What is happening in the rental market?

MikeJXE

oldernonethewiser said:

What does the "must have" mean?

I tried the "student property" option in Glasgow and plenty of places were suggested but none exclusively for students.

There is a lot of student accomodation in Glasgow and more being built but those places are not available to non-students.

Rightmove have filters such as Flat or house or both 

You can also choose what's required ie must have parking must have student accommodation or not 

Veteransaver

hugheskevi said:

Veteransaver said:

Why is 29% of gross income so bad? Even a basic rate taxpayer pays 30%, and that's income they've actually had to go out and earn, and usually suffer travel costs etc to go to work as well.
As for a yield of 4%, well yes I've never thought buy to lets ever really stood up to the yield test in the last 15-20 years even when rates were really low, it was only the effect of gearing and house price growth that turbocharged it.
They certainly don't make a lot of sense now in a falling market.

I neither say that it is good or that it is bad - it is what it is and has a consequential impact on yield and hence on incentive to invest in the market.

You can't expect landlords to stay in a market where the levels of return - which are partly determined by tax and regulatory obligations that now form the large majority of costs - don't match up to alternative opportunities. Investing money into pensions, ISAs and suchlike is a much easier activity so it is no surprise to see landlords leaving the market and reducing supply - which is part of the answer to the OP's thread title "What is happening in the rental market." (along with provision of social housing and the demand side of the equation)

From my own perspective, pensions are very attractive, ISAs are desirable, Premium Bonds are okay for funds above ISA allowance, Venture Capital Trusts have some attraction, unwrapped investments are more trouble than they are worth with the recent slashing of capital gains tax and dividend taxation, savings accounts have such a low tax-free allowance to be unattractive whilst I am a higher-rate taxpayer, and rental properties aren't even on the radar.

Absolutely, I wouldn't expect landlords to stay in the market, but this is what happens when successive governments have effectively privatised a huge chunk of the country's housing stock out to amateur investors.

_Penny_Dreadful

There are a few things at play but yes the rental markets are very hot across most of the UK.  These are my theories.

Firstly you have the demographic of your average landlord.  The majority are 55+ and would probably looking to sell you for one reason or another as they enter retirement.  However, there are not many new landlords entering the market to make up for the number of rental properties being sold.  I was reading an article the other day about a relatively young landlord who acquired his first rental property at the tender age of 18 using a 100% LTV mortgage.  People just can't do that now so landlords require a minimum 25% deposit plus they face the higher rate of SDLT/LTT/LBTT so becoming a landlord requires you to have more capital than you once did.  Combine the higher rates of SDLT/LTT/LBTT with changes to how mortgage interest is treated and changes to CGT allowances and from a tax perspective BTL seems a lot less appealing than other savings and investments. 

Other reasons landlords are choosing to cash out are higher interest rates and legislation.  Those that are heavily geared are feeling the squeeze as costs go up but remember you can no longer treat your mortgage interest as an expense and the credit received isn't that attractive if you're a higher or additional rate tax payer.  A lot of landlords were shafted during the emergency measures during COVID-19 where it became more difficult to recover the property even when tenants had stopped paying the rent.  Following those emergency measures in Scotland all grounds for eviction, and in Scotland for a Private Rental Tenancy you need a ground to evict, were made discretionary.  Then the Cost of Living (Tenant) (Scotland) Act 2022 was introduced which put a moratorium on the enforcement of most eviction orders and severely limited how much rents could be increased.  The Act will finally come to an end 31st March 2024 but combined with the COVID-19 measures landlords in Scotland have had their hands tied for 4 years.  I imagine that on 1st April many rent increase notices and notices to leave will start hitting tenants' inboxes and doormats.  Meanwhile in rGB the Welsh government made a total hash of rolling out the new occupation contracts and landlords in England are getting twitchy about the Renters Reform Bill.  This all leads to a reduction in supply.

UCAS have been warning universities for years about the impact of increasing student numbers has on accommodation.  In 2023 there were 2.2 million full-time students across the UK, which means 3 students per 1 available bed in purpose built student accommodation.  Those students who can't find a bed in purpose built student accommodation have you find accommodation within the private rental sector competing with the non-student population.  I don't know if anyone saw in the news last year that students in Glasgow, Manchester and Bristol could not find accommodation for love nor money.  Students studying in Manchester were being told to look at Liverpool to find a room.  This leads to an increase in demand especially when you consider the number of overseas students being offered places at UK universities because the universities can charge them an arm and a leg.

BobT36

Albermarle said:

MikeJXE said:

East Midlands but more central

2 bed flat this time last year was £625 now  £725 + 

My 1 bed  I moved into last  February was £625 

No increase yet 

A friend searched Reading area for 6 months before securing a property. One bed flat - £1050 per month + bills.
One year rent up front.

