RICS: worst set of figures since records began

ianmr65

teabelly wrote: »

BTL is a business. Do you renters honestly think you are immune to increased costs of housing? Do you not expect that you have to pay enough rent to cover the outgoings on a property? Where else would you expect to continually pay less for a service than it costs to provide it? If rents don't cover the current mortgages + costs then rents will rise. Landlords tended to put up with this as they knew they'd have capital growth to enjoy. Now they think that is gone do you honestly think they are going to carry on making a loss indefinitely just to keep a roof over your head?

They will either cut their losses and sell ( you then have to move) or they'll raise the rent so it makes financial sense so you can either move to somewhere cheaper gambling on the fact your new landlord won't do the same so you'll have to move again or you can pay the new rent.

yeah thats the likely scenatio with loads of empty rental stock and not enough renters...
or try this as a more real world alternative:

LL: I want to put your rent up.
T: Why?
LL: Cos i'm not covering my overheads. I'm thinking of selling up.
T: What in this market? rolls on the floor laughing.
T: With tear's still in his eyes.. The guy next door says he'll charge me less rent, than i'm paying you now: bye.

tomstickland

Turnbull2000 wrote: »

RICs, CML, Haliwide media rent-a-quotes these past three years...

2006 "House prices will rise as the fundamentals remain strong"

2007 "House prices will stagnate as the fundamentals remain strong"

2008 "House prices will fall only a small amount as the fundamentals remain strong"

2009?

:rotfl:

House prices fall massively as the fundamentals remain strong.

teabelly

Rental increases are already happening. Most landlords that are going to be left are the pros that expect 8% yields not the johhny come latelys that bought their off plan property from a property club and paid twice what it was worth then charged bargain basement rent. Low mortgage costs and high capital appreciation have allowed renters to enjoy a golden time where they weren't really paying the true cost of living in their property. Don't expect this to continue.

http://uk.reuters.com/article/personalFinanceNews/idUKNOA54682120080515

New household formation is still running at over 100,000 a year. If you can't borrow to buy then you are going to have to rent so don't expect the bloke next door to be offering you a bargain for long.

WTF?_2

teabelly wrote: »

Rental increases are already happening. Most landlords that are going to be left are the pros that expect 8% yields not the johhny come latelys that bought their off plan property from a property club and paid twice what it was worth then charged bargain basement rent. Low mortgage costs and high capital appreciation have allowed renters to enjoy a golden time where they weren't really paying the true cost of living in their property. Don't expect this to continue.

http://uk.reuters.com/article/personalFinanceNews/idUKNOA54682120080515

New household formation is still running at over 100,000 a year. If you can't borrow to buy then you are going to have to rent so don't expect the bloke next door to be offering you a bargain for long.

Don't worry - as house prices go down, yields go up. And the pros who expect to make good yields bought their properties when it made sense to do so and now either own them outright or are paying so little mortgage that they don't need to charge the earth.

It's the idiots who leveraged to the max and bought into negative cashflow that will have to raise rents or sell up - and they'll find that there are plenty of LLs out there who know what they are doing and can easily undercut them if they raise their rents.

Right now it's a good time for LLs as people who are not buying are looking to rent instead which is pushing demand and hence prices up in many places. As the economy tightens, that might change. People who previously had a flat/house to themselves will start to consider HMOs or moving back in with parents. You'll find OOs taking in lodgers and some renters subletting rooms. You'll also most likely see a decline in immigrants as many head home with their hard earned savings. This may well be enough to torpedo demand.

pickles110564

!!!!!!? wrote: »

It's the idiots who leveraged to the max and bought into negative cashflow that will have to raise rents or sell up - and they'll find that there are plenty of LLs out there who know what they are doing and can easily undercut them if they raise their rents.

!!!!!!? if this is the case why do I never have any properties that are empty?
I still never need to advertise to fill them up and because of the condition I can always charge slightly more than current market rates.

WTF?_2

pickles110564 wrote: »

!!!!!!? if this is the case why do I never have any properties that are empty?
I still never need to advertise to fill them up and because of the condition I can always charge slightly more than current market rates.

No problems then. If it's working OK now it'll obviously always be going good. :money: :think:

I've outlined in the post the dangers I see. A short term improvement in the lettings market was always on the cards as the house buying market came off the boil but the economy remained good.

What happens next will be interesting. As long as you bought your properties when it made financial sense to do so you'll be fine. I'm sure cashflow will cover servicing mortgage debt, taking into account voids etc. However, those less savvy than you who just concentrated on leveraging to buy as many properties as possible on the basis that the market would always be buoyant and they'd make a killing from overall capital appreciation will be less fortunate.

boyse7en

ianmr65 wrote: »

yeah thats the likely scenatio with loads of empty rental stock and not enough renters...
or try this as a more real world alternative:

LL: I want to put your rent up.
T: Why?
LL: Cos i'm not covering my overheads. I'm thinking of selling up.
T: What in this market? rolls on the floor laughing.
T: With tear's still in his eyes.. The guy next door says he'll charge me less rent, than i'm paying you now: bye.

You missed the second part:
LL2: Sorry, I know you've only just moved in, but I'm going to put your rent up.
T: Why?
LL2: Because I can
T: But I'll just move next door again rolls on floor laughing
LL2: But he's sold the property, and sold his other house so that he's sitting on capital waiting to buy back into the market when prices hit rock bottom and make a killing, and in the meantime he wants to rent this place...

boinging_2

boyse7en wrote: »

You missed the second part:
LL2: Sorry, I know you've only just moved in, but I'm going to put your rent up.
T: Why?
LL2: Because I can
T: But I'll just move next door again rolls on floor laughing
LL2: But he's sold the property, and sold his other house so that he's sitting on capital waiting to buy back into the market when prices hit rock bottom and make a killing, and in the meantime he wants to rent this place...

You wouldn't be a worried landlord would you by any chance?

If LL2 could let me know when we hit rock bottom, as LL1 has already missed the top so I'm guessing they aren't the best at judging these things.

boyse7en

boinging wrote: »

You wouldn't be a worried landlord would you by any chance?

If LL2 could let me know when we hit rock bottom, as LL1 has already missed the top so I'm guessing they aren't the best at judging these things.

No, not a worried landlord, just trying to point out that, even if 50% of LL don't need to increase rents, they will be able to if the other 50% have to (or sell up).

As far as LLs being able to judge the top and bottom of the market, I reckon they'll be just as useless at it as everyone else is (including me)

boinging_2

boyse7en wrote: »

No, not a worried landlord, just trying to point out that, even if 50% of LL don't need to increase rents, they will be able to if the other 50% have to (or sell up).

As far as LLs being able to judge the top and bottom of the market, I reckon they'll be just as useless at it as everyone else is (including me)

Conversely the 50% of LL selling up in a hurry could push prices down in the property market even further enabling more renters to buy, thus the need for them is no longer there. Even more perversely these renters buying could push prices back up and then the LL are left out in the cold as they missed the bottom.