Saturday, Feb 04, 2017

Blip or change of trend ?

Telegraph: Unprecedented in recent times': Rents across the UK set to fall this year

Rents have been falling in London and the south-east due to the surge in properties hitting the market after landlords purchased them before April to avoid a hike in stamp duty for buy-to-let homes. Now this decline may reach the rest of the country. 

Posted by techieman @ 01:57 PM (11348 views) Add Comment

11 Comments

1. mombers said...

But what about the promised rise in rents due to increased landlord taxes?

Sunday, February 5, 2017 09:43AM Report Comment
 

2. britishblue said...

They claim that rents are falling due to the surge in properties purchased by landlords. I disagree. Being in the business, I think it it is much more to do with affordability. What I am seeing in London is that every time people move house they move a little further outwards because they cant afford the rent. the press might try and sanitised it and say it is down to increased availability but it run deeper than that.
Landlords could be heading for a perfect storm of a property market that is dropping in price, rents that are dropping in revenue, aiightemig of the tax laws and at some point in the future increased interest rates

Sunday, February 5, 2017 06:42PM Report Comment
 

3. reticent said...

If that's the explanation they give, it makes no sense, Techie. There's no way the landlords in question would have been desperate to avoid a 3% fee but happy to live with 9 months of voids.

Here is a better explanation: BTL pushes up rents by pricing out increasingly wealthy ppl and forcing the median income of the median tenant up. BTL has died out since the April reform. We are now seeing the unwinding of 15 years of rents rising out of kilter with incomes.

Sunday, February 5, 2017 09:06PM Report Comment
 

4. techieman said...

Hi Reticent.

I'm a bit confused by the 9 months 3%fee you are quoting.

At the time I think a few here were saying that the 3% stamp duty rise would be a classic buy now.. last chance kind of deal. The real question to my mind is that if rents do start to fall and yields have to rise ... with or without rate interest rates rises in general... then prices are gonna have to fall to provide the yield.

Sunday, February 5, 2017 11:42PM Report Comment
 

5. reticent said...

Sorry, yes. In retrospect, that was flawed logic and at the least, poorly explained.

You and I, and I believe others, pointed out that rents would take a bit in the early summer as a result of the rush to buy. But people won't have brought forward purchases from this far down the line. Btl is down over the year, surely. I read numbers from April onwards were 60% down on the previous year, and that's just CML data IIRC - the hit to cash buyers is likely to be as significant (as they have more investment options, although the fee only represents 3% of the capital put up, as opposed to 12% for leveraged BTL, so perhaps not).

If rents are still falling and expected to fall further it is presumably not because that influx of rental stock is still dribbling through. That would mean 9 months of voids.

If rents are still falling and expected to fall, its surely because demand has fallen as well, which is what you'd expect if the drop in BTL purchases is in excess of the drop in total purchases (i.e. some previously-discouraged FTBs have bought homes who otherwise would not have, alleviating rental demand.)

I will check the last few CML press releases for evidence of this when i get a chance.

Monday, February 6, 2017 06:10AM Report Comment
 

6. icarus said...

'surge of properties hitting the market after landlords purchased them". Purchased from whom? Were they mainly new builds, previously owner occupied, previously unoccupied and renovated, or previously let? Probably the last, in which case the 'surge' would have been just a change of ownership with little effect on supply or price.

Monday, February 6, 2017 09:08AM Report Comment
 

7. hpwatcher said...

I was thinking that landlords had been driven out of the purchase market due to stamp increases....

Monday, February 6, 2017 09:11AM Report Comment
 

8. khards said...

A lot of this is down to Universal Credit reducing the amount of housing benefits people can claim

https://www.theguardian.com/society/2017/feb/07/universal-credit-flaws-pushing-claimants-towards-debt-and-eviction-warning

Wednesday, February 8, 2017 08:17AM Report Comment
 

9. techieman said...

Khards... fancy posting that one. I'm not sure what the calculation of the rent payment element of UC is but presumably - in some places at least - LLs can't be too chosey !

Wednesday, February 8, 2017 04:11PM Report Comment
 

10. khards said...

It the element of working 16 hours per week or having your housing benefit reduced for single mothers with x number of kids any age and the removal of extra housing benefit for families of 3+ children that I would assume have the biggest impact on rents.

Thursday, February 9, 2017 11:18AM Report Comment
 

11. mombers said...

HB cuts are a cruel way to reduce rents for everyone but a good demonstration that government subsidies to private landlords push up rents

Friday, February 10, 2017 08:44AM Report Comment
 

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