Rent Price Crash

cells

http://www.bbc.co.uk/news/business-36285049


This is interesting or should be to the people who think that there is no impact on rents with a movement between owner occupiers and rentals or vice versa

I can confirm on my patch rentals are down notably and voids are up due to a shift from owners to renters as the BTL group purchased a lot of property in the first quarter

So this should be clear evidence to those who think if BTL become net sellers it wont impact rents because renters just buy the home. It should be obvious that if BTL shrinks rents will rise and voids will fall. Just like if BTL expands rents fall and voids increase (as is the case right now)

Of course normally the trend is slow so it does not show up so clearly but its clear right now in the market for all to see. 'Thanks' Osborne its normally hard to prove economic theories as we cant run experiments in the economy and this was an experiment and the proof is right there.

Generali

cells wrote: »

http://www.bbc.co.uk/news/business-36285049


This is interesting or should be to the people who think that there is no impact on rents with a movement between owner occupiers and rentals or vice versa

I can confirm on my patch rentals are down notably and voids are up due to a shift from owners to renters as the BTL group purchased a lot of property in the first quarter

So this should be clear evidence to those who think if BTL become net sellers it wont impact rents because renters just buy the home. It should be obvious that if BTL shrinks rents will rise and voids will fall. Just like if BTL expands rents fall and voids increase (as is the case right now)

Of course normally the trend is slow so it does not show up so clearly but its clear right now in the market for all to see. 'Thanks' Osborne its normally hard to prove economic theories as we cant run experiments in the economy and this was an experiment and the proof is right there.

To what extent do you believe that the benefits cap is creating an effective drop-off in demand at a particular rental price cells? Presumably the effects of that continue to feed through.

mwpt

It is a bit of a mixed article imo. Why didn't you mention the bit where it says rents were falling before the surge of new homes after April? I also never ever trust anything that is reported that comes from anyone affiliated with the BTL business (Property Partners) because they have an obviously massive vested interest and also tend to be myopic in their views.

I am willing to entertain the idea that rents may increase slightly more than they would have but there is too much noise in the system to really say for sure. We can't test this theory, so .... what? How do we conclude anything? Rents will rise correlated highly with wages, at about the average they have risen for many years.

Another point is that if renters have indeed enjoyed a so called suppression of rents since 2002 (the year the % of OOs started declining) then perhaps it is ok for OOs to enjoy a reversal. Renters can afford it apparently. They are rich and landlords can charge whatever they like and no renter will make the decision that London is too expensive and move elsewhere or move further out as they are not price sensitive and the market doesn't self correct.

HappyMJ

cells wrote: »

http://www.bbc.co.uk/news/business-36285049


This is interesting or should be to the people who think that there is no impact on rents with a movement between owner occupiers and rentals or vice versa

I can confirm on my patch rentals are down notably and voids are up due to a shift from owners to renters as the BTL group purchased a lot of property in the first quarter

So this should be clear evidence to those who think if BTL become net sellers it wont impact rents because renters just buy the home. It should be obvious that if BTL shrinks rents will rise and voids will fall. Just like if BTL expands rents fall and voids increase (as is the case right now)

Of course normally the trend is slow so it does not show up so clearly but its clear right now in the market for all to see. 'Thanks' Osborne its normally hard to prove economic theories as we cant run experiments in the economy and this was an experiment and the proof is right there.

I have noticed an increase in supply which is good. The properties I have been looking at though have left much to be desired.

I am not renting a property that does not have central heating, "ANY" insulation and single glazing despite it's perfect location. The latest property I looked at had an EPC rating of F which is awful. The energy bills were estimated to be six times what I currently pay so despite being £50/month cheaper to rent overall it would be significantly more expensive to live in it.

The sooner April 2018 comes around the better which the law will make this property unable to be let as all properties must have an EPC rating of at least an E which is still bad but it's an improvement. Why a landlord ever invested in it I have no idea. Central heating, double glazing, full insulation works are going to cost thousands which won't add much overall value to the property.

