Independent: What’S Really Happening To Rents?

[FreeTrader]

For anyone who wants to delve more deeply into the methodology in computing the IPHRP stats, the ONS has released a comprehensive discussion paper:

http://www.ons.gov.uk/ons/guide-method/user-guidance/prices/cpi-and-rpi/improvements-to-the-measurement-of-owner-occupiers--housing.pdf

This methodology change will impact CPIH, the inflation measure that includes OO housing costs, but the revisions won't be announced until 24 March. CPIH has been materially understated, and this of course has implications for politically sensitive issues such as living standards and real wage growth.

[richc]

For anyone who wants to delve more deeply into the methodology in computing the IPHRP stats, the ONS has released a comprehensive discussion paper:

http://www.ons.gov.uk/ons/guide-method/user-guidance/prices/cpi-and-rpi/improvements-to-the-measurement-of-owner-occupiers--housing.pdf

This methodology change will impact CPIH, the inflation measure that includes OO housing costs, but the revisions won't be announced until 24 March. CPIH has been materially understated, and this of course has implications for politically sensitive issues such as living standards and real wage growth.

The ONS is completely full of it.

I tried reading their justification for the "improvements" in CPIH, but it's so full of self-justifying nonsense that I gave up, i.e. "CPIH uses an internationally recognised approach called rental equivalence to measure OOH". The entire point of CPIH was to align UK inflation stats with those in the rest of the EU by including housing costs, but the ONS chose to base this on the rental equivalence method used in the USA rather than the purchase price method used in the rest of the EU, thereby defeating the entire point of the change, all in the name of further HPI.

[Agentimmo]

Anecdotally, I look at 3 bed houses in Balham on right move from time to time. For normal unmodernised houses, the rent has been 450 to 650 gbp pw since 2008. I have noticed recently that a lot of totally remodernised (possibly even "luxury") properties are appearing, which are a couple of hundred quid higher.

I actually think this is the danger of zirp and possibly why it is creating the illusion of a housing shortage. When money is free, it appears sensible to take properties of the market and renovate them. Like in Dubai, when the price of money reverts to normal, it will be apparent that the "investment" was misdirected.

Balham...crazy prices for bog standard housing. My brother lives/rents there. As I said on another thread the other day, he's just signed up for a 4th year on his 1 bed flat. Same rent as he had at the start in 2012. I guess the LL likes stability and no voids.

Balham is an OK area , but when I look at the house prices....this place has to be a prime candidate for a large correction in a future HPC.

[rantnrave]

LSL meanwhile say rents are going up at 3% a year...

http://www.propertyindustryeye.com/rents-still-going-says-lsl/

[Guest]

The ONS's job is to understate inflation.

The government appears to want massive cost-of-living inflation and low wage inflation (God only knows why). If they printed the true inflation figure then there'd either be massive upward pressure on wages, or a revolt.

[renting til I die]

LSL meanwhile say rents are going up at 3% a year...

http://www.propertyindustryeye.com/rents-still-going-says-lsl/

My rent jumped by 15% this year (LL wanted more!), still under market but I am trying to look for cheaper places, not much luck so far and I've been looking as far out from my current location as Chelmsford.

[Nabby81]

Place I have rented since 2012 costs me 575 per month in Luton, 2 identical sized properties on my street have come onto market this last 2 weeks for £200 a month more.In general found prices have jumped 100-200 a month in the 2/3 bed range in last 2 years.

[feed]

My rent jumped by 15% this year (LL wanted more!), still under market but I am trying to look for cheaper places, not much luck so far and I've been looking as far out from my current location as Chelmsford.

I live in Chelmsford and rentals are just stupid here now.

The fact that you are considering it kind of explains it.

[renting til I die]

I live in Chelmsford and rentals are just stupid here now.

The fact that you are considering it kind of explains it.

Uni, good links to London, yep, not considering it so much now that I've seen the rents! Wasn't so bad when I first looked 6 months ago but London and everywhere with good links to London has jumped since then! Buying a place (even overpriced) is a hedge vs rent rises, boy have I got egg on my face for dismissing a house in Dagenham (back in 2013, I think) because I thought it was still overpriced (and in a dump of an area)!

High rents will continue to push people into buying overpriced houses. At the end of the day most people do a simple sum of monthly costs to see if they are better off or not (and don't even consider the possible return on investing the deposit!).

What will change this? Falling rents or higher mortgage costs? Maybe we should have a poll!

