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Surging B T L Is Causing Rents To Fall

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http://www.bloomberg.com/news/2011-02-18/u-k-home-rents-fall-for-second-month-as-supply-surges-lsl-property-says.html

U.K. Home Rents Fall for Second Month as Supply Surges, LSL Says
By Scott Hamilton - Feb 18, 2011 12:01 AM GMT
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A gauge of U.K. residential rents fell for a second month in January as more property investors entered the buy-to-let market, pushing up supply, LSL Property Services Plc said.
The average monthly rent for a home in England and Wales fell 0.3 percent to 682 pounds ($1,102) from December, the lowest average since July, the Newcastle, England-based company said in an e-mailed statement today. From a year earlier, it was up 4 percent.
While rents rose last year as prospective homebuyers were put off purchases as banks curbed mortgages and the government’s budget squeeze undermined confidence, lending to landlords is now increasing, bolstering the number of properties for rent, LSL said. The number of buy-to-let loans rose 6 percent in the fourth quarter, according to the Council of Mortgage Lenders.

And why are the Koalishon so keen to get the banksters lending to the BTL sector?

Yup--to try to keep the bubble going.

There is only one thing that will slow the juggernaut--massive unemployment. A sad way to have to kill the monster but die it must.

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And why are the Koalishon so keen to get the banksters lending to the BTL sector?

Yup--to try to keep the bubble going.

I remain... confused... by the coalition. I can only assume that they think the situation is recoverable without deleveraging - otherwise, wouldn't the sensible thing have been to let it crash and burn and let labour take the blame?

But that would indicate that they think unemployment won't shoot up... all very odd.

Maybe they just think it's better for the bank to repossess a bunch of BTL properties (and then collect the rent from the tenants?), rather than hand over a lot of photo-ops of families being turfed out of their homes.

Alternatively, well it is the tories...

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http://www.bloomberg.com/news/2011-02-18/u-k-home-rents-fall-for-second-month-as-supply-surges-lsl-property-says.html

U.K. Home Rents Fall for Second Month as Supply Surges, LSL Says
By Scott Hamilton - Feb 18, 2011 12:01 AM GMT
inShare
1More Print Email
A gauge of U.K. residential rents fell for a second month in January as more property investors entered the buy-to-let market, pushing up supply, LSL Property Services Plc said.
The average monthly rent for a home in England and Wales fell 0.3 percent to 682 pounds ($1,102) from December, the lowest average since July, the Newcastle, England-based company said in an e-mailed statement today. From a year earlier, it was up 4 percent.
While rents rose last year as prospective homebuyers were put off purchases as banks curbed mortgages and the government’s budget squeeze undermined confidence, lending to landlords is now increasing, bolstering the number of properties for rent, LSL said. The number of buy-to-let loans rose 6 percent in the fourth quarter, according to the Council of Mortgage Lenders.

And why are the Koalishon so keen to get the banksters lending to the BTL sector?

Yup--to try to keep the bubble going.

There is only one thing that will slow the juggernaut--massive unemployment. A sad way to have to kill the monster but die it must.

I think it's less investors and more 'accidental landlords' who 'can't sell' causing a surge in supply as house prices fall further. I expect rents to keep falling along with HPI.

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http://www.bloomberg.com/news/2011-02-18/u-k-home-rents-fall-for-second-month-as-supply-surges-lsl-property-says.html

U.K. Home Rents Fall for Second Month as Supply Surges, LSL Says
By Scott Hamilton - Feb 18, 2011 12:01 AM GMT
inShare
1More Print Email
A gauge of U.K. residential rents fell for a second month in January as more property investors entered the buy-to-let market, pushing up supply, LSL Property Services Plc said.
The average monthly rent for a home in England and Wales fell 0.3 percent to 682 pounds ($1,102) from December, the lowest average since July, the Newcastle, England-based company said in an e-mailed statement today.
From a year earlier, it was up 4 percent.
While rents rose last year as prospective homebuyers were put off purchases as banks curbed mortgages and the government’s budget squeeze undermined confidence, lending to landlords is now increasing, bolstering the number of properties for rent, LSL said. The number of buy-to-let loans rose 6 percent in the fourth quarter, according to the Council of Mortgage Lenders.

And why are the Koalishon so keen to get the banksters lending to the BTL sector?

Yup--to try to keep the bubble going.

There is only one thing that will slow the juggernaut--massive unemployment. A sad way to have to kill the monster but die it must.

"From a year earlier, it was up 4 percent. exactly the same as CPI inflation then. So, in real terms = absolutely flat.

And the Housing Benefits cuts are coming, from April? Right?

