Friday, Aug 15, 2008
Time to Lower the Rents?
Grauniad: Tenants sitting pretty as rents fall
Quite simply the most hilarious thing I have read for some considerable time. Utter bear porn, but one won't feel quite so shameful after indulging. Enjoy!
Posted by fancypants @ 01:24 PM (5971 views) Add Comment
38 Comments
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2. Chilli said...
Fantastic! Unfortunately I don't think it will last for long.
3. mountain goat said...
"Some have been overpriced by as much as £500 a month, because that's what they need to pay the mortgage."
Her flatmate, Sarah Brewer, says: "Estate agents tell us they have to follow landlords' instructions even if they are ridiculous. Landlords just aren't adjusting to the market.""
4. nooneo said...
"The reality, according to property agents Knight Frank, is that although there is a big rise in the number of people wanting to rent, it has been more than offset by a surge in "forced landlords" who, unable to sell, are now placing properties with letting agents."
The crash is really starting to bite. Now letting agents are basically saying "If you want to let the property you have to drop your asking (letting) price"
Another nail in the coffin of the BTL boom (buy to regret). Properties that were never meant for the letting market flooding the place and reducing rents. Now who-da thought?
Well loads of people on this blog for the last coupla years for starters (apart from all the bulls that is - Now exactly where have all the bulls gone?)
5. quiet guy said...
Thanks for a highly amusing post fancypants. I cannot help wondering how the rental market will look in a year or two if it's doing this now.
Oh and it would be ungrateful of me not to say thanks to all those "amateur buy-to-let landlords who poured into the market in 2006 and 2007 may be facing huge losses."
:D
6. Friend_of_the _stars said...
"Buy-to-let lender Paragon says that, in the past year, rents have risen by 9.3%." Well, they just would, wouldn't they. Idiots.
"buy-to-let landlords ....now face a triple whammy of falling property values, sliding rental income and rising mortgage costs." Only a triple whammy?? I'm sure we can come up with some additional woes. Hows about being considered selfish, idiotic scum by almost everyone.
7. drewster said...
"bear porn" - Damn, I was hoping for some hot grizzly-on-grizzly action....
"Buy-to-let landlords now face a triple whammy of falling property values, sliding rental income and rising mortgage costs"
Vindication at last!
8. maddison said...
Rentals are falling as BTlers are starting to put lettings on the market in a sudden rush but I think this effect will be temporary. So much for all these BTlers being forced sellers and flooding the market with sales. Surprisingly this has not happened.
I suspect NU labour might pull a trick re social housing and empty BTl flats.
9. Stevie Dee said...
#4, lol.. dirt miester.. and i ain't following that bear.. lol
10. mark wadsworth said...
Drewster, you hard hearted g1t, you have hit all three nails on the head.
Warming to my theme of "Who's the smuggest around the dinner table?", just imagine you were a former BTL landlord who had sold off his flats over the past few years and then capped it all by selling to rent late last year.
(That's why I'm not too keen on Japanese Uncle's ideas for retrospective taxation on a different thread).
11. paul said...
"bear porn" - Damn, I was hoping for some hot grizzly-on-grizzly action....
Something for the weekend?
12. sold out said...
Ha ha ha absolutely brilliant post fancy pants this has made my day.
Isn’t this another dismissal of the spin that we continue to hear from all the estate agents, mortgage lenders, government officials, economic experts etc
“Sound fundamentals will support the housing market”.
Unemployment, Repossessions, bankrupts are all on the rise and now confirmation that there is a huge over supply in rental properties pushing down rents.
Not long to go now before we will see a huge amount of forced sellers coming to the market. House prices will then really start to tumble.
13. Davidg said...
but.. but I thought there was a lack of housing in the UK, splutter?
14. Stevie Dee said...
#7, lol.. there has to be someone who lowers the tone.. lol
15. montesquieu said...
Just had all of this this confirmed from personal experience: when looking to rent for the first time 3 years ago I had an awful trouble finding a decent place. Looking this time, I was spoilt for choice. The laughable thing is that my new landlord truly believes that she'll get her (mid-2007) asking price again in in three years time and is 'just letting till things 'get back to normal'. She's 58 and was hoping to sell up on retirement, been in the place 20 years (and has no mortgage) and was getting by renting rooms to lodgers - as a primary school teacher she wasn't earning much. She really doesn't get it that the good times are cancelled indefinitely.
Place was on for sale at £650k for over a year (the going rate for a large 4 bed-double garage plus study and big mature garden round here in the berkshire-surrey-bucks m4 m3 triangle). My rent is £1600, a pitiful yield of 2.5% on that price but still only 4%at a perhaps more achievable pre-2002 price of £400k (and that would be a 38% drop - ouch!).
