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Official: Rental Yields Hit 4 Year Low

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http://www.in2perspective.com/nr/2006/07/r...ur-year-low.jsp

Rental yields hit four year low

By Laurie Osborne, Editor

Published 14th Jul 2006, (a Friday) at 10:00AM

Rental yields in Q2 2006 have fallen to a four-year low (5.69%) in England and London (5.70%), according to the latest figures from Landlord Mortgages.
Landlord Mortgage believes the fall can be partially attributed to landlords keeping rents stable to retain reliable long-term tenants while house prices have continued to rise.

:):D:D:lol::lol::lol:

TTRTR, oh TTRTR where are you TTRTR?

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http://www.in2perspective.com/nr/2006/07/r...ur-year-low.jsp

Rental yields hit four year low

By Laurie Osborne, Editor

Published 14th Jul 2006, (a Friday) at 10:00AM

Rental yields in Q2 2006 have fallen to a four-year low (5.69%) in England and London (5.70%), according to the latest figures from Landlord Mortgages.
Landlord Mortgage believes the fall can be partially attributed to landlords keeping rents stable to retain reliable long-term tenants while house prices have continued to rise.

:):D:D:lol::lol::lol:

TTRTR, oh TTRTR where are you TTRTR?

I haven't got time to read the link. The weekend starts for me in a few minutes.

Are the reductions in yield caused by an increase in house prices or a reduction in rent?

If it's an increase in house prices this isn't good news for property bears even if it does make it easier to swallow that BTL is getting ever more difficult to make money in.

TTRTR is making a very good yield so there's litlle point trying to wind him up.

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I haven't got time to read the link. The weekend starts for me in a few minutes.

Are the reductions in yield caused by an increase in house prices or a reduction in rent?

If it's an increase in house prices this isn't good news for property bears even if it does make it easier to swallow that BTL is getting ever more difficult to make money in.

TTRTR is making a very good yield so there's litlle point trying to wind him up.

According to the article:

Lee Grandin, managing director, Landlord Mortgages, said: “It is disappointing to see that rental yields have fallen to a
four-year low across England
but it is not surprising considering market factors. In this competitive climate, landlords are sacrificing increased rental income to retain reliable long-term tenants. This decision is made easier by the recent prevalence of excellent remortgage deals. At Landlord Mortgages, we have seen an 80% increase in the level of remortgage business as landlords flock to refinance their properties and reduce the level of rent required.

Looks like mortgage rates have been falling allowing LL to pass on the savings to their tenants. Believe that and you will believe anything.

IMO, rents are not rising because of that old law of economics which is rolling out again: demand is falling and people are skint as they pay more for council tax, fares, fuel, gas, electricity and just about everything else that is not included in Gordon Brown's CPI basket of goods..

My rent was frozen because I am in the West Midlands and unemployment is rising rapidly due to manufacturing closing down and moving overseas.

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Folks, IMHO, this is the best bear news of the day.

Falling yields means that the BTLers are going to have to sell if they bought in recently with highly leveraged borrowing and potential purchasers are going to be put off due to the low and falling yields. Makes a nice safe BS account at 5% look good.

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Guest Bart of Darkness
TTRTR, oh TTRTR where are you TTRTR?

Trying to raise the rents?

:lol::lol::lol:

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Trying to raise the rents?

:lol::lol::lol:

TTRTR seems to have migrated to the "other" place. To use a few football terms, TTRTR must be gutted, sick as a parrot, and no longer over the moon. :)

He has made that classic mistake so many investors make. They buy low but can't bring themselves to sell high and hang on too long and lose it all in the downdraft.

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TTRTR seems to have migrated to the "other" place. To use a few football terms, TTRTR must be gutted, sick as a parrot, and no longer over the moon. :)

He has made that classic mistake so many investors make. They buy low but can't bring themselves to sell high and hang on too long and lose it all in the downdraft.

Suckers born every day !!

As Tony Hancock would say "They will fall like saplings in the wind "

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Are the reductions in yield caused by an increase in house prices or a reduction in rent?

They are caused by an increase in house prices, but RB seems to want to ignore that bit of the story, and spin it into a good news story!

In other words, if houses trebled in price next year and rents doubled, RB would call it as evidence of a HPC! :lol:

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They are caused by an increase in house prices, but RB seems to want to ignore that bit of the story, and spin it into a good news story!