In my area LHA will be cut by around 5% this year, and probably around the same next year.

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I remain... confused... by the coalition. I can only assume that they think the situation is recoverable without deleveraging - otherwise, wouldn't the sensible thing have been to let it crash and burn and let labour take the blame?

But that would indicate that they think unemployment won't shoot up... all very odd.

Maybe they just think it's better for the bank to repossess a bunch of BTL properties (and then collect the rent from the tenants?), rather than hand over a lot of photo-ops of families being turfed out of their homes.

Alternatively, well it is the tories...

I think the coalition's fear was that a crash and burn would also crash investors' sentiment, making the recovery difficult. I think their main goal is to "land this sucker" as gently as possible.

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Yeah, I can see yearly falls of 5% over the course of 5 years being much more likely than the 20% crash we had in 2008. Naturally, happening while IR's and/or inflation creep up. Can easily see 30% falls without the country even realising that it's happened.

This one's gonna get real stagnant.. pretty sure it's not gonna be headline crashes/ mass repos like the 90's.. we'll get exactly the same number of repos, they'll just be spread over about 4 years instead of occuring in one. So it'll never make the news.

Edited by DementedTuna

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Yeah, I can see yearly falls of 5% over the course of 5 years being much more likely than the 20% crash we had in 2008. Naturally, happening while IR's and/or inflation creep up. Can easily see 30% falls without the country even realising that it's happened.

This one's gonna get real stagnant.. pretty sure it's not gonna be headline crashes/ mass repos like the 90's.. we'll get exactly the same number of repos, they'll just be spread over about 4 years instead of occuring in one. So it'll never make the news.

I agree, unfortunately.

The problem is, I am still nervous about some kind of monetary collapse/'70s style inflation happening over that period, so the idea of holding onto my savings for 3-4 years while prices fall in real terms feels very risky to me.

It's probably what I'll do, though.

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I think the coalition's fear was that a crash and burn would also crash investors' sentiment, making the recovery difficult. I think their main goal is to "land this sucker" as gently as possible.

Can anyone find a video of the airplane landing at the end of "Airplane!"?

Ahh... pretty bad quality...

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"From a year earlier, it was up 4 percent. exactly the same as CPI inflation then. So, in real terms = absolutely flat.

And the Housing Benefits cuts are coming, from April? Right?

In my area LHA will be cut by around 5% this year, and probably around the same next year.

The cuts in HB have been delayed to sept I think because Clegg did not want to get even more slaughtered in the May local elections than he will anyway.

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The cuts in HB have been delayed to sept I think because Clegg did not want to get even more slaughtered in the May local elections than he will anyway.

Really?! :angry: B@stards.

Which cut? the LHH 50 to 30 quintile? Or the cap?

I think it was the cap, no?

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Really?! :angry: B@stards.

Which cut? the LHH 50 to 30 quintile? Or the cap?

I think it was the cap, no?

I think implementation was split to new contracts with the changes starting shortly with changes to existing later in the year so no one would get stung part the way through a 1 year contract, i.e. existing tenants got sensible notice, makes it seem fairer. I think giving more notice means that there will have been less controversy implementing the plan overall.

I actually think a more gradual introduction will be better for us:

If new contract rent levels are forced down (rather than everything at once) this sets a downward pattern so by the time the 2nd wave of changes come in (September?) the price set is lower than it would be if set now (thus helping maintain a downward pattern), ditto for the 3rd set of changes which come in (april?) 2012. I suspect some government economists will have worked out that this is way to reduce the amount the government pays out overall in the long term i.e. sets up a smoother more consistent fall.

Edited by koala_bear

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Yeah, I can see yearly falls of 5% over the course of 5 years being much more likely than the 20% crash we had in 2008. Naturally, happening while IR's and/or inflation creep up. Can easily see 30% falls without the country even realising that it's happened.

This one's gonna get real stagnant.. pretty sure it's not gonna be headline crashes/ mass repos like the 90's.. we'll get exactly the same number of repos, they'll just be spread over about 4 years instead of occuring in one. So it'll never make the news.

This is increasingly how I see things playing out. The whole shared-ownership thing means the state is much more at risk from a crash now than it ever was before and so slight nominal falls against a backdrop of actual devaluation in real terms is where we're very slowly heading.

Having said that, the amount of emails I'm getting from Pure Acquisitions and My BMV Deals suggests that things are definitely increasing on the 'forced seller' front.

