A survey this week from the Royal Institution of Chartered Surveyors (RICS) showed that rents for homes fell for the first time in 5 ˝ years, a consequence of the UK property slump which is now seeing the market flooded with rental properties.
[UKPRwire, Fri Nov 21 2008] A survey this week from the Royal Institution of Chartered Surveyors (RICS) showed that rents for homes fell for the first time in 5 ˝ years, a consequence of the UK property slump which is now seeing the market flooded with rental properties.
This is due largely to two critical trends in the property market. The first is the large drop in house prices – which fell an annual 14.6% in October – which has led to a glut of rental homes on the market, as more homeowners become landlords rather than sell at today’s depressed prices.
“Many vendors have been forced to become amateur landlords, creating an inevitable downward pressure on rents,” said James Scott-Lee of the RICS.
At the same time, the tightening of the mortgage market and the difficulties of obtaining home loans are pushing would-be buyers into the rental market instead.
The survey showed that 12% more estate agents said that rents had fallen rather than risen between July and October, and they expected the slide to continue in the coming months. This was the reverse of the previous three months when almost a third more agents said that rents were rising. Landlords in London fared the worst, with 53% of agents reporting a fall rather than a rise in rents for houses in the three months to October.
A report from Standard & Poor’s ratings services anticipates a rising number of defaults, arrears and repossessions among buy-to-let landlords, with more than one in three falling into negative equity by mid-2009. Those investors who obtained buy-to-let loans in 2006 or 2007, taking advantage of low borrowing costs and rising home prices, are particularly vulnerable. Standard & Poor’s forecast that between 20% and 40% of buy-to-let loans of this type would be in negative equity if house prices fall from their peak last year by 25% to 35%. Prices have already fallen by around 15%, according to Halifax.
Not all homeowners hoping to sell are either able or willing to become landlords, or want to wait for the volatile market to improve. “Those who want to sell quickly do have a third option – selling their property to a house-buying company, which guarantees them a fast and convenient sale, at a fair price, so they can move on,” said Lawrence Smith of Decision Homebuyers.
For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil@dhbuyers.co.uk
Web: www.decisionhomebuyers.co.uk
News provided by Decision Homebuyers, a leading UK property company offering a quick and simple solution for selling your home, no matter what the condition.
Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
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