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Sale and Rent Back in the Dock says Lawrenson of LettingFocus.com. Also, Local Housing Allowance and Rents.

I see that the OFT has asked eight firms in the, er, Sale and Rent Back “industry” to come to see them for coffee and biscuits and while they are there, try to justify the advertising claims they made to try to get hapless home owners to sell them their property at knock down prices.
Of course, this is all part of an overdue investigation into that industry which is now ongoing.
I’d like to have been at that meeting to see some of the less straight of these firms struggle to explain the quite outrageous advertising claims they had been making in the past.
Another meeting I’d like to be at is the one today where Sir Fred Goodwin of RBS and his pals try to explain how they just about destroyed a bank and helped b****r up the UK economy in the process.
I trust they will entering the building by the back door and well away from angry protestors.

WHY ARE RENTS FALLING?
Lots of people (well five this week actually) keep asking me why rents are falling and how much longer and further they have to fall.
Well, there are various reasons for the fall in rents.
First, there is a lot more property about which is available for rent.
Many would be house sellers cannot bear to take 15 or 20% less on their property than they would have got 18 months ago and so they opt to rent the house out instead.
With lots of stock about tenants can be choosy. In London and the South East, which have seen the local economy hit hardest due to the large number of financial services firms, rents are down about 10% on last year overall.
Second, as many landlords’ mortgage payments have fallen in line with the falls in the base rate, they can afford to cut the rents a bit.
Some people think rents will keep falling slowly as long as this situation persists.
But I am not so sure because there are a few things that will underpin rents.
First of all, at the lower end of the market, the Local Housing Allowance (LHA) rent levels provide a sort of buffer below which private rents will not fall much. OK, I know LHA is supposed to reflect private rents but the process by which the government adjusts them is slow. Think of the big Afghan family in the large house in Hampstead that recently made the news as a good example of this!
Second, mortgage lending is only going to unfreeze very slowly. Heck those bankers have still got bonuses to pay so they need to keep up both high mortgage margins over base rate and high product fees for quite a while.
Add in all the doom and gloom in the news plus the fear over jobs and I think we can see a scenario in which an increasing number of would-be first time buyers will opt to be tenants for some time yet.
And with this increased demand for renting, rents will not fall too far.
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ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts. Read More Articles on Property by David Lawrenson.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert freelance property writer and property speaker - and I run the well known property investment 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 property letting advice for a fee 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 are independent property investment advisors 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.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2009. This blog is updated once a week.
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