Buy-to-let boom is getting over, as rents suffer big drop

Posted under General by Alan

The early predictions from analysts that buy-to-let boom will be short-lived are getting confirmed by the rental returns that are falling sharply and tenants, suffering job losses, are failing to pay rent. This in turn is making it extremely difficult for landlords to meet mortgage repayments.

Home sellers not ready to dispose off their properties at throwaway prices, are turning to rental market, creating glut of available to-let property.

This surge has pushed rental prices down by 1.2% over last month and 4.8% over last year. In February average rents touched £830 per month as against £840 in January 2009 and £872 in February 2008.

According to an agency report, rental asking prices in the North West have fallen by 14.3% over last year, increasing in February with further drop of 8.2% over last month.

This fall is attributed to big increase in available stock which rose by 45.9% over last year, especially in Manchester area and now accounting for 57.8% of the available property in the North West area.

Demand is up too but not enough to soak up increased stock. Consequently properties are taking longer to rent. The average time a property is taking to rent is 70 days, a rise of 27% year-on-year. This meant no rental income for landlords for two months, forcing them to better accept 10% cut in rent than have void of 2 months.

Tenants are becoming more demanding due to market swing in their favour, making it difficult for landlords to get hike in rents at renewals.

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