Will Rents Fall During A Crash?

[laurejon]

And for students, even you are exposed to higher rents from those pretending to be offering protection.

Many of the rumours hanging over Imperial College halls of residence were answered today at the 4th meeting of the ICU accommodation committee. As expected, hall rents are set for another 'above inflation' increase. Rents for the 2004-2005 session will be rising by an average of 4.8%, with Beit and the other premier halls seeing a 6% increase. To compensate for this rents in the halls that urgently require renovation, Fisher and Southside, will only see modest increases of 3% next year. This rent increase, considered in conjunction with the large jump imposed last year of an average of 10%, will bring an ensuite, single room in Beit up to a cost of £135 per week.

Although this was important information, some of the other issues discussed at the meeting were even more startling. With three halls currently earmarked for renovation, Fisher, Linstead and the Southside complex, it was made clear that the cheapest refurbishment option, with a total saving of nearly £10million, would see both Linstead and Southside shut at the same time. Southside is currently earmarked for closure in June 2005 but if Linstead were to close at the same time the Fisher refurbishment would be pushed back to summer 2007 at the earliest. It was also suggested that Southside, due to the current high costs of maintenance, might not be reopen in October 2004, which would come as a shock to those reapps and subwardens already planning to live there next year.

This possible double closure, taking 550 beds out of the accommodation system, would see a dramatic decrease in hall space, putting serious pressure on the first year guarantee. Rough calculations carried out by Katherine McGinn, Deputy President for Education and Welfare, showed that, in the event of both halls shutting at the same time, the first year guarantee could just be met if all available space in Imperial College halls was utilised. This however takes into account space at Clayponds and Parsons House which are currently used by older undergraduates and many PhD students new to Imperial. A need to find alternative accommodation therefore will become pressing if both Southside and Linstead were to be shut at the same time. When questioned about the first year guarantee, Sharine Brown, Head of Residences, admitted looking into alternative accommodation for first year undergraduates that could be obtained on a short term basis to cover any shortfall in October 2005.

The reduction in available hall space for the 2005-2006 session has also been increased by two other strategic moves currently being undertaken. The first will see the closure of Brabazon in June, with the loss of 70 postgraduate spaces. The second move is the rolling reduction of capacity in Evelyn Gardens which will see many small double rooms converted into larger, more expensive singles. The loss of Brabazon has been on the cards since the start of this academic year but will only add to the confusion about where future postgraduate students will live when they arrive in London. As the Rector, Sir Richard Sykes, has made clear on many occasions recently, the value of postgraduate research at Imperial has been promoted due to extra money that can be attracted to college. The loss of good housing for incoming PhD students may have a negative impact, coupled with London’s high living costs, when Imperial tries to attract the cream of research talent.

Other questions were also raised about facilities that could be lost if the Southside complex were to close early. It was made clear that the Health Centre, dentist and Southside gym would remain open even if the hall above was to close in 2004. However, many new questions have now been raised as an outcome of this meeting.

[Marina]

Thank you for the English lesson, I will take that on board should I be required to create a presentation for a potential client.

I too like yourself have both Spell Checker, Grammer Check, and Thesaurus however feel it a bit over the top to use it to post messages on a house price forum.

Still whatever rocks your boat.

The important thing is to appreciate that todays rents will be going up, by your own valition and many others on the board renting is producing results in terms of savings. These savings are being eyed by Government and Landlords as disposable income. I suspect that one or the other will be claiming it soon.

<{POST_SNAPBACK}>

Okay, hands up, bit cheeky. But, through observing the world around me, I think that what I can only describe as 'contemporary English' e.g. as found in text messages and web forums is actually doing the language a lot of harm. One might argue I am an intellectual snob - but I am not. I am concerned that if standards are not maintained, in 20 years time our language will be unrecognizable and, therefore, not as widely or easily understood.

Thought your incorrect spelling of grammar was very clever.

Can't see how the Government are going to get at my 'savings' from renting. They already tax the interest. I am sure my Landlord will be very happy for me to rent again for another year when the contract comes up in December - for the same rent. I have never missed or been late with a payment and his property is in the same condition as when I moved in.

