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CrashedOutAndBurned

How Much Is Too Much Rent?

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On the 'Divorce' thread a several posters said £750 was a lot of rent to pay. While this might seem so for someone who bought several years ago and was used to paying only a £400 or less mortgage (like many of our slightly older friends) what about everyone else?

In much of the South East, not even London, 750 lands you a 2 bed house or flat often in a very shoddy state in a poor area, or a slightly better one bed flat. It's extortionate for sure, but often the equivelent mortgage is several hundred more for the same property.

DrBubb often asks why people aren't happy to rent instead of buy. Because renting's a complete rip off that soaks up far too much of most people's real-world wages destroying their purcahsing power. It hardly matters that buying is even more of a rip-off. Just because someone dodges one form of torture for a milder form, doesn't make the milder form bearable or acceptable.

For an STR subsidising their rent with their gains, it's probably no problem but for the young who do not qualify for the last few dregs of social housing, there is virtually no way to gain accomodation for a reasonable price - rent or buy.

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rent should be about 1/5th of your net monthly income.

On mean average income of around £26k a year that would mean the average rental should cost £300-350 per month.

Edited by RJG18

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I'm paying 30% of net income on rent. Too much, ofcourse.

Could get a smaller place, find myself a solvent woman or rent out one of the rooms.

Nah!

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1/5 is fair and balanced.

1/4 is probably nipping.

1/3 is biting too hard for what it is.

1/2 and you need to question your democracy.

..and if you've paid rent for more than the last 7 years you also need to question your wisdom.

For an STR subsidising their rent with their gains, it's probably no problem

Is it no problem for an STR?

If they banked the cash in 2003 like a lot of the experts suggested (£250k) and tried to rent off the interest then they really aren't any better off over the last 2 years.

They will lose 20% of the interest in TAX which stifles their renting power and then there are the selling fees, moving fees, rental deposit etc. If they earn a decentish wage then they will get hit for 40% tax on their interest which just makes it worse.

They also face stamp duty when they buy back in and another lot of moving costs and legal fees.

There is all the stress of moving house (twice) and all the restrictions of being a tenant.

They also must have had to dip into their wallets quite a few times to finance all the above.

Also there is the small matter that house prices have gone UP since 2003.

Maybe they should have waited a bit longer to STR? :)

If they'd stayed 'at home' they could have put their feet up and put moth balls in their wallet.

Instead, people like TTRTR are borrowing 'their' money from the bank to buy more HMO property :lol:

Edited by Without_a_Paddle

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..and if you've paid rent for more than the last 7 years you also need to question your wisdom.

so your saying/admitting we dont have fair rents in the uk anymore.

as renting, according to you is only a stop gap between making money on hot property ect ect ect.

and if were 'unlucky' rents will skyrocket and all homes will already be bought up by 'clever' investors.

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..and if you've paid rent for more than the last 7 years you also need to question your wisdom.

I wish to make it plain that I agree rather strongly with everything that everybody has said on this thread, with the exception of the above post.

Thank you.

:)

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so your saying/admitting we dont have fair rents in the uk anymore.

as renting, according to you is only a stop gap between making money on hot property ect ect ect.

and if were 'unlucky' rents will skyrocket and all homes will already be bought up by 'clever' investors.

I'm saying we are at the point in the housing cycle where those that COULD have bought 7 years ago have been unwise if they chose to keep renting instead.

At this point in the cycle both rents AND mortgages are high. You could argue that this is unfair for both.

Don't blame me though, I FTBd during the mid nineties, before the boom. Prices were still settling when I bought. I had to ignore all the bearish crap about property being doomed forever and I took the plunge to buy.

The need to buy property ASAP became a lot clearer in the late 1990s boom and anyone who could afford a mortgage and ignored this has only themselves to blame if they are stuck with paying high rents in 2006.

Edited by Without_a_Paddle

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Hmmm, I pay 1/4 of my net income, where income includes realised gains in STR money. I consider my rent to be high and know that I could pay less, but I made the decision to live in a nicer area.

1/5 of my basic net income would get me something pretty skanky, but it's doable.

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I wish to make it plain that I agree rather strongly with everything that everybody has said on this thread, with the exception of the above post.

Thank you.

:)

Does this mean we will never hear you complaining about the high cost of renting in 2006?

