Rents Have Crashed

[the_duke_of_hazzard]

It's a common refrain on this board that people want to buy when property is cheap.

This got me thinking. Imagine if the culture here was that people had to buy property until they could afford to rent, the logic being that looking after a property is expensive and they can't afford the legal fees of renting etc. (bear with me).

Now look at the last ten years. In my experience, rents have fallen slightly in nominal terms and massively in real terms while property prices have shot up.

The fact is 10 years ago rents were expensive and property was cheap. I intuitively knew this, and tried to raise a mortgage with no success (I was a temp worker at the time), so was forced to rent.

Now I have savings, the interest on which covers a significant part of the rent, and I have a well-maintained property that is cheaper than an IO mortgage without the inflexibility, legal, maintenance and estate agent fees of owning.

If you look at it this way, you'd be missing the boat if you didn't rent.

My experiences with landlords has never been bad. I've found that if you pay on time and give them no hassle they are immensely grateful, and treat you well. You've got to be careful to vet your landlord, though, and make sure they're not chancers. I've lived in one of a builder's many rental properties (basic but fantastic maintenance - no leaks, damp or owt), I've lived in a rich doctor's flat (didn't care as long as the rent was paid and I was the "right sort"), and two reputable agents' flats.

This doesn't just go for little two bed flats - I've looked around and you can get absolute bargains of rentals on large houses that are easily cheaper than having the money in a mortgage.

The fact is property is a bad investment right now because you can get the same goods cheaper without taking massive risks. If we only got over our obsession with ownership then we'd all see that.

Of course if you want to own for the sake of owning, go ahead. But you're at the mercy of the elements, subsidence, shoddy plumbing etc just like renters are at the mercy of landlords.

Edited September 10, 2006 by the_duke_of_hazzard

[Live_in_hope]

Ove the last five year I've noticed that they peaked in 2004 dropping back down.

There are now more properties to rent than ever which I think is partly the reason for this .

Have noticed though that EAs charges have jumped some what, though have learn't that everything is negotiable

Would not be surprised if we see further softening in rents

Would not say rents have crashed though for a lot of BTLrs who bought in the last few years they must be just breaking even - though I guess they are looking on a very long term view

Edited September 9, 2006 by Live_in_hope

[Golden Shower]

May depend where you live. In my area, rents are on a par with buying. In fact, my landlord trie to hike the rents up massively and was one of my reasons to buy. After I left he hiked the rents even higher! A whopping 37%!

I think someone has actually taken the house on as well. If I was still living in London maybe my perception of the market would be much different.

[M&M]

What makes me laugh is the fact that most people on this site HATE BTL, but they are the ones giving BTL an income. Are the poeple on this site just screwed what ever happens. I say buy and be your own boss. ITs GREAT.

My colleague rents and has just spent £££s on doing up the garden and house, yet is oblivious to the fact that the BTL owner is the one who benefits from more of her hard earned ££££££££s. How stupid.

[Live_in_hope]

What makes me laugh is the fact that most people on this site HATE BTL, but they are the ones giving BTL an income. Are the poeple on this site just screwed what ever happens. I say buy and be your own boss. ITs GREAT.

My colleague rents and has just spent £££s on doing up the garden and house, yet is oblivious to the fact that the BTL owner is the one who benefits from more of her hard earned ££££££££s. How stupid.

Whys is it stupid ???. If folk have no choice then thats what they have to do, try applying thought before posting its a good tonic

[Golden Shower]

What makes me laugh is the fact that most people on this site HATE BTL, but they are the ones giving BTL an income. Are the poeple on this site just screwed what ever happens. I say buy and be your own boss. ITs GREAT.

My colleague rents and has just spent £££s on doing up the garden and house, yet is oblivious to the fact that the BTL owner is the one who benefits from more of her hard earned ££££££££s. How stupid.

Yeah, it certainly played on my mind a bit. A BTLer seeing you as their pension fund and then rents snapped into line with buying. The other thing I personally considered was, if I bought 12 months ago my salary may have increased about 4%. In another 12 months, it may have gone up another 4-5%, doesn't sound much but if you are smart with your money you start to inflate your way into relative safety.

