You Think London Prices Can't Go Higher?

[Trampa501]

SocialHsgRentTo rise

Council and housing association rents look set to rise steeply if proposals from the government and the Mayor get the go ahead.

They claim the money is needed to build more affordable homes but critics say the plans will drive people on low incomes away from some parts of London.

I know there is a resentment here of those fortunate enough to occupy council/social housing in London, but doubling their rents can only increase house prices. Why? Those out of work or claiming benefits will probably get most of the rent paid from Housing Benefit (ok so they may have to do illegal p/t work if HB doesn't cover all the rent), but what about those in decent paying jobs? They'll look to buy somewhere asap (if only in zone 4,5 or 6) once the rents start to rise.

Well done, the jealous bigrade. You've now made an overpriced housing market even worse.

[Pent Up]

Can't watch the video. But I don't understand the caption paragraph. I thought rents were being cut??

[Trampa501]

Can't watch the video. But I don't understand the caption paragraph. I thought rents were being cut??

Nope, but they are trying to stop high housing benefit pay-outs.

The govt policy is to change the current social rent (which is about 30% of private) to something called "fair rent" which is 65-70% of the private market value.

What do you think those who are earning good money will do, as they realise their rents will more than double? Either a) buy B ) move away or c) stop working and claim hb.

Those who move away will find their flats/homes snapped up by benefit claimants.

But those who now decide to buy will add to the demand for housing in London, unless they all buy the place they currently occupy.

Chances of a London HPC now? Zero, I would have thought?

Edited March 3, 2012 by Trampa501

[Trampa501]

I have to get out more. I now think Sibley could be right

[Pent Up]

I have to get out more. I now think Sibley could be right

Drunk too much? He's already been proved wrong as of now.

[@contradevian]

I have to get out more. I now think Sibley could be right

As I've posted on here before they are putting up social rents in areas, and on properties (one bed flats) where they are starting to push private (bubble) rents (I refuse to use the term "market rent").

Social rents are not just rising in London. For instance my social rent in West Yorkshire will increase from £57.29 per week to £64.62 from April 2nd (and partially because service charges cannot be hidden in the rent).

Admittedly there is a greater disparity with family homes.

Edited March 3, 2012 by "Steed"

[Dorkins]

More money being spent on rent = less money available to buy (and bid up prices). It's not rocket science.

[sims]

But why would 'social rents' be going up because of lower housing benefit rents?

Not on existing ones. This whole argument is about rents on newly built properties billed as affordable homes, which are much more expensive than old council/social rents.

[MongerOfDoom]

SocialHsgRentTo rise

I know there is a resentment here of those fortunate enough to occupy council/social housing in London, but doubling their rents can only increase house prices. Why? Those out of work or claiming benefits will probably get most of the rent paid from Housing Benefit (ok so they may have to do illegal p/t work if HB doesn't cover all the rent), but what about those in decent paying jobs? They'll look to buy somewhere asap (if only in zone 4,5 or 6) once the rents start to rise.

Well done, the jealous bigrade. You've now made an overpriced housing market even worse.

I don't follow your argument at all.

There will be less public resources going into subsidised housing, so that hardly sounds like the sort of thing likely to increase prices. Social rents will still be below market rates, hence there is very little chance of anybody wanting to leave for similar-sized accommodation elsewhere. The only effects I can foresee are i) increased interest in RTB, ii) benefits no longer covering the largest council properties, and iii) people not wanting to live in disproportionately large council houses.

Even if the effect was somehow to increase prices, subsidising the rents of an arbitrarily chosen part of the population who can afford to pay for it on their own would still be a very poor use of public money.

[MongerOfDoom]

Not on existing ones. This whole argument is about rents on newly built properties billed as affordable homes, which are much more expensive than old council/social rents.

I thought all new council tenants would face much higher rents anyway, of around 80% of the market rent? It seems to me that either the article below or the BBC report is confused, though they both mention the 80% figure.

http://www.telegraph.co.uk/news/newstopics/spending-review/8076638/Spending-Review-New-council-house-tenants-face-trebling-in-rents-to-pay-for-new-homes.html

[peter_2008]

Where I live, rent as well as house price is back to 10 years ago if not cheaper. Not sure if this is the direct result of HB cuts, but good news anyway.

