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London & UK Rentals - How to track them?


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#1 DrBubb

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Posted 20 October 2010 - 12:50 AM

London & UK Rentals - How to track them?
Looking at both Residential and Commercial

QUOTE (DrBubb @ Oct 20 2010, 09:35 AM) <{POST_SNAPBACK}>
That makes sense to me, but it is hard to track London rents from abroad.
== == ==

There are many contradictory reports, here is a bullish one:

London rents at record levels as buyers fight for mortgages

Russell Lynch .. 15.10.10

London landlords have pushed rents to an all-time high as frustrated first-time buyers are forced to spend longer as tenants.

Rents in the capital have risen by seven per cent already this year to an average of £972 a month, according to latest figures. The average terrace property is renting for £1,162 month, with the average flat costing £916.

The increases are being driven by the shortage of housing in the capital combined with a continuing scarcity of mortgage finance, according to LSL Property Services. Potential purchasers are delaying buying their homes while they put together the deposits needed to access mortgage finance.

David Newnes, estate agency managing director of LSL Property Services, said: “Landlords have seen tenant demand continue to hit new heights. The mortgage market remains tight and many buyers simply cannot get the finance to get a foot on the property ladder.

“And with potential spending cuts on the horizon, and uncertainty over the direction of the economy, many buyers are choosing to remain in rented accommodation for longer.

“As a result, demand for rental accommodation is increasing, and supply is not rising fast enough to match it.”

The imbalance between supply and demand is particularly acute in London, where rents soared by two per cent last month alone.

Across the country as a whole, the cost of renting a home is now 3.1 per cent higher than it was last year and above the previous high reached in August 2008.

The rise means an investor buying a buy-to-let property could expect to make a return of 9.2 per cent — an average of £15,592, once both rental income and house price growth is factored in.

Many tenants still struggle to keep up to date with their rent. Arrears levels fell slightly during the month, but about 10 per cent of rent remained unpaid.

/more: http://www.thisislon...or-mortgages.do

(Comment from there, on the inaccuracy of the article - typical BTLer-BS?):

"The rise means an investor buying a buy-to-let property could expect to make a return of 9.2 per cent — an average of £15,592, once both rental income and house price growth is factored in."
Yields in London are about 5%, but house prices are falling rather than rising, so the overall return is less than zero.
The figure of 9.2% might have been correct a year ago but it's laughably inaccurate at the moment.

- Ben, London, 15/10/2010 13:20


One of the drivers - falling Household sizes


/source: http://www.greenener...showtopic=11120
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#2 DrBubb

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Posted 20 October 2010 - 12:51 AM

What next for retailer costs?

We keep hearing that the economic recovery is driven more by exports and manufacturing than consumers but retail property markets are starting to look more interesting and, in some cases, more active too. Retailer demand is still cautious but now reportedly increasing for example, while retail investment in Europe is up 48% this year compared to 10% for offices.

The findings of our latest global research also makes for encouraging reading (download Main Streets Across the World 2010). Global rents were down but much more stable than in 2009 and an increasing number of locations are seeing positive growth – led by Latin America and Asia but with core European markets also turning the corner.

Retail Rental Growth – Getting back to business?
Global rents down 1.5% in the year to June versus a 6.4% fall to June 2009

Global Comparison


/source: http://blog.cushwake.com/
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#3 DrBubb

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Posted 20 October 2010 - 12:57 AM

LONDON - so popular, but for how long ?

Recently, it topped the list:

London or Bust!

While some commentators are unsure whether London will hang on to its crown as a top centre for global finance, according to our latest European Cities Monitor (click here to access) it retains a healthy lead as far as corporate decision-makers are concerned.

