Monday, June 9, 2008

Central London still going strong it would seem.

Rental market booms as house prices slide

I just re-rented one of my flats in 2 days with a 9% increase in the rent compared with last October. Agents have also lowered their commissions to get business so net cash certainly up...

Posted by chief @ 04:35 PM (2219 views)
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26 thoughts on “Central London still going strong it would seem.

  • Interesting:
    “Agents have also lowered their commissions to get business” and the title says “Central London still going strong it would seem”.

    If that is the case why are agents lowering their commissions?

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  • I don’t get it:

    “Despite the boom, rents fell slightly during the three months to the end of May, with average rents for houses falling by 7 per cent, while the level of income landlords can expect from flats dropped by 9 per cent.”

    A. How does this square with the bullish title?
    B. 7% fall during 3 months is not a ‘slight’ fall.

    “The mortgage lender Paragon said strong demand had pushed the average cost of renting a home in England and Wales…”

    Ah, our old friends ParaGONE said. They wouldn’t be saying that just to get a few more BTL suckers in?

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  • Yup…gotta agree with all the posts. How can you have a boom in rental prices when rents are infact going down. So I suppose, by this ‘journalists’ assumption the UK has enjoyed a rather lucrative housing ‘bust’ for the last 10 years. What a moron.

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  • Ha ha. Not the case in Bristol I assure you. I’m having estate agents call me up to ask how my recent tenancy is going… not the sign of a booming rental market.

    Note also that lots and lots of block of flats are just being finished here… haha lots of choice for the tenant then!

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  • doom&gloom says:

    Interesting – a generally bullish article on rental demand, but buried in second-to-last paragraph, “Despite the boom, rents fell slightly during the three months to the end of May, with average rents for houses falling by 7 per cent, while the level of income landlords can expect from flats dropped by 9 per cent.”

    The apparently increasing rental demand just doesn’t stack up with falling rents. Don’t think that’s ‘slightly’ either – almost 10% decrease in flat rental income over just one quarter. That sounds severe.

    Almost as if ARLA were chided last month for not talking the rental market up enough, so have spun it a bit this month.

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  • So according to the last paragraph, if you live in London, you have to be earning £36,000 per annum AFTER tax, NI etc just to rent an average house! And then of course you’ve got council tax, utility bills, food, heating, clothing, transport etc to think about. The figures don’t seem to make sense to me.

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  • What rental market boom? The article itself points out that average rents for houses and flats fell by 7% and 9%, respectively in the 3 months to May. Not sure about the rent levels reported here either. http://www.rentright.co.uk/rrpi.aspx shows a figure of £619 per month for a 3-bed in the UK and £965 for a 3-bed averaged throughout London (not sure I trust these figures either). Getting back to the article it seems they’re not even comparing like with like – “other reasons for the boom in demand included a sudden influx of desirable properties coming onto the market”. As Huck Finn would say, it’s rubbage.

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  • Je ne comprend par – “Despite the boom, rents fell slightly during the three months to the end of May, with average rents for houses falling by 7 per cent, while the level of income landlords can expect from flats dropped by 9 per cent.”

    So london is different? Vive la difference mes amies! – All double dutch to me.

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  • Stevie Dee says:

    @Chief, if you know the guy who wrote the article.. tell him to lay off the sauce for a couple of weeks..

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  • Chief can you give more details – i assume this is your experience rather than from the article. Fair enough, but where is yr property and what kind of flat is it. Really im not being skeptical but i’d like to know. Maybe your property is in one of them housing/rental boom enclaves.

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  • Yerhavingalaugh says:

    Bound to be a lot of volatility whilst the market is adjusting to the new reality. I expect rents to be falling in 6 months time as inflation and unemployment rise. Affordability will surely be the key issue. I can see a lot of recently departed fledglings returning to the family nest!

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  • Stevie Dee says:

    @6 yes.. belgravia..

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  • Stevie Dee says:

    or he’s a really good salesman, and a greedy landlord.

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  • This is possibly the most poorly written article I have ever read. You can’t write an entire article about the “boom” in rental demand, and then end it by saying that prices have dropped by 9%. That makes no sense. The strongest piece of quantitative data in the whole article points to the exact opposite of what the author is claiming.