[Bingley Bloke]

Interesting this topic should come up today. I was doing my rounds last night and noticed that there has been a swathe of rent reductions around Bingley as landlords struggle to fill empty properties that the priced-out wannabe buyers can no sooner afford to rent! Rents may be look disproportionately low when viewed alongside buying prices but that only goes to illustrate how overpriced the market is.

[redwing]

What makes me laugh is the fact that most people on this site HATE BTL, but they are the ones giving BTL an income. Are the poeple on this site just screwed what ever happens. I say buy and be your own boss. ITs GREAT.

My colleague rents and has just spent £££s on doing up the garden and house, yet is oblivious to the fact that the BTL owner is the one who benefits from more of her hard earned ££££££££s. How stupid.

Answers:

1. negotiate, put in low offers when looking. Be prepared for them to refuse. There seems to me to be a constant flow of new rental properties coming onto the market each week.

2. call their bluff on rent increases. "If you raise the rent, then I'll be looking for somewhere else. In fact, I think it would be better if you dropped the rent a bit as a reward for my loyal custom; saving you the costs of finding new tenants, remarketing, and possible voids."

3. yields are low. Your rent won't be giving them a great income on their capital. And might even not be covering their mortgage.

and, most importantly:

4. you are not taking the risk of a correction in the market. They're taking that risk for you.

and least importantly:

5. if you're waiting to buy after the correction, then you've just got to live somewhere.

[penguin]

im renting a grade 2 listed cottage with 2 bedrooms, large bathroom and large garden in sherborne just meters from sherborne abbey for just 475pcm, ive been there 3 years and she hasnt budged the rent one bit, always paid the rent on time and so i think if your a good tenant youl have a nice landlord

[alexays]

im renting a grade 2 listed cottage with 2 bedrooms, large bathroom and large garden in sherborne just meters from sherborne abbey for just 475pcm, ive been there 3 years and she hasnt budged the rent one bit, always paid the rent on time and so i think if your a good tenant youl have a nice landlord

There is a flood of 2 bed properties to rent on market here in Guildford. Hence prices should be dirt cheap. However, there is a complete lack of 3/4 bed properties in the 1800-2500 price range.

[dog]

What makes me laugh is the fact that most people on this site HATE BTL, but they are the ones giving BTL an income. Are the poeple on this site just screwed what ever happens. I say buy and be your own boss. ITs GREAT.

My colleague rents and has just spent £££s on doing up the garden and house, yet is oblivious to the fact that the BTL owner is the one who benefits from more of her hard earned ££££££££s. How stupid.

I don't hate BTL but I hate the system that makes BTL more attractive than investment in wealth creating businesses.

[Michael]

go to out of the way places and rent say a detached house and rent will be far less than purchase price...Annual rent say 3% of house's ''value''..........but in most places 5% is the norm...about the same as a fixed i/o mortgage over 10 years.

[Rave]

My landlord has never tried to raise my rent in three years- which is just as well, as the going rate round here (Catford, SE London) hasn't budged either. After the first year, when he'd let it through an agent, he came round and presented me with a new contract he'd downloaded off the internet (I guess), I signed it, and I've barely heard from him since- that was two years ago.

We're finally going to move out of this poky one bed place, and there seems to be a real glut of rental property on the market round here. The going rate for a two bed flat seems to be £750-850, but for a three bed house with two 'receps' downstairs it's £900-950. For the sake of £100 a month, I'll happily forego a night in the pub per week to live in a proper house with a garden and all. Of course, I wouldn't have a hope in hell of buying a similar place.

There was even a three bed semi going for £950 in a nice road very close to where I grew up. I'm not crossing my fingers, but I'm still be hoping it'll still be on the market at the end of the month and that they'll be so desperate that they'll take a cheeky offer:).

As for estate agents fees, they can have the £20 it costs them to do a credit check. £150 for downloading a contract off the internet and writing a letter to the utility companies, they can shove right where the sun don't shine . That's the first thing I'll mention when I walk in the door, and any agent who isn't desperate enough to agree on the spot doesn't get my business .

[gfromls]

What makes me laugh is the fact that most people on this site HATE BTL, but they are the ones giving BTL an income. Are the poeple on this site just screwed what ever happens. I say buy and be your own boss. ITs GREAT.

My colleague rents and has just spent £££s on doing up the garden and house, yet is oblivious to the fact that the BTL owner is the one who benefits from more of her hard earned ££££££££s. How stupid.