London is always a special case.

The woman in that video have a two bed flat to herself. She talked as if it is her divine right to live there. I have friends on above national average income that have been living in bedsits for 10 years in London, because they do not breed like HB claimants. Madness.

[Bruce Banner]

London is always a special case.

It certainly was in the 90s, Greater London had pretty much the biggest falls of the lot, about 30% from memory.

[Bruce Banner]

It certainly was in the 90s, Greater London had pretty much the biggest falls of the lot, about 30% from memory.

Not a bad guess. The Nationwide House Price Calculator shows a drop of -30.6% between 1989 Q2 and 1993 Q4 for Greater London.

http://www.nationwide.co.uk/hpi/calculator.asp

Results:-

A property located in Greater London which was valued at £500000 in Q2 of 1989, would be worth approximately £346996 in Q4 of 1993.

This is equivalent to a change of -30.6%.

[crash2006]

SocialHsgRentTo rise

I know there is a resentment here of those fortunate enough to occupy council/social housing in London, but doubling their rents can only increase house prices. Why? Those out of work or claiming benefits will probably get most of the rent paid from Housing Benefit (ok so they may have to do illegal p/t work if HB doesn't cover all the rent), but what about those in decent paying jobs? They'll look to buy somewhere asap (if only in zone 4,5 or 6) once the rents start to rise.

Well done, the jealous bigrade. You've now made an overpriced housing market even worse.

I did high light the higher rents to people, they are rising social rents to use as a tool to justify private rents, they arent going to build more, they are now looking for extra income and social housing is one of them.

They are trying to diffuse the argument for more social homes to be build, what this would do its restrict even more homes being built, private rents will go up aswell, these people in power have no idea how to run a country they are pushing for a revolution in this country and leading us to be the most uncompetitive driving more jobs offshore.

Edited March 4, 2012 by crash2006

[crash2006]

Can't watch the video. But I don't understand the caption paragraph. I thought rents were being cut??

i can't watch it, what is wrong with the BBC service.

[richc]

SocialHsgRentTo rise

I know there is a resentment here of those fortunate enough to occupy council/social housing in London, but doubling their rents can only increase house prices. Why? Those out of work or claiming benefits will probably get most of the rent paid from Housing Benefit (ok so they may have to do illegal p/t work if HB doesn't cover all the rent), but what about those in decent paying jobs? They'll look to buy somewhere asap (if only in zone 4,5 or 6) once the rents start to rise.

Well done, the jealous bigrade. You've now made an overpriced housing market even worse.

Sorry, but your argument is nonsense. If anything, this policy will reduce demand for housing and will lower the cost of houses.

If things go as you describe and those with jobs try to buy somewhere in zone 4,5 or 6, they will free up a unit of housing in the social sector for each unit of housing they move into. There won't be any net increase in demand. Those units vacated in the social sector will almost invariably be larger and more centrally located and this increase in the supply of better properties will reduce rents (and prices paid by BTL investors) in the private-rented sector.

[bomberbrown]

Anecdote.

I'm lucky enough to have a 1 bed garden Housing Association flat in London. Back in 2004, in line with the usual annual rent increases, I also had an extra £2 a week added on under some government rent restructure initiative. The idea being, for council/social rents to become in line with private rents. This £2 was added every year till 2010 when it went down to £1.70 and then from 2011 to date, it has ceased to be added.

I'm presuming that they consider my rent to be in line with private rentals, or at least 70% of it.

Edited March 4, 2012 by bomberbrown

[Trampa501]

Sorry, but your argument is nonsense. If anything, this policy will reduce demand for housing and will lower the cost of houses.

If things go as you describe and those with jobs try to buy somewhere in zone 4,5 or 6, they will free up a unit of housing in the social sector for each unit of housing they move into. There won't be any net increase in demand. Those units vacated in the social sector will almost invariably be larger and more centrally located and this increase in the supply of better properties will reduce rents (and prices paid by BTL investors) in the private-rented sector.