[SE10]

Place I have rented since 2012 costs me 575 per month in Luton, 2 identical sized properties on my street have come onto market this last 2 weeks for £200 a month more.In general found prices have jumped 100-200 a month in the 2/3 bed range in last 2 years.

My bit of London has shown a similar scale increase.

[Si1]

What's pushing rents up in London then? Influx of foreigners looking for jobs? Inventory taken off the market to sell?

[EUBanana]

Rents seem to have rocketed lately (Devon), and there certainly seem to be people paying those rates as properties are on the rental market for mere days before being grabbed.

I would guess they've gone up about 15%-20% ish in a couple of years.

[Maynardgravy]

I'm seeing my landlord next week to negotiate my rent down (he's going to deal with me direct rather than through an agency, saving us both money). I have not had a rent rise in 8 years.

Pinner, two minutes walk from Met line.

[renting til I die]

I'm seeing my landlord next week to negotiate my rent down (he's going to deal with me direct rather than through an agency, saving us both money). I have not had a rent rise in 8 years.

Pinner, two minutes walk from Met line.

That's the first time I've heard anyone in London talking about negotiating their rent down. Can you give us a figure and what sort of dwelling you are renting? I'm off to check rents in Pinner!

[moneyfornothing]

Worlds first, you seen it in the UK!

Rents race ahead of incomes.

Never in history of any country EVER has this happened before, but there you have it's happening in the UK.

Must be the `Recovehry' or a VI with some BTL's to offload.

Actually ... You have another wing of the ONS putting out the same information that rents are racing ahead of incomes and in fact the biggest acceleration was during the period of heavy recession... Check imputed rents in the gdp ..

[Maynardgravy]

That's the first time I've heard anyone in London talking about negotiating their rent down. Can you give us a figure and what sort of dwelling you are renting? I'm off to check rents in Pinner!

Two double bedrooms, large lounge, huge balcony - £825 pcm.

I'm under no illusion that me and the missus are on a good deal, but we didn't just jump at the first place we saw. Landlord has had no voids or hassle from me and we look after the gaff so he doesn't risk losing us by increasing the rent. He wants to drop it to £800 LOL.

A mate of mine negotiated his rent down in Rayners Lane too. Why not? Why treat LL like they hold all the cards?

[Timak]

Renting depends on how the household is made up.

So around me

A 1/2 bedroom flat/house is in the region of £1000 a month. Doable as a couple not as a individual.

If you rent a bedroom in a house it will cost around £400 a month, so a 5 bedroom house (well a 3 bedroom house with extra dividing rooms and no lounge) will get a landlord £2k a month.

If you rent a big house as a family then a 4 bedder might "only" cost £1500 a month.

Rents are up about 40% since I've lived in Cambridge (about 13 years) whilst prices are up by about 150%

[LondonIsFallingDown]

The ONS is completely full of it.

I tried reading their justification for the "improvements" in CPIH, but it's so full of self-justifying nonsense that I gave up, i.e. "CPIH uses an internationally recognised approach called rental equivalence to measure OOH". The entire point of CPIH was to align UK inflation stats with those in the rest of the EU by including housing costs, but the ONS chose to base this on the rental equivalence method used in the USA rather than the purchase price method used in the rest of the EU, thereby defeating the entire point of the change, all in the name of further HPI.

Yet of course Paul Johnson recommended CPIH to be the new UK inflation measure! As you make clear "The ONS is completely full of it.". I remember reading in the Daily Telegraph earlier this month that one economist was scathing about the new plans so I looked it up.

https://notayesmanseconomics.wordpress.com/2015/01/08/the-johnson-panel-has-embarrassed-itself-by-recommending-cpih-as-the-uk-inflation-measure/

[Bloo Loo]

Landlord Raj Shastri Jailed for fraud...

[renting til I die]

Two double bedrooms, large lounge, huge balcony - £825 pcm.

I'm under no illusion that me and the missus are on a good deal, but we didn't just jump at the first place we saw. Landlord has had no voids or hassle from me and we look after the gaff so he doesn't risk losing us by increasing the rent. He wants to drop it to £800 LOL.

A mate of mine negotiated his rent down in Rayners Lane too. Why not? Why treat LL like they hold all the cards?

Thanks for the info and nice to know that there still are reasonable places to rent in London, maybe I can find one of them. One more question. Where did you find your current LL?

[Maynardgravy]

Thanks for the info and nice to know that there still are reasonable places to rent in London, maybe I can find one of them. One more question. Where did you find your current LL?

