Rent Rises

[pig]

Stupid question but are rents actually rising because lettings are the only way Estate Agents are staying solvent ?

I know it sounds like a conspiracy theory - 'Estate Agents rigging the rental market having blown the housing market'. The thing is some of the rent rises I've heard of or seen in London don't seem credible. The 'story' is that nobody can afford to buy so there is a rise in rents seems a bit of a wooly theory to say the least. The main rises seem to be in prime central property and the rental stock isn't necessarily the same as the stock for selling.

If you are an EA and trying to keep head above water through lettings then it makes sense to edge up rents for the commission, or to attract business from Landlords - that seems to me to be a much more direct and logical pressure on rents.

[Allez_L'OM]

Aren't rentals better business for estate agents ?

A house is likely to be sold every 7-10 years whereas a rental could happen every six to 12 months if they agitate the landlord that he could get more money, thus putting the idea in their heads to get rid of or hike the rent on the current tenants. This then combined with the 'dig feet in' mentality (as we espouse on fora like this) convinces the tenants to up-sticks which consequently then gets the agent the admin fee from possibly the tenants (finding and putting them in a new place) and landlord (when they get a new tenants).

If that is at a higher rate than was previously paid, then everyone's a winner (except the tenants themselves and the knock-on effect they would have produced through their spending)

[pig]

Aren't rentals better business for estate agents ?

A house is likely to be sold every 7-10 years whereas a rental could happen every six to 12 months if they agitate the landlord that he could get more money, thus putting the idea in their heads to get rid of or hike the rent on the current tenants. This then combined with the 'dig feet in' mentality (as we espouse on fora like this) convinces the tenants to up-sticks which consequently then gets the agent the admin fee from possibly the tenants (finding and putting them in a new place) and landlord (when they get a new tenants).

If that is at a higher rate than was previously paid, then everyone's a winner (except the tenants themselves and the knock-on effect they would have produced through their spending)

OK so that is a much better detailed explanation of the horrible thought I've been having. And it seems exactly what has happened to at least three acquaintances of mine (all in London).

What also troubles me if this is true, this is a market that is really not working as it should be in the classical sense. While housing might not be a great example of the 'classic market' what ultimately is strange is that if funny money pumped the market up in the first place then shouldn't its withdrawal - and I'm talking about tenants in the rental market here with salaries or jobs under pressure - push it down again ? Perhaps its naive to just blame estate/letting agents but the market does seem strangely rigged and would welcome any other explanations.

Also if rentals are artificially high, then doesn't this also act as a restraint on house prices finding their true level ? And what other knock-on effects - does this not also restrain economic activity or simply shuffle money from one set of people to another ?

[Rentergirl]

OK so that is a much better detailed explanation of the horrible thought I've been having. And it seems exactly what has happened to at least three acquaintances of mine (all in London).

What also troubles me if this is true, this is a market that is really not working as it should be in the classical sense. While housing might not be a great example of the 'classic market' what ultimately is strange is that if funny money pumped the market up in the first place then shouldn't its withdrawal - and I'm talking about tenants in the rental market here with salaries or jobs under pressure - push it down again ? Perhaps its naive to just blame estate/letting agents but the market does seem strangely rigged and would welcome any other explanations.

Also if rentals are artificially high, then doesn't this also act as a restraint on house prices finding their true level ? And what other knock-on effects - does this not also restrain economic activity or simply shuffle money from one set of people to another ?

rents are being artificially hiked, by using the rents 'asked for' and not those 'achieved.' Figures also ignore vids, and how long tenants stay. Rents are falling where there is an oversupply (amazing to Londondrs, but in Leeds, Norwich and other newbuild BTL hubs) there are too many flats. Add reluctant landlords, and you've got a nightmare of bad interpretation, myths and not enough homes where they are needed. The truth is out there, somewhere.

[pig]

rents are being artificially hiked, by using the rents 'asked for' and not those 'achieved.' Figures also ignore vids, and how long tenants stay. Rents are falling where there is an oversupply (amazing to Londondrs, but in Leeds, Norwich and other newbuild BTL hubs) there are too many flats. Add reluctant landlords, and you've got a nightmare of bad interpretation, myths and not enough homes where they are needed. The truth is out there, somewhere.

So London in particular is in a sort of rent 'bubble' ? Artificial hiking is working in London but not outside ?

The excess of flats are perhaps the most tangible monument to the bubble - I've seen a bit of this up North, even in prime locations. Falling rents for over-priced flats are damaging to the economy in the short term, but is probably a healthy readjustment otherwise.

My anecdotal experience in London is that there has not really been a surge in demand (certainly not one that justifies the rise in prices) but rather the perception that rents are rising has so far led people to put up with it. This is why I am getting a little suspicious of what is really going on and wonder if it point to trouble ahead.

Of the 3 people I know coming to the end of their tenancy agreement and facing hikes in rent, the 1st has said 'sod that' and moved somewhere cheaper (and it turns out much nicer!), the 2nd is staying, probably due to inertia and the 3rd is a 'don't know'.

As well as the perception that 'rents are rising everywhere therefore may as well stay' inertia plays a part - psychologically, some people tend to measure distance rather than tube time and so 10 or even 5 mins further away from the centre 'seems' unacceptably miles away. The 'don't know' was like the 2nd but is gradually grasping the minor changes to her day compared to the significant reduction in rent.

[Lacuna]

Rents here in Worcester have risen about 10% in a year. Spoke to an agent last week and he said that if it wasn't for the rental market they'd be really struggling, so make of that what you will.

[zebbedee]

Rents here in Worcester have risen about 10% in a year. Spoke to an agent last week and he said that if it wasn't for the rental market they'd be really struggling, so make of that what you will.

Maybe rents are rising if you're gllible enough to pay them, our rent is 3.3% less nominal than it was 2 1/2 years ago in the same place. LL clearly understands better the devil you know^*.

* Although that seems to be the only thing he understands