The landlord thinks a bit of (the listing in 2016 says new but the listing in 2011 is exactly the same) carpet, a lick of paint, modern kitchen and "new" bathroom suite will attract viewers and get it let quicker. As a tenant I expect that. That's not a feature. And 5 years old is not "new". New means unused by anyone...ever....

What's with letting agents using 5 year old photo's anyway. Isn't that false advertising. It's not as it appears 5 years ago any more. Get the camera out drive down there and take some new photo's.

Sorry for the rant. I want landlord's to be taking some responsibility for the properties they let out and make sure they are of a standard they would feel okay putting their own mother in. A single gas fire is not going to heat the whole property efficiently at all.

Generali

In Aus we have a system whereby the tenant pays the water bill as long as certain mandated water saving measures have been put in place. If the landlord hasn't put in water saving he can't get the tenant to pay the water bill.

I think it's a good system that could be adapted for energy saving in the UK.

westernpromise

HappyMJ wrote: »

I have noticed an increase in supply which is good. The properties I have been looking at though have left much to be desired.

I am not renting a property that does not have central heating, "ANY" insulation and single glazing despite it's perfect location. The latest property I looked at had an EPC rating of F which is awful. The energy bills were estimated to be six times what I currently pay so despite being £50/month cheaper to rent overall it would be significantly more expensive to live in it.

The sooner April 2018 comes around the better which the law will make this property unable to be let as all properties must have an EPC rating of at least an E which is still bad but it's an improvement. Why a landlord ever invested in it I have no idea. Central heating, double glazing, full insulation works are going to cost thousands which won't add much overall value to the property.

The landlord thinks a bit of (the listing in 2016 says new but the listing in 2011 is exactly the same) carpet, a lick of paint, modern kitchen and "new" bathroom suite will attract viewers and get it let quicker. As a tenant I expect that. That's not a feature. And 5 years old is not "new". New means unused by anyone...ever....

What's with letting agents using 5 year old photo's anyway. Isn't that false advertising. It's not as it appears 5 years ago any more. Get the camera out drive down there and take some new photo's.

Sorry for the rant. I want landlord's to be taking some responsibility for the properties they let out and make sure they are of a standard they would feel okay putting their own mother in. A single gas fire is not going to heat the whole property efficiently at all.

Interesting perspecrive, thanks. You're right about the re-use of old photos - a house I left in 2012 has been re-let three times since then using photos taken when we lived there. Presumably this is either because nobody CBA to update the photos, or, judging by the current state of the garden, because it has been a complete tip ever since!

The point about EPC is interesting. I haven't looked at this but a lot of period properties would surely struggle to achieve an E simply because if they're in a conservation area, you're very limited in what you're allowed to alter. This would effectively mean it would probably be impossible to let out most older listed buildings. You wouldn't be allowed to double glaze a Queen Anne cottage, for example, and it certainly won't have or be allowed to acquire central heating, so if it's an F it's not going to be lettable.

cells wrote:

It should be obvious that if BTL shrinks rents will rise and voids will fall. Just like if BTL expands rents fall and voids increase (as is the case right now)

In the shorter term, clearly so. Several years' purchases of property for rent have been advanced to escape Osborne's 3% levy, so the supply has increased without the demand having correspondingly done so. Osborne really is determined to squeeze renters though, isn't he? Everything he's done lately is forcing their rents up in the longer term. I wonder if the next move to entice them out of renting and into buying (and paying stamp duty) is going to be something like making landlords charge VAT on rent? Or maybe stamp duty on the rent?

cells

mwpt wrote: »

It is a bit of a mixed article imo. Why didn't you mention the bit where it says rents were falling before the surge of new homes after April? I also never ever trust anything that is reported that comes from anyone affiliated with the BTL business (Property Partners) because they have an obviously massive vested interest and also tend to be myopic in their views.

I am willing to entertain the idea that rents may increase slightly more than they would have but there is too much noise in the system to really say for sure. We can't test this theory, so .... what? How do we conclude anything? Rents will rise correlated highly with wages, at about the average they have risen for many years.

Another point is that if renters have indeed enjoyed a so called suppression of rents since 2002 (the year the % of OOs started declining) then perhaps it is ok for OOs to enjoy a reversal. Renters can afford it apparently. They are rich and landlords can charge whatever they like and no renter will make the decision that London is too expensive and move elsewhere or move further out as they are not price sensitive and the market doesn't self correct.

