Monday, November 1, 2010

Dreamers dreaming of return to the days of free money

Reluctant Landlords Make a Comeback

'The ‘reluctant landlord’ – a phenomenon that emerged during the recession as home owners were forced to let their property rather than sell it – has returned to the rental market, according to ARLA. Ian Potter, operations manager at ARLA, said: “The rise of the reluctant landlord seems to reflect wider market uncertainty and instability.”

Posted by montesquieu @ 03:07 PM (1741 views)
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14 thoughts on “Dreamers dreaming of return to the days of free money

  • This is indicative of the basic belief that house prices will always be what they were worth in 2007. I mean, if these people thought house prices were going to fall and continue falling, they would bail out asap.

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  • Would be interesting to get figures on this … how many people there are out there waiting for better financial weather? And what would their reaction be if they thought that even in in straight cash terms (let alone allowing for inflation) that 2007 value might be 10 years off? Meanwhile coming interests rate rises leave rent receipts well short of covering the mortgage?

    A rush to the lifeboats I’d suspect.

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  • mark wadsworth says:

    That is splendid news (assuming it to be true)!!

    We rent our house from “a reluctant landord” for a yield of 2.5% of what they were trying to sell the house for back in early 2008. Of course that yield is now up to 3.3% at today’s prices 🙂 So our rent has covered a fifth of their “capital loss”.

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  • how many people there are out there waiting for better financial weather?

    Yes, I think that is a key question. People are treating their houses just like equities and choosing not to sell if the climate is wrong….whereas a few years ago, they would just sell instead of trying to hang on.

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  • LOL.

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  • I guess that there must be quite a few who can’t sell because there house price has dropped and does not cover there mortgage, therefore there if they need to move there only option is letting it out.
    Lets say you paid 150k for a house at 85% LTV back in 2007 and now you can’t sell for 127k and you have no capital then your only option would be to let it out or post the keys back.
    I suppose letting it out is just delaying the inevitable unless government come to the rescue.

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  • ‘ARLA’s research revealed that 34% of member offices in the third quarter of this year experienced an increase in the number of rental properties coming on to the market because they can’t be sold’

    I’m not sure if ‘can’t’ be sold is the right description here. They can be sold – for 75% of 2007 prices!

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  • “They can be sold – for 75% of 2007 prices!”

    Not necessarily true!

    If the bank will not let them sell for less than the mortgage value and they have no spare cash or are not willing to chuck in there spare cash then they can’t be sold and the price can’t be dropped.

    We will see steady price falls when interest rates rise.

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  • My current landlady just came back from overseas and was all set to issue us with written notice and sell up (place failed to sell in 2007-8 at silly money, over £600k, so she rented to us).

    She withdrew the verbal notice and didnt sent the formal confirmation letter, after two valuations suggested a £75-80k fall since it was last valued in 2008. At the current valuation it’s a 3.6% yield. She’s been in the place 20 years, hasn’t mewed but split from hubby some years back and has a mortgage for his share of the place.

    TBH I do feel for her a bit as before moving abroad she turned 60 and retired (as a scoolteacher). Since then her retirement nest egg has shrunk in valuation by roughly double what we’ve paid her in rent these past two years,

    But ultimately greed and listening to estate agency bulllllshit has been her downfall – she still has a great big number in her head and won’t let go of it for anything. I suppose that’s what those of us waiting for the crash to get going before we buy back in are up against, that dogged sense of entitlement to free money.

    Tears before bedtime I suspect.

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  • monty,

    If she was a schoolteacher, she must surely have a decent pension anyway?

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  • and this is why any talk of a HPC is pointless until interest rates go up, or return to normal at least. see my thread on a couple i know who have just done the same thing, because they wanted to move and had a big mortgage on there first property, so have let it out rather than sell. ive also seen another one recently that was on the market some months ago, its now up for let.

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  • I don’t like the phrase ‘reluctant landlord’
    Reluctant Landlord: “No, go on with you! Keep your silly rent money!”

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  • ‘Reluctant Landlords’ are not a cause for mirth in anyway. Their very existence corrupts the dynamics of what should be a balanced market place. Choke the supply side ,and the demand side pays the price. They need to be taking a demonstrable caning, and its just not happening…..if we descend into the scenario of Japan’s ‘lost decade’, these amoral unthinking (forget reluctant….think scumbag BTLs, for that’s what they are) opportunists, could yet end up with a tax free gift that screws generation X&Y. If there is no pain, they’ll just see out the mortgage of their feus and think themselves so clever.

    Let’s see them for what they are.

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  • 12, I can’t see 0.5% interest rates for the lifetime of there mortgages.

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