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tommyboy

Rents Coming Down

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ok this weeks property news has loads of rent reduced banners on lets

i never seen so many before, may be 1 or 2 but this week there are to many

i was unsure if rents would start to fall because all those still needing to rent

but looks like they are

must be all those lux apartments on btl that are still empty

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Those with parents will stay for (maybe) a little longer than they otherwise would, while the storm passes.

The flats were never needed.

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ok this weeks property news has loads of rent reduced banners on lets

i never seen so many before, may be 1 or 2 but this week there are to many

i was unsure if rents would start to fall because all those still needing to rent

but looks like they are

must be all those lux apartments on btl that are still empty

This is the Beta bull case made by people like freddieforecaste on TMF or perhaps dogbox over here. Prices will go down a bit but this will mean that loads of buyers will be staying out of the market, meaning that they will rent, driving up rents so driving up yields so keeping the BTL business case alive. All this, of course will prop up house prices.

The problem with this case is that a substantial proportion of these renters, especially if the economy is tanking at the same time, will seek to save money on rent by renting something smaller than they'd want to buy. This is not just about people staying with relatives, but also about someone who wants a flat deciding to take a room in a shared house, or a couple looking at a three bed house in a nice area renting out a two bed property in a dodgier area.

This will be a real fall in demand for housing which will, as in the nineties, add momentum to any house price fall. And unlike interest rates, the government can do nothing to stop it.

IP Newcomer

(Looking to buy a three bed, but renting out a two bed).

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ok this weeks property news has loads of rent reduced banners on lets

i never seen so many before, may be 1 or 2 but this week there are to many

i was unsure if rents would start to fall because all those still needing to rent

but looks like they are

must be all those lux apartments on btl that are still empty

i think we are at the stage where all those people who can't get the selling price they are after (i.e. NEED, to get their "investment" back) are trying to rent out "until the market picks up" - stands to reason that as the property boom has been driven by BTLs, the properties which we now have an excess of are the rental ones - so we now have a glut of rental properties up for let - down come rentals

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How long can these people hold out?

If a BTL muppet has a £1000 IO mortgage, and is prepared to rent the place for £1000 (so he's losing slightly on maintenance etc), and he only gets offers for £800pm.

So the place stands empty. For how long? After 3 months, he's down £3k.

Reality sets in. He rents the place for £800pm.

Now he can't sell the place, because the prices of 2 bed "luxury" apartments has fallen.

Can you imagine living this life?

Years and years of propping up your tenants lifestyle, while forever wishing the price to go up so you can get out.

Probably capitulating after 5 years, unable to take the financial stress and sleepless nights.

It's going to happen (again) to a lot of fools out there.

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How long can these people hold out?

If a BTL muppet has a £1000 IO mortgage, and is prepared to rent the place for £1000 (so he's losing slightly on maintenance etc), and he only gets offers for £800pm.

So the place stands empty. For how long? After 3 months, he's down £3k.

Reality sets in. He rents the place for £800pm.

I see a lot of what you suggest here in North London: rents being pulled downwards, as the BTL just have no choice. And yet... I see lots of property that has failed to sell for 6 months or more, also now fail to rent for the same extended period. I just can't get it into my head what these people are thinking: we can't sell, so lets just let some other mug pay our mortgage for us via rent. They must be shocked that that plan doesn't work. Nice to see the greedy b'stards go down finally! :D

Nomadd

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I see a lot of what you suggest here in North London: rents being pulled downwards, as the BTL just have no choice. And yet... I see lots of property that has failed to sell for 6 months or more, also now fail to rent for the same extended period. I just can't get it into my head what these people are thinking: we can't sell, so lets just let some other mug pay our mortgage for us via rent. They must be shocked that that plan doesn't work. Nice to see the greedy b'stards go down finally! :D

Nomadd

that's exactly it - many of these people don't realise they will have to accept a loss - they have waited to sell at a non-loss-making price and failed and now they are trying to rent at a non-loss-making rental

many claimed that property was now an asset class (always has been) but they don't treat it as such - basic rule of trading, as soon as you think a position is going against you, cut your losses and get out - i suspect many are facing losses they can't really afford

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that's exactly it - many of these people don't realise they will have to accept a loss - they have waited to sell at a non-loss-making price and failed and now they are trying to rent at a non-loss-making rental

many claimed that property was now an asset class (always has been) but they don't treat it as such - basic rule of trading, as soon as you think a position is going against you, cut your losses and get out - i suspect many are facing losses they can't really afford

I suspect it will be the amateur BTL landlords that don't get out soon enough. And why is that, do you think?