Confirmation bias is strong in this one in this topic

Rents (at least in London, not sure elsewhere as I have none elsewhere) move seasonally. The summer months they go up the winter months they go down. But right now is specially weak both on price and void periods.

I was at my perfered agent yesterday and they were very happy that they have had a flood of businesses but they are now at a point of not enough tenants to properties. They are even holding back listing some properties for a little while. They are not aware of it but they are acting as market makers do in illiquid shares. It might get a bit worse before it gets better.

In my experience rents are now below what they were two years ago and lettings are taking longer.


With a boom in rentals rents go down normally things move slow and other factors hide this. With a contraction in rentals rents will go up

cells

Generali wrote: »

To what extent do you believe that the benefits cap is creating an effective drop-off in demand at a particular rental price cells? Presumably the effects of that continue to feed through.

I've almost never had any benefit tenants only one in all the years so I'll be honest I don't know fully about the benefits cap on housing but if my understanding is correct it will/is having two impacts.

One is that its moving renters to within certain parts of boroughs. Eg Waltham forest has cheap parts and expensive parts with the cap its pushing benefit tenants to the cheaper areas and cheaper properties on those cheaper areas.

Second would be that it moves people further out of London or in some cases completely out of London. Of course depending on the scale of this movement it would hurt London rental prices and help wherever the tenants are being moved to. However I would guess this movement pales in comparosopn to the general population growth of 100k a yr in London


Certainly in Hackney my main area I don't see or think there are many benefit tenants the rents are a good deal higher than the LocalHousongAllowance (not including the social he's which will be full of benefit tenant's)

cells

HappyMJ wrote: »

I have noticed an increase in supply which is good. The properties I have been looking at though have left much to be desired.

I am not renting a property that does not have central heating, "ANY" insulation and single glazing despite it's perfect location. The latest property I looked at had an EPC rating of F which is awful. The energy bills were estimated to be six times what I currently pay so despite being £50/month cheaper to rent overall it would be significantly more expensive to live in it.

The sooner April 2018 comes around the better which the law will make this property unable to be let as all properties must have an EPC rating of at least an E which is still bad but it's an improvement. Why a landlord ever invested in it I have no idea. Central heating, double glazing, full insulation works are going to cost thousands which won't add much overall value to the property.

The landlord thinks a bit of (the listing in 2016 says new but the listing in 2011 is exactly the same) carpet, a lick of paint, modern kitchen and "new" bathroom suite will attract viewers and get it let quicker. As a tenant I expect that. That's not a feature. And 5 years old is not "new". New means unused by anyone...ever....

What's with letting agents using 5 year old photo's anyway. Isn't that false advertising. It's not as it appears 5 years ago any more. Get the camera out drive down there and take some new photo's.

Sorry for the rant. I want landlord's to be taking some responsibility for the properties they let out and make sure they are of a standard they would feel okay putting their own mother in. A single gas fire is not going to heat the whole property efficiently at all.

I live in a big solid no insulation property and what I find is that I simple don't heat the whole house and use zonal heating. Typically only half the house is heated and at night only the bedrooms in use. So overall energy use is affordable. In more energy efficient housing I would just leave it on at 19/20 whole house all the time.

Anyway the idea that all homes should meet criteria X is silly you have the choice as a tenant. Landlords are forced to meet X it will push up rents. It's like tenants that complain about their rentals being not so nice and with second hand furniture but they choose the cheapest, there are always very good quality rentals they just aren't the cheapest on the market. You can buy a new car for £6k or £60k but you wouldn't expect the £6k car to be like the £60k car.

Oh and solid wall homes in my experience don't leak as mich heat as the stats say but that's a different topic altogether.

chucknorris

cells wrote: »

Anyway the idea that all homes should meet criteria X is silly you have the choice as a tenant.

The legislation wasn't introduced for the sake of the tenants, it is to do with helping to meet the gov's long term commitment/targets to reduce carbon.

lisyloo

The most significant bit at the end was that a "short term supply shift" won't change the fundamentals.