Thursday, May 1, 2008

Paragons latest “survey”

BTL booms as rental costs skyrocket

Buy-to-let (BTL) remains a lucrative investment option, with average rents increasing by 12 per over the last six months to reach record levels. Average rents have risen to more than £1,000 a month (£12,041 annually) over the last six months, according to Paragon Mortgages' latest Buy-to-Let Index. The index also revealed that rents increased 4 per cent in the first quarter to 2008, indicating that the market is not suffering greatly from turbulence in the wider property market.

Posted by jack c @ 02:38 PM (1238 views)
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23 thoughts on “Paragons latest “survey”

  • Wasn’t there an artical from the FT a few days ago saying residental rents were dropping due to over supply in popular places such as Canary Wharf – They certainly are putting up a few hundred units more on Westferry road. Just as people are getting laid off from financial services.

    What I find amusing walking home every night along Westferry Road are the estate agent windows( getting fuller all the time) – They have highly inflated rentals next to the silling asking prices for sales – As a way of justifing the price for BTL’s – I’ve always got a 20-25% reduction on any rent being asked on the Isle.

    My rent is 60% of what an intrest only mortgage would be on the same flat – If you paid what they are currently asking – And I don’t have the 4k+ service charges and 10% agent fee’s.

    btw; I work as support staff in a bank, everyone is very worried about their jobs – There are very few other banking jobs out there at present!

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  • Balls!

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  • So lenders, seeing what a good investment BTL is, are falling all over themselves to do BTL mortgages? ………. Not!
    So people are queueing up to buy BTL properties? ………… Not!
    Wonder what John Heron’s been smoking?

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  • Well – all I can say having just negotiated a rental for this sort of price in South Bucks, the agents are very keen to keep you renting rather than leaving the house empty since the landlords are fearing that higher mortgage costs and no income is even worse. Of course Allbutgone Finance don’t need foreclosure and fire sales – reality is that Landlords are PRAYING people stay. I’ve done a deal for less than inflation.

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  • tyrellcorporation says:

    Laughable!

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  • uncle chris says:

    Well, considering that my rent hasn’t gone up in the last 3.5 years, somebody else out there must be facing a a pretty hefty rent rise. Surely there is some way of regulating the falsehoods eminating from paragon and assetz – trades descriptions maybe?

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  • … I think that Allbutgone are literally clinging on to dear life. Even the most gullbile BTL investors must be looking at BTL like people ended up regarding timeshares: Don’t touch with a bargepole. It just goes to show that however you dress it up – rubbish is rubbish. You can’t kid all of the people all of the time.

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  • waiting for the crash says:

    Been renting my place for over a year now and I have not had an request for an increase in rent and thus my rental payments have not kept in line with CPI and are falling. Many people will be in a similair situation to me and landlords wont ask for a yearly inflation rise. So in many situations they are not rising. Unless they use Foxtons of course.

    And a house down the road which is very similair to the one I rent is be offered for 75 quid less than what I pay. (cannot be sA** to move to a cheaper place). Always worth keeping an eye on what properties around are being rented out for as if the landlord does call and mentions an increase, I can point him in the direction of similiar rental properties in the area and would the risk of one month with no rent be a problem – I would have thought so.

    Although I have seen the rental price (what the agent advertises it for ) increasing for flats of all things.

    I also have noticed quite a few properties that are offered for rent are also offered for sale at the same time.

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  • mark wadsworth says:

    sorry for double-post, I don’t know how that happened.

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  • ontheotherhand says:

    Just got an email from my landlord for renewal at the same price as last year. Contained below was the email from the estate agent recommending a rise with inflation which he ignored.

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  • letthemfall says:

    Wasn’t there an almost identical piece to this posted recently? The dodgy lenders trying to talk up the market for all their worth. One nice looking place I’ve noticed round where I live has been up for sale or rent for months, no takers.

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  • Hard Cheese says:

    What a load of rubbish, I have rented for nearly 5 years, and only once did they attempt to raise the rent. I say attempt, because I refused to pay any more. Needless to say. My rent has not moved. I only pay £515 for a three bed, corner plot detached with single garage.

    These people spouting this crap must either be deaf, dumb or just plain stupid!!!

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  • confused76 says:

    MWAU UHAHA AH HAA HHA HAHHA HA AHAAHHAHAHHAHHAH

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  • Even if Paragon’s figures are correct, and average yields really are 6.3% (but less than 5% local to me..) after the costs of BTL are deducted, BTLers on a 6.5% SVR will be having to top up the rents to cover the mortgage if they’re more than 60% borrowed (which the great majority are)

    So, aside from the cash flow nightmare (can’t liberate equity any more, so where does the money come from?) there’s also the little matter of their equity being wiped out by price falls.

    In the words of Private Fraser: “They’re doomed, doomed, I tell yer”

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  • new user 2007 says:

    The key flaw in this is that a FTB or BTL should not buy if rent is substantially lower than the mortgage and related costs i.e. the case for anyone buying in the last 2 years.

    The pivotal reason is whether both think prices will rise or fall. FTB now think they will fall so would have a double-whammy, but BTL obviously think prices will rise i.e. they think they can offset rent subsidies with capital.

    So unless rents are higher than interest payments and/ or capital appreciation is taking place, then it does not make sense i.e. only an idiot would do BTL (although plenty have been over the last two years for sure, sadly).

    If I did buy it would be my home so I would more likely try harder to keep it than the “BTL in it for the long term”, so not sure how that comparison of they are in it for the long run is done.

    And that chart from the City Wire article is interesting…RPI adjusted house prices going back to 1952, which show the spikes…if you…

    bought in 1952 you would not get your money back until 1972 i.e. 20 years
    bought in 1972 you would not get your money back until 1988 i.e. 16 years
    bought in 1988 you would not get your money back until 2002 i.e. 14 years

    Even the most optimistic scenariob based on that trend is it would take 12 years BUT, the peaks in previous cycles were short-lived. This peak has been sustained as even more people got on and it is as high, so different.
    Allegedly, the many BTL who bought in 2006-07 (most of them did buy then) would have to wait now until about 2021 just to get their money back when the correction starts…

    …no wonder that will be in it for 17 years, they have to just to break even:)

    Overall, as credible as Mr ASSetz

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  • Lucrative? isnt that spelt L-u-d-i-c-r-o-u-s?

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  • the haunted says:

    Jokers…

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  • it_is_going_with_a_bang says:

    Average rent?

    What have they done – included the rental sums of a couple of Palaces thrown in for good measure?

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  • In paragon’s shoes I’d do exactly the same thing – they’re fighting for their survival.

    you really can’t blame them – laugh at them and blame the ft for printing this rubbish, yes, but blame them, no!

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