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Renting - Whats The Future?

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I'm currently renting and have been for some time as a result of HPI and not resulting to ridiculous monthly mortgage payments for a bedsit on a once used refuse disposal site. But now we are at last going to experiance the long awaited decline/slump/crash, will my rent reflect relatively?

I hear stories about people selling and now letting to buy and FTBs now holding that first purchase, does this all mean that the letting market will be in higher demand and therfore not be affected by the HPC?

Common sense would tell you that rent must be relative regardless of demand, or am I getting caught up in the hype?

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I've never looked at any historical data, I've heard rents are going up recently due to the slowdown in the mortgage market (my blocks gone up) but I'd assume in the long run that rents would roughly correlate to mortgage rates plus a margin. Because renting is an investment. I think IRs and prices will fall together so IMO rent will generally fall as the crash progresses, don;t have any evidence to back that up though really.

Edited by domo

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I'm currently renting and have been for some time as a result of HPI and not resulting to ridiculous monthly mortgage payments for a bedsit on a once used refuse disposal site. But now we are at last going to experiance the long awaited decline/slump/crash, will my rent reflect relatively?

I hear stories about people selling and now letting to buy and FTBs now holding that first purchase, does this all mean that the letting market will be in higher demand and therfore not be affected by the HPC?

Common sense would tell you that rent must be relative regardless of demand, or am I getting caught up in the hype?

I am expecting rents to go up but only in the short term and only a small jump.

My reasoning is that as more BTL's reset to higher rates, owners will either have to up rents or subsidise and they cannot subsidise for long. Some of these high rents will be used by those who have been kicked out of their current property due to repossession or landlords thinking that it is easier to sell an empty property. But a lot will just sit there empty until repossession because people cannot afford to rent them and those that paying high rent will jump ship to somewhere cheaper in a heartbeat.

But rents will be brought down in the medium term as the repossessed properties get sold and put back into the rental market. Long term landlords will know that it is better to have someone paying the rent than a void and they will always offer properties at a more reasonable rent.

I am seeing this happen in our area, there are a number of properties that have been on company let, so nice 4, 5 beds, very high rate. The owners now want either to sell or rent at a high enough rate to cover the mortgage. One has been empty for 18 months, another has been rented by a family for 2 months who then jumped to a cheaper rental. There are others that have been rented but now stand empty as the landlord tries to sell them at too high a price, hoping that they will not make a loss. There is always a churn of good priced rentals in the 2 & 3 bed market to keep rents stable.

Rental prices in our area have not really changed for the past three years, there are peaks and troughs but the swing in either direction has been less than 10%.

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I'm currently renting and have been for some time as a result of HPI and not resulting to ridiculous monthly mortgage payments for a bedsit on a once used refuse disposal site. But now we are at last going to experiance the long awaited decline/slump/crash, will my rent reflect relatively?

I hear stories about people selling and now letting to buy and FTBs now holding that first purchase, does this all mean that the letting market will be in higher demand and therfore not be affected by the HPC?

Common sense would tell you that rent must be relative regardless of demand, or am I getting caught up in the hype?

Frankly this is a really hard one to call. There will be increased demand from people not wanting to buy, and not all empty homes will be let out. There will also be fewer landlords so willing to subsidise tennant's rents so will be putting up rents more aggresively.

On the other hand a disproportionate number of rented properties are rented out to recent immigrants, and if the recession reverses this that may take a dent out of demand. You may also find some of the reposessions and distressed sales being rented out - at a far lower cost base. Finally if there is no money going around then high rents may simply be unachievable.

I know this has not answered your question.

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Demand for rented?

If there was a demand for rented, the BTLS wouldnt be in trouble.

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I am also carefully watching for any hints, amongst the flurry of new lending regulation, for similar tightening of letting rules. PM Brown must be aware that by registering/controlling rents he has the power to drive down the housing welfare budget whilst effectively preventing the landlords from selling out by way of re-introduction of protected tenancies. A driver and justification for a move in this direction would be any sharp increase in rents from stretched landlords.

