Have rents risen in London?

[Renter77]

We’ve been out of the uk for nearly a year and looking to come back. And will rent first. I was idly looking at Rightmove and I’m shocked at the rental prices! Have they gone up?

I’ve been reading a lot about a property crash looming. Does this cause a rise in rents as people don’t buy?

Yes there has definitely been a rise in rents. A 2 bed flat in London will set you back about 2k a month at least, used to be a lot less. While I'm no expert I really don't think there will be a crash when there's so little housing stock available, unless people can't pay mortgages. Most people will stay put and make cuts elsewhere to afford their mortgage.

If you are in a position to I would buy asap. Why give a rich landlord 2k per month? Even if prices drop (and who knows if that will happen massively) you're still better off buying an asset of your own.

We have to rent first really - we can’t buy from abroad without seeing the place first. Plus we’re moving to a new part of London, so I really need to scope out the streets!

Yeh rents have gone up massively. We rent out our 1 bed flat. Last year we rented it out for 1500 pcm and this year its rented it out for 2200 pcm. We don't make any money on it, agency management fees are 400 pcm (we live overseas) and we pay a tax of 350 pcm for being overseas. So we are actually down each month. But generally everything has gone up with a bang.

Geez. Making me think maybe we shouldn’t come back to the uk at all?!

I don't think now is the best time to come back. If you can stay where you are and sit it out until things improve in the UK then I would do that. Cost of living gone up in UK, high rents, energy crisis, rail strikes all the bloody time, NHS totally failing, childcare expensive, inflation......

How are you down each month when your fees are £750 and you are charging £2100 per month?

I imagine they have a mortgage to pay.

Even if they have a big mortgage they are charging £700 more than last year when they (presumably) also had to pay a management fee since there are always costs associated with renting out a property

Landlords have sold up in droves due to legal and tax changes making it financially unviable, therefore very little supply.

While I concede there are some moral issues around landlord-ism if the government relies on private landlords to house a huge proportion of the population, forcing most of them out without other options in place is not bright.

I'm always intrigued by the landlords are getting out of the market so there's fewer places for people to live argument

Do the houses / flats go pouf and vanish into the ether when the landlords sell them? No. They still exist, to be lived in by owner occupiers, or renters if bought by another landlord.

Many landlords opt to turn their properties into AirB&Bs / holiday lets instead - it’s what we did when our tenants moved out last year. Was meant to be a short term thing but have realised there’s far less risk overall so will continue: quite apart from the tax changes, I can’t take the risk any more of a tenant moving in, opting not to pay any rent, and being nigh on impossible to evict. Short term lets or properties just left empty has become common, particularly in more affluent parts of London. It’s clearly a big problem for a lot of people who need to rent.

@Twiglets1 we have a mortgage to pay. We rented to a friend last year so didn't go via an agency but as we are abroad with a toddler we chose the fully managed option as it's not easy to pop back to fix problems that arise. As we rented to a friend we gave discounted rent, also our mortgage repayments were less - we remortgaged end of last year and they went up by £200 per month.
We don't make any money out of it and are trying to overpay the mortgage where possible so that the rental income covers the mortgage.

Yes where I live most btl landlords now Air bnb, or even worse, just leave them empty, knowing that they’ll go up in value so it’s still an investment even if not bringing in an income

I don't blame them in a way. It must be awful if you're stuck with tenants who won't leave/pay their rent.

I was noting the argument about landlords selling up altogether, not landlords renting properties out in other ways or leaving them empty.

Though leaving residential properties empty for an extended period can attract the attention of local councils, who have various powers in this regard.

Maybe they were down even more last year?

One big change is that a lot of boroughs have introduced selective/additional HMO licensing. This means a flat that's 2-bed (or more) can only be rented to a couple, couple and child, or two friends, without it requiring a costly HMO license and adaptations to the property.

A couple and their friend, or two couples, would no longer be able to rent it. So in one well-intentioned move, flatshares have become more expensive. There are a lot of listings aimed at couples where the listing shows "home offices" and "snugs", where previously the flat might have been available to groups of professional sharers.

At the same time the standard of accomodation really seems to have risen. It's quite unusual to see "always been a rental" rundown listings. Yes there are a lot of 2-bed flats for £2k+ even in places like Camberwell and Peckham, but they've usually had a lot of money spent on them and are indistinguishable from owner-occupied property sale listings.

If your tenants are paying your mortgage- or almost completely paying your mortgage- I would argue that you are making money out of the property because it will be increasing in price over time from when you bought it to when you sell it.

@Twiglets1 yes in the long term its a good investment. Someone else is paying the most of the mortgage and fingers crossed we should make some money if we ever decide to sell it.
Just at the moment it feels like a giant money pit. Hopefully if we can overpay on the mortgage over the few years before we have to remortgage it will feel worth it.

nothing for rent in my area...i work in an agency one day a week....a lot of landlords have sold up...flats and houses bought instantly they come onto market or many dont even get that far.....snapped up....also licence as mentioned has restricted a lot of properties.

I’m a LL. My tenant moved out and the agent suggests the rent should be increased by £200 a month.

I expected to raise it by at least £100 because the previous tenant had been there over 4 years with no rent rise and a £100 rise would amount to 10%, or just 2.5% per year increase.

I would also mention that between tenancies we are spending £8k on decoration and kitchen refurb and a couple of other little bits. We expect to pay that and factor it in, but it is more than a year’s worth of rental income for us gone, as after tax and agent fees we make less than £8k per year. I don’t say it as a sob story, but just pointing out some of the facts about lettings that sometimes people forget.

Currently you can get over 4% interest on savings. For many LLs faced with rising mortgages and increasing red tape from government which all costs and reduces income, it starts to feel like more hassle than a simple savings account.

And yes, when LLs sell, there remain the same amount of properties. Many are bought up by private owners not LLs, especially at the moment, so actually it’s the stock of rental property that goes down. That’s relevant to renters becaus less supply makes it harder to find a property and it’s also likely to be more expensive to rent.

I plan to keep going and will probably be raising the rent by £150 not the £200 suggested by the agent. As I say, given the rent hadn’t been increased for over 4 years, and actually the flat will have a new kitchen, it’s not a bad increase, Ali though I appreciate rents are very high when you’re paying them. The agent told me she let a property last weekend that hadn’t been refurbed at all - was decent but dated and that the rent for that was increased by £200 and 10 viewed and 4 suitable candidates made offers that day.

In the end, LLs and tenants are co-dependent aren’t they. It only works if it works for both groups. I’m not sure if increasingly it’s not working for either group, but I do know that if LLs exit the housing market in droves, they won’t be the ones with nowhere to live, as they already have their own homes, it will be the tenants that are affected most.