No probs.

Through an estate agent strangely enough: Baker Pierce.

I was renting for two years when the agency sent me a letter telling me the rent was going up by a hundred quid pcm. I did some research and found out where the LL lived, sent him a note telling him i was actively looking elsewhere.

I'm only guessing but I'm assuming he told the EA to wind their necks in. The rent hike never materialised and here we are six years later with no increase and we've got our money wrapped up in other things.

I've told LL that I'll be here at least another year and he's finally getting rid of the agents (taking 10% for doing bugger all).

There's a lot of luck involved I know, but probably no more than buying a house. I know a couple who bulk at me for renting so long and 'wasting' so much money, until I point out that they have almost spent as much on repairs, insurance and a new roof.... that doesn't include the money they spend renting money from the bank. I intend to buy for cash someday.

[renting til I die]

No probs.

Through an estate agent strangely enough: Baker Pierce.

I was renting for two years when the agency sent me a letter telling me the rent was going up by a hundred quid pcm. I did some research and found out where the LL lived, sent him a note telling him i was actively looking elsewhere.

I'm only guessing but I'm assuming he told the EA to wind their necks in. The rent hike never materialised and here we are six years later with no increase and we've got our money wrapped up in other things.

I've told LL that I'll be here at least another year and he's finally getting rid of the agents (taking 10% for doing bugger all).

There's a lot of luck involved I know, but probably no more than buying a house. I know a couple who bulk at me for renting so long and 'wasting' so much money, until I point out that they have almost spent as much on repairs, insurance and a new roof.... that doesn't include the money they spend renting money from the bank. I intend to buy for cash someday.

Thanks. I have a similar intention, although my current landlord seems intent on restricting the rate that I can save!

Just to add, I also have similar bulking on my renting position. Most people are just parrots, parroting well worn sayings like "renting is dead money", "buying a house is an investment", "get on the property ladder while you still can" etc, etc..

Edit: amendments

Edited January 31, 2015 by renting til I die

[subspace]

Thanks. I have a similar intention, although my current landlord seems intent on restricting the rate that I can save!

Just to add, I also have similar bulking on my renting position. Most people are just parrots, parroting well worn sayings like "renting is dead money", "buying a house is an investment", "get on the property ladder while you still can" etc, etc..

Edit: amendments

If the cost of servicing a mortgage is the same or less than the cost of renting, then why not buy?

And if rents are stagnating or only rising by 1-2% then why are people marching calling for rent controls to be introduced?

Edited February 1, 2015 by subspace

[cybernoid]

If the cost of servicing a mortgage is the same or less than the cost of renting, then why not buy?

And if rents are stagnating or only rising by 1-2% then why are people marching calling for rent controls to be introduced?

If by 'servicing a mortgage' you mean paying the interest on an interest only mortgage, then renting and 'buying' are equivalent except renting is cheaper due to no maintenance costs. Also you have the flexibility of moving for work, or due to bad neighbours, or because you fancy a change etc without all the costs of selling and buying a house. Further, you are not exposed to the risks of the housing market where a small percentage fall puts you into thousands of pounds of debt.

If you mean a repayment mortgage versus rent, then you should take a look out there at prices versus rents. The rent is never more than the cost of the interest on the borrowing. It is not cheaper to buy. Further, if you 'buy' with a repayment mortgage you are investing in the housing market, whereas better returns are likely to be had elsewhere. You have the freedom to do that when renting.

Rent controls is one of the reasons people are 'marching'. Tenant rights is the main one, making renting more feasible for families who don't want to live under a constant fear of eviction. Its always a tragedy in the media when some over indebted 'home owner' family is evicted for not paying their bills… no such sympathy is ever extended to renters who DO pay their bills but are made homeless regardless. Theres plenty to 'march' for.

[pig]

Anecdotally, everybody I know who is renting in London is complaining about the rents, some have had to move several times in as many years. Difficult to say whether its just as much a wage problem but Its across the board:

Parents worried about their children, (students and early 20's workers),

workers in their 30's wondering what to do next to raise kids (leave ? BoMaD? carry on renting?)

workers in their 40's - well, all ages - starting to realise they may have to move out a Zone or two.

Can rents outstrip wages ? For middle-classes with a bit of disposable income certainly -and it takes a while before financial situation overcomes 'location anxieties'. For London definitely - this is how we've ended up with millionaires living in 19C workers cottages.