Meanwhile my old landlord in Somerset, house on sale for for a 15 months now, has dropped his price from £500k to £400 (20% drop) and told me he has just had his first offer - of £350k, which is less than he paid new build in 2002. Given my rent was £1000 a month and his mortgage was £1600, he might well have to take it too!
Sadly this week I visited a friend who last year bought a 3-bed newbuild for £299k (got his stamp duty paid too!), but chose to remortgage and rent out his old place (on which he had £100k equity at the time) to get a deposit for the new place, rather than sell up. He's stuffed on both properties now and has almost certainly lost most if not all of that £100k between the old place and the new one.
I did try to warn him at the time but like a lot of people out there he was certain property was a one-way bet (he's only 35 so doesn't remember last time). He is not the only one.
16. yorkshireman said...
Agreed sold out. They tried rearranging the deckchairs on the Titanic, now it seems they are overloading the lifeboats as well. Maybe Stuartz band will keep on playing as it all sinks below the waves.
17. Stevie Dee said...
#Monte 9.. "to try but fail is no disgrace"
18. montesquieu said...
@ yorkshireman @ 10
haven't you heard? mr arsetz is moving to a rock in the north atlantic called Cape Verde (his latest hot tip for property investment).
This is what the BBC web site says about the place:
During the 20th century severe droughts caused the deaths of 200,000 people and prompted heavy emigration. Today, more people with origins in Cape Verde live outside the country than inside it. The money that they send home brings in much-needed foreign currency.
Increasing numbers of Europe-bound migrants have been intercepted in Cape Verde waters. From the mid-1990s, droughts cut the islands' grain crop by 80%, and in 2002 the government appealed for international food aid after the harvest failed.
19. sold out said...
maddison@0204pm
"So much for all these BTlers being forced sellers and flooding the market with sales. Surprisingly this has not happened."
Unsurprisingly these things take time.Its not long before they start having to sell,simply because they are being squeezed by the unavailabilty of morgages at a good rate and the inability to raise rents due to the obvious oversupply.There is only so long that they can continue taking monthly losses.
The only thing missing in this crash are the forced sellers, when they arrive en-masse over the next few months there will be carnage.
20. voiceofreason said...
Had an odd opinion from a mate in the pub last night.
His take is that he is in the phosphate with neg equity and Northern Crock SVR "through no fault of his own".
Er excuse me, nobody forced him to to purchase the house a few years back, then spend another 20% of the value doing it up, then MEW on top of that.....
21. voiceofreason said...
I also heard that valuers are really turning the screw, and a lot of properties are already being valued at 2002 prices.
22. Will said...
Nowhere else for property investors to turn. Tried to sell - couldn't , Tried to rent - couldn't.
Soon they will realise they made the biggest misssteak of their lives.
OOOOps
23. fancypants said...
glad you all enjoyed it. I'm just happy to see that the VI notion that an HPC will push rents up to compensate BTLers is finally started to get nailed.
24. maddison said...
Sold out. I know I am waiting to see with interest what happens. The problem is that I know alot of people who are still in the BTL game, admittedly they bought a few years ago but they seem in no rush to sell. Most are rich anyway so a bit of a knock on the mortgage/rent is not a problem. One mate who is not rich in any way says he doesnt want to sell as he needs the certainty of a rental income as he is a freelance jounalist. I think we underestimate just how many people in their 30's and 40's seem to have alot of cash.
25. Friend_of_the _stars said...
I think a number will jump ship when they realise that their 'investment' is a depreciating laughable piece of poorly built cr@p.
26. South East London Mate said...
I rent a nice riverside flat (but bad area) in Thamesmead for 3 years. The landlord bought it for £260,000+ 4 years ago. I pay £840 per month up from £750 per month. I have just opened a letter addressed to my flat. I have suffered fraud from people ordering goods to my address (bad area affect) so I open everything in case it is fraud. However this letter was from a morgage company trying to help my landlor who is in £1000+ morgage arrears. Obviously my rent is not covering the mortgage and prices have dipped at least 30%. What should I do? could I get stung if the house gets repo'ed?
Glad in a way, shows these greedy BTL'ers have no concept that prices can fall.
27. mark wadsworth said...
Maddison, Monty, the problem with our anecdotal evidence is that it's difficult to build an overall picture.
FWIW, the last people I talked to who are in this 'mess' were the same as Monty's last example - they'd made massive gain on old home and bought a new one two and a half years ago and all their lovely profits are ... gone. They say they will rent it out and hang on for ten years if that's what it takes to recoup their investment.
28. paul said...
