Thursday, May 15, 2008
This fantasy of rents going up will soon end & BTL collapse
CityWire: Rising unemployment will hit landlords in the pocket
"ARLA’s figures show that nationally rents increased by 4% for houses and 2% for flats in the three months to March 2008, in the south east rents for houses were down 2% to £1,361 and down 5% for flats to £882. landlords will have to cope with rising rent arrears as families struggle to make ends meet" Builders stop building in order to corner the market? they will just dig their grave deeper: hundreds of thousand jobs in housing and EAs will be lost; and "if they are made redundant, they won’t be able to afford to rent either" Too bad the article lacks the usual commentary by Para-gone and my Assetz
Posted by confused76 @ 01:08 PM (291 views) Add Comment
1 Comment
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1. uncle tom said...
Last autumn, when the credit crunch took hold, I thought it likely that rents would rise in the first half of '08, and was a little concerned that a spike in rents might spawn some absurd projections - enticing more fools into BTL..
My reasoning was that as the imperative to 'get on the ladder' evaporated, FTB's would defer looking to buy and increase demand for lets; taking up the slack in the rental sector and levering rents upward through excess demand, as BTLers stopped buying.
This logic was subject to two uncertainties; the extent to which FTB's would stay with their parents instead of renting, and the accuracy of statistics relating to voids in the rental sector; none of which come from un-biased sources...
That rents appear to have barely changed this year (if one ignores tainted sources..) it would seem that the excess of supply in the rental sector was greater than admitted, and that FTB's are tending to defer setting up home, rather than renting.
A significant social change has gone un-reported over the last few years. It was only a few years ago that most parents determined that the day their offspring wanted to share a bed with their girlfriend/boyfriend was the day they found a place of their own. Today, only the religious zealots seem to take that view, reducing the pressure on young people to leave home.
Thus an unfavourable climate for FTB's can result in a more dramatic reduction in demand.