Monday, Jun 23, 2008
Paragon stake early claim for comedy club champions of June 2008
mortgagestrategy: Rental yields highest for two years
Paragon Mortgages has revealed rental yields have hit their highest levels for more than two years, in its latest buy-to-let index. Paragon says landlords’ rental incomes have risen nearly 12% in the past year and 6% during the past six months. Meanwhile, property values have risen 7.5% year-on-year, although by just 0.2% over the past six months.
Posted by jack c @ 01:30 PM (981 views) Add Comment
18 Comments
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1. Jayk said...
Why is this "comedy"? Rents are up nearly 20% YtD in my area - I know because I am trying to leave my rented flat for a house but rents have shot up and I am struggling to find one for the money I wish to pay. If Paragon says landlords’ rental INCOMES have risen nearly 12% in the past year and 6% during the past six months then I believe it - I don't care who said it, it is what I am experiencing.
As for HPI, well even the FT says house prices are still higher than last year. But of course some of us pick and choose which indices to believe and quote.
You are the joke.
2. techieman said...
"With an average portfolio gearing of just 36%, landlords are well placed to free up equity to expand their portfolios."
like to know how hes got to this number. Bona fide or slight of hand?
3. Ijjhall said...
Trouble is this is the kind of thing - not this site - landlords read and quote when trying to hike up rents on tenants. Personally I can't be bothered trying to educate my landlord on the realities of the property market as I am happy to see him find out himself in due course.
Paragon really are a joke though. On the one hand they say landlords are taking advantage of falling prices by adding to their portfolio but then no doubt appalled at the thought of even mentioning the word 'falling' go on to state that prices have actually risen this year !! Oh and rents going through the roof too - just great news alround for those nice BTL people..
Just who is worse Stuart Law, The Express or Paragon ? Tough call but I would stick to that order of jokedom.
4. little professor said...
Rents locally are up at least 10% YoY, and with house prices falling, its no surprise that yields are on the up. That still doesn't make BTL a good investment, however. And the "average monthly rent" quoted by Paragone is a complete joke - outside of London hardly anyone is paying anywhere near that amount.
5. it_is_going_with_a_bang said...
Location location.
Where I am rents are static an plenty of To Let signs up.
6. wdbeast said...
Dead Parrot Sketch
The cast:
MR. PRALINE
John Cleese
SHOP OWNER
Michael Palin
--------------------------------------------------------------------------------
The sketch:
A customer enters a pet shop.
Mr. Praline: 'Ello, I wish to register a complaint.
(The owner does not respond.)
Mr. Praline: 'Ello, Miss?
Owner: What do you mean "miss"?
Mr. Praline: I'm sorry, I have a cold. I wish to make a complaint!
Owner: We're closin' for lunch.
Mr. Praline: Never mind that, my lad. I wish to complain about this parrot what I purchased not half an hour ago from this very boutique.
Owner: Oh yes, the, uh, the Norwegian Blue...What's,uh...What's wrong with it?
Mr. Praline: I'll tell you what's wrong with it, my lad. 'E's dead, that's what's wrong with it!
Owner: No, no, 'e's uh,...he's resting.
Mr. Praline: Look, matey, I know a dead parrot when I see one, and I'm looking at one right now.
Owner: No no he's not dead, he's, he's restin'! Remarkable bird, the Norwegian Blue, idn'it, ay? Beautiful plumage!
Mr. Praline: The plumage don't enter into it. It's stone dead.
Owner: Nononono, no, no! 'E's resting!
Mr. Praline: All right then, if he's restin', I'll wake him up! (shouting at the cage) 'Ello, Mister Polly Parrot! I've got a lovely fresh cuttle fish for you if you
show...
(owner hits the cage)
Owner: There, he moved!
Mr. Praline: No, he didn't, that was you hitting the cage!
Owner: I never!!
Mr. Praline: Yes, you did!
Owner: I never, never did anything...
Mr. Praline: (yelling and hitting the cage repeatedly) 'ELLO POLLY!!!!! Testing! Testing! Testing! Testing! This is your nine o'clock alarm call!