"I'm just happy to see that the VI notion that an HPC will push rents up to compensate BTLers is finally started to get nailed."
I for one, will drink to that.
29. montesquieu said...
@ mark w @ 17
that's a good point - there are a lot of people around who seem to be immune. My heart goes out to that mate though - along with the stamp duty and fees being paid for him - how nice of the builders! - this was 2007 btw (what's that, maybe £12-15K), plus a subsidised mortgage at 3% (which resets in less than a year) - what's that worth over 2 years, maybe another £12K - he was almost in negative equity before he started in terms of real house value.
When the mortgage resets to SVR - this is a family guy with three kids on £50k a year - he's up for another maybe £800 a month He'll be lucky to manage, if not it will be two properties on the market not one, and potentially two families out on their ear.
This whole thing is only just starting to kick off.
30. montesquieu said...
@ South East London Mate @ 26
If I were you I'd get out of there ASAP and make sure you extract your deposit from the final month's rent. The reposessing bank has no duty whatsoever towards you and there have been horror stories of people getting a week or less to move out after lenders enforce a reposession order from the courts.
31. paul said...
South East London Mate - show the letter to the letting agent - part of the Shorthold tenancy Agreement should be that the landlord agrees to pay his mortgage.
If there was no agent, stop paying rent immediately, and move.
32. paul said...
I talked to an EA who candidly said that one of their tenants arrived home to find all of the locks changed, with a notice on the door from the bank.
You can sue of course, and claim costs back from the landlord, the agent (especially if they did not check up on the credit record of the landlord) and sometimes the bank for forcible eviction.
33. South East London Mate said...
Thank you for the advice but I have a small issue. The envelope was not addressed to me and I rent through an agent so do not know who the landlord is. I recently got hit with fraud people ordering off mail order companies under my address so I opened for that reason. If I complain to the estate agent, will they question why I opened the letter? My rent comes out in the next few days and I have a 6 week deposit. I don't wanted to get shafted but I'm uncomfortable about not paying the rent.
34. maddison said...
Strictly speaking everyone should get 1 months notice to quit. I believe this is under protection from eviction act 1977. Consult your Citizens advice bureau or shelter charity. KNOW YOUR RIGHTS
35. little professor said...
I'm currently looking for a new place to rent, and the quality of these city centre BTL flats has really appalled me. I can't believe people paid the prices they did for such cramped and poor quality rabbit hutches. Even though the rents have fallen by a quarter to a third, there's still no way I'd go anywhere near them.
Unfortunately rental prices on houses and older flats seem to be on the rise.
36. nooneo said...
little professor
Where are you looking ol' bean, if that's not an impertinant question ?
37. drewster said...
I concur with Little Prof, the quality of many new-build apartment blocks is highly suspect. A couple of years ago I spent some time living in a shoddy new-build block in an urban centre in the north of England. The faults weren't immediately apparent (and I admit I too fell for the logic of "it's new, what could possibly go wrong?"); but plenty of faults manifested themselves after a short period living there. Friends living in nearby had similar problems with their buildings. Luckily the letting agents were always keen to repair wherever possible, because they were so grateful to actually have stable paying tenants.
Ultimately these modern blocks were built for BTL investors who often didn't even know the area, let alone view the completed project. There was no incentive for the builders to create quality or substance; it just had to look good in the marketing photos. The investors really are suckers. A fool and their (borrowed) money are soon parted.
38. Fingerbob69 said...
to #34 ...it's called 'flight to quality'
To all those who could be/are tenants where the landlord is or is about to be ...repossed eg#26... make the bank/morgage-holder awhere that you are the tenant in the property...and a third party such as citezens' advice.
You can not be asked to move out until ownership has transfered from one party to the next. As the sitting tennant you are entitled to be kept informed. AND where it is landlord requiring pocession (for a reason that does not contradict the original tennancy agreement) the (new) owner of the property must give you a minimum statatory 2 months notice... do not be bullied!
Always check with CAB for the latest rules etc... what do i know? ...I'm just a letting agent!
to #13 riiiight! I have this arguement with my boss nearly every week. (We're estate agents by the way). I say there is no shortage... if there was, prices would still be rising, despite everything. He says there is and that it is only the banks' unwillingness to lend holding back the 'flow'.
What about affordability? i say?
Ha ha! he says... quite right too... we need that to.
To which I reply "Until the banks lend, no one will buy. The banks cannot afford to lend in a falling market (unlike in the early 1990's) Furthermore, until property is at x3 average income, people can't/wont buy anyway... affordability boss!"
"And.." I add "if there is a shortage of homes for people to buy(live in) ...where are all the homeless people?...'cos' i can't see 'em! ".