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So many places to rent in my area = downward pressure on rents (or static)

LLs crapping themselves with possibility of void periods = no change or downward pressure on rents.

Bit simplistic but I'm going with this for the next couple of years

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UNLIKE speculative housing booms, renting will only reflect the REAL economic position.

no one speculates on rents, so its affordability driven.

have a downturn and rents will be ground into the walls.

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I am also carefully watching for any hints, amongst the flurry of new lending regulation, for similar tightening of letting rules. PM Brown must be aware that by registering/controlling rents he has the power to drive down the housing welfare budget whilst effectively preventing the landlords from selling out by way of re-introduction of protected tenancies. A driver and justification for a move in this direction would be any sharp increase in rents from stretched landlords.

there is already legislation in place controlling rents and rent rises.

You just have to claim.

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I am also carefully watching for any hints, amongst the flurry of new lending regulation, for similar tightening of letting rules. PM Brown must be aware that by registering/controlling rents he has the power to drive down the housing welfare budget whilst effectively preventing the landlords from selling out by way of re-introduction of protected tenancies. A driver and justification for a move in this direction would be any sharp increase in rents from stretched landlords.

He also has a pretty big vote winner. There are more renters than landlords, they tend to be more concentrated (and I think that they are more likely to be in marginals as well), they are usually Labour voters who are hard to get out to the polls, the Tories would find it very hard to match this and the Labour membership would love it - at least those without BTLs.

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No fault evictions mean that many don't.

they cant evict unless you have broken a major term of the contract or the contract is at an end.

What we need is the right of the tenant to stay for a long time, if he wants, Ah La Germany. Many people seem to flit between landlords.

In my case, we been here for 10 years, although there is annual renewals and sh1te, and the contract can be ended by the landlord if he doesnt want to renew. IMO, the option to renew should be in the tenants favour.

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there is already legislation in place controlling rents and rent rises.

You just have to claim.

Correct me if I am wrong but although one can register a rent on demand it isn't much use if it unnaceptable to the landlord who can evict, almost, at will. Tenancy protection has to go hand-in-hand, no?

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Correct me if I am wrong but although one can register a rent on demand it isn't much use if it unnaceptable to the landlord who can evict, almost, at will. Tenancy protection has to go hand-in-hand, no?

see my later post SVP.

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in a crash, generally speaking, rents will go down!

the reason is, there will be people who choose to or are forced to live more densly. For example students will no longer think OMG i have to buy at 20 before prices go up more. they will live with parents longer (freeing up housing ect)

also less MEW = less spending = less jobs = people moving in with friends/family to save money = more places to rent

the unknown in all this is goverment subsidised rents. so will someone move out of their rented home if they loose their jobs or ask the gov for help?

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Guest happy?

The future of renting is piss poor for BTL who joined-in after the speculation started i.e. c2001.

Property prices will fall 20-30%, mortgage renewal will be impossible (or punitively high) on LTV exceeding 70%, and the number of tenants defaulting will increase as their own credit position weakens - who are your priority creditors - food and gas or a landlord on direct debit who lives somewhere in the south and will take 3 months to get possession?

As this spiral develops you will have increasing numbers of tenants with bad credit history, plus property whose landlords have been re-posssesed being boarded-up by banks. Banks will then become landlords as they try to prevent the deterioration in properties they have re-possessed - having any sort of legal tenant is better than having the boiler/bathtub stripped by squatters. This mass increase in banks as landlords (probably through holding companies) will then see rents static or declining further. This will drag more landlords toward the county court as further increase in lending charges couples with falling rental prices pushes more of them toward bankruptcy. The Daily Mail will have headlines about 'dentist landlord bankruptcy hell', and carry some sob story about a greedy bast4rd who use to drive a 4x4 beemer but now is facing the ignominy of owning a Mondeo.