The 10 Best Cities in Europe to Locate in Today

Cushman & Wakefield, European Research Group

Not only was London voted the top city in which to locate a business (for the 21st year running, yawn!), it actually managed to increase its lead over some of its main competitors. The news for Europe’s other core markets is still good however, with Paris secure in 2nd place, Brussels up to 4th and Germany enjoying more popularity– with 4 cities in the top 10 thanks to the rise of Dusseldorf.
Away from the core, the mood is more mixed. The “PIIGS” have moved down – with their average city ranking dropping from 16th to 18th place over the year – but emerging markets are on the up and in fact dominate future expansion plans, which are led by Moscow, followed by Warsaw, Istanbul, Paris, Bucharest and then London.

Interestingly, the survey noted an increase in the expected importance of “expansion” in driving real estate strategies over the next 12/18 months, with expansion plans targeting the top 10 cities up by over 8% on last year- led by growing interest in Moscow and Istanbul.
== == ==

(But now, more recent data suggests a slowdown and supply glut - in commercial & office space):

Where Has All the Development Gone? .. October 8, 2010,

Construction activity has always been a good benchmark of the industrial sector’s strength. However, with the extended lag time between concept and completion, it may be better viewed as a confirmation of where the industry has been over the last 12 to 18 months. With that in mind, it should come to no surprise that construction activity is down, and down drastically. As of midyear 2010, construction completions totaled 8.8 million sf with a year-end projection of 16.7 million sf. This is a far cry from the 62 million sf that was completed in 2009 and the 136 million sf that was completed in 2008.

Another interesting trend is the flight from speculative development. Historically, and across many fluctuations in total deliveries, one thing has remained consistent… speculative development has far outpaced build-to-suit activity, usually by a pace of about 2.5 to 1. So far in 2010, this long-standing trend has been reversed.

With vacancy rates spiking to 10.8%, and the resulting glut of space on the market, speculative development has all but dried up. Why? In one word, competition. With so much vacant space, there are existing options to fit most occupier needs. The prospect of adding additional vacant inventory to this already flooded market, more often that not, will be a losing endeavor. C&W expects this lack of speculative development to continue until the vacancy rate levels off somewhere around 8%.

/source: http://blog.cushwake.com/
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#4 DrBubb

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Posted 20 October 2010 - 01:07 AM

More demand for flats to rent in London?
There may have been an increase in demand for flats to rent in London in the three months to the end of September, new research has suggested.

According to Paragon Group's Private Rented Sector (PRS) Trends report, more than a third of landlords identified a rising number of individuals seeking tenancy during the third quarter of the year.

Over two-fifths of property owners believe there will be a greater number of people looking to rent in 12 months' time, the study found.

Commenting on the results, Nigel Terrington, Paragon Group chief executive, said: "Demand for private rented property is buoyant and many landlords have tenants competing for their properties."

He added the third-quarter results demonstrate the low levels of lending currently taking place in the owner-occupier market.

Because of this, property owners are experiencing a higher demand for rented accommodation due to individuals being either unable or unwilling to buy, Mr Terrington stated.

Last week, Mark Garner, director and founder of LettingZone, noted more people could be choosing to stay in their rented homes because a decision to move may not be financially wise.

Posted by Ben Carter / Published 19th October, 2010
/source:

== ==
How funny:
Over two-fifths of property owners believe there will be a greater number of people looking to rent in 12 months' time, the study found.
Does that mean 3/5ths see less demand?
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#5 DrBubb

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Posted 22 October 2010 - 12:04 AM

RISING RENTS? - How true?

QUOTE (DrBubb @ Oct 22 2010, 08:36 AM) <{POST_SNAPBACK}>
ADDED 19/10/10
Rising rents reach record high for buy to let landlords

Rents have reached an average record high of £689 per month following eight consecutive months of increases.

London rents are up by two percent to reach an all-time high and are seen as a driving force behind UK rental inflation in 2010.

But unfortunately although tenant arrears fell in September the level of these remains high with 10 percent of all rent in arrears.

These figures are the latest findings of the Buy to Let Index from LSL Property Services.

It found the average UK rent is now 3.1 percent higher than September last year and that the average yield remained stable at 4.9 percent last month as rising rents were matched by modest house price growth in the past three months.
. . .
“With rental properties so sought after in the city, landlords have been able to continually hike rents since January and are seeing a yield just 0.1 percent shy of the UK average.

