Tuesday, April 7, 2009

BTL is dead

Property rentals in London at September 2000 levels

The vibrant capital of the small island populated by cash laden city boys spending £10,000 to dine out, with corporate rentals to multi-million salary expatriate bankers... guess what... rentals are down to 2000 levels. Says who? Knight Frank... "Demand for rental property has increased by 20% over the past year, but this has been more than offset by a 67% increase in supply" take that, BTL leeches! bleed cash and hurry up to repay your loans.

Posted by confused76 @ 12:16 PM (1935 views)
Please complete the required fields.



21 thoughts on “BTL is dead

  • Another source showing the dire state of the London property markets. despite the effort to claim that sales prices are holding, the critical chart to look at is the ever increasing stock of vacant properties in the rental section. but at some point these buy to losers will have to capitulate and sell…. I can’t wait!

    http://media.primelocation.com/content/prime-index/prime-index-200903.pdf

    “Weekly rental values have dropped for the eleventh
    successive month since March and are now 2.15%
    lower than January 2009. Landlords must continue to
    offer reduced rates in order to entice prospective
    tenants.
    • For the second successive month, all five prime
    London regions have seen a decline in weekly rentals.
    With stock levels increasing by 97% compared to this
    time last year, all the regions in London are hit hard,
    especially Central London, decreasing by 2.42%.
    • Annualised price changes continue to fall and are now
    at their lowest since January 2005, with weekly rents
    13.72% lower than this time last year.”

    Reply
    Please complete the required fields.



  • Well I am looking forward to seeing these dramatic falls in Devon over the next few months, as at present we have witnessed no such falls in asking prices. I suspect the figures are once again taken from a very small turnover of properties.

    Reply
    Please complete the required fields.



  • The oversupply of rental properties available has been created by the ‘reluctant landlords’ who have not been able to sell recently. This situation was created by the Estate Agents who offered renting as a way out to desperate vendors.

    Reply
    Please complete the required fields.



  • montesquieu says:

    @ will

    Well I’m certainly seeing it in Berkshire where the glut of rentals from accidental landlords is in evidence everywhere, as are plummeting rental prices. After a certain number of void months, would be landlords are taking what they can get, hammering the buy to losers hard.

    Rental prices are driven very much by local circumstances – if there are 10 comparable houses on the market and five prospective tenants, to attract a tenant, prices need to drop. This glut is a relatively new phenomenon and may take a while to propagate across all markets – indeed if capitulation on selling prices comes first it might never reach some places.

    What I find interesting is that one plausible assumption some time back was that rents would rise as the crash progressed, coming to meet deflating sale prices in the middle somwhere … clearly this hasn’t happened. Since there is a historic connection between prices, rents and yields, evidence of falling rents is yet another indicator of continuing sale price falls.

    Reply
    Please complete the required fields.



  • stillthinking says:

    I don’t think rents ever moved much. I left the UK in 2002, came back in 2006, and didn’t notice any difference in rents over that period. Now of course they are in full retreat.
    However, rents are always backstopped by social housing, which is a dictated price independent of market conditions. Private renters are in the situation of bidding against each other for the most desirable places, but the bidding always starts from the baseline of the dictated price level. Hence the situation where private bidders can’t compete for certain rare properties such as 5+ bedroom family houses.
    The biggest advantage to the renter would be if the government realised that they are themselves the market due to their bulk requirements, and lowered the dictated “fair market” values, which would in turn lower private rents.

    Reply
    Please complete the required fields.



  • Seller –> Desperate seller –> Reluctant landlord –> Property repossessed
    –> Property back on the market –> Glut of property for sale –> Final crash

    I read other comments re Devon. Not sure about that, maybe job market strong there. Here in central London property is in freefall. US expatriate gone. Private schools have 50% vacancy rates. Restaurants are empty. Sure property is the only thing to defy gravity HA HAHAHHA HHAHHA

    You can rent in Chelsea today for less than you paid in 1999 and get a property in much better shape because was meant to be owner occupied. BTL is dead!!

    Reply
    Please complete the required fields.



  • BTL is certainly dead, got out 16 months ago and making cash easier on short-selling banks and financials this last 9 months.

    Have been selling the Pound too since last August and the Pound is definitely D-E-A-D.

    With all these empty shops, restaurants, pubs etc doesn’t it tell you something about the UK recession, whoops I mean Depression

    Reply
    Please complete the required fields.



  • Anyone noticed a fall in Scottish property rentals?
    My rent is still going up but I haven’t seen any alternative properties at a reasonable rent.
    Just found out that a similar-sized (but mid instead of end terrace) 3-bed house 3 doors down sold for only 65,000 last year. 6500 rent pa seems a pretty good return for this place then.

    Reply
    Please complete the required fields.



  • The reluctant landlords who have taken the EA “advice” to rent out the place they can’t sell (presumably through the EA lettings side, taking a nice %) are effectively owners of 2 properties, and so have stuffed themselves, as the tax man will now want
    his capital gains when they finally sell. Oops.

    Reply
    Please complete the required fields.



  • @7 a saver

    Mate, if you are paying that much you are a chump

    Reply
    Please complete the required fields.



  • shining wit says:

    When I was looking for a new rental property in late 2007 I was astonished to learn how many were for sale as well as for rent. The situation has now got so bad I am about to negotiate my second reduction in rent sice first taking the lease. I have already got them down by just over 18% and am hoping to get at least another 10% off. You need to establish a good rapport with your landlord/letting agent to achieve this.

