In London, the housing market crash is forcing would-be sellers to become landlords
Le Monde, 06.01.09
In January 2008, Sheila, who works as a head of marketing, put up for sale her home in Chichester, in the south of England at a price of £425,000. After "Black September" which was the height of the financial crisis, this marketing expert reduced the price to £395,000, but without success. The young English woman finally found a tenant who was prepared to pay £900 per month for the property, an amount which would cover the property's mortgage. She herself has rented a small house in a less sought-after area of this medieval town.
Sheila makes up part of growing number of reluctant landlords, the name given to those who are renting their property because they have not been able to sell it due to the fall in housing prices. Contrary to normal landlords, she has had some trouble settling into her new role. She is worried about the damage that may be caused to her property. she fears that she will be bothered day and night by her tenant with regard to plumbing and electricity problems and burst pipes. Traditionally in the United Kingdom, the great majority of rentals are furnished, which brings with it large maintenance costs for the owner.
These properties are blowing up the total number of rentals, which have increased by 60% in 2008, from 171,000 to 284,000, according to the specialist housing site Rightmove.co.uk.
INFLUX OF PROPERTIES
The result of this influx of properties onto the market is that rents have fallen by 8.1% over the course of the last year in the centre of London, which is much sought-after by incoming City workers, and by 2.1% for the whole of the United Kingdom. This phenomenon has even reached the countryside where second homes are being rented out by their owners, the majority of whom are bankers, who have been confronted by brutal falls in income, in particular their yearly bonuses.
"Generally it's a case of properties which have been completely renovated with a view to selling, which are competing against more cheaply maintained rental properties", states David Adams of Humbers estate agents. According to Mr Adams 40% of sale properties are subsequently placed on the rental market due to a lack of buyers.
This new wave of reluctant landlords are also unlikely to make a financial killing through that greatest of symbols of the glory years; the buy-to-let. Those who had bought city centre flats in the hopes of renting them out often find themselves in a difficult situation. Nowadays, despite the interest rate cuts, rental income still doesn't always cover variable rate mortgage payments
Marc Roche, From our London correspondant