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  • Property Yields

    DPS claims rents are "in recession"



    UK rents have fallen for the third consecutive quarter, the Deposit Protection Service (DPS) claims.

    The decline – based on the DPS’s own database of rentals – showed that average monthly rents in the third quarter were £761, down from £764 in the second quarter of 2018.

    This has been dubbed as a recession by the DPS.

    If this trend continues, it will be only the second time there has been a full year of quarterly decreases since the DPS records began in 2007.

    The DPS data also shows that average UK rent has now decreased £14 or 1.83% since the same period last year.

    The east midlands experienced the greatest decrease down 2.47% on a quarterly basis to £569, while Northern Ireland had the largest increase, up 2.68% from £542 to £557 over the two quarters.

    Meanwhile, average rents in the north-east of England remain the lowest in the UK at £529 per month.

    Full/source story

    Anecdotal observation - we are just trying to re-let a 4 bed town house in Basingstoke and have had to drop the rent from £1250.00 per month to £1100.00 per month.

    My view is that Brexit and economic uncertainty are stagnating property transactions and that Section 24 has yet to truly bite due to lack of awareness.  When landlords do their tax returns, then the effects will start to filter into the PRS, but there will be a lag of at least 6 months to a year.  We will not see a reversal of rent declines until around Spring 2020 imho.

    What rental trends are you experiencing in your area?

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    It’s too early to say this is right

    let’s see in three years time

    rents have to rise as costs rise

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    rent will only rise if supply/housing options is lower and tenant will need to have sufficient income to support an increase in rent. If not they will move as they have no other options.

    Increase cost for LL doesn’t matter as it is down to supply/demand and affordability.

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    Increase cost does matter for any business.

    Do you think bread manufacturer will not increase the price of bread if their raw material or cost goes up? If all bread company increase the price by £1, we will still have to buy it as it is a necessity like having a home.

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    If I can make a loaf of bread for 40p and sell it for a £1  I will

    If the raw materials cost goes up to 60p to make it I have in principal 2 choices .

    Sell for a £1 still and take only 40 p profit or sell for £1.20 to maintain my margin

    If I  increase the price  by 20%  and others don`t people will buy bread elsewhere 

    If I and all the others increase the price 20% collectively we may sell 20% less bread

    People will look at alternatives

    Bread is not a necessity nearly as much as a house is . I can live with out bread 

    Housing is very high up on the necessity list  though . Comes after food and water

    Given the choice between no bread and a night on the streets I would say no bread every time

    I will just eat steak and eggs or cauliflower cheese or fish and chips

    The slack between a house and the streets is taken up by sofa surfing with relatives

    Houses are being crammed and then rents can stay the same level or perhaps rise further

    I have a private renter paying 850 . Her sister is being evicted and piling in there to live with them

    £1000 is now affordable to them .

    The original renting sister  is paid maybe 300 by her sister moving in as compensation

    All gain in some way but some lose in other ways  

    I get an extra 150 

    Original sister pays now only 700 not 850  but has less space

    New sister gets a room and shared facilities for 300 rather than go on the streets or B&B



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    Jonathan Clarke. http://www.buytoletmk.com

    Your example is exactly what I believe will happen for poorer tenants - they will simply have to share in one way or another.

    In so doing of course that maintains/increases the rent generated by each property especially in desirable locations.

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    Poorer tenants may accept the need to pay an increased rent if they have someone stay with them but I cannot see the majority of tenants agreeing to it and certainly not those that can afford to rent in desirable areas.

    A property is advertised for an amount it is thought it will rent for and not different amounts dependent on the number  of occupiers.  How many landlords reduce the rent when children grow up and go off to university or leave home? None, and on that basis I cannot see charging extra rent for a relative staying justifiable, HMOs with utility bills included in rent being an exception.




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    So there's more rental properties available if tenants are sharing, pushing rents down...? Your example makes less sense the more times I read it, haha.

    Bread isn't a necessity, housing is a necessity, but housing comes after food and water.......(*Moderator note: Content removed*)?

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    I’m afraid, in your example, there will come a point where people simply cannot afford to pay more for their bread or seek alternatives as it’s too expensive which means the bread manufacturers will have to either cut costs, reduce profits or go bankrupt.

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    Your break even point changes as costs rise, not necessarily the price of the service.

    Which is determined by other factors such as affordability and competition.
    There is an argument that in time rents may rise, as there may be fewer landlords, but, wont that mean there will be less tenants as they will be homeowners.

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    _________________________________________________________________________


    The above post is not financial advice, its often me rambling - passing time on a coffee break.
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    In vast majority of cases Tenants are Tenants simply because they can not afford to buy a place of their own - so the changing percentage of the 3 main housing tenures does not suggest a fluid interchange of people from PRS to Owner Occ.

    Lone parents who have been outside employment arena for any length of time will struggle to get well paid full time work - as will those around middle age due to ageism in workplace. Latter is well flagged on HMRC website - check out their 5 yr age banded earnings data and you will see peak earnings in the 45 to 50 age band - with progressive and sustained decline thereafter.

    I think we shall see fewer landlords per se - but more portfolio landlords

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