buying is already cheaper than renting in all regions except London.... (although granted a decent deposit is required)

Rising rents can only further help swing the balance in favour of purchasers.[/QUOTE]

Renting has been more popular abroad for years, we have been fooled into buying

drc

We renegotiated our rent mid-September and we are paying £100 less per month now (in London).

chucknorris

drc wrote: »

We renegotiated our rent mid-September and we are paying £100 less per month now (in London).

I have lowered some of my rents but even so my properties have never been this profitable before, due to the low interest rates and unlikely to be so again.

I don't actually anticipate rents to 'rise sharply' but I do expect them to return to previous levels within 1-2 years and then start rising in line with inflation.

Thrugelmir

chucknorris wrote: »

I have lowered some of my rents but even so my properties have never been this profitable before, due to the low interest rates and unlikely to be so again.

I don't actually anticipate rents to 'rise sharply' but I do expect them to return to previous levels within 1-2 years and then start rising in line with inflation.

Isn't the issue that at current levels in many areas buying a property as an investment isn't worthwhile. As the gross yield on the capital invested is too low. So either rents need to rise to a gross level of say 10% or property prices fall if rents remain unchanged. Too much emphasis has been placed on rapidly rising property prices recently.


Quote FSA Mortgage Review

consumers were attracted to the BTL market because of the apparently unending appreciation in property values rather than the steady return from rental income.

and

we conclude that the BTL sector has a significant portion of borrowers with small portfolios and potentially limited knowledge of the complexities of a BTL mortgage.

Due to low base rates the property market is both distorted from a rental and investment perspective. As interest rates progressively return to normal. Then buying will again return to be cheaper than renting for those who can raise a good deposit.

chucknorris

Thrugelmir wrote: »

Isn't the issue that at current levels in many areas buying a property as an investment isn't worthwhile. As the gross yield on the capital invested is too low. So either rents need to rise to a gross level of say 10% or property prices fall if rents remain unchanged. Too much emphasis has been placed on rapidly rising property prices recently.


Quote FSA Mortgage Review

and



Due to low base rates the property market is both distorted from a rental and investment perspective. As interest rates progressively return to normal. Then buying will again return to be cheaper than renting for those who can raise a good deposit.

I think property is still a good investment, but it's no good looking at the early years, it's a long term investment.

Personally I am not investing again because I am nearly 52 years old and I do not want to be managing properties (I do not rate using agents) too far into my 60's (it is not easy work, it's hassle, anyone investing should realise that it is not like a savings account or buying shares as it involves a lot of effort, and at times when you may have other committments which you have to drop and give absolute priority to your property).

If I was in my 30's I would certainly be buying now and for the next year or so. I can't answer for the foolish speculators that bought merely for capital growth in the short term, that was never my main aim.

izzybusy23

HAMISH_MCTAVISH wrote: »

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article6890420.ece

Given that buying is already cheaper than renting in all regions except London.... (although granted a decent deposit is required)

Rising rents can only further help swing the balance in favour of purchasers.

Again... totally incorrect.

abaxas

Hang on a second, but here comes the elephant.

Rents are part of RPI, if that rises sharply. What else can they do but put IRs up.