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Tempus

UK rents expected to rise faster than house prices in next five years

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Depressing from RICS. "The Royal Institution of Chartered Surveyors has predicted that rents will increase by just over 25% in the coming years, while property values are set to grow by less than 20%." https://www.theguardian.com/business/2017/feb/09/uk-rents-rise-faster-house-prices-next-five-years-rics-survey

They are also supporting BTL: Jeremy Blackburn, the head of UK policy at Rics, said ... “At the same time, we need to stop punitive measures against our bedrock small landlords. The detail on the ban on letting agent fees is yet to come, and along with any overt forcing of longer tenancies, [it] could dampen investment in buy to let overall. The government must be careful about signalling both stop and go at the same time."

What's the betting that Blackburn is a BTLer? 

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21 minutes ago, Tempus said:

property values are set to grow by less than 20%.

That, for once, is true. -40 is definitely less than 20.

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I'm not entirely sure I believe the RICS, CML, NAEA, or any other organisation that has an invested interest in rising house prices.

IMO

1 As the tax stranglehold bites, Landlords wont be able to make a profit and would possibly make a loss, they will either sell up or hold on, if they sell up, which is what we are seeing anecdotally with the increased number of properties with tenants in situ at auctions, then in the short term this might cause an increase in rents but it will also mean that there is greater volumes of housing stock being returned to the owner occupier market, which will increase supply to this side of the market,

2 with the inflation increases creeping in the possibility of interest rates rising is an extremely likely possibility, higher interest rates result in increased mortgage payments and increased defaults by those who can no longer afford their 100% mortgages. More houses come to market which pushes price down.

3 as house prices reduce then the loan to value of properties increases, e.g. Mortgage of £75k +Equity of £25k = £100k Current Market Value therefore LTV of 75%. If prices go down e.g. Mortgage of £75k +Equity of £10k = £85k Current Market Value therefore LTV of 88.2%, in this situation the mortgage company could make a margin call to get the LTV back to within the terms of the Mortgage agreement i.e. 75% of 85K therefore asking for an additional £11.25k to be paid, where does someone suddenly find £11.5k, they either go to the Boomer parents who created this or they default and repo...more houses to market, prices lower...

 

However, one caveate to this is the quality of the properties are likely to be rubbish, trashed properties and angry tenants...but this will further reduce the value of the properties...

 

what do you think?

 

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19 minutes ago, MrMonkey said:

Rents will need to rise by over 25% for BTL landlords to break even on the changes to taxation being phased in over the next few years, surely?

agreed rents would need to rise for the poor hard done by landlord to make a tincy wincy profit, but as ordinary people are generally struggling to pay the rents at the moment, any increase will not be seen as a viable option.

I tour the country and have seen thousands of homes that are empty, if people actually want a property then they are out there, unfortunately restrictive landlords who make properties into businesses rather than homes for their tenants, e.g. not allowing them to redecorate, employing restrictive clauses, not repairing the property in a timely manner, will find themselves with bad tenants who wont hang around longer than they need too, creating void periods etc.

Further I have seen that in a lot of places rents have been reduced because of landlord voids and tenants realising that they are able to negotiate. Times when the LL could demand a rent have gone. and the buyers market has returned.

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Good homes are better lived in not left unheated and empty.....A good tenant with DIY skills should be paid to live in a lot of them.....Doing the landlord a favour protecting the investment.;)

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19 minutes ago, Blooman said:

I suggest RICS try to understand the markets that they are in as rents move up and down with the price, they do not diverge.  

Rents are set by wages, not DEBTjunkie costs.

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This sort of news really boils my p!ss.

Presented as fact. How many thousands of people will believe this, and be thoroughly depressed because of it. We know that almost no-one could afford a 25% rent increase without a wage increase (which no-one expects)

So well done RICS and the media, you have caused worry/stress to hundreds of thousands of families by broadcasting fake news / blatant lies just to try and persuade the Gov't to reverse a perfectly fair tax change.

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2 minutes ago, thewig said:

Rents are set by wages, not DEBTjunkie costs.

In my experience (i was an estate agent, do not hold against me), I found that in 08 when prices went down by 20% and this happened very quickly and across 4 branches, we also noted rents followed in line.  So i cant believe that in that very short period that wages went down by that much.  Also, when I purchased my house similar properties rented out at  approx £1300 pcm, i exchanged on my house yesterday (40% increase in value from 07) I have just rented a similar property at £1850 pcm which is exactly 40% increase.  i know that looks too clean, so it matches my numbers exactly, but I had not done the math for it until just a moment ago.  Maybe i am wrong and it was pure coincidence.

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Actually started to see a few rent reductions my way via property bee , granted the initial price was crazy but still encouraging ...especially with all the new flats being built I suspect they may find the demand isnt  actually there 

http://www.rightmove.co.uk/property-to-rent/property-46394469.html

http://www.rightmove.co.uk/property-to-rent/property-59269136.html

http://www.rightmove.co.uk/property-to-rent/property-46593753.html

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This is absolute BS. If landlords are selling then the people who buy from them are no longer  renters. Rental demand will fall correspondingly. RICS wide boy Rubinsohn is blatantly lying and thinks we are stupid

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No problem - I'm sure that the government can draw up a 'Help To Rent' scheme.

 

Actually, most likely they will be happy to pay increased amounts of housing benefit to LLs demanding higher rents (under the guise of helping the poor HB claimant have somewhere to live, actually to help line the LLs pockets) so I guess in areas where there are a lot of renters claiming benefits, rents may in fact rise due to the willingness and ability of the public purse to pay.

 

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5 minutes ago, Sour Mash said:

No problem - I'm sure that the government can draw up a 'Help To Rent' scheme.

 

Actually, most likely they will be happy to pay increased amounts of housing benefit to LLs demanding higher rents (under the guise of helping the poor HB claimant have somewhere to live, actually to help line the LLs pockets) so I guess in areas where there are a lot of renters claiming benefits, rents may in fact rise due to the willingness and ability of the public purse to pay.

 

housing benefit or LHA as we should call it has just been (31st Jan 2017) either increased by 3% or capped to the 30% percentile for the area with overriding caps of about £260pw for the most expensive places...one caveat is that there is discretionary help available in certain circumstances...

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7 hours ago, CunningPlan said:

This sort of news really boils my p!ss.

Presented as fact. How many thousands of people will believe this, and be thoroughly depressed because of it. We know that almost no-one could afford a 25% rent increase without a wage increase (which no-one expects)

So well done RICS and the media, you have caused worry/stress to hundreds of thousands of families by broadcasting fake news / blatant lies just to try and persuade the Gov't to reverse a perfectly fair tax change.

Hear hear!

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7 hours ago, CunningPlan said:

This sort of news really boils my p!ss.

Presented as fact. How many thousands of people will believe this, and be thoroughly depressed because of it. We know that almost no-one could afford a 25% rent increase without a wage increase (which no-one expects)

So well done RICS and the media, you have caused worry/stress to hundreds of thousands of families by broadcasting fake news / blatant lies just to try and persuade the Gov't to reverse a perfectly fair tax change.

 

This needs tweeting.... Do RICS have a twitter thingy?

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