How high can they go? Rents keep breaking records

joguest

Yes, the rent was too high (at the lower end of that advised by the letting agent).

By the time it was let, it was the most competitively priced house on the rental market market for miles around (well, other than the other one in the street that's still advertised).

Cleaver

joguest wrote: »

It isn't possible for rents to be unaffordable (despite the nonsense spouted by shelter today). By definition, rents are determined by what the tenants can afford.

I think the Shelter report today states that 'unaffordable' is above 35% of income. So I guess it is possible to go above what tenants can 'afford', as they start cutting down on essetials or they form households in numbers that they wouldn't normally consider - getting an additional person to live in the house, for example.

chucknorris

joguest wrote: »

Bizarre. I'm (unfortunately) a landlord. A situation I had hoped to rectify a couple of years by persuading my wife to sell the old house. We've just had an 8 month void and had to drop the asking rent by 18% to get it let and there's nothing wrong with the house (there's another house on the street that's had its asking rent dropped by the same amount and it's still sitting there).

The attempts by vested interests to talk up rents is nothing more than desperate ramping. If rents are going up in the SE/London, so will the length of the average void. It isn't possible for rents to be unaffordable (despite the nonsense spouted by shelter today). By definition, rents are determined by what the tenants can afford.

I have owned investment property (4 or more properties) in London for over 20 years, in that time the only voids I have experienced were those that were self imposed to refurbish properties. In the last year I have inreased the rents in my properties from 5 to 10%.

It's astonishing that you had a void for 8 months you really need to have a word with yourself about improving your business acumen.

shortchanged_2

Guess what, the rental market is now starting to resemble the buyers market of around 2007. It's getting too expensive and it may well go pop.

Why is it that many landlords think people have an unlimited amount of money?

These are tough financial times, you can only squeeze the pennies so much. This is why the rental market will eventually fall because there is no logic in the fact that peoples incomes are falling yet rents continue to rise, something has to give. I forsee a glut of renters in arrears or a drop in rents before long.

adibrown

In my area of Sussex rents have risen by about 15% in the past year. An average 3 bed semi is now around £1300pcm.

I am not sure about other areas but here in Sussex I can only see rents rising as more and more people flow into the area and hardly any houses are being built.

I currently rent and I feel the pain of a lot of people on here who desperately want to talk the market down and have been announcing a crash since 2005. The plain and brutal truth is that a Landlord is making you pay for his asset, renting works if you need short term flexibility but otherwise you are literally paying for somebody elses retirement. It is simply developing a huge gap between renters and owners and the sad thing is that as renters reach retirement they will be struggling whilst owners will have paid off their mortgage and be substantially better off. As a result I think the impact of this property boom will be most clearly seen in 30 years time.

As a previous poster stated. Why will prices fall if a BTL investor can snap it up at a decent yield. It really is a no brainer, prices will not fall beyond 5% whilst we have record low interest rates, increasing population and draconian planning laws. To state otherwise really shows a true vested interest (I wanna buy a house, I need to talk up a crash).

From somebody without a Vested Interest

joguest

chucknorris wrote: »

I have owned investment property (4 or more properties) in London for over 20 years, in that time the only voids I have experienced were those that were self imposed to refurbish properties. In the last year I have inreased the rents in my properties from 5 to 10%.

It's astonishing that you had a void for 8 months you really need to have a word with yourself about improving your business acumen.

It's hardly astonishing, given that other properties are remaining on the market for similar lengths of time and the only ones being let out are those with substantial drops in the asking rent (below typical rents being achieved a couple of years ago). It's got nothing to do with business acumen, it's the state of the market. My acumen's quite sound, given that I wanted to get rid of the thing a couple of years ago. (Not that all of this particularly matters to me - the rent easily covers the low LTV mortgage - my wife's keen to keep the house if we move back to the area).

The market isn't determined by a landlord's acumen.

Cleaver

shortchanged wrote: »

Why is it that many landlords think people have an unlimited amount of money?

Landlords don't set rent prices. The people, or at least the amount of people, who rent places set rental prices.

adibrown

How is it going to go pop? People need to live in houses, the population is rising quicker than number of new homes. I agree that going forwards rent may not increase by much more than inflation but if rental properties are going within a day of being on the market as they are here in Sussex then how is this pop going to materialise. Demand drives rent.

RENTER ONE "I wont pay more than £500 for a one bedroom flat, I cant afford it"
RENTER TWO "OK, if you dont want it at £650 then I'll have it"
LETTINGS AGENT "May be for £500 you need to look at a studio flat"

I rent and unfortunately I have to face facts that I now have to pay more for a desirable house. I would love to pay less but unfortunately I dont dictate the market, other people do and if somebody is willing to pay that amount then that is the rent for that property. If I want to pay less I have to now lower my expectations.

shortchanged_2

Cleaver wrote: »

Landlords don't set rent prices. The people, or at least the amount of people, who rent places set rental prices.

Well the higher the rent, the increased risk of arrears.

Cleaver

shortchanged wrote: »

Well the higher the rent, the increased risk of arrears.

I would say that the higher the inability of people to pay the rent, the increased risk of arrears. Similar, but not quite the same. I agree that a likely consequence of rents going up is that you get more arrears, but not necessarily.