Great Story In The Blog

[Time to raise the rents.]

Rents up 10.5%!!!!!

http://www.timesonline.co.uk/newspaper/0,,...1848857,00.html

Simon Tyler at Chase de Vere Mortgage Management, a broker, said: “According to Paragon Mortgages, the average price paid by a landlord for a property is up by 13.7% over the year to September, while rents are up by 10.5%. Although still apparently healthy, these figures point to a marked reduction in the yields that new landlords can earn.”

[Mod: text quoting article in full removed due to copyright violation]

Edited October 30, 2005 by Bubble Pricker

[Warwickshire Lad]

Wherever I see the words "Paragon Mortgages" I tend to switch off. TTRTR perhaps you should use your riches to send them all new calculators.

Edited October 30, 2005 by Warwickshire Lad

[Casual Observer]

http://www.timesonline.co.uk/newspaper/0,,...1848857,00.html

“Most of the rental demand comes from those for whom home ownership is not a realistic option. At the margins there may be people who have not bought because of fears about house-price falls, but this has not driven the private rental market, so I expect demand to remain strong.”

I just never get this bit! If people can't afford to buy how can they aford the rent that needs to cover the costs of the landlord buying??

[zorn]

I just never get this bit! If people can't afford to buy how can they aford the rent that needs to cover the costs of the landlord buying??

Because mortgage lenders won't let you spend 60% of your income on mortgage repayments, whereas landlords will let you spend 60% of your income on rent.

[Time to raise the rents.]

I just never get this bit! If people can't afford to buy how can they aford the rent that needs to cover the costs of the landlord buying??

I agree with you, but there is also the element that people are willing to share when renting, but turn their nose up at sharing when buying.

So what they can afford to buy as individuals is markedly less than the standard they can get (albeit shared) when renting.

But nobody wants to share forever, so biting the bullet happens eventually.

[Once in a lifetime]

I just never get this bit! If people can't afford to buy how can they aford the rent that needs to cover the costs of the landlord buying??

I think because landlords like TTRTR put 5 families into a studio flat!

[enworb]

I just never get this bit! If people can't afford to buy how can they aford the rent that needs to cover the costs of the landlord buying??

Possibly, those that can't commit themselves to a mortgage. Because of work, moving in with partner for the first time, checking out a new area.... Or bad credit rating.

[Time to raise the rents.]

Because mortgage lenders won't let you spend 60% of your income on mortgage repayments, whereas landlords will let you spend 60% of your income on rent.

Most of my tenants are spending less than 30% (but often less than 20%) of their take home pays on rent. That is one of the reasons I'm so convinced that rents have plenty of room to rise further.

[Warwickshire Lad]

That is one of the reasons I'm so convinced that rents have plenty of room to rise further.

In a recession with rising taxes, energy prices, mass unemployment and immigrants fleeing Britain's economic wasteland, I wouldn't use that option unless you want your tenants to go elsewhere.

[Time to raise the rents.]

Well WL, don't you think rising prices increase people's willingness to share resources with others & continue renting for longer?

And most of my tenants don't have cars and are extremely employable.

[karhu]

Most of my tenants are spending less than 30% (but often less than 20%) of their take home pays on rent. That is one of the reasons I'm so convinced that rents have plenty of room to rise further.

HOLD ON. Your tenents rent rooms in a shared houses, don't they? Hardly sustainable for most people, and I doubt anyone would want to pay >30% of their invome in these circumstances.

TTRTR, I sold my house a couple of years ago, and in my present rented flat not only did I manage to negotiate the rent DOWN, but my landlady nearly bit my arm off when I agreed to rent it. With this reduction I'm easily clearing the rental payments with profits from my investments [not property]

Hardly evidence of a bouyant market. Again I think many landlords are in denial when it comes to the rents that they can achieve.

K.

[Time to raise the rents.]

HOLD ON. Your tenents rent rooms in a shared houses, don't they? Hardly sustainable for most people, and I doubt anyone would want to pay >30% of their invome in these circumstances.

TTRTR, I sold my house a couple of years ago, and in my present rented flat not only did I manage to negotiate the rent DOWN, but my landlady nearly bit my arm off when I agreed to rent it. With this reduction I'm easily clearing the rental payments with profits from my investments [not property]

Hardly evidence of a bouyant market. Again I think many landlords are in denial when it comes to the rents that they can achieve.

