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Ash4781

Landlords Snapping Up Cheap Homes As Average Rents Continue To Fall

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http://www.google.com/hostednews/ukpress/a...bmQF_EdWUkxlohg

Investment landlords are taking advantage of house price falls and record low interest rates to increase their property portfolios, research has shown.

Around 16% of letting agents said buy-to-let landlords increased the number of properties they bought during the second quarter of the year, up from only 8% during the first three months.

The Association of Residential Letting Agents (ARLA) said the move was being driven by the dramatic falls in the Bank of England base rate seen between October and March.

Half of letting agents said they thought landlords were returning to bricks and mortar because of the minimal returns available on savings accounts.

At the same time, house price falls have made properties cheaper to buy, boosting their rental yields, while lower interest rates are reducing mortgage repayments, although there is still a shortage of buy-to-let loans.

Cheaper property prices have boosted the yields landlords can make on houses to 5.1%, up from 4.8% during the first three months of the year, while annual rents are now the equivalent of 5% of a flat's value, up from 4.9%.

But the rise in yields masks a continuing fall in average rents, as supply in the private rental sector continues to outstrip demand due to a glut of so-called accidental landlords who are renting out their homes because they have been unable to sell them during the housing market downturn.

The average monthly rent on a house fell to £1,570 during the second quarter, down from £1,682 during the previous three months, while the average rent on a flat is now £987, down from £1,013 during the first three months of the year.

Ian Potter, operations manager of ARLA, said: "Each quarter we glimpse a bit more activity as the bargains get snapped up and confidence is restored in buy-to-let as a viable long-term investment vehicle, particularly if the returns are rising too."

Jump in for a slice of the falling rents pie. The yields still look too low compared to risk free rates but as ARLA suggest it's really just a gamble on the capital gain. For the yield to improve though considering the current oversupply in rentals, and falling rents it'll have to rest on the capital values. Repo's and receivers of rent for BTL are rapidly rising combined with reduced equity and lack of affordable BTL loans. Not sure about the margin calls area though.

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Investment, and landlord, in the same sentence. I am gob smacked!

Not really. I encourage anyone with loose capital or credit lines to buy up all the distressed property, as it will only exacerbate he situation leaving a much reduced bottom line in five to ten years for now. Remember those 'sound' fundamentals...things ain't getting better for a long time.

This will clear out the chaff.

Edited by cashinmattress

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The average monthly rent on a house fell to £1,570 during the second quarter, down from £1,682 during the previous three months, while the average rent on a flat is now £987, down from £1,013 during the first three months of the year.

These average rental figures must be heavily skewed by London. I can think of one house in my area (Darlington) where the rent wanted is £1600, with the vast majority being under £700 a month. I suppose its similar to the 'average' wage of £25,000.

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8 million economically inactive, with the country insolvent and bankrupt as a result of the gambling losses of the banks being passed onto the taxpayer.

Mervyn Knut (his predecessor) and his comrades that the Bankrupt of England did everything in their power to encourage have played a blinder. That they talk of moral hazard is a disgrace bigger than MP's expenses, as they have been the fount of it for so long.

Th UK economically is finished in comparison to any recent historical measures. The financial raid that has occurred on the finances of the population and the remnants of the functional economy is irreversible .

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Guest eight
These average rental figures must be heavily skewed by London. I can think of one house in my area (Darlington) where the rent wanted is £1600, with the vast majority being under £700 a month. I suppose its similar to the 'average' wage of £25,000.

Hello Fossildog.

Just out of interest, where is the £1600/month one?

I was saying on another thread that I can't understand how Darlington has a functional economy, house prices and wages being so out of kilter, although I suppose it's the same everywhere hence this site.

eight

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