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Rarely see much on here about rents.

I am told rents in London have been falling for a couple of years, largely due to HB changes and oversupply of BTLs.

In E Herts family homes languish at high askings then normally get reduced until taken. Seen this for well over a year and still happening.

I saw one earlier this year at the same asking as 10 years ago!

Another asking less than we offered 2 years ago (and rejected) and still available. Think about that.

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Spoke to somebody yesterday that said rents in parts of London were heading down big time. Don`t know if he had checked them out for himself, or knew someone who was paying low(ish) rent in London. HB must have had an effect by now?

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Any chance you could say where you are if you don't mention or link?

Edited by Killer Bunny

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I know of a nice 2 bed house with garden, garage and off street parking in York that is renting today for just £25 per month more than it was 6.5 years ago - £650 vs £625

In that time it has been redecorarted inside and out, had a new power shower, new boiler and a new hob plus various sundry repairs to keep it in tip top order

That said, neither the landlord nor the tenants are complaining

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Rents in my part of London - Zone 3, West London - are pretty much where they were a decade ago. In nominal terms!

Rents in London are broadly higher than they were ten years ago. I guess you are in the Acton type area. How are rents now to sale prices today as a ratio?

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Rents in London are broadly higher than they were ten years ago. I guess you are in the Acton type area. How are rents now to sale prices today as a ratio?

Yes I am in the Acton area. Rents are just a little higher here than they were in '99. i paid £600 for a very large room in a shared house in '99. There's not a huge amount of change since that period. Meanwhile, prices of homes have nearly quadupled ie. £200K in 98 for a modest terraced house - now nearly £800K.

There have been rent increases in other parts of London, but LHA explains most of that. LHA rates cover a wide area. The cheaper areas got a lift a decade or so ago when they were introduced, more expensive areas didn't. LHA rates are now capped and pretty much uniform across the city, and it is reflected in pretty much uniform rents outside zone 1. Interestingly, the last pockets of places playing catch up with the LHA rates also appear to be experiencing some of the hottest rises in prices eg. Peckham, Walthamstow.

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Rents are the dog that didn't bark. There's been no yoy increase of more than 2% in the past eight years, exploding the lazy, journalistic fiction of undersupply.

www.ons.gov.uk-ons-dcp171778_349607.pdf.

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In E Herts family homes languish at high askings then normally get reduced until taken. Seen this for well over a year and still happening.

I saw one earlier this year at the same asking as 10 years ago!

Another asking less than we offered 2 years ago (and rejected) and still available. Think about that.

Good reading. Lot of supply I think will eventually come flowing back onto the sales market, at crashing asking prices, when this market turns.

I'd take a rent price crash too, in HPC.

Midge Ure: Fame and Fortune. 8 June 2014
What’s the biggest current drain on your finances?
The price of electricity and gas seems ridiculous right now. We’ve got a reasonably sized house but, heavens, trying to keep the place warm we seem to spend an obscene amount of money. We are paying what seems to be an extortionate price for something that should be a necessity, whereas the prices seem to be based on something that’s a luxury. It’s completely ludicrous.

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That said, neither the landlord nor the tenants are complaining

The landlord probably calculates yield based on what they paid for it in the 90s, most of them seem to do that. Shh, don't tell them.

For me also rents have been near enough static for 10 years.

I suspect related to wages being near enough static for 10 years. Whereas credit, gosh lots of that wasn't there. And house prices tripled. Thats funny isn't it, its almost as though the argument about supply is a very minor component of prices and its 90%+ about the availability of credit. Whodathunk.

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The landlord probably calculates yield based on what they paid for it in the 90s, most of them seem to do that. Shh, don't tell them.

For me also rents have been near enough static for 10 years.

I suspect related to wages being near enough static for 10 years. Whereas credit, gosh lots of that wasn't there. And house prices tripled. Thats funny isn't it, its almost as though the argument about supply is a very minor component of prices and its 90%+ about the availability of credit. Whodathunk.

Isn't that the way to calculate yield?

Edited by fru-gal

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I'm genuinely curious. How would you calculate a rental yield from a home bought 20 years ago?

The point of knowing the yield is so you can compare investments. For me at least.

To do that you need to base it on the income from it today, and on its value today. If you sell in order to invest that money somewhere else you will get what it is worth today, not what it was worth when you bought it.

If a savings account pays 10%, and based on todays value, your yield from your mortgage free (for simplicity) buy to let is 5%, it would be sensible based solely on the yield to sell the property and put that sum into the savings account instead.

You may not reach that conclusion if you use the original purchase value to calculate the yield. Maybe you bought it for a third of what you could sell it for today. If you use that purchase value in your yield calculation and compare with the savings account you're better off keeping the property.

So using the purchase value for yield will not give you a valid value for use in comparison.

As to how you would actually do it, you would make a guess as to its current value. You won't know what its worth until you sell it.

I have also seen buy to letters calculate yield based on the cash used for the deposit. Money in = deposit, money out = rent-interest payment, therefore yield is based on those values right? If you do it this way you might feel better about it since it produces a bigger number but that puts you in danger of simply comparing that to a savings account rate and thinking you've got a good deal. It ignores your debt of 5+ times your outlay!

