Landlords grapple with shrinking budgets as private rents sink

Higher interest rates will only make things worse.

Homeowners who are relying on rental income to service their mortgage loans will face significantly smaller budgets this year, according to a report by PropertyGuru.

Although rental volume rose significantly in the past year, the report noted that average rents faced steep year-on-year decline. Average rents in the OCR amount to $3,161 and $4,720 in the RCR, both displaying a steep year-on-year decline of 9.9 and 10.3 percent respectively. Rents also fell in the CCR to an average of $4,982, closing the year with a 7.5 percent correction from 2014.

“As a result, more landlords had no choice but resort to accepting rents at a lower market or become more willing to enter negotiations with potential tenants to adjust rents,” said the report.

“Despite the optimism the slight bump in transaction figures brings, in reality, landlords are faced with the prospect of garnering lower rental yields as prices continue to taper further. As a result, more landlords had no choice but resort to accepting rents at a lower market or become more willing to enter negotiations with potential tenants to adjust rents,” said PropertyGuru.