Frustrated Sellers Forced to Consider Let-to-Move

Frustrated Sellers Forced to Consider Let-to-Move

16:35 PM, 6th January 2012, About 12 years ago 11

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Frustrated sellers are turning into reluctant landlords as the stagnating housing market in some areas has driven buyers away.

Around half of letting agents report a rising number of unintended lets as homeowners either cannot sell or are holding off accepting offers until property values increase.

The number of reluctant landlords has risen by almost a quarter from 40% to 47% in the past 12 months, according to a survey by the Association of Residential Letting agents (ARLA).

While numbers have remained static or decreased in London and South-East, the rest of the country has seen a huge increase in the number of reluctant landlords.

In the North-West, the number of letting agents dealing with reluctant landlords has risen from 47% to 62% in a year – while their colleagues in Scotland also confirm a similar rise from 47% to 65%.

Other regions have also seen lesser rises, reports ARLA, like 40% to 46% in the South-West; 44% to 48% in the Midlands and 61% to 67% in the North-East.

The findings also revealed the most likely homes let by a reluctant landlord are detached and semi-detached houses, while least likely are studio flats.

“Letting a property is an excellent way of generating consistent income from your property, if the correct approach is adopted by prospective landlords,” said ARLA president Tim Hyatt.

“Lettings is an unregulated industry and there can be pitfalls for both landlord and tenant, including loss of monies. While we are, of course, happy to see an increase in the number of landlords, it is vital that every landlord – reluctant or keen – seeks expert advice before embarking on a rental arrangement.

“In particular, we would advise anyone considering renting or letting a property, to consult a licensed ARLA member. Licensed agents have to adhere to a strict code of conduct, and must have a number of consumer protection mechanisms in place, meaning that if things do go wrong, there is a way to seek redress.”

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12:53 PM, 7th January 2012, About 12 years ago

Re "Frustrated sellers are turning into reluctant landlords as the stagnating housing market in some areas has driven buyers away."

Is stagnating code for falling or crashing?  We all know prices are falling even in the South East so why do articles call it stagnation.

15:56 PM, 7th January 2012, About 12 years ago

It is “stagnation” as there are so few trades; very few people are selling at the current fallingprices.  At present there are very few people that feel the need to sell, likewise very few people feel the need to buy.   To talk about the current housing “market”, is rather pushing the meaning of “market” in some areas, as you need sellers and buyers to have a market.

Mark Alexander - Founder of Property118

17:30 PM, 7th January 2012, About 12 years ago

I completely agree Ian and when mortgage ability returns, so will the "market". The media will all be hailing the return of a property boom as people will be able to afford to sell their homes at decent prices but the reality is that we will have been living in limbo until this happens. The media hype, when this occurs, could actually panic the market into the "buy now before prices get out of reach again" mode. It's a strange world we live in isn't it?

If the indices do reflect some of the predictions that brit1664 and his House Price Crash mates are predicting, what do you reckon the chances will be of him finding a property at those prices he actually wants to buy? I'd say somewhere close to zero because the cash rich investors he despises so much will beat him to closing deals with all the good ones and will get there before him. That will just leave him with the crap that nobody in their right mind would want to buy to choose from.

5:38 AM, 8th January 2012, About 12 years ago

I think one thing brit1664 fails to realise is that unless you had some considerable equity in your property;  mortgage companies won't allow you to sell your property for less than the outstanding mortgage.
Which means that anybody who has purchased a property since 2005 is sitting on negative equity and therefore cannot sell at a loss even if they wanted to.
The mortgage company has the final say so on whether a property may be sold.
So Mr brit1664 stick that in your piper and smoke it!!!

Mark Alexander - Founder of Property118

9:52 AM, 8th January 2012, About 12 years ago

That leaves a question that somebody may wish to write a guest blog about, i.e. Should the UK adopt the US short sale program". We all know how much the repossession and receiver route costs UK lenders. Would they be better off offering "short sales" to UK borrowers?


10:18 AM, 10th January 2012, About 12 years ago

From my experience of HousePriceCrash, the majority of people on that site will never actually bite the bullet and buy a house, no matter how low prices fall: they live in a bubble world of mutual congratulation about their own wisdom and the idiocy of everyone else. The psychology is one of unchanging resentful entitlement: they don't earn enough to get a mortgage or save a deposit, houses are too expensive, rents are too expensive, life is too expensive, and it's all a gigantic conspiracy with buy-to-let landlords as the principal pantomine villains.

Frustrated sellers becoming landlords in large numbers seems to be a new phenomenon: I don't remember this happening in the house price crash of the early 90s or the long stagnation and slow recovery of c. 1993-1999. I remember homeowners handing in their keys to building societies, thinking they could just walk away from negative equity, and remember all the talk, as now, about the lack of "the feel-good factor". But why didn't more homeowners rent out their houses and rent themselves in a new downsized location to wait for the recovery?

Another key difference for me from past crashes is low interest rates, which keeps the majority of potential distressed sellers on life support. Other sellers are free to pick and choose whether they sell, hence the symptom of fewer and fewer properties on the market if there is a sniff of a sustained fall in prices: there is a seller strike as well as a buyer strike. Sellers learn from this experience and are afraid that if they do cut their prices dramatically to sell, other sellers won't do the same and they will be left out of pocket when they become a buyer.

Ian Ringrose

16:15 PM, 10th January 2012, About 12 years ago

Mark, can you explain what a "short sales" is?

Mark Alexander - Founder of Property118

0:09 AM, 11th January 2012, About 12 years ago

Lender allows borrower to sell property for a forced sale Market value even if that's not enough to cover the mortgage. US lenders have realised they lose less of this basis than by foreclosing, getting the occupier out, security the property and selling by auction. Borrower does a sort of IVA for the balance of funds and is more inclined to be reasonable with lender. Looks better on borrowers credit rating too.

7:35 AM, 11th January 2012, About 12 years ago

Because there is now a vibrant rental market for may of the resons you have suggested; things will not improve until wages go up; deposits required are less and sellers are prepared to sell fro less than they purchased for.
Chances of any of this occurring 0
Whilst interest rates remain low;  which they will things will stay exactly the same.
To give an eg of mine.
I have a flat puchased for about £240000.00
It's value according to the HPI is £226000.00
I have seen a similar flat being advertised at £185000.00
Chances of me selling in the next 20 years 0
Am I making good profits
You bet.
This however only lasts aslong as interest rates remain low.
If rates go up I along with hundreds of thousands of landlords who purchased in 2005 to 2009 will be probably bankrupted.
FTB will still not be able to purchase as they will still need ever increasing deposits to cope with the ever decreasing surveyor valuations.
The govt know this which is why interest rates will remain low for years until the economy picks up which could take 15 years or more.

7:44 AM, 11th January 2012, About 12 years ago

I don't know exact insolvency procedures but if you were desperate to short sell because say interest rates had become untenanble; why would people not take the option of short selling.
Refuse to pay the shortfall of let's say £50000.00;  file for personal bankruptcy and be free and clear after a year as opposed to the current 12 years that a mortgage company pursues moregage debtors for.
Also doing that would it not be a tacit admission by  the mortgage lender that the valuation of the property was too high.
Wouldn't that leave the possibility of suing the valuer etc, etc, etc,

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