Yes it will increase demand for private housing. It's so basic I can't even understand why you can't grasp this.

Someone on a decent wage but in council accommodation will see their rent double (at least). Many will then choose to buy (and yes there will be some who stay put or move out of London), and this will INCREASE demand for housing (the purchase side).

As for freeing up their unit of housing - it's rental property, so won't affect demand for the sale/purchase of property. Judging by the numbers on the waiting list (many of whom just can't afford to buy, that's why they're on the list), we won't see this affect demand for the purchase of homes at all.

[Trampa501]

Regardless of this, you highlight the problem to me of a problem with 'social' (i.e. 'cheap taxpayer subsidised' rent) when it isn't really 'social' at all.

Clearly the provision of housing and the support for those who cannot afford it should be kept entirely separate.

I've always supported the establishment of a large, regionally based mutual rented sector to avoid both the problems of councils running property and rentiers extracting value.

Yes, it needs an overall, but linked to reforms of the whole welfare system.

Incidentally I wonder what Bob Crowe will do if his rent doubles?

[sims]

Yes it will increase demand for private housing. It's so basic I can't even understand why you can't grasp this.

Not really. There is now one additional council home available (unless the council/ha decide to sell it), which will be backfilled by someone from a privately rented home, so net demand on private housing remains the same.

The only things changing net demand are creation of new homes (via building, conversion etc.) and creation of new households (via immigration, kids moving out from their parents etc.). Moving someone from council to private accommodation doesn't change anything because there is a long waiting list of people wanting to move in the opposite direction.

The only thing you could argue is that it would increase buying demand while decreasing private renting demand, so it would tend to reduce rental yield.

[Trampa501]

Not really. There is now one additional council home available (unless the council/ha decide to sell it), which will be backfilled by someone from a privately rented home, so net demand on private housing remains the same.

Nope, you still don't get it. If the vacancy is filled by someone from a privately RENTED home (and remember many on the list are overoccupying shared places or in b&bs) that doesn't decrease the demand for BUYING homes one iota. It would if there weren't anyone on the waiting list, and rental properties weren't in demand - but that's not the case in central parts, indeed most of London.

The people who feel they have to move out and buy, as rents are doubling, will add to the demand for buying houses.

[Bruce Banner]

The people who feel they have to move out and buy, as rents are doubling, will add to the demand for buying houses.

More fool them.

[council dweller]

Anecdote.

I'm lucky enough to have a 1 bed garden Housing Association flat in London. Back in 2004, in line with the usual annual rent increases, I also had an extra £2 a week added on under some government rent restructure initiative. The idea being, for council/social rents to become in line with private rents. This £2 was added every year till 2010 when it went down to £1.70 and then from 2011 to date, it has ceased to be added.

I'm presuming that they consider my rent to be in line with private rentals, or at least 70% of it.

Well yes, you maybe right. Meanwhile outside London my rent is going up at 6.1% +2%.(=7.5%) and will continue to go up at that rate until 2016 when it will supposedly go up by the inflation rate +0.5%.

I have two choices....

1. RTB.

2. Benefits.

Actually I'm working just 2 days a week at the moment as I have holiday owed...so working 2 days a week and claiming benefits (HB and CT) seems pretty good.

[sims]

Nope, you still don't get it. If the vacancy is filled by someone from a privately RENTED home (and remember many on the list are overoccupying shared places or in b&bs) that doesn't decrease the demand for BUYING homes one iota.

So rental demand (and consequently rental yields) decreasing doesn't decrease demand from BTL buyers?

[Ulfar]

Why would anyone who is currently in a council/housing association go and buy or rent privately. The increases will only bring their property rent up to the 30th percentile which is the aim. It has already been stated that council/HA rents will always be eligible for housing benefit.

In London this still means their rent will be cheaper than buying due to silly valuations, so not going to move.

They aren't going to rent privately as their rent will still be less or equal to private rents, but they have much better security of tenure and get repairs done without the prospect of being booted out for being a complainer.

Anyone in private rented accommodation currently is going to feel the pinch due to the 30th percentile, in London the benefit cap is also going to have downwards pressure on rents.