Incidentally I don't claim to be perfect and I use neither a spell check nor a grammar check. I had this stuff drummed into me at school. However, I have noticed that my spelling lately is getting a bit suspect - and I either have to accept I am getting old or assume that constant reading of incorrect spellings is beginning to confuse my brain. I guess if you see the same word spelt incorrectly enough times you begin to question the correct spelling.

[Marina]

Rentals are increasing... my rentals I charge are 15% higher than I charged last year!

You obviously don't live in the South East. I bet my landlord would like to know your secret. In 2001 the house I rent went for £1700 a month. It's £1000 now and has been for the last 18 months.

it's either increasing capital growth or increasing monthly profits.... tis that simple

Boy, the army of 2 bed flat owning BTL landlords round here will be mighty re-assured by your words. Just when it looks like there is a massive (and I mean massive) over-supply of new build and recent build flats - just when it looks like yields are disappearing down towards 0% - just when it is clear the price of their asset is falling daily (as newbuilds knock 30k off asking prices) - you arrive to let them know the rent will be going up.

Happy days are here again.

Keep taking whatever it is you're on.

<{POST_SNAPBACK}>

Edited June 8, 2005 by Marina

[Dr Hanibal Lecter]

<{POST_SNAPBACK}>

Sorry... my portfolio is in the South east (surrey) and the South west (somerset)... so no this is not some northern high yielder LL your being obtuse with......

If you paid £1700 in 2001 I think it was you that was the mug then and you've obviously realised you were being ripped off rather than rents dropping that much..... obviously they've dropped because that period was the time of most rapid growth therefore lack of demand in renting but to drop that much.... pleassseee thats plain lies!!!

ta ta

H

[laurejon]

I think the mechanics of supply and demand will always prevail.

Less opportunity to buy means more people renting. Sure I know of people who will put off leaving home, however they are in the minority and most will report its not ideal moving back into the parents house having spent a couple of years away at Uni or whatever.

Add in the factor that we must not mention (Immigration) and you are drawing up a huge amount of pressure in terms of demand. Sure the Gov will build more houses, and I think they will see this as the next way to spend the taxpayers money to bolster up the failing economy. Government always knows better how to spend your money than you do.

But there is no way we can build our way out of the current housing crisis, its too far gone. London is now shoulder to shoulder and totally overpopulated. The rents in London have always been obscene, and I dont suspect for one moment that will ever change.

[CrashCrash]

Furnished is cheaper for the simple reason.

The Landlord has more rights to possession.

<{POST_SNAPBACK}>

Believe you are joking about Furnished is cheaper thn unfurnished.

Its because when house prices go down it drags rent with it.

[Pedro]

I think that rents at the low end of the market may well go up - and it is at the low end that most immigrants and young people (including students) sit. However, at the higher end things seem to stay pretty much the same as far as I can tell. I will wait and see if I'm wrong! All I can say is that from what I can tell in this area now, 3-bed houses and above are going for a little less than they did a few years ago.

Also, something I don't understand - there seems to be a massive difference in the range of prices for renting compared to mortgages. In my area, you can just about rent a 1-bed flat for £500pcm, although 550 is more common. You can get a 2-bed flat for 550-650pcm a 2-bed house between 600-750pcm, but when you get to 3 and 4 beds, you seem to get ever increasing size and value (in terms of being detached, having a garden, garage, conservatory etc) quite quickly from 750 onwards (I've seen a 5-bed house for 900pcm!). There are lots of 3-beds available for between 750 and 800pcm. The difference in mortgage repayments for the same range of houses would be much more marked - you certainly wouldn't be able to get a 3-bed detached house for an extra £100 on your monthly repayments when compared to a 2-bed end terrace, but you can rent a 3-bed detached house for an extra 100pcm when compared to a 2 bed end terrace. So why is this so?

I hope this makes sense, it is something I have always wondered about.

[gone west]

I think that rents at the low end of the market may well go up - and it is at the low end that most immigrants and young people (including students) sit. However, at the higher end things seem to stay pretty much the same as far as I can tell. I will wait and see if I'm wrong! All I can say is that from what I can tell in this area now, 3-bed houses and above are going for a little less than they did a few years ago.