(Takes parrot out of the cage and thumps its head on the counter. Throws it up in the air and watches it plummet to the floor.)
Mr. Praline: Now that's what I call a dead parrot.
Owner: No, no.....No, 'e's stunned!
Mr. Praline: STUNNED?!?
Owner: Yeah! You stunned him, just as he was wakin' up! Norwegian Blues stun easily, major.
Mr. Praline: Um...now look...now look, mate, I've definitely 'ad enough of this. That parrot is definitely deceased, and when I purchased it not 'alf an hour
ago, you assured me that its total lack of movement was due to it bein' tired and shagged out following a prolonged squawk.
Owner: Well, he's...he's, ah...probably pining for the fjords.
Mr. Praline: PININ' for the FJORDS?!?!?!? What kind of talk is that?, look, why did he fall flat on his back the moment I got 'im home?
Owner: The Norwegian Blue prefers keepin' on it's back! Remarkable bird, id'nit, squire? Lovely plumage!
Mr. Praline: Look, I took the liberty of examining that parrot when I got it home, and I discovered the only reason that it had been sitting on its perch in the
first place was that it had been NAILED there.
(pause)
Owner: Well, o'course it was nailed there! If I hadn't nailed that bird down, it would have nuzzled up to those bars, bent 'em apart with its beak, and
VOOM! Feeweeweewee!
Mr. Praline: "VOOM"?!? Mate, this bird wouldn't "voom" if you put four million volts through it! 'E's bleedin' demised!
Owner: No no! 'E's pining!
Mr. Praline: 'E's not pinin'! 'E's passed on! This parrot is no more! He has ceased to be! 'E's expired and gone to meet 'is maker! 'E's a stiff! Bereft of life, 'e
rests in peace! If you hadn't nailed 'im to the perch 'e'd be pushing up the daisies! 'Is metabolic processes are now 'istory! 'E's off the twig! 'E's kicked the
bucket, 'e's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisibile!! THIS IS AN EX-PARROT!!
(pause)
Owner: Well, I'd better replace it, then. (he takes a quick peek behind the counter) Sorry squire, I've had a look 'round the back of the shop, and uh,
we're right out of parrots.
Mr. Praline: I see. I see, I get the picture.
Owner: I got a slug.
(pause)
Mr. Praline: Pray, does it talk?
Owner: Nnnnot really.
Mr. Praline: WELL IT'S HARDLY A BLOODY REPLACEMENT, IS IT?!!???!!?
Owner: N-no, I guess not. (gets ashamed, looks at his feet)
Mr. Praline: Well.
(pause)
Owner: (quietly) D'you.... d'you want to come back to my place?
Mr. Praline: (looks around) Yeah, all right, sure.
7. Yerhavingalaugh said...
Rents seem to be rising (or steady) in London and the South East at the moment at least. As the economic situation deteriorates with rising unemployment and inflation kicking in the trend will surely reverse. Outside these areas reality seems to be very different already.
8. mark said...
of course paragon need the business..
9. the haunted said...
Rents are at best static where I live and appear to be going down in general. Therefore, I call "Bullsh1t!"
10. symo said...
Paragon, get thee o'er to Devon lad. Rents be reet down.
11. denzil said...
Rents not rising in the Somerset that's for sure. The amount of properties with "For Sale" AND "For Rent" signs outside is making it a renters paradise.
12. drewster said...
Rents are up in my area too, but this is after being static for 5+ years. A lot of people who can't sell for what they hoped are renting out their house "waiting for prices to rise again", so that additional supply should cool off the rental market again. Fundamentally though rents are linked to month-to-month affordability - they can't rise dramatically in the same way prices can. With other living costs squeezed, and high baseline housing costs of council tax and utility bills, rents should remain under control.
Also see my recent article post about Poles going home - that will directly affect the slumlords at the lower end of the rental market.
13. Bangybongo said...
Our rent went up 5%. We have a house in South East London.
To be honest, I'm a tiny bit worried about rent increases, but there's a lot of economic gloom out there and I wonder if our landlady would want us (reliable, hard working, clean family who look after the place) or the devil she doesn't know.
