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fru-gal

London Rents Drop 10% Over The Last Year

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Even with all the "demand" we are always being told about, huge population increases and the twin evils of local housing benefit and high house prices pushing up demand for private rentals, there has still been a 10% drop over the past year which is staggering. That is quite a big drop for London and I can't find much news of it on this board. If all these props can't keep the BTL gravy train from rolling along then it will only take a very small shock to make huge waves in this very delicate and temperamental market imo.

Edited by fru-gal

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I think you have to be cautious in reading too much into any particular press release like this.

Reliable data on rents isn't easy to find and there is a great deal of conflicting info out there.

For example, from LSL Property Services latest Buy-To-Let index (for June 2013):

"London remains the region with the fastest annual rent rises, up 6.4% from a year ago."

And from the HomeLet rental index (again, June 2013):

"Tenants in Greater London are paying 3% more than last month, and an additional 4.9% than in June 2012."

So, while I wouldn't dismiss this report out of hand, I'd like to see more evidence before I'm convinced.

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That is because they are imputed rents not real rents so they can do whatever they like with the figures. In the same way when property prices fell in 2009 imputed rent still rose.

I think he knew that.

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How many London LLs bought expecting to get X rent from people on benefits and now those benefits have been cut? No one know.

How would anyone collect such information? Why would any LL admit to being in trouble - much better to try and sell first.

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Maybe see if there is a correlation in areas of high benefit claimants and drops.

Anyone want to hazard a guess that it matches the labour London donut...?

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http://en.wikipedia....ki/Imputed_rent

In population datasets like the CNEF imputed rent is estimated:
  • for owner-occupiers, as a small percentage (4-6%) of the capital accrued in the property.
  • for public housing tenants, as the difference between rent paid and the average rent for a similar property in the same location.
  • for those living rent-free, as the estimate of the rent they would have to pay to rent a similar property in the same location.
  • for renters in the private market, imputed rent is zero.
The government loses the opportunity to tax the transaction. Sometimes governments have attempted to tax the imputed rent (Schedule A of United Kingdom's income tax used to do this), but this tends to be unpopular.
Edited by aSecureTenant

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FT, ONS did a full release on rents this year. I'm on my tablet so I'll find the report later. Basically based on all rentals rather than just new contracts (from a inveterate VI) the picture is quite different over the last 10 years.

Yep, I presume you mean this one.

We've discussed that report before with regard to imputed rents and cheeznbreed cited it in his FOI request to the ONS when he queried the glaring mismatch between the implied deflator on imputed rent and rent increases as measured by CPI.

The ONS report shows rents moving very little over the past few years (only 8.4% up in England over the past 8 years).

However it does show London rents rising in the year to May 2013:

RentsMay2013.gif

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I'm confused this is saying rents are falling yet from posters on here "imputed" rents by the ONS for the GDP states they are going up....

Still I'm sure this won't affect the UK recovery.

Ah but you see: imputed rent is a % and so when f-all GDP reduces to less than f-all, that % increases relative like. /sarc

This time next year Rodney, we'll be imputed miwionaires

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for owner-occupiers, as a small percentage (4-6%) of the capital accrued in the property.

Just looking at that figure, that would be about right in my case, 6%, maybe a little more. However, that would be the gross rent that I would have to pay if I were renting a place like mine from someone else. However, the person doing the renting to me would have to pay interest, pay service, maintenance, insurance etc, agents fees and allow for voids. Not really a way to get rich.

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