    I urge anyone renting to compile a list of available properties (simlar to the one you rent) and how long they have been available and use it as leverage with your current landlord. There are now 7 properties similar to mine (size, cost and other specs) that are available for rent within a 10 minute drive that have been on the market for over 6 months.

    Oh happy days….

    Reply
    Please complete the required fields.



  • Letsgetreadytotumble says:

    I use PropertyBee to log rents on Rightmove in Cornwall, and the trend is definitely down, with a lot of properties staying empty for many months.

    Reply
    Please complete the required fields.



  • Grumpy Middle-aged Git says:

    I rented in Northwood, Middx back in Jan. It appears a fairly popular, family-friendly area with some good schools. I was surprised by the number of voluntary price reductions (admittedly from some ludicrous original prices) before we even started negotiating. We offered on 3 properties and all accepted lower offers (about 15% in each case).

    All I can suggest is that try it on with some low offers. If you look reliable, respectable and are in a steady job, many landlords are prepared to take less in these uncertain times. Interestingly I also played the estate agents off against each other when a property was marketed by more than one agency to make sure that I paid the lower of the two admin + inventory fees. The agent also reduced his finder’s fee to the landlord in our case. In short do your homework and try it on if you’re not in a rush to move.

    Although the rent in my case is not very cheap, I console myself with the thought that the landlord is losing far more each month in capital value than I am paying in rent – I might even offer to buy this place in a year or two’s time!

    Reply
    Please complete the required fields.



  • Westlondon Renter says:

    I have lived in West London for nearly 10 months now and its time of year where I decide whether to move or renew or buy.

    Buying’s out of the question so do I try and negotiate down from the 1200 a month for a 1 bed with garden flat or move to a 2 bed?

    It seems to me there is alot out there but the better quality properties are still being snapped up at asking price pretty quicky.

    Has anyone got any advice?

    Reply
    Please complete the required fields.



  • c'mon correction says:

    There is HUGE over supply of rental properties, there is so many ‘To Let’ signs in my area – Cardiff – that it is really hard to find a street that HASN’T got a property currently ‘To Let’. I challenge anyone on here to look and see how many streets don’t have empty properties in their area, I bet it won’t be many. I estimate about 5% of streets don’t have any ‘To Let’ signs on in my area !! Who are all these landlords losing money hand over fist???!!!

    Currently, I think sellers who can’t/won’t sell at the market price and let-out instead is the main factor that prices aren’t dropping by 4-5% a month. When these sellers realise a year from now, that they haven’t ‘profitted’ out of renting and now their capital loss is another 20% down on top of their loss now, they will get really desperate/ bankrupt.

    Reply
    Please complete the required fields.



  • Sorry to say that if you have lived in the property before you let it out you have a few years of capital gains free of tax…. BTL is/was incredibly tax efficient especially if you lived in the property that many reluctant landlords will have done. Residence relief it is called

    Reply
    Please complete the required fields.



  • it really depends on what property and where. I asked my landlord for a reduction and he said no and that he had recently rented one for a similar price down the road. he basically called my bluff. I guess if I can find similar properties for cheaper I will have a leg to stand on. but I’m not sure I can. I think you might get a discount on the renting the family homes. but cheaper places, not likely. I’m in a large 2 bed place in east london. 1200pcm. basically you can’t get much for less than I’m paying in london nad I haven’t really seen that changing. would love to be proved wrong tho

    Reply
    Please complete the required fields.



  • japanese uncle says:

    BTL market must go down to the hell, until the word Buy to Let will be ingrained into people’s minds like Black Death.

    Reply
    Please complete the required fields.



  • britishblue says:

    One of the most important criteria when renting a property is the stability of the landlord. Does anyone know whether it is possible to ascertain the LTV ratio of a rented property? The market should really be turned on its head with landlords having to provide references, be credit checked by the agents, etc

    If a landlord is repossessed renters may have to bear quite considerable costs in moving in a rush,

    Reply
    Please complete the required fields.



  • Indeed britishblue. As well as performing credit checks on tenants, the EA should add credit checks on the landlord also as opart of the process.

    However, I have heard stories recently of EAs going bust in spots of London (e.g. Dulwich) and pocketing 2 months rent.

    Reply
    Please complete the required fields.



  • Grumpy Middle-aged Git says:

    @14 W. London renter
    It all depends where you are – I read that prime area rents (Knightsbridge, Kensington etc.) are down big time but in the more real world of zone 2 outwards it’s probably a bit more competitive. I did have an offer of 350 pw accepted against an ask of 380 pw for a 2 bed garden flat in Hammersmith (near Ravenscourt Pk) back in Jan and didn’t pursue it that seriously as couldn’t get school places but I suspect landlords will negotiate, even in more “buoyant” areas.

    As 17 Mr Smith points out, you probably get better scope for negotiating above a certain price point and 1 or 2 bed flats will always be in demand but there should be a glut of these properties at the moment as amateur BTL’s get stung. Try and find similar properties at a cheaper price (particularly the private lets on Gumtree etc (NB beware the deposit scam of wiring your deposit via Western Union etc)) and see if you can haggle with your landlord. If you do see a place you like and you think it’s not ridiculously overpriced you may just have to go for it before someone else grabs it but try negotiating a 6 month break clause if you think the market’s going down which I certainly do. I may be in for a shock but I would be surprised if my landlord turfs me out in 4 months time if I’ve been paying the rent on time and looking after the place to try and make an extra 10%.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>