Place your bets..... Mass Evictions or Lower Rents

IveSeenTheLight

RDB wrote: »

That only makes sense if the buyers are going to live there and not rent them out themselves.

This wont start happening until house prices fall a significant amount.

Isnt it still something like 80% of first time buyers cant afford to buy?

So who is going to buy all these newly empty properties not new BTLers if rents are falling so much.

BTL is only about 11% of the mortgage market and is not constricted to only FTBers.
Indeed there will be a number of properties that are not FTB ideal.

Not sure where you got the 80% figure from.
I'd be interested to see a link and what requirements the FTBers are basing this on.

According to this link http://www.cml.org.uk/cml/media/press/2664, there were 14,800 FTB purchases in May with an average income multiple of 3.14 and the proportion of income spent on interest payments being 13.2%

Certainly seems affordable

Average loan value = £121,621
75% LTV meaning house price average = £162,162
Only 13.2% of income being spent on the interest part of the mortgage. the lowest amount since 13% in Mar 2004.

HAMISH_MCTAVISH

Mass Evictions, little change in rents

IveSeenTheLight wrote: »

Not sure where you got the 80% figure from.
I'd be interested to see a link and what requirements the FTBers are basing this on.

It seems to be a confusion the bears have with the report that 80% of potential FTB's cannot afford the current absurdly high deposits unless they get help from parents, etc.

According to this link http://www.cml.org.uk/cml/media/press/2664, there were 14,800 FTB purchases in May with an average income multiple of 3.14 and the proportion of income spent on interest payments being 13.2%

Certainly seems affordable
.

Because it is.

Malcolm.

IveSeenTheLight wrote: »

According to this link http://www.cml.org.uk/cml/media/press/2664, there were 14,800 FTB purchases in May with an average income multiple of 3.14 and the proportion of income spent on interest payments being 13.2%

Certainly seems affordable

Average loan value = £121,621
75% LTV meaning house price average = £162,162
Only 13.2% of income being spent on the interest part of the mortgage. the lowest amount since 13% in Mar 2004.

It's comforting to know rabbit hutches continue to be affordable.

At over £121k a pop, they're a real bargain.

Procrastinator333

Ok, so a stab at some form of estimate.

Using this data:

http://www.statistics.gov.uk/cci/nugget.asp?id=1105

There are about 8m rented homes (social and private - not sure I should be including both).

Assume the average rental property is worth less than the average property. Call it £100k for ease.

Assume average rent is 6% PA. That is £6k rent per year. 8m X £6k gives a total annual rent bill of 48bn.Now put that numer to one side for a minute.

The coalition reckons £1.8bn saving over the life of the parliament. Assume it takes 1 year to get going, round up and call it £500m per annum for the last 4 years.

So the max this is going to directly knock of rental income is something like £500m out of an annual bill of £48bn. About 1%.

Plug in your own numbers, but this seems a fair way of quantifying the max impact instead of just an outright guess.

Then after that I think the pain will get shared, some price rises to tenants, some rental income falls to landlords. Of course, this is an average, so some tenants / landlords / streets etc may see very large swings, but I don't see this making a huge difference to rental prices, maybe 0.5% on average.

EDIT: So in answer to the poll. None of the options.

Harry_Powell

The sun will rise today as it did yesterday and as it will tomorrow. Nothing really changes that much does it? Life goes on pretty much as it always has.