With rents falling is this the time to rent your home?
Over the past year a large number of people have been pushed into renting a home rather than buying one, and this is largely because lenders have become far more stringent over giving out mortgage loans, which has made it difficult for many people to get the finance that they need to purchase a home.
In addition to this, some have decided that renting is the best option at present rather than buying, due to concerns that if they purchased a home property prices would continue to fall, as they have been over the past twelve months, and this would quickly leave them in negative equity.
Recent reports have shown that whilst property prices are falling, which in principle would be encouraging for those that were looking to buy a home, mortgage lending is still very restricted and this means that many people that may want to purchase a home may not be able to do so. However, this may not necessarily be a bad thing, as reports have also indicated that house prices are going to continue falling for some time, and with experts predicting that house prices could fall by a further 10-20 percent over the next year, now may not be the best time to buy.
In addition to this figures have shown that in places such as London rents are actually falling faster than house prices, which means that renting may actually be a good option for many people at the moment. This is because they can enjoy lower rents, which are being driven down by a surplus of rental stock, and can give themselves extra time to wait for house prices to fall further and then stabilise before taking the plunge and buying a property.
In some areas of London, such as Kensington and Chelsea, rental prices are thought to have fallen by around 15-20 percent, which can make hundreds of pounds difference each month. The reason why rents are falling so rapidly is that many homeowners are finding it increasingly difficult to sell their homes in the current climate and therefore many are deciding to rent the property out in the interim until the housing market picks up again. This has resulted in an increase in the number of properties on the market, with supply now outstripping demand.
With the huge choice of properties that potential tenants now have, landlords are having to reduce their rents in order to be competitive and increase the chances of getting a tenant. Corporate demand for rental properties in the city seems to have dried up with the collapse of Lehman Brothers, and this has further fuelled the need for rents to be reduced.
Tags: Mortgage loan, stabilise, negative equity, order, rents, family, chelsea, right timeOne industry official said: ‘As we have seen over the last few months, more people are choosing to rent because they feel now is not the right time to sell. This is creating an over-supply which gives tenants more choice and drives prices down. In addition, the financial crisis has meant fewer international businesses are relocating staff to London. This has reduced the demand for rented family homes, especially in the most popular areas of Kensington and Chelsea.’
