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The Knimbies who say No

Rents Rising Again.

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Another piece of rental rising propoganda from the Telegraph via LSL, hot on the heels of articles pumping BTL using such titles as Buy to Let: can you afford not to?

Cost of renting on the rise again

Private rents are rising again and are close to highs recorded in Octover 2012, an index showed today.

After rapid rises in 2011 and 2012, they had eased back at the start of this year but have picked up over the summer.

At £743 on average, monthly rents in August were 0.7pc higher than a month earlier and just £1 less than an all-time high recorded last autumn, according to LSL Property Services, which owns chains Your Move and Reeds Rains.

The yield, the profit margin, for landlords has held steady at an average 5.3pc over the summer, or £10,600 a year on a £200,000 home.

Rents were 1.3pc higher across England and Wales than a year ago, showing an increase which is still less than half the rate of consumer price index (CPI) inflation at 2.7pc.

continues..

No reason to assume this is any more accurate than other surveys which also show rents rising, but ONS seems to differ.

Somewhat optimistic 'profit' assumptions, as usual. I guess the article means gross yield, which looks still too high, certainly in my experience. £10,600 income per annum is £880 pcm, way above most rents I'd venture, nevermind profit margins.

This might be an approximation to what LSL considers to be the average property (in terms of rent) in my neck of the woods:

http://www.rightmove.co.uk/property-to-rent/property-40393516.html

yours to buy for £250k:

http://www.rightmove.co.uk/property-for-sale/property-40236674.html

Or £800 pcm /£239k to buy:

http://www.rightmove.co.uk/property-to-rent/property-27894873.html

http://www.rightmove.co.uk/property-for-sale/property-27894870.html

Or £1,250 pcm asking rent/ £425k:

http://www.rightmove.co.uk/property-to-rent/property-43253966.html

http://www.rightmove.co.uk/property-for-sale/property-37392152.html

LSL's ratio of price ~20* annual rent looks squiffy. Same principle applies elsewhere I've lived too(which does not include London though). £200k will typically not get you a place you could rent for £880/month.

Does anyone have a counter example to back up LSL's data?

Edit I read this incorrectly- £743/month UK average rent as FreeTrader states below. Apologies.

Edited by The B.L.T.

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I have a feeling that if all these surveys reflected reality, rents would be 25K PA these days.

A bit like PCWorld offering 50% off printers....the headline RRP is meaningless...meanwhile, in the real World....

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My rent just increased above inflation again, it always does. It's social housing.

Not very social mind you, more Anti-social. My housing benefit increases yet again.

Once upon a time JSA>HB.

Now JSA=HB.

Soon HB>JSA.

Fairly soon HB>>>>JSA.

My landlord master's income is guaranteed, and guaranteed to rise!

Get yourself a job in the quasi public sector, for the government spending on so called social housing goes up and up. Although from what I have heard from contractors working for my anti-social housing rentierist exploiter, they haven't even manged to secure pay ries that match inflation. Where is all the money going?

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Boomers Pensions.

Perhaps this money needs to be ringfenced for spending on employment.

Like HB is used to guarantee rents, pensions could be used to ensure employment. Force them to spend it on hiring young people for services (caring, cleaning gardening etc.). They only spend it on ipads, iphones, big tvs, cruises, pwopertee, expensive food etc.

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It will be interesting to watch the UK over the next few years as many of the boomers hit 65 and take 'what they are entitled to'.

In theory there should be a collapse in pension contributions from those retiring and cashing in, there will also be a shift in labor participation from one generation to the next.

I suspect the following will happen:

As people retire their jobs are either lost or shifted to more competitive countries (almost everywhere else) or they are replaced by low cost immigrants and 'trainees'. I have witnessed this myself in R&D and manufacturing.

In theory wages (anbd pension contributions) will reduce at the same time as boomers start spending. the result will be cost inflation, bankrupt pension funds.

For a longtime I have thought much of the stock market and housing market manipulation is in part caused by the expectations or huge numbers of retirees.

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In terms of rent inflation, LSL's recorded rate since 2010 basically matches the ONS CPI – about 2.7% p.a.

Here are the rents by region from the LSL report. As usual London skews the figures considerably.

LSLrentsAug13.gif

http://www.lslps.co.uk/documents/buy_to_let_index_aug13.pdf

I'm not sure how they derive the £743 p/m average, but weighting by population gives an average just below £700 (probably better to weight by households or housing stock, but I can't be arsed to dig out the numbers).

Excluding London (and again weighting by population) the average is £625.

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I think at the lower end yields are higher...

I have rented a 120k house in Cheshire, the Midlands and Devon.....

Cheshire 550 a month

Midlands 575 a month

Devon 600 a month

I have rented a 150k house in Midlands and Devon.....

Midlands 650 a month

Devon 700 a month

Unfurnished houses, some of the stats are far too broad.....You can see, yields are north of 5%....