Also, something I don't understand - there seems to be a massive difference in the range of prices for renting compared to mortgages. In my area, you can just about rent a 1-bed flat for £500pcm, although 550 is more common. You can get a  2-bed flat for 550-650pcm a 2-bed house between 600-750pcm, but when  you get to 3 and 4 beds, you seem to get ever increasing size and value (in terms of being detached, having a garden, garage, conservatory etc) quite quickly from 750 onwards (I've seen a 5-bed house for 900pcm!). There are lots of 3-beds available for between 750 and 800pcm. The difference in mortgage repayments for the same range of houses would be much more marked - you certainly wouldn't be able to get a 3-bed detached house for an extra £100 on your monthly repayments when compared to a 2-bed end terrace, but you can rent a 3-bed detached house for an extra 100pcm when compared to a 2 bed end terrace. So why is this so?

I hope this makes sense, it is something I have always wondered about.

<{POST_SNAPBACK}>

Rental demand is higher for smaller properties. Therefore, higher equivalent rents.

[Pedro]

Rental demand is higher for smaller properties. Therefore, higher equivalent rents.

<{POST_SNAPBACK}>

Such a simple answer. Now I feel quite stupid.

Why is rental demand higher though? Surely sharers and students account for an increase in multiple bedroom housing rentals? Are there stats available on the rental population - would be interesting to see if so.

[gone west]

Such a simple answer. Now I feel quite stupid. 

Why is rental demand higher though? Surely sharers and students account for an increase in multiple bedroom housing rentals? Are there stats available on the rental population - would be interesting to see if so.

<{POST_SNAPBACK}>

Renters are usually in such a position as to be unable to buy. (Read: afford). They are young and single (usually). If you had a 5 bed house, would you rent it to a bunch of students that could just walk out the door at any point? No, you would want a stable family. Not many of them renting compared to young singletons. I am sure BTLlondon could dig up a few rental stats as he always does his research, right BTL?

[Marina]

Sorry... my portfolio is in the South east (surrey) and the South west (somerset)... so no this is not some northern high yielder LL your being obtuse with......

If you paid £1700 in 2001 I think it was you that was the mug then and you've obviously realised you were being ripped off rather than rents dropping that much..... obviously they've dropped because that period was the time of most rapid growth therefore lack of demand in renting but to drop that much.... pleassseee thats plain lies!!!

ta ta

H

<{POST_SNAPBACK}>

I may be a lot of things but a liar isn't one of them. Back in 2000 and 2001 this area was still enjoying the fruits of the dot com boom - and there were loads of corporate lets. I wasn't stupid enough to be out of the market then. I STRed in Dec 2003. Maybe my next door neighbour is lying to me - maybe its the letting agency - but they both said this house used to let for £1700pm. Personally I can believe it because, in those days, you often saw bog standard 4 bed detacheds for over 2k. As I say, for whatever reason, loss of corporate lets, whatever but I now pay 1k for a house that certainly would have sold for 400k last summer - one a few doors from me - a bit bigger - went for 415k last autumn according to nethouseprices.

If it went on the market now, and the landlord wanted to SELL it rather than waste an EAs time and money, I reckon it would go for 375k. Not much of a yield. But the landlord has owned it for 18 years so I guess he is still a happy man.

Local agents windows are full of 4 bed detacheds for £1200. You can get them (like I did) for a grand because there are shedloads to choose from.

You can try to convince yourself you are getting 15% more for your properties. You are either lying or you were renting them cheap in the first place. Nowhere round here has seen a rent increase in the last couple of years. There is an absolute glut of flats to rent - over 1000 properties to rent - every week - in the local property paper. Its a renter's market.

[Marina]

I wonder what it feels like to have a portfolio worth say £1m one minute - regardless of whether rents are or are not covering the loans.

And then, abracadabra, couple of years later it's worth 500k.

Must be unpleasant.

[Waiting Patiently]

I wonder what it feels like to have a portfolio worth say £1m one minute - regardless of whether rents are or are not covering the loans.

And then, abracadabra, couple of years later it's worth 500k.

Must be unpleasant.

<{POST_SNAPBACK}>

Particularly if all of that 500k is owed to the bank.