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http://www.bloomberg.com/news/2011-02-18/u-k-home-rents-fall-for-second-month-as-supply-surges-lsl-property-says.html

U.K. Home Rents Fall for Second Month as Supply Surges, LSL Says
By Scott Hamilton - Feb 18, 2011 12:01 AM GMT
inShare
1More Print Email
A gauge of U.K. residential rents fell for a second month in January as more property investors entered the buy-to-let market, pushing up supply, LSL Property Services Plc said.
The average monthly rent for a home in England and Wales fell 0.3 percent to 682 pounds ($1,102) from December, the lowest average since July, the Newcastle, England-based company said in an e-mailed statement today. From a year earlier, it was up 4 percent.
While rents rose last year as prospective homebuyers were put off purchases as banks curbed mortgages and the government’s budget squeeze undermined confidence, lending to landlords is now increasing, bolstering the number of properties for rent, LSL said. The number of buy-to-let loans rose 6 percent in the fourth quarter, according to the Council of Mortgage Lenders.

And why are the Koalishon so keen to get the banksters lending to the BTL sector?

Yup--to try to keep the bubble going.

There is only one thing that will slow the juggernaut--massive unemployment. A sad way to have to kill the monster but die it must.

Strange that only yesterday we were being told that rents had surged 17% in one year.

I remain... confused... by the coalition. I can only assume that they think the situation is recoverable without deleveraging - otherwise, wouldn't the sensible thing have been to let it crash and burn and let labour take the blame?

But that would indicate that they think unemployment won't shoot up... all very odd.

Maybe they just think it's better for the bank to repossess a bunch of BTL properties (and then collect the rent from the tenants?), rather than hand over a lot of photo-ops of families being turfed out of their homes.

Alternatively, well it is the tories...

Occams Razor. i.e. we have numpties in charge.

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I think implementation was split to new contracts with the changes starting shortly with changes to existing later in the year so no one would get stung part the way through a 1 year contract, i.e. existing tenants got sensible notice, makes it seem fairer. I think giving more notice means that there will have been less controversy implementing the plan overall.

I actually think a more gradual introduction will be better for us:

If new contract rent levels are forced down (rather than everything at once) this sets a downward pattern so by the time the 2nd wave of changes come in (September?) the price set is lower than it would be if set now (thus helping maintain a downward pattern), ditto for the 3rd set of changes which come in (april?) 2012. I suspect some government economists will have worked out that this is way to reduce the amount the government pays out overall in the long term i.e. sets up a smoother more consistent fall.

I hope so. But IIRC, 2 or 3 moths ago they decided to bring the 50 to 30 percentile forward, to April 2011. But they may have changed that too. Who knows.

Another worry is that it seems that LHAs are paid by the Central Government, but set by local governments, with information from local letting agents. If this is true, well.... it is just stupid. Coz obviously local governments have a vested interest in "bringing money to the local economy", and therefore distorting upwards the LHA. I think I read something of the sort ("bringing money to the local economy") part) being said publicly, by a local politician, on record (!) in the Brighton local paper ("Argus"), few couple of months back. (Can't find the link now. Sorry.)

If they push it up, they are defrauding the central government tax payers.

Edited by Tired of Waiting

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Really?! :angry: B@stards.

Which cut? the LHH 50 to 30 quintile? Or the cap?

I think it was the cap, no?

lha50-30 for existing claims take effect in September I think

And the cap for existing claims take effect in Jan 2012

I think all new claims after April this year will use the 30 percentile and the cap

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I hope so. But IIRC, 2 or 3 moths ago they decided to bring the 50 to 30 percentile forward, to April 2011. But they may have changed that too. Who knows.

Can't quite remember the detail but I think the change from 50th to 30th was brought forward for NEW contracts from April, the change to existing will be implemented later, as will the cap.

So a small number of new contracts start the ball rolling on the downwards spiral.

If the landlords think they can find non HB tenants for what they want to charge good luck to them!

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lha50-30 for existing claims take effect in September I think

And the cap for existing claims take effect in Jan 2012

I think all new claims after April this year will use the 30 percentile and the cap

Can't quite remember the detail but I think the change from 50th to 30th was brought forward for NEW contracts from April, the change to existing will be implemented later, as will the cap.

So a small number of new contracts start the ball rolling on the downwards spiral.

If the landlords think they can find non HB tenants for what they want to charge good luck to them!

OK, thanks.

As private tenants, I think we compete more with new contracts than current ones, no? I mean, we are living in an ugly little flat, and are thinking about renting a better place, perhaps in the next few months. We will then have less competition from LHA recipients.

Not sure if current LHA contracts being reduced will help us much (as private tenants that is, as opposed to as tax-payers, of course.)

