House prices down, rents up

westernpromise

While house prices in London continue to slide, rents in the capital are hitting record highs. This week Rightmove reported an 8.2 per cent annual increase in asking rents in London, the highest rise ever recorded, bringing the average monthly payment to £2,093.

These soaring rents are being fuelled by high demand and low supply of homes in the capital, exacerbated by tighter regulations and higher taxes for landlords, leading many to pull out of the market. As a result, the number of properties available to rent in the capital is down by 33 per cent compared with two years ago, according to Rightmove.

https://www.telegraph.co.uk/property/renting/london-rents-record-highs-bright-spots-buy-to-let-investors/?li_source=LI&li_medium=li-recommendation-widget

there used to be someone around here who pointed out that when house prices go down rents go up and so too do mortgage lenders' deposit requirements. I can't recall who that was though.

triathlon

Who cares about over priced London?

The rest of the property market in the rest of the country is doing just fine, better than fine

Thrugelmir

How many rooms are now available on AirBnB in London?

westernpromise

I've no idea what effect AirBnB might have.

My experience had been that landlords take their cue from letting agents as to what rent to ask. While it's possible that some overleveraged landlords will try to pass on their costs in the rent asked, it's very hard to see this factor accounting for the whole of the 8%+ talked about. Such landlords are a minority, and asking a silly rent when probably 4 out of 5 do not will simply result in an unlet property.

It seems likelier that this is the onset of what has long been predicted, i.e. landlords selling to owner-occupiers reduces the supply of rental property by more than the demand for it. An HMO housing 16 people gets sold to a family of maybe 6, so 6 former renters become owners, but the other ten tenants need of a new rental, the supply of which has fallen.

This looks like a painful time to be a renter. Your rent goes up just as the deposit requirements harden, because with prices falling, lenders want the negative equity to be yours, not theirs.

chucknorris

triathlon wrote: »

Who cares about over priced London?

The rest of the property market in the rest of the country is doing just fine, better than fine

I care about the London market, and it definitely has dipped, but it has to be viewed in context, London was soaring not so long ago.

It still has performed well since (pre-crash) 2017, despite quite a drop in prices in the 2008 recession. We actually bought a house in the crash, a 3 bed Victorian house for about 260k (I'm including the cost of refurbishment in that figure), it is probably worth about £440/450k now (it may have touched £500k at some point). If we had bought it before the crash it would have cost about £310k, so it would still have performed well, even when buying at the pre-recession peak.

lisyloo

triathlon wrote: »

Who cares about over priced London?

A few million who have to or choose to work there.
Plus those who are invested there.

But surely if this is down to landlords selling due to regulation and taxes then it will be happening elsewhere as well.

The differences in London (for workers) is that there isn’t the spare capacity in the rental market and commuting times are extremely slow in the center. Anywhere else you could just move 5 or 10 miles.

chucknorris

lisyloo wrote: »

A few million who have to or choose to work there.
Plus those who are invested there.

But surely if this is down to landlords selling due to regulation and taxes then it will be happening elsewhere as well.

The differences in London (for workers) is that there isn’t the spare capacity in the rental market and commuting times are extremely slow in the center. Anywhere else you could just move 5 or 10 miles.

Also anyone who is currently eligible to claim letting relief, only has until the end of this tax year to claim it. So anyone thinking of selling in the near future has an incentive to do so before next April.