Why Rents Will Rise In 2017


Mark Alexander - Published on 11/01/2017
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The fact that landlords want/need to increase rent to cover increased costs isn’t necessarily evidence that rents will actually rise.

However, there are a number of other important factors to consider, not least of which is supply and demand. Why Rents Will Rise In 2017

Government policy to reduce investment into property for business purposes (letting) is working. The surcharge on SDLT for second properties has had the biggest impact and I have no doubt that many rental business owners are selling at least some of their properties due to the changes to mortgage interest relief. The will grow exponentially when the real effects of the tax begin to bite.

Whilst the supply of quality rental accommodation has slowed, and may even be going into reverse, the polar opposite is happening to rental demand. It is increasing, and at quite a pace too.

There has been talk of glass ceilings for rents however, whilst the number of people wanting to rent properties continues to grow the outcome is inevitable. Those that can afford to pay more will win. The losers will be those who cannot afford to pay more. If all of those tenants who cannot afford to pay more are displaced by those who can we might ask ourselves where they will live. Will they miraculously be able to afford to buy the properties from those landlords who have simply had enough and chosen to sell?

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Comments

  • Member of The Landlords Union - Click Here for Details

    There is always a Glass Ceiling in the same way as someone always has a price.

    However, I think this Glass Ceiling is a lot further away allowing the forces of decreased/slowing supply and increasing demand in an open market to raise rental prices well within these limits.


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  • If its (UK) government policy to reduce private investment in the housing sector they would do well to learn for from the Scottish government. The introduction of the new model tenancy under the Private Housing Act (2016) is likely to do more to drive out landlords that the various tax changes. As well as being I landlord I work for an agent and as the details of the implications of the Model Tenancy are becoming clear the feeling among many of our landlords is that its time to get out!

    Regards,

    Rod.


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  • People who say there is an affordability ceiling don’t understand the housing market. It is not a single homogenous market, people will move to houses that they can afford maybe in a cheaper area, or a rent a smaller property.


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  • It is an inevitability that rents will rise. Those that say they cant are not learning from history nor are they understanding that as market conditions change, so do prices. As the amount of available stock decreases for rent, the wealthier tenants will pay more. Only the very poorest will suffer.

    Also, what care or interest do the govt have for those who have rents BMV which will now rise to match MV? The govt’s view is that this is not ‘rents rising’ because market price might be the same, but to the tenants caught in this unnecessarily it definitely WILL be a rise and possibly a steep one at that.


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  • I get quite a few calls every week off tenants wanting houses.
    Over the past 19 years, that has increased.
    And I always ask those on the ground what’s happening-Cause I only know my bits & what I get asked & the News & the Estate Agents I see etc. But I ask the tenants on the ground what’s happening for them. And they say there is nothing out there. And true, I then look where they are looking, I type a post-code in where my areas are, & within a mile or two & it’s surprising that sometimes there only only FOUR houses to rent. For everyone, workers, HB tenants, immigrants, temporary house sellers to buyers etc. So even if they had a ton of money to put down, if you’ve got a good house good area, DOZENS people are wanted u.

    Anyway, my main reply point to your post. A few days ago, I had my first call from a wanting tenant-Her Landlord selling ’cause of the impending Clause 24 tax changes. The tenant was an accountant & she din’t even know about the forthcoming Tax changes.
    I reckon 90% of Landlords don’t know, a lot of my landlord mates don’t know or understand it. It’s only when they get their tax bills in few years time that s__t will hit the fan.
    I know 90%+ of landlords on this site will know about Clause 24, but as it happens, Landlords are gonna’ be selling. I personally think the cash Landlords will buy a lot of these if a few grand cheaper than normal.
    The nice ones with the nice tenants who will comply with the Estate Agents will sell to normal buyers. And then we’ve got to summise that rents will go up with your supply & demand.

    My opinion anyway, some of us are sometimes wrong. Not me though ha ha.


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  • Rents will rise yes

    I get calls every day from desperate home seekers

    When push comes to shove to keep a roof over their head people will forego the upgraded car, the holiday in the Med and the £100 meal for 2 adults 2 kids once a month. People don`t want to come home to a park bench. Rent is a priority

    Life is no fun the wrong side of a double glazed window. There are few essentials in life. A place to come home to is right up there after food and water.

    Only rent controls would impact on the inevitable rise in rents but that would be counter productive as then it will lead to rent top ups being paid in cash as backhanders and the treasury tax receipts would go down not up.


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  • Just in process of finding a new tenant for our hardest to rent place (small, no gas, small 2nd bedroom) at the worst time of year. Overwhelming demand despite several similar but better on market at £50 pcm more. However, there may prove to be some truth in the politicians’ and HPCers’ forecast (desperate hope) that when the tax changes are fully implemented the resultant sell-off will cause a drop in house prices, enabling FTBs to snap up a bargain. Before then there will be widespread homelessness, overcrowding and drain on public resources. I am not convinced there is an enormous pool of unencumbered landlords waiting to buy properties highly leveraged landlords are forced to sell,


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  • Reply to the comment left by “Old Mrs Landlord” at “12/01/2017 – 08:48“:

    Any sell-off will be spread over 5 years and not in one hit in 2021 when the full effect works through to Landlords tax bills. So I very much doubt that there will be any significant impact on house prices, in general. That’s not to say that there may not be some odd pockets where, say, a large portfolio LandLords sells off a whole block of flats individually.


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  • I hope you’re right, Barry, because an across-the-board drop, though in some ways perhaps desirable to bring house prices more in line with incomes, will impact on all LTVs and could cause landlords remortgaging problems. A gradual realignment of all elements will be the best result all round. However, housing markets, much like politicians, tend to behave erractically as ‘herd instinct’ and the fear factor take hold.


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  • YES–next question

    ps i have already increased one rental and i am looking at increasing all my student HMOs from new university year


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