Edited by Tired of Waiting

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http://www.bloomberg.com/news/2011-02-18/u-k-home-rents-fall-for-second-month-as-supply-surges-lsl-property-says.html

And why are the Koalishon so keen to get the banksters lending to the BTL sector?

Yup--to try to keep the bubble going.

There is only one thing that will slow the juggernaut--massive unemployment. A sad way to have to kill the monster but die it must.

3 things:

  • It will likely be more "Accidental Landlords", rather than "Savvy Investors" increasing the number of BTL mortgages

  • We already have massive unemployment

  • Why do you use
    tags, rather than
    tags?

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Yeah, I can see yearly falls of 5% over the course of 5 years being much more likely than the 20% crash we had in 2008. Naturally, happening while IR's and/or inflation creep up. Can easily see 30% falls without the country even realising that it's happened.

This one's gonna get real stagnant.. pretty sure it's not gonna be headline crashes/ mass repos like the 90's.. we'll get exactly the same number of repos, they'll just be spread over about 4 years instead of occuring in one. So it'll never make the news.

The early 90s crash was a pussy, nominally speaking. IIRC prices only dropped about 12-13%. Adjusted for inflation though, prices fell circa 30% (of course back then there was wage inflation). As for repos, I suggest you compare the number of repos in 2008 (when prices fell) with those in 2009 (when prices rose) - what does that tell you? Also, take a look at the haliwide data for the early stages of the first part of the crash (ie late 2007 - early 2008) - what you'll see is that now it has resumed, the indices are following a very similar trajectory ie starting slowly but building momentum (the proper M-O-M falls didn't begin until mid 2008).

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OK, thanks.

As private tenants, I think we compete more with new contracts than current ones, no? I mean, we are living in an ugly little flat, and are thinking about renting a better place, perhaps in the next few months. We will then have less competition from LHA recipients.

Not sure if current LHA contracts being reduced will help us much (as private tenants that is, as opposed to as tax-payers, of course.)

Don't forget that the LHA reduction should have an ongoing effect.

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Don't forget that the LHA reduction should have an ongoing effect.

Yes, I am counting on it. But I think these LHA reductions (around 5%/year) should not happen just twice. It should continue for a few more years, following house prices downwards.

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Yes, I am counting on it. But I think these LHA reductions (around 5%/year) should not happen just twice. It should continue for a few more years, following house prices downwards.

they are

the long term rental price trend , and indeed house price trend, seems to follow desposable income - ie inflation + growth

future HB payments are going to be tied to CPI inflation, so may well be several percent lower than the intrinsic rate of growth of disposable income, so in reality will be falling, against private rents, by the amount you suggest

However, it has been done in such a cunning way that the vested interests do not realise...

Edited by Si1

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they are

the long term rental price trend , and indeed house price trend, seems to follow desposable income - ie inflation + growth

future HB payments are going to be tied to CPI inflation, so may well be several percent lower than the intrinsic rate of growth of disposable income, so in reality will be falling, against private rents, by the amount you suggest

However, it has been done in such a cunning way that the vested interests do not realise...

I hope you are right, but that will happen only if, in 2 years time, average salaries start to grow in real terms - more than CPI inflation. Possible, but not guaranteed. And even if it does, it may be very very slowly. They could just keep this 30th quintile permanently.

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Perhaps more important than the drop from 50th to 30th percentile for LHA is the fact that single people under the age of 35 will no longer be get free LHA money to live in a flat: they will be obliged to live in houseshares. Previously this only applied to people under the age of 25. This should bring an end to the situation where young working people have to live in houseshares but the layabouts on benefits seem to believe they are "entitled" to live in a flat. This should improve the supply of flats for private renters and encourage a fall in rents. Houseshares however are unpopular with landlords due to the amount of work involved, both from the tenants and all the legislation affecting HMOS, so there may well be a squeeze in supply for those properties as the LHAs start competing with students and young workers.

I know from my work as a parish councillor that lots of "affordable" homes are being built but these tend to go to the disabled or families on benefits. There is a gigantic social experiment going on at the moment by mixing private homes next door to housing asociation properties, which is leading to acute social tensions on new estates where there isn't enough parking, private buyers are forced to live next to scroats moved out from city centres, and the private buyers are sick as parrots when they realise that their high-priced houses partly paid for the affordable homes: builders only get paid the build cost by the housing associations, so all the land and development costs and the builder's profits have to be loaded onto the 60% of the site that the builders are allowed to sell to private buyers.

Not surprisingly landlords are moving onto these unpopular new estates instead and renting to private tenants, eading to yet more social pressures as there is never enough parking spaces.

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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