Slightly confused

Alex_of_Swansea

I've seen a few threads now where people state landlords will struggle as house prices drop. Can someone explain this to me, please? My landlord will recieve the same amount of rent no matter what the value of the house. We can't afford to buy yet, but if the above is true, would it be worth offering to buy this one without knowing if she wants to sell or not?
Ax

dekh

Could be that if house prices drop, the monthly cost of mortgages for some people like first time buyers will drop.

If you are in rented accomodation (ideal FTB) what are you gonna do? Pay high rent or buy a cheaper house with lower monthly repayments?

The LL will still be stuck with his property and high mortgage and no tennant.

The buy-to-let market seems to be struggling, more properties than tennants.

Perhaps IF house prices are falling now is not the time to buy. When they have reached the bottom, then buy. (When) will that happen? Who knows?

Richard_Webster

A landlord has the choice of selling or letting. If he doesn't want to sell because his flat is worth less than he thought, then he may want to carry on letting until prices go up again. If he is not the only one in that position there will be competition to find tenants and therefore presumably rents will go down too!

clutton_2

""Could be that if house prices drop, the monthly cost of mortgages for some people like first time buyers will drop."

mortgage rates will only drop if Lenders reduce the interest they charges on mortgages.

i cannot necessarily correlate house-price-drops with mortgage-interest-rate-drops ........

Phirefly

What about all these thousands of people being reposessed? And the scores of potential FTBs being put off buying because of the 'crash'? What of the impact of these factors on the demand for rental accomodation?

Thali

Hi there,

I'm not sure if it's the other way around, if there is a real crash and prices are really, really down, why would anyone want to sell their house/ flat? Rather sit it out till prices are going up again and then sell. Meanwhile, with more people pouring into the country and less flats for sales available, rent should go up or at least stay at the same level.

It all comes down to supply and demand ...

Maybe only true for London but very much so IMO

Thali

Gorgeous_George

I bought my BTL for X pounds in 2001.

If I never have it valued, or more relevantly, I never offer it for sale, what is it worth after 6 years? I don't know and I don't care - to me it is worth £5,000 per year in rental income minus costs, tax and risk.

I don't plan to sell it - ever. If a good tenant wanted to buy it, I might be persuaded to sell and would offer a small discount (upto 10% based on years as a tenant?) because I'm a nice guy. Otherwise it will continue being worth about 20% of my salary. When I retire, the rent will be worth about 40% of what I will need in retirement. When I pop my clogs, my kids can do with it as they wish but I shall ask them to treat my tenants with respect. maybe I should leave the tenants a few grand in my will as compensation for losing a trustworthy LL

GG

Tassotti

Alex_of_Swansea wrote: »

My landlord will recieve the same amount of rent no matter what the value of the house. We can't afford to buy yet, but if the above is true, would it be worth offering to buy this one without knowing if she wants to sell or not?
Ax

IF prices drop, then when your LL comes to remortgage, may not be financially viable.

Put in a cheeky offer and see what happens...May be that your LL is considering selling and accept..Who knows until you try?

Tass

poppy10_2

Thali wrote: »

if there is a real crash and prices are really, really down, why would anyone want to sell their house/ flat? Rather sit it out till prices are going up again and then sell.

Herd mentality

BTLers aren't going to sit back calmly while they watch the value of their "pension" plummet dramatically. They will stampede to the exits, further lowering house prices due to o0versupply.
Meanwhile those people "pouring into this country" turn to people "pouring out of this country" as the economic downturn hits and other countries become more prosperous.

zar230

[STRIKE]Tennant[/STRIKE] Tenant

Luckno7

Because people are foolish:

If a house price falls in terms of money, the value of the house hasn't changed, its a house, ultimatly a plot of land, its no smaller than it was, it isn't running out. The value of money has simply increased. Think about it backwards a property isn't worth X pounds a pound is worth 1/X of a property.

Now who in their right mind would buy a pound today for 2/X of a house when they sold that pound for 1/X of a house yesterday?

You wouldnt trade one apple for an orange today, then trade that orange back for half an apple tomorrow.

Interest only mortgages are different as you never own anything you just artifically inflate house prices by devaluing the currency. Then when the lending stops as everyone has borrowed all the banks money and no one is lending the bank any (your savings are lent to the bank, who intrun lend it to some douche with an interst only morgage) the currency regains value against the property and the borrower has now realises what a fool they were and decides to sell up instead of continually buying interest of the bank in return for...NOTHING.