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Unsold homes results in decreasing rents

January 6, 2009 by admin  
Filed under News, News-Mortgages

1 Comment

Recent reports have shown that the number of unsold homes in the UK are resulting in the amount of rent being charged on rental properties being driven down. Over recent months more and more homeowners that were hoping to sell their properties have found that in the current climate they are unable to secure a sale for their properties, and with many unable to keep on top of mortgage repayments a large number of these sellers decided to put their homes up for rent on the market.

This has resulted in the number of homes coming onto the market for rent going up, and because of the increased supply of properties rents on these rental homes are being driven down.

This is good news for the many renters who are unable to get a mortgage to buy their own homes, or choose not to buy, and decide to rent instead, as it means that they can enjoy both a wider choice of properties and lower prices on their rent.

An official from the Royal Institute of Chartered Surveyors stated: “Frustrated vendors are placing their property on the market to let as they have been unable to agree sales due to a lack of demand in the housing market.”

The demand for rental properties is healthy at the moment, as many people are nervous about buying property of ongoing house price falls, and others cannot get the mortgage they need to purchase a home.

In a recent report over half of RICS members stated that they has seen property rental prices fall as a result of the influx of rental properties on the market, with landlords having to reduce rents in order to remain competitive and attract tenants in the increasingly growing market.

Tags: current accounts, house market, Renting, Business Finance, official, unsold homes, landlord

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Comments

One Response to “Unsold homes results in decreasing rents”
  1. Zuriel Shiv says:
    January 28, 2009 at 6:43 pm

    Be creative and attractive.
    For example, offer a three-year rental contract with a bonus. How?
    This is what I posted somewhere else:

    How to get rid of vacant homes.

    A special three-year rental contract, consisting of the following elements, could help clearing the market.

    1. Notional value: a Gross Rental Yield of 7% will be applied to the agreed rent, producing thus a notional value of the property. Example: annual rent of $10,000 will produce a notional value of $142,857 (10,000 divided by 0.07; the suggested yield is above the ‘historical’ average due to the handling costs).
    2. Bonus to tenants: once the property is sold, the tenants will get a bonus equal to 7.5% of the notional value ($10,714 in the above example). In other words, the higher the rent, the higher the bonus.
    3. The tenants undertake to occupy the property, and pay the rent, for a period of three years. On the other hand, the owners are entitled to sell the property at any time, discharging thereby the tenants of their long term obligation.
    4. The tenants will be entitled to their bonus even if the property is not sold during the rental period.

    The advantages are numerous and mutual, but first and foremost, the market will be cleared of vacant homes more rapidly than otherwise. Moreover, notional values, based on a conservative rental yield, could be safely regarded as real values, at least for the near future.

    Subject to some variations, a similar deal, based on gross rental yield and notional value, could be struck for people who are about to lose their home due to financial difficulties.

    Zuriel Shiv
    (Could well be that 7.5% bonus is not enough, but the principle is there)

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