Wednesday, Jul 16, 2008
MSN tries to spin inflation as a good thing for BTL
MSN Money: Why inflation is great news for buy-to-let landlords
Inflation is apparently good news for buy to let investors as rents increase rapidly.
Except that they aren't. If anything they are falling. Repair costs and mortgage costs are increasing rapidly though.
Posted by jonb @ 10:48 PM (575 views) Add Comment
12 Comments
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1. last_days_of_disco said...
Sigh, if only this was true.
2. drewster said...
It's only good news for them if it's the right kind of inflation. Landlords want House Price Inflation and/or Rent Inflation, but food & petrol inflation actually work against them because people have less money to spend on rent. If the BoE prints banknotes til the cows come home then everything will inflate and landlords will be fine, but you just have to look at today's strikes to see why that's a dangerous path to tread.
3. Cheekie Charlie said...
But wages aren't rising with inflation! What about accidental landlords who have been conned into thinking (by estate agents) that rather than selling their house at a discount, it's better to rent it out to pay for that bridging loan. These people must be flooding the receding rental market with property's. Oh dear, it's a blood bath.
4. Jayk said...
Care to post your sources that prove all the many indices which show rent rises are completely wrong or are you simply confusing your own opinion with facts?
PS Rents up 20% YoY in the areas I'm watching.
5. Cheekie Charlie said...
This artical is comical! Inflation is good, but it doesn't mention deflation of house prices!
6. Spotthedog said...
If price inflation happens without corresponding wage inflation, rents will be squeezed.
7. techieman said...
True - Drewster is right. There is just one problem. We are on the cusp of a deflationary recession at best and quite possibly a depression which will hit discretionary spending concurrently with previously inflated assets prices. Poor article, as in not very good rather than there there. Poor BTLrs as in both. But hold on Greenbay always told me the government wouldnt let the market fall! Thats lovely boyo
8. Eyes_wide_open said...
Rents are static where I am (Leigh-on-Sea, Essex), in fact, there are loads more properties To Let in my area, some have been empty since February.
Rents have fallen on the empty ones to attract tennants and yet they are still empty. Oh dear. I'm looking to ask my Landlord to drop the rent by £100pcm at the next tenancy renewal, if he doesn't, I'm off. There are loads to choose from, all about £50-100pcm cheaper than my current place.
9. denzil said...
jayk said:
"Care to post your sources that prove all the many indices which show rent rises are completely wrong or are you simply confusing your own opinion with facts?
PS Rents up 20% YoY in the areas I'm watching."
You may find this article straight from the horses mouth quite interesting.
Source: The Association of Residential Letting Agents (ARLA)
Title: No Soaring Rents as Supply and Demand Levels Come into Balance Quarterly ARLA Survey Shows.
Date: 10th June 2008.
"The Association also points out that this demolishes the myth that rent levels are soaring."
"However, average weighted rents for houses are down by 7% and for flats by 9%."
Read the full article here:
http://www.arla.co.uk/news/100608.htm
It is possible that one could find very small pockets of rent increases due to company relocations etc, but ARLA are probably one of the most reliable sources who simply do not post spin like perhaps other VI's would.
Care to post your sources?
10. Jayk said...
Denzil,
And there is the main problem with most of the people on this site.
Whenever a new house price index shows that prices are NOT falling as much as Halifax and Nationwide say, or that rents are rising regardless of what ARLA say - neither of which you want to hear - many come out and shout "Absolute rubbish! Their methodology is wrong. Don't care what they say, my experience is this....this index says that....this report proves this"....etc etc.
And whenever a new index shows what you DO want to see - falling prices, falling rents - you all take it as absolute gospel and say "See I told you so! This index trumps experience in the street, proves that that other report I didn't like must be wrong....etc etc."
Personally I do not agree with that ARLA report not because it says something I do not like (indeed, it is MUSIC TO MY EARS as I am trying to rent a decent house for my family). I think it is rubbish because it does not reflect the experience I have in the areas I am looking (50 mile radius of Guildford) nor the experiences of friends and family across England. I want it to be true, but it is utter crap unless you live in Leeds city centre or some parts of London. Most do not.
"Happy is the man who hears and sees only that which pleases him. But it is a stupid happiness not unlike that found in a pill bottle".
Who said that?
11. enuii said...
Jayk,
You live in the London bubble, a lot of the other posters on this site live in the boonies where rents have been more or less static, in many areas for years!
Up in the Northwest of England we have more crappy flats to rent than you can shake a stick at and I cannot see any significant rise in rental rates for years due to the oversupply of housing aimed at this sector.
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