1, May I strongly recommend that you go out and buy a calculator.

2, Sit down with said calculator, a pen and a sheet of a4 paper.

3, Then work out how much it cost to buy a house…. You know mortgage repayments and stuff.

4, Then take away your “potential” monthly income from rent away from the mortgage repayment.

5, Then go upstairs and look in the bathroom mirror and say “btl is a good idea”

If you can do all 5 successfully….. go back to the shop were you got the calculator and ask for a refund.

Edited September 9, 2006 by gfromls

[redwing]

So tenants are giving BTLers an income are they?

Within this article about online self-assessment lurks the following gem from an amateur landlord:

In my experience it's more a case of BTLers providing canny tenants with subsidised housing. ITs GREAT (sic).

Exactly.

Because house price values are currently so ridiculous and while the rent to capital ratio (yield) is so poor, it makes absolute sense to rent.

Thanks to BTLers.

[heather5]

I've learnt a hard lesson here.

When renting - always find out what the landlord paid for the property - that will tell you whether they'll flip you or not and whether its likely you'll get reasonable rent for a long period of time - or whether they are just chancing their arm to get more money.

Managed to persuade my landlord who was going to flip the place I live in that she was getting a good return on rent for me for what she paid - and that if she stayed put - she would be in credit on my flat.

So she flipped another more recent buy - at not much - to pay for her cash crisis and even deemed me a good tennant - and has left me alone.

It is true and somewhat annoying - that I am right - and she will if I sit here for the next 20 years on this level of rent, have paid for her property that she bought in !997.

However, I did rent from a landlord before I discovered this site and learnt about the market. And although he'd bought cheap - he'd taken out two further remortgages on the property - and was close to needing to sell - and did - and I had to move.

Shame that we can't find out when renting what the landlord actually owes on the property in real terms.

Unfortunately, the block I'm in has a mixed bag - professionals who bought because they couldn't afford elsewhere and BTLers who've bought up many of the flats - and in an attempt to secure their income are renting to DHSS who apparently guarantee money for the repairs (our tax money!!!).

So now we have a mixture of drug addicts - and Eastern europeans (very polite) - and people who are around all day long and don't work - and who play loud music until the early hours - because they don't go to work.

If I ever have the money - I'll never buy a flat!

[kenclarkesshoes]

just looked at rooms to let in london on loot.com

id say prices are up abt 20 quid a week from when i last rented in london in 2003.

back then i got a really nice room for 75 quid a week in N11.

very spacious . very good pad all round.

seems that id need to pay at least 100 per week if i wanted to rent something similar now.

ps

when i left i owed abt 7 months rent after 2 1/2 years but my LL was incredibly humanistic and knew the situation/

[I'M WITH STUPID]

Am still getting £750pcm for my one bed city centre flat in Manc - same as I did in 2001 - right place, right time

[PropertyGuru]

I had no luck raising rents over the last 4 years. Every time I tried, either the tenant walked and I ended up with voids, or I had to back down under the threat of a walk.

Each walker generally left me with a month or more of no rent, the expense and trouble of finding a new tenant, and usually accepting a new LOWER rent because tenants nowadays have so much choice.

Crap business it had become. so I walked. Thanks God for stupid amatuer BTLers!!!

[Marina]

I had no luck raising rents over the last 4 years. Every time I tried, either the tenant walked and I ended up with voids, or I had to back down under the threat of a walk.

Each walker generally left me with a month or more of no rent, the expense and trouble of finding a new tenant, and usually accepting a new LOWER rent because tenants nowadays have so much choice.

Crap business it had become. so I walked. Thanks God for stupid amatuer BTLers!!!

Yes, praise the Lord. And in 10 years time those stupid amateur BTLers will be thanking God for the stupid, 'professional' BTLers who let them buy their investment enabling them to double their capital.

Fair play to you for sharing the investment opportunities around.

Edited September 11, 2006 by Marina

[PropertyGuru]

Yes, praise the Lord. And in 10 years time those stupid amateur BTLers will be thanking God for the stupid, 'professional' BTLers who let them buy their investment enabling them to double their capital.

Fair play to you for sharing the investment opportunities around.

whatever, pmtavenger

[I'M WITH STUPID]

and whoever said money doesn't make you happy