Tuesday, August 19, 2008

But Paragon says rents are going up?

Rental market flooded by frustrated sellers

Record numbers of homeowners are letting out properties after failing to sell them in the worst housing market downturn for more than a decade, the Royal Institution of Chartered Surveyors (Rics) says today. The flood of properties is expected to depress rental levels, which Rics warned may fall this year. A fall in rents, combined with higher mortgage costs, will place recent buy-to-let landlords under intense financial pressure and could accelerate the housing downturn as they dump properties on to the market.

Posted by little professor @ 12:18 AM (1175 views)
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10 thoughts on “But Paragon says rents are going up?

  • “… national average UK rent fell from £950 per month in June to £900 in July.”

    Wow, down 5% in a month! Let’s hope this trend keeps up! Does anyone know if rents are included in the BoE’s inflation basket? That’d be an excellent way to fudge the figures.

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  • Same story in the Times:

    Times: Families forced to let homes they can’t sell
    The seizure in the housing market is forcing families who cannot sell their properties to let them and move to rented accommodation, a new survey suggests.

    Rental demand has soared to a ten-year high in the past three months and the number of properties to let has also hit record levels, figures from the Royal Institution of Chartered Surveyors (RICS) show. The balance of surveyors reporting a rise in business from new landlords soared to a record high of 43 per cent in the three months to the end of July, up from 30 per cent in the three months to the end of April, RICS said.

    At the same time, some 37 per cent more surveyors said that tenant demand had risen rather than fallen in the three months to the end of July, up from 30 per cent in the previous quarter and the highest proportion since the RICS survey began in 1998. David Richardson of Arnolds, a chartered surveyor in Norwich, said: “People are letting their own house and then renting something more suitable to their current needs.”

    The housing market has virtually ground to a halt in the wake of the credit crunch, with lenders becoming more circumspect about lending to would-be buyers. Home sellers are being forced to cut prices and in some cases they still cannot secure a sale. About £22,000 has been wiped off the value of an average home since the market turned in August last year. Many economists predict that prices will continue to fall next year and even into 2010, prompting many households that have already sold to move into rental accomodation rather than buying a new home while they wait for the market to bottom out.

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  • It’s just like dominoes toppling, each aspect of the downturn in turn impacts on the next aspect and on and on it goes……

    I wonder if it’s going to be exceptionally quiet on the high street this Christmas?

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  • Same story in the Independent:

    Rush to rent as house sales dry up
    The number of people instructing letting agents to rent out their homes rose at a record pace during the second quarter of 2008, as increasing numbers of would-be property sellers struggled to offload their home at a reasonable price. According to the Royal Institution of Chartered Surveyors…….

    [skip to the analysis]

    David Hollingworth of London & Country said homeowners need to think carefully before deciding to become an amateur landlord. “This is a drastic measure, and will usually result in taking on a much greater level of mortgage debt than originally planned at a time when credit is more expensive and not as freely available.”

    “Borrowers need to fully understand the costs and risks that come with being a landlord before putting additional stress on their finances. Both properties are likely to be subject to larger mortgages, and payments need to be met whether there are tenants in place or not.”

    The growing number of new amateur landlords has created a two-speed market, with many amateur buy-to-let investors now trying to exit the market in response to the collapse in prices.

    Thousands who bought properties over the past few years are still struggling to generate enough rent to pay their mortgages – and are now facing even higher borrowing costs when they come to refinance. While they had hoped a continued rise in capital values would help them to achieve a profit, the collapse in the market has encouraged many to sell.

    Meanwhile, the number of landlords defaulting on their mortgages has risen sharply over the past few months, and Bradford & Bingley has predicted that the market may only get worse during the second half of the year.”

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  • little professor says:

    Cheers drewster

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  • “as increasing numbers of would-be property sellers struggled to offload their home at a reasonable price.” @[email protected]

    …………reasonable price according to whom?????

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  • tyrellcorporation says:

    Another phenomenon I predicted a year ago was that people will become more inventive about accommodation in general. I know of many friends now who are renting out rooms in their own houses to lodgers, students and even couple, to make a bit of extra cash. People are also choosing to go back to mum & dad in an effort to avoid paying exhorbitant rents. All this is pushing down rental prices rather than the oft shouted “massive rent hikes due to lack of supply” mantra.

    I had a £25 hike in my rent at the beginning of the year (first for 2 years) and I fully expect the next move to be down.

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  • Eyes_wide_open says:

    Why would someone let out their own home, then rent somewhere else?

    What’s the point of that?

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  • Oops… two threads on the same subject.

    The good old Beeb… RICS press release as reported on Ceefax and it basically says whilst there has been a large increase in the number of properties to rent, yet rents have gone up because this increase has been surpassed by the increased number of renters.

    This doesn’t make a lot of sense… more supply (rental properties) should cause rents to fall!

    This is what the unknowing public reads, Beeb/Ceefax wisdom could as ever colour their judgement.

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  • This is 100% driven by the belief that prices will bounce back within a year or so. More mass delusion and denial.

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