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  • sure techieman. i only buy places i would want to live in i.e. no big developments, good transport, places with character etc. it is a large 1 bed in west london (zone 2). i called 3 agents. one of them found me someone in 2 days (current tenant doesn’t move out for another 3 weeks). told them i would accept it they knocked 2% off the commission (10% to 8%), they bit my hand off…better be lucky than good as the saying goes! who knows where it will be in 12 months when the contract rolls…

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  • A classic piece of denial, IMHO. Perhaps the jurno’s a member of the Flat Earth Society – metaphorically speaking, of course.

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  • … it would be a lot easier for the Independent just to give free ‘happy drugs’ with each copy, rather than print this sort of contorted cr*p.

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  • it_is_going_with_a_bang says:

    One of my friends who has 6 flats he rent sin London just increased his rents by 10%. Having said that it is the first time he has increased rents in about 4 to 5 years.
    So it is not just a case of it being an annual adjustment in his case. I would think many other rent increases are due to this not just an ‘annual’ increase.

    The point being that if rents are higher than they can be managed – especially in a slow down – the only thing a landlord has to look forward to is people not affording it and not paying their rent.
    Leaving them with months of unpaid rent and court fees.

    A bright future indeed.

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  • confused76 says:

    Lies, bad lies

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  • Stevie Dee says:

    @11… perfectly put.. if people are hard up.. this is why i believe legislation should be brought in.. to reign in landlords.. fines.. a quick & efficient system for tennants to sort these landlords out.. when i say fines, £1,000 – £5,000 for every tennant.

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  • 'twas_the_leaving_of_liverpool says:

    Few peeps asking for more details about rental changes, hopefully this will help – if you want any more clarification, I promise I’ll repost. I have a rental portfolio spread between London (City) and Liverpool (City & environs). 500sq ft City of London 1-bed rented 1st 6 months last year at £325/week, period to end May ’08 £345/week, 1st June 06 6months at £365. Self managed £7 tenancy find costs thru gumtree and all tenants moving in sameday/next day to previous contract.

    Liverpool. New build city centre £725pcm 2005; £700 2006/7 – tenants refused increase to £725 April 2008 – new tenants took 4 weeks to find at that rate. 4 weeks needed as after 2 years flat needed to be empty and ‘freshened up’ (new cushion covers and bedspread) to market. £15 in feature listing costs on gumtree.

    Liverpool, edge of centre. £600 2beds new build for 2007. New tenants May 2008 £625. Same block, initial March 2007 tenant took rent rise from £650 to £675 in June 2008.

    Bootle; 1 bed £395 / month all of 2006 and 2007 – £425pcm new tenant June 2008. Void for 3 months but down to the useless local EA.. Couldn’t trust gumtree due to scallie nature of area(!)

    Have saved £12k – £15k a year by sacking full service (yes, a contradiction in terms) Liverpool agents – most thru fees, rest thru slicing void times by taking marketing and enquires seriously (and non-competitive!). Don’t get me wrong, still not enough to keep ahead of 2008 rises in mortgages, but what the heck I …. (gone on too long – will add this bit in a later post if anyone is interested)…..

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  • funny how estate agents are always trying to make out how brilliant things are……

    compulsive liars

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  • my rent has just gone up by £20 585 to 605 after 2 years of tenancy. is it 3%? Whoa!

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  • I live in central London. There are 48 properties on Primelocation in my development under the “to rent” section. People are moving out each week. Rents will go down in London, not up. Finance workers from abroad are all going back home. The death of the “company rent”

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  • new user 2007 says:

    Chief…

    So if all of the 2mn BTL properties never have any void periods, and all see a 25% increase in rental yields they may alsmot match the rise in interest costs they are facing:)

    So you are renting out your second property. Good news. May I ask how many times more than your rent was the capital loss this month?:)

    Oh, and on your 500k empire with 25% equity….by the end of the year you will have lost around 50k on 125k i.e. a 40% capital loss:)

    Goodluck with that lol

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  • new user 2007 says:

    p.s. how stupid are your tenants exactly? You must share the same gene pool:)…tell them to move into my nice safe part of London with great transport links, where my rent has risen by 15% over several years. There enough properties here…of the 18 flats built opposite where I am only two are rented out…there are more EA “To Let” signs than tenants:)

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