Had to edit the weeks to months, apologies, only weekly rents here in Oz, no monthly......Got mixed up

Edited by Panda

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My rent just increased above inflation again, it always does. It's social housing.

Not very social mind you, more Anti-social. My housing benefit increases yet again.

Once upon a time JSA>HB.

Now JSA=HB.

Soon HB>JSA.

Fairly soon HB>>>>JSA.

My landlord master's income is guaranteed, and guaranteed to rise!

Get yourself a job in the quasi public sector, for the government spending on so called social housing goes up and up. Although from what I have heard from contractors working for my anti-social housing rentierist exploiter, they haven't even manged to secure pay ries that match inflation. Where is all the money going?

You would be horrified how much your social rent would buy (assuming you have a deposit, could get a mortgage and IF interest rates remained low).

Probably a 2/3 bed home.

But you (and I) are the subsidised ones of course. :lol::blink:

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You would be horrified how much your social rent would buy (assuming you have a deposit, could get a mortgage and IF interest rates remained low).

Probably a 2/3 bed home.

But you (and I) are the subsidised ones of course. :lol::blink:

If the government really wanted to cut the housing benefit bill and make our economy competitive, it could build everyone one house each and give it to them upon reaching 18... laugh.gif

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If the government really wanted to cut the housing benefit bill and make our economy competitive, it could build everyone one house each and give it to them upon reaching 18... laugh.gif

I'm sure I read that Kuwait did that.

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I think at the lower end yields are higher...

I have rented a 120k house in Cheshire, Midlands and Devon.....

Cheshire 550 aweek

Midlands 575 aweek

Devon 600 aweek

I have rented a 150k house in Midlands and Devon.....

Midlands 650 aweek

Devon 700 aweek

Unfurnished houses, some of the stats are far too broad.....You can see, yields are north of 5%....

Had to edit, weekly rents here in Oz, no monthly......

your figures are holiday lets??

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I would like to add to the case that rents cannot and will not see a continued rise as REAL wages (the amount left to pay rent each month) is declining.

Where are tennants going to get the money from Wonga? The good news rolls in for landlords as the cost of repairs (inc. in the inflation figures) keeps going up!

I reacll someone here saying how their grandmother told them that being a landlord was not a good idea as the maintenance cost a lot of money - unless there is a swift change we are going back to that period in history, but coupled with high fuel prices.

At the end of the day tenants like us go without heating all winter so that we can afford the rent, but it isn't doing the house much good as it causes damp. There is not much left to cut back on for most tenants so defaults will rise above the already high 8% rate.

[edit] - just to add we know that wage distribution is not even and the top 5% who receive the biggest slice are hardly likely to be renters.

Average%20earnings%20and%20consumer%20prices%20annual%20growth%20rates.png

Edited by Gone to Ireland.

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your figures are holiday lets??

Chester, Leamington, Plymouth do your own research on Rightmove. In most cases a 100k flat one bedroom will yield 500 a month. Just poke in Torbay will not get much for less than 500 a month and you will pay at least 90 to 100k for a decent flat. A 3 bedroom house in Torbay at 150K something decent will cost you at least 650 to 700 a month. No not holiday lets...

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I live quite near the sea! Giant whelks ate my wallpaper! Some of them were as big a fridge! :blink:

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Chester, Leamington, Plymouth do your own research on Rightmove. In most cases a 100k flat one bedroom will yield 500 a month. Just poke in Torbay will not get much for less than 500 a month and you will pay at least 90 to 100k for a decent flat. A 3 bedroom house in Torbay at 150K something decent will cost you at least 650 to 700 a month. No not holiday lets...

Your figures were weekly?

I know the clients of the central bank are aiming for that kind of return, but really ...

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your figures are holiday lets??

Bloo

Apologies my figures are monthly not weekly. It was 2 in the morning here in Oz. Was a tad bladderrd.....when I posted its just all rents are weekly here in Oz.....I got mixed up....

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Your figures were weekly?

I know the clients of the central bank are aiming for that kind of return, but really ...

No my figures the original post should have been monthly. Had been out skiing on the Pisste..

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I think at the lower end yields are higher...

Yep, definitely.

There are also big rural/urban biases. Inner-city Plymouth: £120k = £650, £200k = £800. Ten miles out, £120k = £400 (very tiny), £200k = £600, while £850 would be over £300k. At least if 'social' subsidies are excluded.

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I would like to add to the case that rents cannot and will not see a continued rise as REAL wages (the amount left to pay rent each month) is declining.

Rents could double from current levels and still be lower in relation to after-tax incomes than they were in the 1980s.

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Rents could double from current levels and still be lower in relation to after-tax incomes than they were in the 1980s.

My rule of thumb Monthly....

25K OF EQUITY EQUALS 110 per month.

So 125K House value = 550 per month

150k House value = 660 per month

But my rule of thumb is what I call low rents they can be as high as 25k of equity equals 120 per month.

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