In other words, if houses trebled in price next year and rents doubled, RB would call it as evidence of a HPC! :lol:

This is not the point.

The point is that it makes BTL less attractive as an investment. The start of the big heavy lead ball rolling.

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This is not the point.

The point is that it makes BTL less attractive as an investment.

Not if people expect the capital appreciation to continue it won't.

And he's been claiming that prices have been falling, not rising.

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Not if people expect the capital appreciation to continue it won't.

And he's been claiming that prices have been falling, not rising.

Not quite the full picture.

The landlord also needs to balance his/her/its books on a short term basis.

If the repo rate continues to climb higher and rents do not, the landlord may run into financial difficulty. If this is severe then they may be forced to sell up early. In this case longer term capital appreciation wouldn't be relevant.

Many in the late eighties were bug gered this way. They couldn't afford their monthly payments and had their houses thoughtfully taken back by the mortgage lenders for safe keeping.

:o

P.S.

I have problems with the argument that if the repo rate goes up then all landlords will increase their rent and everything will be ok.

This is in my opinion a load of bol locks. Remember your economics, the landlord can only charge a price that the market will bear. Two parties are involved in price negotiation, the landlord and the tenant. Think about it, if the landlords could charge what they wanted then everybody would be paying in blood.

If the repo rate goes up then the landlords tenants are also likely to have less cash, and thus will find it difficult to accept higher rental payments.

The landlord could kick them out, but who is going to replace them if others aren't able to submit to higher rental terms? In practice the landlord would need to keep tenants even if they were not bringing in enough rent, otherwise they would really start to haemorrhage money.

Before somebody parps on about the property shortage remember that 1 in 20 houses stands empty. Interestingly there was a property shortage in the late eighties which had miraculously disappeared after the crash. Funny that. Ha ha.

Low interest rates have created an asset bubble. Those that think that higher rates are not going to deflated this bubble are living in cloud cuckoo land...

:blink:

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Guest Alright Jack

TTRTR seems to have migrated to the "other" place. To use a few football terms, TTRTR must be gutted, sick as a parrot, and no longer over the moon. :)

He has made that classic mistake so many investors make. They buy low but can't bring themselves to sell high and hang on too long and lose it all in the downdraft.

Ah, the bull trap!

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This is not the point.

The point is that it makes BTL less attractive as an investment. The start of the big heavy lead ball rolling.

Unfortunately I think CO's comment about capital appreciation is right. I know a few people who are amateur BTLr's (and most entering market now are) and all they care about is Rental 'covering' the IO mortgages. For them, they think the are on 0% yield and that as their properties go up by something like £8K a year, they will be making £8K for an investment of ZERO, as they also finance the deposits from loans!!

I'm sure this kind of think must be happening all over the Country as its bloody frightening as they are 100% geared, with no yield, no margin of safety, no equity and not making any repayments on captial because their plan is to pay of the capital when they sell and just take the profit on capital appreciation.

Whilst they can keep the wheels turning at the moment, won't take much to derail their plans, and if that does happen, I think alot of damage could be done very quickly, as these amatuers have no resources to cover downturns.

AFP

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yep - and when the tide turns the amateur btl'er will be extra stuffed because

his tenant will have a lease, hopefully a 12 month one.

what a nice thought - you're amateur landlord offering you cash to terminate

your lease as he tries to sell into a falling market ...nice ;))

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Unfortunately I think CO's comment about capital appreciation is right. I know a few people who are amateur BTLr's (and most entering market now are) and all they care about is Rental 'covering' the IO mortgages. For them, they think the are on 0% yield and that as their properties go up by something like £8K a year, they will be making £8K for an investment of ZERO, as they also finance the deposits from loans!!

I'm sure this kind of think must be happening all over the Country as its bloody frightening as they are 100% geared, with no yield, no margin of safety, no equity and not making any repayments on captial because their plan is to pay of the capital when they sell and just take the profit on capital appreciation.

Whilst they can keep the wheels turning at the moment, won't take much to derail their plans, and if that does happen, I think alot of damage could be done very quickly, as these amatuers have no resources to cover downturns.

AFP

Exactly - and when they bail out on mass they will cause a crash. Sentiment has pushed prices up to unrealistic levels, and it will have the opposite effect once the penny drops that they have no investment but a debt liability.

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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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