Why Rents Will Rise In 2017

Why Rents Will Rise In 2017

14:42 PM, 11th January 2017, About 5 years ago 65

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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?



Comments

by Chris Clare

10:16 AM, 12th January 2017, About 5 years ago

Reply to the comment left by "Jonathan Clarke" at "12/01/2017 - 08:07":

You hit the nail on the head Jonathon "rent controls"!

That is truly my greatest fear. All this talk in the press about the inevitability of rising rents due to S24 and the principle of supply and demand getting throttled due to wholesale selling by landlords, again due to S24, leads me to an uneasy feeling that the Government will just step in with some draconian rent control policy.

I really really hope i'm wrong.

by terry sullivan

10:18 AM, 12th January 2017, About 5 years ago

Reply to the comment left by "Rod Adams" at "11/01/2017 - 15:46":

wales is also trying this--shelter is the problem

by terry sullivan

10:20 AM, 12th January 2017, About 5 years ago

Reply to the comment left by "Chris Clare" at "12/01/2017 - 10:16":

it will end the "tories"

by Gromit

10:22 AM, 12th January 2017, About 5 years ago

Reply to the comment left by "Old Mrs Landlord" at "12/01/2017 - 10:01":

We will probably never really know as there are so many other factors that could affect house prices; like interest rates, lenders criteria, average wages, even Brexit to name but a few.

by NW Landlord

10:36 AM, 12th January 2017, About 5 years ago

I cannot believe the change in the north west over the last 10 years most people are sitting tight and also in flats now when years ago they where a revolving door. When a house comes available I cannot believe how many people call I use open rent. I put one in southport three weeks before xmas so I thought I wouldn't get anyone until Jan as we all know December isn't the best month.....I got 27 calls and had people offering over the rent i was asking its crazy out there and I genuinely see desperate people and they all say the same thing there's nothing out there which makes what this government are doing even more crazy I really cannot believe what they are doing tampering with a market they have no knowledge of I shudder to think what is going to be like in a couple of years time as I am a human being and don't like to see people desperate just to have a roof and we could be part of the solution until ther dreaded s24 came in when is common Sense going to prevail ?????

by Steven Burman

10:36 AM, 12th January 2017, About 5 years ago

Barry, I agree that those private landlords who decide to sell up will do so over a period of time. There are good reasons for this including fixed rate mortgages with different expiry terms, taking advantage of annual CGT allowances etc.etc.

As such, there will be minimal impact on house prices and those that cannot afford to buy now will still not be able to buy in the future (unless other factors allow them to do so).

House prices will continue to rise, as will rents. As others have pointed out, it is a simple case of supply and demand.

The reason for the current position is not down to 'greedy' landlords like you or I. It is down to the ineptitude of successive governments who have systematically failed to ensure that enough new homes are built to supply demand. The attack on the PRS is a diversion tactic to deflect attention from the failings of all politicians - past, current and (no doubt) future!

by Old Mrs Landlord

12:28 PM, 12th January 2017, About 5 years ago

Reply to the comment left by "Steven Burman" at "12/01/2017 - 10:36":

Steven and Barry, you are probably right about landlords selling up over a period of years, but the cumulative effect on supply will be the same. As we know, insufficient housebuilding combined with the selling off of council properties without replacement thus forcing many low earners into the private market encouraged the growth of private provision to fill the gap. If government policy punishes private landlords who are making up the supply shortfall their actions have created and makes their business model unworkable, it doesn't take a genius to forecast the result. Any further disincentive, such as rent controls, will inevitably exacerbate the shortage of supply with obvious social consequences

by Rod Adams

14:33 PM, 12th January 2017, About 5 years ago

>> 'Any further disincentive, such as rent controls'

The new 2016 Housing Act in Scotland introduces the option of rent controls for local authorities to impose, removes the 'no fault' clause for ending a tenancy at the end of its term (this will cause real problems for landlords in the student market), removes the concept of a fixed term period for a lease (not sure how mortgage providers will view this lack of income security), gives the tenant the option to terminate a lease at any time with 28 days notice (but doesn't give the landlord the same option!). I can see there being a steady flow of landlords exiting the sector as their circumstances allow (end of lease, end of fixed mortgage, capital gains etc.) I would suspect its only a matter of time before England follows suit with these legislation changes.

Regards,

Rod.

by Old Mrs Landlord

17:49 PM, 12th January 2017, About 5 years ago

Reply to the comment left by "Rod Adams" at "12/01/2017 - 14:33":

After reading your latest post I'm not surprised Scottish landlords are exiting the sector. It seems to me that all the talk/threat of rent controls causes landlords to put up rents in anticipation. No-one wants to be caught with below market rate rents when annual percentage based controls are introduced! So those who tout rent controls as the solution to rising rents are causing the very effect they aim to counter, in advance of any possible legislation.

by Old Mrs Landlord

17:51 PM, 12th January 2017, About 5 years ago

Reply to the comment left by "Rod Adams" at "12/01/2017 - 14:33":

After reading your latest post I'm not surprised Scottish landlords are exiting the sector. It seems to me that all the talk/threat of rent controls causes landlords to put up rents in anticipation. No-one wants to be caught with below market rate rents when annual percentage based controls are introduced! So those who tout rent controls as the solution to rising rents are causing the very effect they aim to counter, in advance of any possible legislation.


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