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LettingFocus

Unbiased buy to let, property investment and letting coaching, mentoring, advice and seminars for landlords from top selling property author and media commentator.

Commentators don't understand the new paradigm on house prices says LettingFocus.com

I do think that some property market commentators are over fixated on first time buyers’ chances of getting mortgages as the lead driver of the future direction of house prices.
It matters, yes, and so does the ratio of earnings to house prices but it does not matter as much as it did before
For quite a long time now I have said that in the future, the new driver of activity will be either professional investors or wealthy parents with spare cash to pass on to their kids.
Don’t forget that over 40% of people have no mortgage so don’t give a stuff about mortgage rates and if they are not buying for themselves they will be giving their lucky offspring at least some of the money for a deposit and for the hefty mortgage fees which are now the norm.
Hard nosed property investors and rich parents of first time buyers are two key groups with the money to buy property and many commentators should wake up and realise the paradigm has shifted.
They should stop looking only at the standard measure of the ratio between a young person’s earnings and house prices or the affordability of mortgage interest payments but look instead at the stock of wealth that first time buyer’s parents and experienced property investors have.
I think it was the think tank, "The Future Foundation" who said that property was becoming more "dynastic" in nature.
I agree and about four years ago I wrote a press release suggesting that because of these and other factors, the proportion of property in the UK that is privately rented (then about 9%) could hit a third within 20 years.
Well, today I expect the budget may well give a boost to more private rented accommodation so I think my predictions could yet prove correct as more people either choose or are forced to stay in private rented accommodation.
It is sad to say - and a real shame for would be first time buyers- but if your parents are not rich your chance of getting on the housing ladder these days and in the future will be a whole bunch harder than it was in the past.
Maggie Thatcher gave us hope that we could all be home owners if we saved a little bit and worked hard. This hope is slowly being dashed.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property letting experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investing Book.
The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing and capital gains taxes.
I’m an expert property writer and property speaker - and I run the well known property letting blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting and consulting to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we offer independent unbiased property investment advice because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
On the contrary, we are often asked to evaluate other property investments.
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Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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Rents are Up Strongly in London

I always try to keep my tenants rents some way below the market level. This gives me a good choice of potential tenants allowing me to pick and choose the best ones who I consider will look after my properties and also be fair and reasonable people to deal with.
It also means that they feel they are getting a good deal too.
As well as that I try my best to get things fixed as quickly as possible.
I also don’t like putting up rents. My view is that good tenants have to get a reward for being good tenants.
Right now though, my rents WILL have to go up because they are now something like 20% adrift of market rents locally in one area.
The reason for this is that rents have gone up strongly in the local area, by around 8% over the last year in fact -so mine are now too far out of line.
So, I’ll be putting them up, but I will still keep the level below the local market rent.
After all, my tenants are good practical people who have earned the right to be paying a bit less than market rent (and as good tenants they also help keep my costs down)
Would I ever have rents at a premium to the market? Yes, if I had a tenant who was an utter pain – the sort that would have you out to change a light bulb. This kind of tenant costs money in terms of time you have to spend on them.
Having a higher rent for them may compensate for this extra hand holding and hassle - and if they leave because of the high rent, then that’s no problem as you will be better off with another more hassle free tenant at a market or below market rent.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.


Services to Businesses and the Public Sector


Primarily I am a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the broadcast media.


Services for Private Landlords


We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one-to-one mentoring / coaching basis or through our occasional group seminars. With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

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David Lawrenson 2007. This blog is updated roughly once a week usually on a Monday or Tuesday.

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