Central London Prices V Rent

[I Told You So]

I live in a flat that before the crunch was probably worth £400K and the rent is £1200/ month £14400/year

Interest only assuming 6% = £2000/month £24000/year

thats £800/mth or £9600/year shortfall

Madness i say madness

dont anyone dare say but but what about the deposit the mortgage will only be say 300K, well your still loosing the interest you would get by leaving the £100K in the bank

other examples £600K flats renting for aound £450/week you do the math but its similar

[_w_]

And to make it worse rents in London will have to come down from their current hyper inflated levels.

Subsidising renters or keeping properties empty only made sense when property prices 'only went up'.

It's going to be a bloodbath.

[Gone baby gone]

Indeed, right now the London BTL market is akin to someone with internal bleeding. They are feeling deeply unwell but there are few external signs of a problem. 2008 is the year the patient expires.

[silver surfer]

And to make it worse rents in London will have to come down from their current hyper inflated levels.

Maybe. Maybe not. There is some evidence that residential rents actually tend to rise most when house prices are flat or falling. In the area I rent (Richmond/Kew, south-west London) I'm not seeing rents increasing, but neither am I seeing a glut of vacant rental properties nor any rent declines. Personally I think the jury's out on where rents will go over the next year or two.

[Telometer]

The thing that is going to give is rent. It will go up. It is going up; rental properties are generally not on for more than a few days.

Enjoy your cheap rent whilst you can. And with BTL not currently attracting new money the number of BTL properties will reduce - thus pushing rents higher.

Simple economics and supply and demand.

[jez123]

The thing that will give is that people will move out of London

[piece of paper]

And to make it worse rents in London will have to come down from their current hyper inflated levels.

Subsidising renters or keeping properties empty only made sense when property prices 'only went up'.

It's going to be a bloodbath.

LA's underpin a certain amount of London rents due to the housing waiting lists. For as long as they pay top-whack for inferior accommodation, good accommodation will command a premium. LAs are slow to react to changing markets.

p-o-p

[piece of paper]

The thing that is going to give is rent. It will go up. It is going up; rental properties are generally not on for more than a few days.

Enjoy your cheap rent whilst you can. And with BTL not currently attracting new money the number of BTL properties will reduce - thus pushing rents higher.

Simple economics and supply and demand.

Are you really a neither?

p-o-p

[Smash It Up]

I just renewed my tenancy in Acton/Gunnersbury Park - nice(ish) 1 bed flat over a shop on the north circular, not exactly dez-rez but it's the best I could afford within 1/2 hours walk from the office. I was expecting the rent to be pushed up after initially signing an 18 month contract for £750pcm, but the managing agent didn't even try to weasel more money out of me, they just asked nicely if I'd like to stay and then sent me the renewal forms.

[_w_]

Are you really a neither?

p-o-p

Dear old Telometer is a first class bull, just doesn't have the guts to say it. Gloated today about having 'made' £24,000 on his house based on today's LR figures and admitted he didn't give a f*ck about FTBs. Cried like a sheep for 50 redudant EAs yesterday.

Suspect he's a hard line EA or a BTLer.

[_w_]

Maybe. Maybe not. There is some evidence that residential rents actually tend to rise most when house prices are flat or falling. In the area I rent (Richmond/Kew, south-west London) I'm not seeing rents increasing, but neither am I seeing a glut of vacant rental properties nor any rent declines. Personally I think the jury's out on where rents will go over the next year or two.

That's what I would have thought too.

But I live in West London too, have you noticed how stupidly expensive rents are? Prices are so high they are even quoting weekly rents now!

To me the tell tale sign that rents are coming back down to earth are the forests of 'To Let' signs springing up suddenly all over the place. I've noticed there are even more 'To Let' signs than 'For Sale'. I had expected the contrary but I can see how a market where people simply can't sell will result in a glut of rental properties.

[Landagan]

I live in a flat that before the crunch was probably worth £400K and the rent is £1200/ month £14400/year

Interest only assuming 6% = £2000/month £24000/year

thats £800/mth or £9600/year shortfall

Madness i say madness

dont anyone dare say but but what about the deposit the mortgage will only be say 300K, well your still loosing the interest you would get by leaving the £100K in the bank

other examples £600K flats renting for aound £450/week you do the math but its similar

I totally agree, it's a no brainer to rent rather than buy in SE London.

For instance;

To Buy - £329,995

http://www.rightmove.co.uk/viewdetails-178...=3&tr_t=buy

To Rent - £1000/Month

http://www.rightmove.co.uk/viewdetails-193...3&tr_t=rent

This is just one example, and it has been on the market for almost a year now.

Something really must give.

[Frank Hovis]

Maybe. Maybe not. There is some evidence that residential rents actually tend to rise most when house prices are flat or falling. In the area I rent (Richmond/Kew, south-west London) I'm not seeing rents increasing, but neither am I seeing a glut of vacant rental properties nor any rent declines. Personally I think the jury's out on where rents will go over the next year or two.

They'll fall. The difference this time to GC1 is that there are a hell of a lot of BTLs out there who have to have rent coming in or they'll go bust. They can't just sit there waiting for the ideal tenant who'll pay the asking rent.

[bomberbrown]

Without mincing my words, London is going to be a bloodbath over the next 5 years. End of.

[silver surfer]

They'll fall. The difference this time to GC1 is that there are a hell of a lot of BTLs out there who have to have rent coming in or they'll go bust. They can't just sit there waiting for the ideal tenant who'll pay the asking rent.

I hope you're right. But, despite scouring the data sources, I've never found a reliable analysis of the degree of leverage that characterises UK BTL landlords.

I know a couple of johnny-come-lately BTL landlords here at work who are mortgaged up to their eyeballs and are now visibly sweating.

But I also know one or two long term landlords who stopped buying in the late 90's and are as solvent as you can get. I also know quite a few "accidental" landlords; people who got married when they both owned property, or inherited a property, and just decided to rent it out rather than selling. These people aren't under any pressure and can take all the time they want to make a decision.

Unfortunately I'm not aware of any solid data that shows how many BTL landlords are in group one versus group two!

[beans on toast]

I totally agree, it's a no brainer to rent rather than buy in SE London.

For instance;

To Buy - £329,995

http://www.rightmove.co.uk/viewdetails-178...=3&tr_t=buy

To Rent - £1000/Month

http://www.rightmove.co.uk/viewdetails-193...3&tr_t=rent

This is just one example, and it has been on the market for almost a year now.

Something really must give.

On an interest only basis, 1000/month to cover the mortgage, the value of that property would have to be 200K. 6% interest.

On an repayment 155K.

SOmething has got to give.