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 Ian Simpson

9:55 AM, 14th January 2017, About 5 years ago

Hmmm... I am seeing the exact opposite ... Downward pressure on rents ( have had to reduce two house rents at renewal) and also have reduced some room rates due to local price drops ( Aldershot, Hants) and have two rooms empty which I just cannot shift after eight weeks! ( usually they go in hours,, not days!!)

Not quite sure why I am experiencing this but it seems totally different to everyone else which is a worry....

by Old Mrs Landlord

11:26 AM, 14th January 2017, About 5 years ago

Reply to the comment left by "Ian Simpson" at "14/01/2017 - 09:55":

From what I've read here and elsewhere. so many landlords have gone for HMOs in recent years that there is an over-supply in some areas. Your properties may be in one of them. Changes to benefits a few years ago which meant under 35s were eligible for only shared accommodation rates, greatly increased demand and the market naturally stepped up provision to match. Obviously there is a ceiling for every type of rental accommodation and this changes with political manipulation of demand as well as demographic factors. In Aldershot you may also be affected by London commuter belt influences, I gather both demand and rents are falling in at least some parts of the capital. I stress I have no personal knowledge of your area and my comments are based solely on widespread reading.

by steve watt

13:52 PM, 14th January 2017, About 5 years ago

I think rents have not kept pace with house prices in London and South-East since about 1997, so they have some way to go.
George Osbourne had quite an effect on landlords and I think most of us are relieved things have calmed down since he left.
Letting agents are still charging very high fees to tenants and if the new rules come in tenants will end up paying these via their rent as I can't see letting agents disappearing. So rents may be "grossed up" to include the amount they will no longer pay directly to the letting agency. Since the letting agency fee on the tenant can be as much as one month's rent and the duration can be six months then rents could need to increase as much as 16.6% to cover this, although in reality somewhat less.

by NW Landlord

13:55 PM, 14th January 2017, About 5 years ago

In every area I operate in the north west rents have increased and are increasing further as demand is crazy I can only see one way myself with all the increased costs coming

by Ian Simpson

15:29 PM, 14th January 2017, About 5 years ago

Wish we had the same demand down South... It has certainly cooled dramatically over the past six months or so.... An advert on Spare room used to get nine responses within an hour... Now we might see three a week.... As OML said above perhaps the HMO supply is too high now.... But I have had to drop rents for standalones too...

by H B

6:47 AM, 16th January 2017, About 5 years ago

Reply to the comment left by "steve watt" at "14/01/2017 - 13:52":

An alternative viewpoint might be that house prices are too high and need to fall because they are out of kilter with demand for the underlying product as shown through rental yields. Given stamp duty changes and c24, there will be lower demand for property. This might cause falls, especially in areas like the South East.

Rents can rise at the same time as wider house prices fall.

by steve watt

9:22 AM, 16th January 2017, About 5 years ago

Reply to the comment left by "H B" at "16/01/2017 - 06:47":

Tend to agree with HB, house prices are out of kilter with rents. When Halifax announces 6.5% and Nationwide 4.5% house price growth for the year 2016 this information will be in the mind of the buyer and price rise becomes a self-fulfilling prophecy.
Rental prices are less volatile than property prices but according to Rightmove rental prices are down by 4.4% in Greater London, and more than that in Inner London.
There is some catching up of rents with house prices still to come in 2017 but the year looks to be a fairly stable one.
I am quite intrigued by the 14+4 cycle rule for house prices (fourteen years of rises followed by 4 years of falls), which means watch out for 2022. There can be some wobbles in between and there have been plenty of events that justify them.

by Mick Roberts

15:20 PM, 16th January 2017, About 5 years ago

Did I hear someone say the 14+4 year rule?
I've know about that for years & I'm surprised it's not talked about often on here, especially with some clever knowledgeable guys on here. Well knowledgeable then ha ha.

Yes I had it in my book for 2022 to 2026 to sell a lot of my houses then at what may be a peak.
Things have changed & I may not sell now, but it would be interesting to see if the rule came to fruition in 2022 to 2026.

So anyone thinking of selling, be prepared for them dates.

by H B

20:05 PM, 16th January 2017, About 5 years ago

Reply to the comment left by "Mick Roberts" at "16/01/2017 - 15:20":

But didn't house prices fall until 1996 and then rise until 2008? That was 12 years.

by Mick Roberts

18:52 PM, 18th January 2017, About 5 years ago

Well it's debatable on where you read.
In Nottingham some of the truthful experts on the ground will tell u prices peaked in 2004.
And in 2008 the bargains were happening - I bought 13 or so that year. And I din't want any of em. Just too cheap to refuse.

So was 2008 the peak? I talk to Nottingham Agents on the ground & we was saying 2004 was the peak, whereas on Radio this morning, Kate Faulkner was saying 2006 was the peak-In different places like West Bridgford.

I'm not a statician either, but from what I've seen of the experts who put out these 14 + 4 years rules, to me it looks like 2022 could be the high year to sell (maybe even up to 2026) and maybe 2022 to 2026 could be the declining years. Controversial I know. But if there was an EXACT science to it, we'd all do a lot better than we do. 12 years 14 years 16 years, who knows? But there is compelling evidence on the 14+4. And I'm ruddy sticking to it ha ha.

And I'm also advising anyone to stick to 2022 to 2026 for advising anyone thinking to sell.


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