K.

So you reduced your housing cost by selling a house & renting a flat. I applaud that approach because our personal costs are what cause many of us to get into debt, so controlling them is important.

It all depends on where you are though. Your landlord may operate in an area where tenants don't normally want to be.

As I've said many a time, there are loads of cheaper places than mine in SW11. But why are mine ALWAYS full & ads for the others saying 'available now'? Because I chose places close to shops & transport, off main roads & in period streets. The landlords struggling in SW11 are on main roads, away from stations, along railway lines, above shops, in ex-council buildings etc etc.

The truth of the matter is that those landlords will only be in a position to raise their rents if I can first. And I am, so they will too.

Edited October 30, 2005 by Time to raise the rents.

[karhu]

So you reduced your housing cost by selling a house & renting a flat. I applaud that approach because our personal costs are what cause many of us to get into debt, so controlling them is important.

It all depends on where you are though. Your landlord may operate in an area where tenants don't normally want to be.

As I've said many a time, there are loads of cheaper places than mine in SW11. But why are mine ALWAYS full & ads for the others saying 'available now'? Because I chose places close to shops & transport, off main roads & in period streets. The landlords struggling in SW11 are on main roads, away from stations, along railway lines, above shops, in ex-council buildings etc etc.

The truth of the matter is that those landlords will only be in a position to raise their rents if I can first. And I am, so they will too.

I've actually gotten to know my landlady quite well, and she's actually admitted to me that my rent does not cover the mortgage + service charges (oh & she pays 40% income tax, ouch). This type of experience confirms that something is astray in the housing market. I'm very happy to take advantage of it.

For every one of you TTRTR there must be a 50 landlords who haven't even looked at their long term sustainabilty. In these circumstances surely we're going to experience a property correction? Even you must agree, TTRTR. You'll pay the price of the financially unaware. That must make you angry.

[Time to raise the rents.]

Yes the financially unaware operate as a drag on my business in terms of rents, but not by much and they have certainly helped in terms of prices, so I'm not complaining.

I also can't see how your landlords 40% tax bracket would be relevant considering that you say she makes no money off the rent?

[karhu]

I also can't see how your landlords 40% tax bracket would be relevant considering that you say she makes no money off the rent?

Yes, agreed. I suppose it's one advantage for her! Just checking you were paying attention

Edited October 30, 2005 by karhu

[karhu]

Yes the financially unaware operate as a drag on my business in terms of rents, but not by much and they have certainly helped in terms of prices, so I'm not complaining.

BTW. Just to get the logic straight. Don't LOW house prices and high rents maximise your yields? As you've said you're increasing your portfolio right now and capital gains are only realised on selling. If there is a property correction (and nobody can rule that out with the bad economic news that is coming out daily, i.e. a company the size of a country almost in bankrupcy) you'll never realise these gains and so you have to focus on YIELDS. Therefore, the financially unaware would certainly affect someone deterimentally who is increasing a portfolio, but be beneficial to someone who is reducing the size.

[Marina]

Just one of about 2 dozen local rental agents.

Local letting agent listings

87 properties to rent. Not one of them would make financial sense if you bought it to let in today's market.

[dog]

Paragon are a specialist lender for BTLs. Their numbers simply do not stack up with my personal experience. My previous house had been rented out for the same price since 2002. Three months after I had left, the landlord had dropped the rent asking price by further 10%.

When I was looking for my new rental property, the stock phrase was "the landlord is negotiable". The one thing that I did notice was that landlords wanted long term tennants. I suspect that Paragon have used short term rentals to get the right numbers.

My suspicion is that a new breed of landlords are starting to emerge who buy up large quantities of properties at discounts. Because they can buy cheap and have economies of scale, I believe that they are going to do a 'Henry Ford' on the rental market. They will want high occupancy and will drive rents down to achieve it.

[karhu]

When I was looking for my new rental property, the stock phrase was "the landlord is negotiable". The one thing that I did notice was that landlords wanted long term tennants. I suspect that Paragon have used short term rentals to get the right numbers.

