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 Michael Fickling

10:41 AM, 21st January 2017, About 5 years ago

CLAUSE 24 HOUSE PRICE EFFECT AND RENT LEVELS EFFECT>>>>>>>>>>>I dont see how any sensible person could imagine that driving a fraction of private landlords to reduce their property investment could have a significant effect on house prices overall. Mathematics dictate it can not.
VIZ>>.If we have about twenty % of total stock..and over an extended period landlords reduce their holdings by a mean of say 25%..(probably a high side fig. ).you have little more than 5%....addition to total non rental market ..spread over the total number of years it takes for that to occur. Given that..... as many contributors have said.... there are still thousands of landlords and indeed accountants who either dont know about Cl 24 (or its full effective extent).... and thousands more landlords still devising personal strategies as yet unexecuted!...its probably going to take at least three years and maybe quite a bit longer for the "sell off fraction" to actually be acheived.
So there is therefore considerable dilution on any posible house sale/ price / v supply effect...via Cl 24. Negative leverage effectively applies to this issue.
On the other hand the maths work the other way around on rental supply....since the 20% of total stock thats private landlord" held" represents a much LARGER fraction of total RENTAL stock....AND..there will also be fewer than "normal" new landlords entering the market..as well as the increase in landlords leaving it or reducing their personal stock.. So Mark and others of us who predict rent rises being significant ..as evidenced in Irelands recent scenario are very likely to be correct.The maths support the history and the history supports the maths.
In summary in terms of Cl 24s eventual effects...general house price effect will be massively diluted.Rental levels effect massively magnified...upwards of course. The leverage forces acting upon the two issues being inverse. It would be foolish to think otherwise.

by Whiteskifreak Surrey

19:03 PM, 3rd February 2017, About 5 years ago

Posted today on Property Wire:
http://www.propertywire.com/news/uk/rents-start-falling-uk-latest-national-index-shows/

I really do not understand.... I am at South East (not London) and the prices I am looking at are going up. Our students reported the same, their friends already received a notice.

Does any of my esteemed fellow LLs here has any explanation?

by NW Landlord

20:50 PM, 3rd February 2017, About 5 years ago

Don't listen to the media

by Monty Bodkin

9:37 AM, 4th February 2017, About 5 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "03/02/2017 - 19:03":

I really do not understand…. I am at South East (not London) and the prices I am looking at are going up.

UK rental indices are too small a sample size and only reflect the business the data was drawn from. There could be a 1001 reasons the Homelet index isn't showing what you and I are seeing.

For example (and I don't know if this is true), perhaps more landlords are referencing tenants at the lower end of the market as they move away from accepting benefits tenants, thus driving down the overall index- A Homelet reference comes up as a 'fail' on a benefits tenant so presumably not many landlords bothered before.

Here is a link to the latest LSL index, which has been running for some time;

http://www.lslps.co.uk/documents/buy_to_let_index_nov16.pdf

"The South East of England saw rents rise faster than anywhere else in the last 12 months. Landlords in this region saw prices grow 13.6% in the last year"

Which is more in line with what my part of the market is doing, but again, reflects their business.

The ONS has perhaps a better index of the broader market, (it is roughly from where LHA rates are set), but even that is 'experimental';

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/dec2016

"The largest annual rental price increases were in the South East (3.4%)"

Lies, damn lies and statistics eh?

What I do know for sure is that my rents are up 14% on last year.

by sam

12:38 PM, 16th April 2018, About 4 years ago

More than 1 year has passed. Where are we with all the predictions n comments on this articles ?

by Mick Roberts

8:22 AM, 21st April 2018, About 4 years ago

Much more tenant demand in my area.
No tenants leaving any more cause nothing out there for them to go to.
Rents increasing if any houses do come up for new tenants.
Existing tenants struggling to pay.
All cause of Govt cuts and over regulation, Benefit Cap. Universal Credit, Section 24, and local council Selective Licensing.

by sam

8:43 AM, 21st April 2018, About 4 years ago

Reply to the comment left by Mick Roberts at 21/04/2018 - 08:22
Where do u operate ?

by Mick Roberts

8:46 AM, 21st April 2018, About 4 years ago

Nottingham

by sam

8:58 AM, 21st April 2018, About 4 years ago

Reply to the comment left by Mick Roberts at 21/04/2018 - 08:46
We r in Birmingham. 11 units vacant this yr (not had so many vacancies before at same time) : 1-bed £750, 2 beds £950, house £1,750. Same rent as last couple yrs. Most r let now but seems to b having some difficulties for the 1st time ever.

by NW Landlord

8:58 AM, 21st April 2018, About 4 years ago

Put a house up for rent on Birkdale near Southport on openrent had SIXTY FOUR calls in 24 hours and it went for 100 PCM over asking most of the calls saying same thing my landlord is selling. It’s a crime what these Tory’s have done to our industry


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