Housing Rental Market - Rents Rising, as predicted!

publication date: Aug 25, 2010
author/source: Kate Faulkner, Designs on Property and Author of Which? Property Books

Housing Rental Market - Rents Rising, as predicted!

Rents Rising and will Continue to Rise, says Kate Faulkner, Property Commentator!

Latest news from letting agents across London confirms Kate's predictions of housing rental market rent rises of up to 10% in 2010. Lucy Morton of W.A. Ellis reports "Bidding wars have become the norm again in prince central London" says Morton, Head of Lettings at the West End firm. "Properties newly launched on to the market are being viewed and secured within hours of coming on. Last Wednesday we showed a two bedroom property on Kings Road with five other prospective tenants viewing it at the same time. Our letting was agreed within ten minutes of the viewing, the holding deposit was paid by credit card and five minutes later the landlord received other offers."

Kate believes this situation will be a similar story across the UK as lenders continue to misunderstand how the property market works and impose ridiculously tight conditions on buy to let investors, even when they have a perfectly good proven track record. Kate says "I don't understand why lenders are nervous about lending to long term buy to let investors, some of whom are delivering 15% gross yields on their property porfolios, yet they are being treated and offered the same products as someone who becomes an accidental landlord".

Kate continues "Until the credit crunch I thought lenders undrestood how the property market works and lent money accordingly. Now I'm not sure they understand it all. When property prices go down and credit is restricted, isn't it blindingly obvious that more people will need to rent and this will naturally increase rental income, making buy to let a good bet? I understand that they want to avoid the people who geared themselves too highly, but why restrict lending to credible, long term investors who clearly know what they area doing?"

In the meantime, Kate knows that lenders are still either knowingly, or via poor due diligence, lending money to people on a 'no money down basis' whereby a property is actually bought for £70,000 for example, but valued via the lender at £100,000. This practice should, in theory, not be possible now, but many property investors - and property investor clubs - are still carrying out these kind of deals.

"It is about time the FSA really took a good look at the way property investment is funded by lenders" says Kate, "What's the point of regulating things like 'sale and rent back' schemes but then completely ignoring, or not addressing the major issues of property investment finance such as 'no money down' deals" asks Kate.

Property investment to provide good quality, well run lets by experienced and proven good landlords is desperately required now. If it isn't provided within the next six to twelve months, rents for millions of young people will continue to rise way above inflation and wage increases, making it increasingly difficult for young people to live anywhere but back at home.


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