The property value is the enormous component of buy to let and will determine whether they make any money at the end of it at all, this 100 quid odd a month income is neither here nor there.
They are kidding themselves looking at it in these ways, but plenty of them do. And it is good that they do, because otherwise they wouldn't be so keen on subsidising a tenants living costs for them.
On the other hand their misunderstanding is partly responsible for the bubble… all of them seem surprised when once they exit the only money they made was from capital appreciation, not from income from rent.. which in the last few years at least has only ever just about covered the interest only payment they make on the mortgage. The investment simply 'washes its face' until its time to sell. If they make money its purely luck, based on a bubble they had no comprehension of.

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The point of knowing the yield is so you can compare investments. For me at least.

To do that you need to base it on the income from it today, and on its value today. If you sell in order to invest that money somewhere else you will get what it is worth today, not what it was worth when you bought it.

If a savings account pays 10%, and based on todays value, your yield from your mortgage free (for simplicity) buy to let is 5%, it would be sensible based solely on the yield to sell the property and put that sum into the savings account instead.

You may not reach that conclusion if you use the original purchase value to calculate the yield. Maybe you bought it for a third of what you could sell it for today. If you use that purchase value in your yield calculation and compare with the savings account you're better off keeping the property.

So using the purchase value for yield will not give you a valid value for use in comparison.

As to how you would actually do it, you would make a guess as to its current value. You won't know what its worth until you sell it.

I have also seen buy to letters calculate yield based on the cash used for the deposit. Money in = deposit, money out = rent-interest payment, therefore yield is based on those values right? If you do it this way you might feel better about it since it produces a bigger number but that puts you in danger of simply comparing that to a savings account rate and thinking you've got a good deal. It ignores your debt of 5+ times your outlay!

The property value is the enormous component of buy to let and will determine whether they make any money at the end of it at all, this 100 quid odd a month income is neither here nor there.

They are kidding themselves looking at it in these ways, but plenty of them do. And it is good that they do, because otherwise they wouldn't be so keen on subsidising a tenants living costs for them.

On the other hand their misunderstanding is partly responsible for the bubble all of them seem surprised when once they exit the only money they made was from capital appreciation, not from income from rent.. which in the last few years at least has only ever just about covered the interest only payment they make on the mortgage. The investment simply 'washes its face' until its time to sell. If they make money its purely luck, based on a bubble they had no

comprehension of.

Excellent post.

Rents have been broadly flat near me(Chester) but as I've only been here 18 months it's no surprise.

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I rented a three bedroom/two bathroom house in Richmond, West London from 2007 to 2012, the rent was £2200 per month throughout. Before that, from 2005 to 2007, I rented a three bedroom/two bathroom apartment in Kew that overlooked the river, that was £2000 per month throughout. Both rents were peanuts compared to the market value.

I suspect that rents go up, if at all, when a tenant leaves. If it's a decent tenant, who pays promptly and looks after the place, then I guess most landlords breath a huge sigh of relief and leave rent increases well alone.

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Makes me think of Brian Hall ('expert'), and his solution that the young should buy immediately, seemingly at any price, and save loads and loads of money.

Got to worry about more recent landlords jacking up the rents, apparently, which all tenants will obviously comply with.

I disagree with your argument. There isn't a lot of difference between the cost of buying and renting. The Halifax now say that renting is more expensive, while the historic data I used made buying slightly more expensive. But lets say the costs are about the same - at the outset. But rents rise (for most tenants) and after 25 years you are rent free. If you can save while you are renting you can save while you are buying. In the past landlords didn't really care about rental yields because they made most of their profit from property price inflation. Now they must cover all their costs and return a profit exclusively from their rental income, so things are very different.

The landlords at propertytribes dot com (your system requires I present URLs like this) claim that 10-12% yields are now commonplace, making renting far more expensive than buying. I think you were exceptionally lucky to do what you did and a tenant today would find it impossible to repeat your strategy.

Alternatively one could opt for the view that the system will still crash massively. Personally I don't see this either because of the shortage of properties.

Have a look at www.propertytribes.com to find out what the landlords make of their tenants. Better to buy I think.

So property prices rise over time and rents are normally linked to property prices. That is why the private rental sector is so preoccupied with rental yields. If property prices fall and rents rise, tenants start buying, reducing demand and causing rents to fall again. This didn't happen immediately after the credit crunch, but in recent quarters rents have stabilised or even fallen a little, bringing things back into kilter. So, in principle, property prices will increase through a lifetime.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=189928

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Makes me think of Brian Hall ('expert'), and his solution that the young should buy immediately, seemingly at any price, and save loads and loads of money.

Got to worry about more recent landlords jacking up the rents, apparently, which all tenants will obviously comply with.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=189928

If landlords think they can get away with putting up rents then in my experience they won't hesitate to do so. I personally haven't had a rent increase since I moved in 2010 (prompted by the threat of a rent rise I opted for something better). The ONS data - eight years of <2% rent inflation - clearly illustrate an extreme aversion to the pricing-out of existing tenants, remarkably even in London where the housing crisis is most acute.

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I suspect that rents go up, if at all, when a tenant leaves.

Maybe in some parts of London but not elsewhere starting just outside M25.

I know of a large family home in E Herts that was £3100 in 2007, £2350 with new tenant 2010 and £2100 in 2012 with new tenant.

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