Yes, I've never seen or heard of this before. I was looking at both properties to rent and buy. The EAs told me that sellers may be very open to offers and one EA said that rents can be negotiated (she actually said that most people didn't realise this - and I've certainly never heard it spelled out like this before).

All this points to one thing - OVERSUPPLY.

Edited October 30, 2005 by karhu

[Time to raise the rents.]

OMG you lot don't get it.

There will always be overpriced places, especially on agents books. Their sale doesn't occur when they get places sold or rented! Their sale occurs when they convince the owner to use their services!!!!!

The owner is baited with overvaluations & probably in much more than 50% of occasions has to reduce their asking price (whether selling or letting) later on.

I have NEVER EVER had to reduce the rent I ask for, because I know the appropriate level for my area and therefore am priced correctly.

So despite the fact that you will continue to hear of negotiable landlords forever into the future (as the agent knew the asking rent was too high to start with), Paragon are still in a position to know that rents are rising, because the rental value achieved on new lets are rising.

So in short, many of you are excited by a false belief and a lack of understanding.

[Bubble Pricker]

Rents up 10.5%!!!!!

Yeah, except these figures are from cloud coockoo land.

According to Paragon Mortgages, the average price paid by a landlord for a property is up by 13.7% over the year to September, while rents are up by 10.5%.

So Paragon claim property prices have risen by 13.7% year on year. I recommend you have a look at the HPC main page (http://www.housepricecrash.co.uk) and the house prices figures there. There is not even one surevey that comes even close to that figure. Paragon have to drum up their faltering business, so they quote fantasy figures that have no basis in fact. Strangely enough, it always seems to be the quotes from VIs that TTRTR parades on the forum.

[Time to raise the rents.]

I thought you could read BP.

It says "the average price paid by a landlord for a property is up by 13.7% over the year to September".

It doesn't say prices have risen by that amount.

[theChuz]

Tbh TTRTR this just highlights what people have been saying on here for some time now, the nuBTL havn't got a clue what thier doing and they will end up in serious trouble. They are still buying property with no knowledge of whats involved, little numeracy skills , from what i can gather a 1 in 6 are having problems or as the article puts it are finding it harder.

BTL has increased 20 fold since 1998, that must concern you in some way ? Now, what ive always said is that profesional landlords who know what thier doing, who have been buying sound investment properties for years will be ok.

"Im in it for the long run , johny come latelies " and "Its my pension - Dustbin man" will be screwed. It is these people who have increased the BTL bubble by 20 fold.

EDITED:

As a side note a negative yield of - 20% under mortgage payment + 10.5% yoy increase still makes it a negative return.

Edited October 30, 2005 by theChuz

[dog]

So despite the fact that you will continue to hear of negotiable landlords forever into the future (as the agent knew the asking rent was too high to start with), Paragon are still in a position to know that rents are rising, because the rental value achieved on new lets are rising.

Why should Paragon be 'in a postion to know that rents are rising'. They are a lending institution.

[Time to raise the rents.]

Tbh TTRTR this just highlights what people have been saying on here for some time now, the nuBTL havn't got a clue what thier doing and they will end up in serious trouble. They are still buying property with no knowledge of whats involved, little numeracy skills , from what i can gather a 1 in 6 are having problems or as the article puts it are finding it harder.

BTL has increased 20 fold since 1998, that must concern you in some way ? Now, what ive always said is that profesional landlords who know what thier doing, who have been buying sound investment properties for years will be ok.

"Im in it for the long run , johny come latelies " and "Its my pension - Dustbin man" will be screwed. It is these people who have increased the BTL bubble by 20 fold.

EDITED:

As a side note a negative yield of - 20% under mortgage payment + 10.5% yoy increase still makes it a negative return.

1/ A 20 fold increase from zero (as the BTL mortgage was non-existent until 1997) is not difficult to explain.

2/ It didn't say 1 in 6 having trouble did it......maybe you should re-read it.

3/ For 1 in 6, losses for 1-3 years then cashflow positive. It is a lot better than you'll get in other countries, therefore Britain is not overvalued.

Why should Paragon be 'in a postion to know that rents are rising'. They are a lending institution.

I suppose all those surveyors reports & market information they have wouldn't help answer your question?

Come on, was that a joke?