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Number Of House For Rent Vs For Sale

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An interesting thing is occurring in my local Berkshire town. According to Globrix, the number of rental properties coming on to the market is starting to dwarf the number of new properties for sale. Historically, although I do not have any data to hand, my impression has always been that houses for sale vastly out number houses for rent. The opposite now appears to have become the case.

There could be a number of reasons for this:

  1. It is a university town, so the number of new rental properties may be distorted by student lets becoming available
  2. The number of new houses listed for sale may be being ‘held back’ by the requirement to have a HIP in place before advertising
  3. The number of rental properties may have remained constant and the number of new houses for sale may have dropped (due to the ‘supply shortage’ we are hearing about from the industry). I do not think this is the case though.
  4. Renters may be moving from sole occupancy flats to shared houses
  5. People may be deciding to ‘hang on’ to current houses and rent them out until ‘the market improves’

Unfortunately, I do not have historical data on the average number of properties available for sale vs the number available for rent. Does anyone have any idea where I could get this data from?

The point is, if the reason for the change is because of point five listed above, we are slowly building up a huge surplus of ‘pent up sales’. If people are moving, buying a new house and not selling their old one, then this will be why there is a lack of new stock coming in to the market. I do not believe that rental demand will increase – mainly because in a recession people economise on housing and either move back in with parents, move from a single occupancy flat to a shared house or if they are a home owner, rent a spare room out thus increasing supply. These factors, coupled with the cessation of immigration from Eastern Europe suggests that demand for rental properties will decrease. In turn, this would indicate that we will eventually face a tsunami of supply hitting the market when these ‘reluctant landlords’ realise that there is an oversupply of rental property on the market, interest rates will have to go up and that property prices are continuing to decline.

I am starting to think that the trigger will be tax increases after the next election??

Edited by Pond321

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Todays news

The number of young men and women living with their parents has shot up over the last year, according to the latest figures seen by Newsbeat.

http://news.bbc.co.uk/newsbeat/hi/the_p_wo...000/8057167.stm

The young are loosing there jobs in there thousands and moving back in with mum and dad.

These people either rented flats or house shared...

I am personally fidning it much harder to rent out a spare room due to competition, less people looking for rooms and more rooms/competion available.

Edited by moosetea

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I think your point 5 is very likely the best explanation.

I know people in a rental chain, each one renting a house from somebody that can't sell at the price they want.

They end up paying tax on their rental income yet pay their rent out of net income.

Sentiment has not turned.

VMR.

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I think your point 5 is very likely the best explanation.

that coupled with the fact that they can't afford the mortgage, so they let it out & move in with parents.

This won't work though with the majority because they WILL have rental voids, as I am seeing locally on many properties. The 3 bed semi next door to me has taken 8 months (I kid you not) to rent out. One of the better parts of Osset, based on local knowledge (although it's a sh1thole from a national perspective ;) ).

Normally this house would have gone within a week.

She has had to drop the rent down from £630 but I don't know what it went for & the person who is renting does not work & has 2 little kids. She drives a newish car and is in her early 20's I would think.

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An interesting thing is occurring in my local Berkshire town. According to Globrix, the number of rental properties coming on to the market is starting to dwarf the number of new properties for sale. Historically, although I do not have any data to hand, my impression has always been that houses for sale vastly out number houses for rent. The opposite now appears to have become the case.

There could be a number of reasons for this:

  1. It is a university town, so the number of new rental properties may be distorted by student lets becoming available

  2. The number of new houses listed for sale may be being ‘held back’ by the requirement to have a HIP in place before advertising

  3. The number of rental properties may have remained constant and the number of new houses for sale may have dropped (due to the ‘supply shortage’ we are hearing about from the industry). I do not think this is the case though.

  4. Renters may be moving from sole occupancy flats to shared houses

  5. People may be deciding to ‘hang on’ to current houses and rent them out until ‘the market improves’

Unfortunately, I do not have historical data on the average number of properties available for sale vs the number available for rent. Does anyone have any idea where I could get this data from?

The point is, if the reason for the change is because of point five listed above, we are slowly building up a huge surplus of ‘pent up sales’. If people are moving, buying a new house and not selling their old one, then this will be why there is a lack of new stock coming in to the market. I do not believe that rental demand will increase – mainly because in a recession people economise on housing and either move back in with parents, move from a single occupancy flat to a shared house or if they are a home owner, rent a spare room out thus increasing supply. These factors, coupled with the cessation of immigration from Eastern Europe suggests that demand for rental properties will decrease. In turn, this would indicate that we will eventually face a tsunami of supply hitting the market when these ‘reluctant landlords’ realise that there is an oversupply of rental property on the market, interest rates will have to go up and that property prices are continuing to decline.

I am starting to think that the trigger will be tax increases after the next election??

I've stopped believing in tsunamis, triggers etc. There was much talk of a 'flood of BTL properties' hitting the market after the 2008 CGT changes, it didn't happen. I've come to the conclusion there is never going to be a moment of capitulation in the British property market, like some housing equivalent of VE Night. It's going to be a slow, painful fight down to the bottom. I am STILL getting people saying to me things like 'why are you still renting, surely you could afford to buy property, now is a good time, you're just giving your money to a landlord' etc etc etc

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Easy analysis really - They cant sell because they wont lower their asking prices so they rent the property out instead. This can only happen for so long as there becomes an over supply of rental properties.

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There could be a number of reasons for this:

I am starting to think that the trigger will be tax increases after the next election??

Well ordered and thought out post, in my opinion.

Probably all of the reasons are valid and no amount of research will ever prove what is really happening.

The prinicipal valid point is that rentals ARE increasing out of proportion to sales.

And we are seeing a gradual attrition - growing redundancies, high LTR requirement by lenders, gradually

increasing mortgage rate (despite the historically ludicrous IR), growing collapse of small companies,

incessant reduction of BTL amateurs, increasing number of renters returning home, constant erosion of

selling prices (despite recent attempts by EAs and buyers to raise asking prices).

And, as you point out, this is BEFORE tax increases and rising Interest Rates.

It seems to me a completely illogical concept, that, given the present circumstances,

anyone could actually expect house prices to go up.

It simply does not compute.

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I've been told this when viewing a flat for rent. It didn't endear me to the place.

Hah hah - it is not really a USP........

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Hah hah - it is not really a USP........

you dont think so? if you aren't looking to stay for a long time it might be.

knowing that my prospective landlord was a reluctant owner who also had the flat up for sale but couldn't afford to sell at the current market price allowed me to negotiate a tasty discount 6 months ago - and he even agreed to take it off the market. This month i turned the screws even further knowing that a couple of months void would send him into the abyss.

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#5 is the answer. I have been tracking it in Edinburgh for over a year.

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