“In the last 12 months, the average London landlord would have made an annual total return of nearly £34,000 on a typical rental property.”

/more: http://www.residenti...k/news2485.html


Back a few years ago, this type of statement was questioned:

23 June 2008
Rental yields "highest in two years"
These stories about rising rental yields really irritate me. Today, Paragon Mortgages again claimed that rental yields have hit highest levels for more than two years, in its latest buy-to-let index.

The troubled lender announced that landlords’ rental incomes have risen nearly 12% in the past year and 6% during the past six months. Meanwhile, property values have risen 7.5% year-on-year, although by just 0.2% over the past six months.

So how does Paragon reconcile their double digit rental growth with the rental inflation data produced by the Office of National Statistics. Here is there chart, which shows that rental inflation is running at approximately the same rate as RPI inflation:




/source: http://ukhousebubble...-two-years.html
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#6 Rosco

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Posted 22 October 2010 - 05:15 PM

Latest quarterly review for Prime London by Knight Frank.

http://resources.kni...e.ashx?id=12084



#7 DrBubb

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Posted 22 October 2010 - 09:46 PM

QUOTE (TrueNorth @ Oct 23 2010, 02:52 AM) <{POST_SNAPBACK}>
Interactive chart from The Economist: "Clicks and Mortar" re Global House Prices

http://www.economist...al_house_prices

Great resource. Thanks for posting that !
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#8 DrBubb

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Posted 28 October 2010 - 08:30 AM

From the London to Drop 25% thread:

QUOTE (The Undertaker @ Oct 28 2010, 04:06 PM) <{POST_SNAPBACK}>
I read today that 65% of all private sector rental income comes from housing benefit. If this is really true, the rental market is anything but a free market. With the planned cuts rents should fall substantially.

65%?
That is truly a shocking figure if it is true !
Then, the entire BTL brigade would be like a sunset industry, surviving on government support. Yee gads !
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#9 Mabon

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Posted 28 October 2010 - 01:00 PM

QUOTE (DrBubb @ Oct 28 2010, 09:30 AM) <{POST_SNAPBACK}>
From the London to Drop 25% thread:

65%?
That is truly a shocking figure if it is true !
Then, the entire BTL brigade would be like a sunset industry, surviving on government support. Yee gads !


I feel the amount of renters will increase over this next decade. Less people will want to or be able to buy/ own a house.

Whether there is a big housing market blowout or not, some of the slack in the market may replace housing benefiters with paid-up working folk.

Clearly though if the above 65% figure is correct, then we can expect some contraction in the rental market.

A double-edged sword?

In that potentially un-rentable surplus property could be sold to wannabe homebuyers.

Potentially this could provide more cheaper property because sales will need to be made as certain BTL'ers cash out.

Sustainable well rentable property though could become more valuable.

Rents could rise at first due to the contraction in the amount of rental property available??

The housing benefit 400 per week limit will have greatest effect where rents are highest.

So less relevance outside of south-east england is my guess.

Difficult to navigate muddy waters.
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#10 DrBubb

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Posted 28 October 2010 - 04:05 PM

QUOTE (The Undertaker @ Oct 29 2010, 12:38 AM) <{POST_SNAPBACK}>
This was the link I found:

http://www.insidehou...6512084.article
I may have misunderstood as I cannot seem to find the reference anywhere else.
If it is true, then it really is a scandal. I wonder how many buy to lets Boris Johnson's friends have?

EXCERPT
Chancellor George Osborne announced a £500 cap last week at the Conservative Party conference. The cap would be for a combination of benefits, such as jobseekers allowance and housing benefit. The Treasury confirmed housing benefit would be the payment cut if the combined total came to more than the cap.

The Treasury estimates the cap will affect around 50,000 families, who will lose an average of £93 a week.

Housing benefit accounts for £5.3 billion - 65 per cent - of landlords’ rental income. Many have started modelling the impact of a drop in housing benefit income on their business plans.


