According to research from the Association of Residential Lettings Agents, the number of tenants seeking rental properties has reached an eight-year high with letting agents across the UK reporting a significant shortage of available rental properties as tenant demand far exceeds supply.
Popularly termed ‘Generation Rent’, these are the people who are being forced to rent either through pressure to complete from potential buyers or because they just cannot afford to buy. However, a big part of the current housing shortage problem is the lack of available properties and one of the main reasons for this is the vast numbers of investors who are snapping up one and two bedroom homes as a buy to let investment because of the low rates on offer for savings. Anyone with £100k-200k is looking for a far better return on their money than the pittance currently obtainable from most banks and building societies which pushes them into the property market.
These investors buying up all the low to mid-range flats and apartments causes a huge hole in the numbers of properties available for first-time buyers and those downsizing due to financial pressures.
When I first decided to leave my husband and look for somewhere else to live, I wanted to buy but, invariably, every flat I asked about already had an offer on it and had done within hours of it becoming available. Every estate agent had a list of prospective buyers just waiting for a property, no matter how run down, to come onto their books. It is more cost-effective to do somewhere up cheaply and rent it out than to leave the money sitting in the bank. So many times I would go to view a potential home, only to hear an hour later that an offer had been made… and then a short while later, it would appear on my weekly email listing potential rental properties. It was most frustrating.
Some investors do not target their own local town either but search out areas where there is a high turnover of rental properties and employ the services of an agent to handle tenants. They are also in a strong position as a buy-to-let investor because they are chain free and, as most vendors are keen to make the whole process go as swiftly and smoothly as possible, they can favour buy-to-let investors over regular purchasers.
Many will get the bug and avail themselves of a Buy To Let Portfolio Mortgage Facility as these are useful for an investor who wants to make bids on properties without having to make an application for additional finance each time. On portfolios that are over £500,000, the interest rate charged will often be more competitive than those for smaller individual loans but, with lenders expecting rental income to be in the region of 130% of the loan value, this type of landlord can also have an effect on the level of rents in the area.
Lenders will usually look at portfolios of between £500,000 and £10 million and will expect rental income to be in the region of 130% of the loan repayments. The interest rate charged will often be more competitive than rates on smaller individual loans.
In a market that is already static due to homeowners refusing to accept that their property is now worth less than it was when they bought it some years ago and insisting on offering it for sale at a profit, the presence of these investors in the housing market serves only to further inflate prices for others who actually require homes rather than investments. But, worse, it decreases the number of properties actively available in the lower price brackets leading to gazumping and other underhand cash deals being required to secure the deal.
As a lessee, I would love to purchase my current apartment but, just by being here at all, I make the chances of that happening very slim. Whilst the lessor has a property that is occupied, it is unlikely that they would consider selling it unless there was an additional financial incentive.
Difficult :(
Come live in Dublin, no one can sell anything here :)
Jo recently posted..sometimes this job sucks
Jo, From what Ive heard recently, Im not sure there’s much shifting here either these days.
Joanna you may want to educate yourself on Rent To Own – take a look at http://www.rickotton.com/
And don’t believe that landlords never want to sell, quite often they do for various reasons such as wanting to change their investment strategy. If you really want to stay where you are and buy it, maybe introduce Rent To Own as an option.
Or you may go off and find other property/ies to buy in this way. If you want to speak to someone who’s done this I know a few people, probably the most successful is the lovely Peter Stanley http://www.PropertyMadeSimple.com
Biggest tip I can give you is to observe what you’re telling yourself as they are beliefs that have maybe been made through what you’ve read or what people have told you – often people who have actually had no personal experience of what they’re saying is ‘truth’, they’re just regurgitating stories they’ve heard from others.
Something I keep saying to myself when I catch myself saying ‘i can’t because’ or ‘but’ is to change it to ‘how can i?’ The mind strives to give me what I’m asking for and it’s amazing what answers and opportunities can suddenly arise when I do this.
Of course.. this takes a lot of practise and I am crap for falling into old thought patterns but when I’m aware, it does work for me.
RawRRR recently posted..Twitter Updates This Week 2010-11-07
Hey Sarah, I shall certainly give rent to own some thought as I will have some decisions to make over the next year. Perhaps things have changed a little over the last 18 months but certainly back in the first and second quarters of 2009 in a nice town within easy commuting distance of London, the buy-to-let brigade were a serious problem for those of us actually looking for homes. The ones left on the market tended to have major flaws – like no windows, lots of steps or an asking price above market value.
I do hear what you’re saying tho and, trust me, I am moving forward in the ‘I can’t’ department. I have discovered that, in a lot of cases, I actually can…. and very well :)