Is it simply ignorance? Or is it something about being a landlord and the perception of status/wealth it gives you that amateurs are reluctant to let go of? I get that from some BTLs I know...they love being landlords, able to survey their 'wealth' as a tangible asset, not just a few shares written on a bit of paper.

I have heard it many times, that the clever money got out of property a while back... ;)

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i think we are at the stage where all those people who can't get the selling price they are after (i.e. NEED, to get their "investment" back) are trying to rent out "until the market picks up" - stands to reason that as the property boom has been driven by BTLs, the properties which we now have an excess of are the rental ones - so we now have a glut of rental properties up for let - down come rentals

I live in Muswell Hill (North London) and that's certainly what's happening there. It used to be you would have little choice when looking for somewhere to rent. Now there are "To Let" boards everywhere. I've tracked at least 3 houses which after 3-6 months of trying to sell just went up for let. This has got to be pushing rents down.

Nasty. :D

I see a lot of what you suggest here in North London: rents being pulled downwards, as the BTL just have no choice. And yet... I see lots of property that has failed to sell for 6 months or more, also now fail to rent for the same extended period. I just can't get it into my head what these people are thinking: we can't sell, so lets just let some other mug pay our mortgage for us via rent. They must be shocked that that plan doesn't work. Nice to see the greedy b'stards go down finally! :D

Nomadd

Not just BTL though seeing a lot of GOOD quality family homes here in N10. (The rents are laughable of course)

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i think we are at the stage where all those people who can't get the selling price they are after (i.e. NEED, to get their "investment" back) are trying to rent out "until the market picks up" - stands to reason that as the property boom has been driven by BTLs, the properties which we now have an excess of are the rental ones - so we now have a glut of rental properties up for let - down come rentals

I'm seeing quite a lot of this going on where I live (Oz). Just two doors from me someone has moved (bought) a new house about 40km (about 25 miles) away but rather than selling their existing house (which is mortgaged) they are planning to rent it out.

No sign of any activity, real estate agents, tennants, inspections or anything like that though so I have a feeling it could be empty for a while.

I've heard quite a lot of other "we couldn't sell so decided to rent it out instead" stories as well. It seems to be becoming quite common.

Meanwhile, new units sit unsold for months. An older complex of units built around the peak of the boom has literally 75% of the units for sale with one having been for sale for well over a year. Bought at the peak and clearly unable to sell at that price now. And it is increasingly common to see that houses for sale are empty which tends to prove the point that there are more houses than we actually need.

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I suspect it will be the amateur BTL landlords that don't get out soon enough. And why is that, do you think?

Is it simply ignorance? Or is it something about being a landlord and the perception of status/wealth it gives you that amateurs are reluctant to let go of? I get that from some BTLs I know...they love being landlords, able to survey their 'wealth' as a tangible asset, not just a few shares written on a bit of paper.

I have heard it many times, that the clever money got out of property a while back... ;)

i suspect many amateur investors have also put ALL their investment cash into the one property, so to sell, effectively means losing everything

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Rental prices are also driven by confidence in the market. Just as inflation can increase because of the velocity of money theory, so rents can also ioncrease (or decrease, because of a slowdown in the velocity theory).

So the velocity of money theory says that when the money supply is the same, if people are spending faster and there's no leakage to savings, the speed with which someone pays out can lead to inflation, just like pass the parcel with a timebomb.

Similarly, if there is confidenc ein the market and the average renter moves evey year, there are twice as many people people moving than when the average renter moves every 2 years. Someone moving every year leads to upward pressure on rents, so if they don't move, the pressure declines and the desperate will rent out for wahtever they can get to avoid the voids.

So a house price fall can also have reduced rental prices at the same time, with the same number of properties for rent, and the same number of renters.

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A lot of landlords are very greedy. About 2 months ago me and my wife found a smart 3-bed flat in Highcliffe, Dorset which we were keen on renting. It was £700 per month (at the high end for this area) and we said we take it and would be in touch the next day. The lettings agent then said that the landlord was going to change the carpet throughout and this would mean increasing the rent to £750 per month after the first 6 months. We thought about it and rang back the next day and decided against renting it. Since that time 2 months ago it has been sat empty and is losing the owner £700 per month!! The house market is quite strange here. It's a very expensive area to buy but better value than cheaper areas nearer to Bournemouth and Poole. I guess there will be some interesting movements in prices later.

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  • 301 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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