Let's see: a reduction from £593 to £500 a week, pushes annual rents down from: £30,836 to £26,000 per annum

If we multiply that by 50,000 properties that's £241 million of lost rental income per annum for BTL landlords - a big hit.

Looking at it another way...

====== : Old yield : New yield
Rental Inc : £30,836 to £26,000
Property- : £165,000 : £165,000 - Average UK House price
Yield ----- : 18.69 % : 15.75 %

(Obviously, these expensive Rents, were on homes more valuable than the average - !!
A £26,000 cap per annum seems more than generous. Why should benefits takers be living in something
MORE VALUABLE than the average UK home. I think a £350 or £400 cap makes sense.)

If these lower rents "set the pace", and drive down yields across the country, there will be many unhappy LL's.
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#11 Mabon

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Posted 28 October 2010 - 04:28 PM

It'll be more of a reduction than that.

The £500 per week includes jobseekers allowance (approx 60 per week?).

So the amount available for housing is 440 max.

I get offered HMO (Houses Multiple Occupancy) deals that are housing benefit-orientated a lot.

The number of HMO social housing deals offered is increasing.

Clearly it has been a growth industry for the last couple of years.

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#12 DrBubb

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Posted 29 October 2010 - 01:33 AM

QUOTE (Mabon @ Oct 29 2010, 01:28 AM) <{POST_SNAPBACK}>
I get offered HMO (Houses Multiple Occupancy) deals that are housing benefit-orientated a lot.

The number of HMO social housing deals offered is increasing.

Clearly it has been a growth industry for the last couple of years.

A tax-payer financed RAMP of Property prices !

+ Taxpayers pay the Rental subsidy
+ Taxpayers own the banks than finance the BTL investors

Mr Brown was even more ingenuious than I thought. And the bloody thing almost got him re-elected. If Nick Clegg's stomach hadn't turned when he met the villain, we might have had him back as PM
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#13 DrBubb

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Posted 13 November 2010 - 05:57 AM

QUOTE (DrBubb @ Oct 29 2010, 12:05 AM) <{POST_SNAPBACK}>
Let's see: a reduction from £593 to £500 a week, pushes annual rents down from: £30,836 to £26,000 per annum

If we multiply that by 50,000 properties that's £241 million of lost rental income per annum for BTL landlords - a big hit.

====== : Old yield : New yield
Rental Inc : £30,836 to £26,000
Property- : £165,000 : £165,000 - Average UK House price
Yield ----- : 18.69 % : 15.75 %

(Obviously, these expensive Rents, were on homes more valuable than the average - !!
A £26,000 cap per annum seems more than generous. Why should benefits takers be living in something
MORE VALUABLE than the average UK home. I think a £350 or £400 cap makes sense.)

If these lower rents "set the pace", and drive down yields across the country, there will be many unhappy LL's.

So what happens ? Do LL's sell enmass?
NOT YET - the sector is still growing, albeit more slowly:

There were 26,900 buy-to-let loans advanced in the third quarter, worth £2.8bn.
This quarterly rise of 8% by volume and 12% by value is the second consecutive quarterly increase in lending. Compared to the third quarter of 2009, the volume of lending was up 14% and the value up 33%, from 23,700 and £2.1bn respectively. Buy-to-let lending is low by historical standards - running at levels last seen in 2002 - and the market will likely continue to show growth into 2011.

At the end of September, there were 1.29 million buy-to-let mortgages outstanding, an increase of 7% from the previous quarter. The proportion of loans in arrears of more than 1.5% of the balance remains broadly unchanged at 1.45%, while repossessions (at 0.12%) and the appointment of receivers of rent (at 0.10%) were also virtually unchanged from the previous quarter.

Buy-to-let demand appears likely to increase, which is unsurprising in an environment where the demand for rental property will be boosted by the access problems that first-time buyers face in the owner-occupier market.


/more: http://www.housepric...howtopic=154423
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix




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