12.6k upfront!!!! Imagine having multiple of those and banging it all in a high-interest account. Or just buying another property with it. Wow. 

BobT36

I'd have also thought that more landlords selling up, less rentals & rental price going up, would mean more up for purchase, and avg sale price going DOWN? But that doesn't seem to have happened that much, despite all the interest rate rises.. 

Just where are all these houses going? 

There's a point that for rentals they can just HMO it (officially or otherwise..) and bung loads of people in one dwelling whereas purchased houses will likely be single family, but still..

Olinda99

you forgot deposit protection fee and PAT testing! Also you are lucky not to have a selective licensing fee.

staffie1

grumbler said:

RHemmings said:

Having bought a house, the rental property I'm currently in is on the market for new tenants. 

It's listed for hundreds more than I'm paying a month, and the number of viewings is just unreal. 

Is this typical? 

Thanks to our lawmakers, being a landlord became a hard and risky job, that has to be paid for accordingly.

…and they’ve still done nothing to improve the rights of tenants.

RHemmings

I had a look around at all of Leicester. If I was having to rent again now, this is what I would do.

First, I'm currently in a large 3 bed semi. If renting again, I would certainly be looking at 2 bed terraced properties, and would have to downsize stuff to fit. 

Also, while I've been targetting particular areas in the past, I think I would have to look at properties anywhere in the city. 

And, while I had no real trouble finding a property last time (about two years ago), I remember one 2-bed flat where several of us turned up for a viewing. The EA never turned up and I later heard from them that the flat had already let so they cancelled the viewings. 'Thanks' for not telling us. That makes me think that hanging on Rightmove and applying the instant a property is listed would be a good idea. 

I'm not sure that the above would be sufficient to find me a property without paying extremely expensive rent (compared to salary). But I would try. I'd put on Facebook that I'm looking for a property, but I wouldn't have high hopes of friend of a friend. 

If I hadn't received inheritance, then I couldn't have afforded the property I've bought (for cash). But, I would have been able to afford a 2 or 3 bed terraced property with a smallish (1x salary or so) mortgage. I suspect that if I found myself trying to rent in this market I would have jumped ship to ownership even if it was just a house that was anything I could get, and expensive. Even at current rates, it takes quite a bit of mortgage to match the rent I was paying. Others trying to build a deposit may not be so lucky. 

In the long distant past, I did have a rental fall through at the last minute. In that case I dumped all my stuff in one of those storage places and stayed with in-laws. This was in the extremely late 1990s. Before I decided to throw money at things by not giving notice until my sale had completed for stress-reduction reasons, I considered putting all my stuff in storage and going into a single room. Looking on booking.com, it's possible to find single rooms for enough less than my current rent that it would cover the storage costs. That would leave me reasonably 'agile' in terms of waiting for something to come up and being able to move in. That's for me at the moment. When my family is back (and for others with families) that doesn't work. Though, it would work for my partner and I and my son continuing to move around the country staying with friends. 

Sorry, a bit lazy this morning. I think that someone asked if student properties can be advertised as only for students. I had a look at some in my local area, and while they were advertised as 'student property', none actually said that they were only for students. That doesn't mean that a landlord wouldn't just silently choose students. 

ProDave

hugheskevi said:

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• £475 Replacement fuseboard to meet latest regulatory standards (fuseboard was fairly new and if I was continuing to live there would not have been replaced).
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I will pick up on that one item as I think you were scammed.

You say it was a recent CU so I am guessing a split load dual RCD plastic consumer unit, and your electrician told you it had to be metal

If that was the case it was unecessary work.  a plastic CU as long as it is in good order should only be a C3 on an EICR so would not make the EICR unsatisfactory.  It is both surprising and disappointing how many electricians will gladly tell you it must be replaced.

ProDave

Another issue that savvy landlords thinking ahead will have worked out, is minimum EPC requirements for rental properties coming down the tracks.  Tenants may say "good an end to cold damp expensive to heat rental properties"

But who pays for it?  To properly upgrade an old house is very expensive and very disruptive, i.e. the property would have to be vacated.  What landlord wants to evict his tenants, have the property sit empty with no income and spend £1000's on it to improve it before he can let it again?

So I expect those that have realised this will be selling up their old poor houses, while the market of house buyers are still largely oblivious of EPC's and energy costs and will haplily pay as much for an old cold house as a new warmer house.

It reminds me of a game of pass the parcel, I would not want to be the one owning an old house when crunch time comes and it HAS to be upgraded at great cost.

The people that make these rules sit at a desk and proclaim how all houses will be a certain EPC rating by a certain date, without a thought to what will actually happen as a result of what they have just written.