Something that interests me is government-subsidised housing: specifically non-working tenants.
With the tax take at risk from many sides from a recession, to what extent can government keep bailing out this element of the market? I doubt the government will cough up 10% to 20% more to provide housing for unemployed tenants when the money's not rolling in and it needs to fund so many other projects quite desperately. If not, what does it mean? Does anybody know how much the government spends on subsidising/paying rents?
Incidentally, if landlords really did succeed in jacking up rents extortionately (I have no comment on the Paragon statement other than that I'm always sceptical of vested interests and it's not my personal experience of renting), it would be a major contributor to a disastrous inflationary spiral that's ultimately self-defeating.
People who're renting and have no savings would spend very little if rents climbed 20%, harming another ``central plank'' of the economy (three others being ``housing'' ``financial services'' and ``borrowing,'' which always cracks me up.) That would weaken sterling and jack up interest rates to keep a lid on the resultant inflationary risk.
We may be in for a deflationary environment, but we're also a way off that yet. Record oil's full consequences haven't filtered all the way through the broader economy yet: not by a long way.
14. crash bandicoot said...
Jayk "some of us pick and choose which indices to believe and quote" why do you choose the FT one? Is it because it has a reliable track record for being correct? No I didn't think so, it's because it says what you want to hear isn't it? I believe "hoist' by your own petard" is the phrase that enters my mind.
15. bidin'matime said...
The rent I pay produces the landlord a yield of about 2% - but the yield is rising – should I be worried?? No, of course not!
But seriously, a small jump in rents is not at all surprising, as people decide not to buy - but as the economy stalls, the momentum towards independent living with also stall, so young people will be relieved of the pressure from parents to live independently, young couples will stay living at home (moving in with one set of parents), more fighting couples will decide to ‘make a go of it’ (instead of going their separate ways), etc etc..
The old chestnut that they always bring out – “people will always need somewhere to live” overlooks the corollary – that they must therefore have had somewhere to live in the past – if they always needed somewhere to live, then where have they been living before – on the moon??!
16. new user 2007 said...
"Meanwhile, property values have risen 7.5% year-on-year, although by just 0.2% over the past six months."
AND
“With lower property prices and higher rents, the yield they can achieve on a carefully selected and well-managed investment property can be significantly higher than other forms of investment."
Could someone explain this magic trick. House values have gone up in their mystical world (despite what EVERY index is saying) YET lower property prices have helped to raise yields.
A magic trick?
Anyway, ParagonE cannot be taken seriously.
17. new user 2007 said...
JAYK, the FT is a LAGGING index that does indeed have more thorough data. It will therefore soon catch up with the other indices.
As for picking and choosing...if you want to use the FT index on house prices, perhaps you should also use their index on rental yields, which show that yields are well below the cost of funding.
OR do you really want to use your own selective system and ignore the indices that are down year on year since May.
OR do you want to ignore the fact that on any index, if you bought since September, you would have lost money.
Your story sounds awfully odd for someone who wants to rent, so I smell something odd, HOWEVER, if you are having problems, come over to my area of London...safe, links to the city, used by city types and yet my rent has gone up once in several years.
You can live in one of the BTL buildings near me. There are 18 flats and 6 To Let signs. To gve it some context, there are more To Let signs than tenants.
Stop kidding yourself. As ever, the credit cycle won the day...cross-sectionally and time series wise, this was inevitable. It has begin, get over it:)
18. new user 2007 said...
p.s. so if rents go up by another 25% maybe they will cover the increase in mortgage payments:) Not sure how they will cover the massive losses on capital though....
...a £1m portfolio with 25% equity means a 10% fall is a loss of 100k on 250k, not on £1m i.e. a 40% capital loss. BTL is about to find their clever leverage works both ways...
AND that is before we are even entering recession and E Europeans are going back.
Nice summer we are having:)
JAYK...do you work for Foxtons. They were telling me how bouyant the market was in April, even as they started sacking people and are now facing problems because their sales and revenues have fallen so far that they cannot srevice their debt properly:)