Buy to let property investors keeping an eye on rental and interest rates

Bad news for real estate investors in Bratislava is reported this week on the property forums with buy to let property owners pointing out that rents are plummeting.

One of the main problems is that potential tenants are offering 40 to 50% below the market rate. They are viewing properties available at around €1,000 a month and offering €600 per month and wanting a three to six month contract, according to those posting on the propertysecrets.net forum.

One investor who has received these kind of offers said he has declined but warns others that some property owners and agents are accepting these very low rates even in sought after areas such as the Old Town paved area.

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Some tenants are even asking for rent reductions of 20 to 30% during their tenancy. While many are not keen on such large price drops other on the forums welcome them. But there are also reports of tenants just disappearing. One property investor has had a Greek medical student up and leave and on another property he has a debt collector chasing the tenant who is a a star footballer for Bratislava who is two months behind on rent and wants to terminate his two year contract which still has four months to run.

Another investor who has a desirable apartment next to the US embassy reports he was getting €1,300 per month but is now having to consider €900 a month. As this particular investor does not have a mortgage he is considering just letting family and friends use the flat until the situation improves.

But many property investors do have loans to pay and rely on the rental income to cover their monthly outgoings. Other report that agents are advising them that if they are looking for new tenants they can expect around 20% less rent.

One reason given is that a large number of new apartments are coming on the market. Although it is also interesting that those with properties in Slovakia are not rushing to sell them despite falling rental incomes. Many report that they think the property market as good long term prospects.

Indeed a recent report indicates that Slovakia is an island of relative calm in a troubled region. Growth has fallen sharply in line with all of Europe, but the country, as well as neighboring Poland and the Czech Republic, are in relatively good shape from a financial point of view.

It is often said that estate agents are one of the professions that are most hated in the UK. So with tentative signs that interest from buyers is increasing one issue that is emerging on the UK property forums is whether to sell on the internet or use estate agents.

The main issue seems to be on of exposure. As is pointed out on the movechannel.com forum the big five property portals don't cater for private sellers so immediately your presence on line is much reduced if you decide to opt for selling without an agent.

Opinion is divided on the subject. Some believe that estate agents don't actually do much for their money and point out there are plenty of internet sites for private sellers.

Others think that without exposure on the big portals you risk not being able to sell at the best price. And it is always possible to put a property on with an estate agent and still list it on a private sale website.

Another issue that emerges from signs of improvement is the question of when interest rates will start rising again and what effect that will have on the real estate market. This is of particular concern to buy to let investors and on the singingpig.co.uk forum opinions vary. Some believe higher interest rates will mean prices falling even further.

Economist and analysts vary in when rates will start go up and various predictions include from 12 months to 10 years. One indication is the rates that are being offered for fixed rate mortgages. Several investors report that they are being offered two year deals at 3.99% and 4.35%, indicating that brokers expect rates to remain low for at least two years.