It's a funny old world - BTL's are prospering!

jimc_2

As reported by Reuters, the RICS has found that demand for rental properties has continued to grow and yields remain on an upward trend.

More chartered surveyors reported a rise than a fall in tenant lettings in the last quarter.

Family homes are more in demand than flats because of the oversupply in new-builds. At the same time, gross yields in last three months of 2007 increased at their fastest rate since the third quarter of 2005. This may have persuaded some BTLs to not sell after all.

Some commentators put this down to the closing of the market to new entrants by refusing 125% or even BTL loans at all, thus making the availability of new rental properties rarer. Coupled with the rise in returns, BTLs may not be dead in the water after all.

Is it also perhaps because of the new demand from Sell To Renters who have been advised to sell up and wait? Where does this leave them now with less choice of rental home and increasing rents?

Is this Karma in action?

chriz1000

Well it makes sense really, if less people can afford to buy, then more people have to rent when say they move out of the parents house. Also as you said the people who has sold up and are renting have also taken up properties!
Its all swings and roundabouts

mystic_trev

........and this from BBC

The buy-to-let housing boom may be about to stall, according to a survey from the Royal Institution of Chartered Surveyors (Rics).

http://news.bbc.co.uk/1/hi/business/7279154.stm

lostinrates

From my position (not a house owner but waiting to pounce on the market as FTB) I'll rent a dive in order to keep ading to my deposit. In the 'buying mindset' I'm aware that what I rent is not an investment nor a long term decision. But then, I don't have children, and I'd feel differently if I did I suppose.

Limited choice doesn't really bother me though (rent increase does!)

Lotus-eater

This has just been on Working Lunch, Rents are going up. They were talking about a yield of 6.2% atm and 6% in 98 I think.

This goes against the prices of houses and renting that I can see?

mystic_trev

Lotus-eater wrote: »

This has just been on Working Lunch, Rents are going up. They were talking about a yield of 6.2% atm and 6% in 98 I think.

This goes against the prices of houses and renting that I can see?

Nett yield on the one I'm selling 2.6% was nearly 10% when I purchased it in 1998

Lotus-eater

mystic_trev wrote: »

Nett yield on the one I'm selling 2.6% was nearly 10% when I purchased it in 1998

Is the 2.6% against the value of it now?

PasturesNew

The yield going up doesn't mean increased rents.

Yield is the amount you get back for the property's value.
If the property value falls, you still collect the same rent, but the yield goes up.

e.g.
£200,000 - Property Value
£700 - Monthly rent
4.2% - Yield

£180,000 - New Property Value (it's dropped 10%)
£700 - Monthly rent
4.66% - Yield

jimc_2

The article also quotes:

"Established investors continue to reap the benefits of ...... enjoying the fruits of rising rents"

I've heard other reports of a rising trend in rents so it's not just the property 'value' causing the effect.

teabelly

Property yields are misleading though as the ROI should be what it actually costs you to buy in the first place. Not many buy with 100% cash so saying the yield is only 5% or whatever is meaningless. The actual yield should be rental profit after costs and taxes and would vary year on year depending on what you paid out and received.

If you buy with no money down and cash back then you have an infinite ROI while you have a tenant paying more than the mortgage

jimc_2

mystic_trev wrote: »

Nett yield on the one I'm selling 2.6% was nearly 10% when I purchased it in 1998

As a matter of interest what is the current yield versus the 1998 price?