At this point, tenant delinquency will become a political movement as tenants realise that there are no circumstances in which they can secure affordable, stable, rented accommodation and mortgages property becomes a pipe-dream. Once this movement establishes its own ideology and political movement direct action will be undertaken and there will be instances of mass squatting. I'd expect to see such direct actors securing easily defensible properties - a large block of flats in Manchester or Leeds are obvious targets. Attempts by the authorities to cut-off water and electricity will be countered by publicity of women and children suffering. A housing association will then buy the block in question for a pound from Bovis, with additional funding from Northern Rock (which has transformed itself into a social lender) and issue tenancy agreements to the squatters.

Me, I'm in it for the long term.

Edited by happy?

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the unknown in all this is goverment subsidised rents. so will someone move out of their rented home if they loose [lose] their jobs or ask the gov for help?

This is a major deal. It is bad news for a government to have a large rental sector because they then take on the responsibility for the payment of that rent in times of unemployment, sickness and throughout whole of retirement. Means tested of course, but with a bit of financial planning or imprudence on the part of the tenant ...

Edited by Knut

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There are many factors that will keep rents down in a HPC already mentioned.

Has anyone thought of the effect of the retiring of the baby boomers? Many have been selling and trading down or emigrating. Now the housing market has slowed many of these un-mortgaged will opt to let rather than sell and take the monthly rent to Benidorm or wherever, flooding the upper end of the market with tenant properties.

Also, many people trading up now can't find buyers so are remortgaging and letting to buy.

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Guest happy?
There are many factors that will keep rents down in a HPC already mentioned.

Has anyone thought of the effect of the retiring of the baby boomers? Many have been selling and trading down or emigrating. Now the housing market has slowed many of these un-mortgaged will opt to let rather than sell and take the monthly rent to Benidorm or wherever, flooding the upper end of the market with tenant properties.

Also, many people trading up now can't find buyers so are remortgaging and letting to buy.

There won't be the money to take to Benidorm (even if it's crashing there). There will be a massive glut of such properties available - 3-bed semis will be two-a-penny, and retirement bungalows will treble in price as they all try to sell-up at the same time. Any rental opportunities will be insignificant.

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One change whose effect is not yet clear will be the introduction of Local Housing Allowance to replace housing benefit. LHA provides elligible tennants with a fixed sum based on average rents and the size of the property they need. LHA is being introduced from April.

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One change whose effect is not yet clear will be the introduction of Local Housing Allowance to replace housing benefit. LHA provides elligible tennants with a fixed sum based on average rents and the size of the property they need. LHA is being introduced from April.

That should affect landlords that rent their property out on behalf of LAs big time. :huh:

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I’m not so sure we can expect the best of both worlds, much as I would like to!

Now that the sentiment of ‘I must buy soon at all costs in case I miss the boat completely’ seems to have evaporated from most buyers I believe there will be an increase in demand for rental properties and a corresponding increase in the rents that they are able to achieve. However, although some people try to make a connection that therefore this must mean BTL is still a great idea, imo, because house prices have become so detached from rental yields, I think we have a long way to go before the balance tips back again.

I was browsing a book called ‘The Buy to Let Bible’ in Waterstones the other day and interestingly it suggested that you should look for a 12% gross yield when purchasing and ignore the capital appreciation. Basically dividing the purchase price by 100 to get the required monthly rent.

Currently up here in Edinburgh, for a decent 2 bed flat in a good area you're looking at around £300k to purchase and a similar one might rent out for £1000 pcm. The above rule would suggest that either the price has to come down to £100,000 (even on a really bearish day I think that’s unlikely!), rents rise to £3k pcm, or they’ll meet somewhere around the £175k /£1750pcm level.

I’m expecting drops in house prices of about 30-40% depending how much they overshoot on the down side.

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  • 292 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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