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  • Buy-to-Let

    Rents to rise faster than house prices

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    Learn Change and Adapt ?????

    I've noticed them creeping up in the area I invest in, and I've only been at this for 6 months or so!  Great news for me, as the buying prices remain low too.

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    More on this story:

    Rental prices look set to increase faster than house prices over the next five years, according to the Royal Institution of Chartered Surveyors (RICS).

    When it comes to house prices, chartered surveyors said that they anticipate an increase of just less than 20% over the next five years, while rents are expected to rise at a faster rate of 25% during the same period. This is owed mainly to an anticipated reduction in housing supply in the private rented sector (PRS), as more buy-to-let landlords either exit the market or reduce the number of properties they have in their portfolios, as a consequence of tax changes.

    Source article

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    With the new PRA Changes on Buy to Let Affordability in January 2017, this will be good news for many South East & London Landlords. That may find that rents are restricting the maximum loan to value they are able to achieve on purchases (and remortgages) resulting in property investors having to put down higher deposits (or increase equity) and looking at the lower stress tests given by Limited Companies and Five Year Fixed Mortgages.

    The old argument is very true that that Rental Amounts are decided by the supply of Rental Properties. This is hardened by the fact that Landlords looking at the BTL Affordability Changes as well as Clause 24 of the Finance Act (Tenant Tax) changes giving them pressure to increase rents - to remain in business. Those in which the affordability effects or tax restricts too much are indeed looking at selling rental properties and others looking at buying less.

    Whilst we may see supply of rental properties decrease in the South East & London due to these two issues AND the higher 3% stamp duty. The north has these issues too but not to a larger extent - the rental yield has always been more generous up giving high loan amounts achievable and investments profitable despite the tax changes with the 3% SDLT on small purchase prices not being restrictive.

    The question is - will landlords switch investments to the north. Giving higher supply therefore meeting demand and lowering rents?

    That is the problem with Government Intervention in Free and Open Markets. It can shift where the investments go and returns are best achieved.

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    Looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance. The above is not financial advice, its me rambling - just passing time on a coffee break.

    Not that housing has ever been a free and open market.

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    Some areas where rents are rising fastest:

    Luton is the area with the fastest growing rents with a rise of 6.5%, followed by Northamptonshire up 5.1%, Peterborough up 4.8% and Edinburgh up 4.6%, the Landbay rental index shows.

    Other areas to see high rental price increase include Medway up 4.5%, Bedfordshire up 4.6%, Thurrock up 4.4%, Bristol up 3.62%, Swindon up 3.31%, Nottingham up 3.25%, Leicester up 3.1%, and Greater Manchester up 3.06%.

    Full/source story

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    Rental price growth has now fallen below the general rate of inflation, research shows.

    HomeLet’s February Rental Index showed that new rents had risen 0.8% year-on-year, below the general inflation rate of 1.8% recorded in the same month.

    The rental inflation figure is also well below the high of 4.7% recorded as recently as last June.

    On a monthly basis rents were up 0.7% at £895 in February.

    London still remains the area with the highest average rents on new tenancies, at £1,520, while the lowest was £596 in the East Midlands.

    Source article

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    Renting a property is now cheaper than buying in over half of British cities, according to new data, suggesting that house prices may be approaching a peak.

    Property website Zoopla analysed the monthly cost of renting a two-bedroomed home, compared to servicing a mortgage, in the country’s 50 largest cities.

    The proportion of locations where it is now cheaper to rent has increased by 14 per cent since October 2016, when it was more cost effective to buy in 60 per cent of British cities.



    Full/source story

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    Rents will be increasing.

    We have yet to see the effects of S24 and EPC requirements

    Many LL will have to sell up as it will no longer be viable to retain properties.

    Tenants won't be buying these properties and so there will be shortage of rental stock which can only mean rents increasing.

    There will be lots of homeless tenants as the shrinkage of the PRS continues apace.

    This is great news for those LL that can manage to stay in the market.

    Their rental properties will be in even more demand.

    I predict we will start to see rental bidding wars with desperate tenants fighting eachother for the increasingly scarce rental stock.

    Good news for LL seeking to attain greater yields from their existing properties.

    There will be very few new LL entering the market to keep rental stock levels up or even existing LL increasing their stock.

    So for existing LL prepared and able to stay the course they will be receiving greater rental returns over the coming years..

    Happy days for the LL!

    Not so for the tenants.

    The tenants will need to blame Govt for the shrinking PRS.

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    "Many LL will have to sell up as it will no longer be viable to retain properties.

    Tenants won't be buying these properties and so there will be shortage of rental stock which can only mean rents increasing."

    ​Who will be buying the properties then?

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