Wednesday, Jul 11, 2007
Little Stewie Griffin at it again
Firstrung: Tenants will lose out due to interest rate increases - Assetz
According to Assetz tenants will pay the price of five interest rate rises in the last 12 months, as buy-to-let landlords will need to increase rents to cover their mortgages. Higher mortgage costs will result in fewer and fewer people being able to afford their own homes which will in turn drive demand for rental property and enabling landlords to increase rents, says Assetz.
Posted by converted lurker @ 11:54 AM (161 views) Add Comment
15 Comments
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1. Uncle Fargas said...
So let me get this right - at the moment they could charge more if they wanted to, but they choose not to? Rents are driven by free market supply and demand, it has nothing to do with the landlords mortgage payments.
2. dohousescrashinthewoods said...
Hmm, maybe, but round me there are houses for rent under a grand a month that used to go for 1500.
We're sitting tight for a few months and then intend to go out and grab a bargain in a flooded rental market.
3. Darrude said...
or do landlords become more desparte to fill the propertise they own and have to accept that they will make loss in the interim period.
4. Planetmervyn said...
The article assumes that all landlords have mortgages on their rental properties. In reality this is not the case. Some landlords like mine do not have mortgages at all on their rental properties. My rent has remained static for the last 3 years. I agree with dohousescrashinthewoods in that there will be a flooded rental market.
5. Andy said...
Assetz - Picked out a single factor put it in a petri dish, froze it and looked at it under the microscope - but in the real in situ housing market it looks alot different.
Rents are charged on a competitive basis, and they are charged dependent on the various mortgage term of the Landlord. i.e. a landlord who is coming to the end term of his mortgage can afford to keep the rental market subdued and outmanouvere the BTLetters who bought yesterday.
If House prices fall - new BTL's have cheaper mortgages and maintain rent as is or lower.
If House prices rise - more people stay in there homes and rental demand is quenched.
These are the contradictive arguments to the theory put forward by Assetz, they are not conclusive or exclusive but prove a point that the relationship between rents and HP's/IR is not as simplistic as Assetz maintains. Applied to the changing economic factors in the real world, these can act both ways and become so complex that any relationship becomes non existant. Expect a mild increase in rents but dont get too scared by Assetz theoretical stunt.
6. Orwell said...
I do not know how many times I've said this. Once a buy to let tenancy in place a tenant and this can be as long as a tenant wishes, which may be for a long period of time agreed between tenant and landlord, a tenant has a right to go to a Rent Assessment Tribunal.
What an amateur landlord may not understand is that they can enter a long-term tenancy agreement and have the Rent Assessment Tribunal impose a rent that they did not envisage ever having to accept.
So Mr Griffin, perhaps you are wrong about landlords being able to immediately impose higher costs on to their tenants. We shall see, I am sure.
7. george monsoon said...
If my landlord tries to charge more, I will just move to the competition who will be more than glad to have someone in the property helping to pay off their massive debt.
8. paul said...
I should also point out that residential rents are included in the CPI. By definition therefore this thinking is incorrect - if their assertion was true then increasing rates would force an increase in inflation and have a feedback effect.
It doesn't, so the Assetz Wide Boyz are completely wrong.
9. confused76 said...
In my area, "prime central london", rentals are now just back at Y2k levels, but barely. BTL makes a real "case study" of naivety, it is not really about economics and finance, it s more of a mix btwn social sciences and psychiatry
10. C'mon Correction said...
There are huge amounts of void houses around South Wales currently. I've just got a lovely converted barn in a very desirable area on a 12 month lease at HALF, yes that's HALF the amount it would cost in the interest part of a repayment mortgage (let alone insurance, maintenance, agent fees etc)!! I'm saving over £600 renting compared to buying; only fools would buy in virtually every case here in South Wales in the present situation.
And if the rental market was so strong for landlords, why was I able to knock them down £50 pcm ??! And it's verbally agreed to stay the same in the second year when our 12 month lease renews!
11. mrmickey said...
What happens to the tenant if the BTLer has the house/flat repossessed, does the bank become the tenant's landlord.
12. denzil said...
Assetz are little more than a spin machine without a brain.
I take their conjecture on rental increases with the same level of seriousness as their name.
Assetz. The investment group for the chavz generation.
13. Davidhpc said...
just look on rightmove, put any postcode in with a 1 after it, eg LS1 L1 BH1, ie. city centre. thousands of flats vacant, all brand new. they are all starting to drop the price, as anything is better than nothing.
14. confused76 said...
mr mickey
your tenancy agreement is honored by the next owner, also in case the house is simply sold. Then the new owner can give you notice of course
15. Andrew said...
wtf? since when do my landlord's interest rates determine my rent? it astounds me that people like Assetz are asked for their opinion, but then again, the interviewer's publication likely has an interest in prolonging the party.
The UK housing market now thinks that the UK economy revolves around it, not the other way around.