Rents and property prices rise as landlords rejoice

There is nothing that warms a landlord’s heart more than increases in both rents, their income and capital values, their net worth. When the two happen concurrently this always increases interest in the buy to let sector. Their Royal Institute of Chartered Surveyors survey reports that 13 percent of their clients are reporting rent increases rather than falls. This demonstrates that UK rents have risen consistently since 2009, many point to the mortgage drought and tighter lending criteria as a factor as it keeps households in rented accommodation and stops them from moving on into their own homes. The lack of mortgage funding lies with the banks and their ability to obtain money supply. There are no signs of a recovery in a bank lending in the short term so it looks a safe bet that rents and rental yields will continue to rise. This will undoubtedly lead to landlords actively looking to expand their property portfolios. House prices in some areas are without a doubt being supported by the value of their rental income rather than their desirability to buyers. It is interesting that none of the sectors pundits are predicting rises when there are increasing similarities to this part in the property cycle in the start of the last boom. Many economists look at the prices to average wage earnings ratio, but if there is one proven fact in the property market it is that the market although constrained by the fundamentals is without a doubt driven by sentiment. The herd mentality is never displayed better than when the property market moves up or down. Once buyers feel motivated to buy more quickly fearing they may become priced out of the market that is when capital values increase rapidly. Once this happens banks themselves are more motivated to lend on an asset that is increasing in value and surveyors are more relaxed about committing to higher values. This gives surveyors the confidence that even if they may have mistakenly over valued a property their mistakes will soon be covered by a rising market. With the opposite being true in more recent times?