...or in 2007.....2008.........2015....?

you can be my tenant if you like when I rent this place out in a few years. You just passed the interview.

Edited by Without_a_Paddle

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Does this mean we will never hear you complaining about the high cost of renting in 2006?

...or in 2007.....2008.........2015....?

you can be my tenant if you like when I rent this place out in a few years. You just passed the interview.

no thanks. As suggested by Fred - it's not my wisdom that I'm questioning in respect of my rent-tastic habits of the last ten years.

I've got plenty to say about the high cost of renting, but I don't feel it would be particularly useful to unfurl this at the moment. Suffice to say that I am in the camp of those who believe that rents will continue to fall alongside buying costs. Additionally, I have some rather cunning ways of minimising my rental expenditure.

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so your saying/admitting we dont have fair rents in the uk anymore.

as renting, according to you is only a stop gap between making money on hot property ect ect ect.

and if were 'unlucky' rents will skyrocket and all homes will already be bought up by 'clever' investors.

I see people are finally admitting to the rise in rents.

The status of tenant is already perminant for many here.

There is no end to exploitation, of savings, of your real wages, unless you unionise and mobilise.

Most of the population, is under 40 and out of this boom. Thats one hell of a lot of power if they realised thier power to demand the most basic chance of life. Only 35% of the population voted this government in.

UK Population by Age 2003 (millions)

0-14 10,924

15-29 11,234

30-44 13,519 (under 40s)

45-59 11,424 (Boomers)

60-74 7,948

75 and over 4,505

All ages 59,554

Mean age (years) 39.4

Edited by brainclamp

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no thanks. As suggested by Fred - it's not my wisdom that I'm questioning in respect of my rent-tastic habits of the last ten years.

Fair enough, in your case you have possibly seen the World in the last 7 years, renting beach huts as you go along.

I can't argue with that philosophy. It's the 'unwise' ones who still stayed here in the usual rat race and rented instead of buying 7 years ago that I was referring to. There's probably quite a few out there...

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Guest Charlie The Tramp
How Much Is Too Much Rent?

Any rent charged that is much greater than a LA or HA rent for a similiar property according to location.

Example: In laws rent for one bed LA flat £260 per calendar month with no subsidy or housing benefit.

Same flat in the block a RTB and now let out by owner £500 per calendar month.

The difference would have been much smaller prior to the 1988 Housing Act.

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I pay £520 per month for a bedsit in West London.That's 50% of what I earn a month (£1070 net).

It's pure madness having to pay this much,but I have no choice at the moment.

This is not a joke its my reality.Needless to say I hope a housing crash and some sanity returns to housing.

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Guest prudence

Everyone is looking at rent in terms of personal income when it should be seen in terms of yield. At four or five percent gross rents are not too high

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On the 'Divorce' thread a several posters said £750 was a lot of rent to pay. While this might seem so for someone who bought several years ago and was used to paying only a £400 or less mortgage (like many of our slightly older friends) what about everyone else?

In much of the South East, not even London, 750 lands you a 2 bed house or flat often in a very shoddy state in a poor area, or a slightly better one bed flat. It's extortionate for sure, but often the equivelent mortgage is several hundred more for the same property.

DrBubb often asks why people aren't happy to rent instead of buy. Because renting's a complete rip off that soaks up far too much of most people's real-world wages destroying their purcahsing power. It hardly matters that buying is even more of a rip-off. Just because someone dodges one form of torture for a milder form, doesn't make the milder form bearable or acceptable.

For an STR subsidising their rent with their gains, it's probably no problem but for the young who do not qualify for the last few dregs of social housing, there is virtually no way to gain accomodation for a reasonable price - rent or buy.

What our friend hasn't realised, but his wife has instinctively realised, is that he is now paying much more than he was for his accomodation. Here is my basic calcs:

As an owner:

400 old mortgage payment

240 old lost opportunity to earn interest on his equity (80k which he has banked after the sale) at 4.5% minus tax

- 1000 guestimated CG per month, cyclical, but reliable over years.

200 maint & ins

-------

- 160 total basic housing cost (free, he gets 160 pm for it :D )

As a renter:

750 rent

-240 interest received on 80k after receiving 4.5% interest and paying tax

1000 CG being earned by other owners that he'll have to raise later to buy back the property

0 Maint

---------

1510 total housing cost.

Yeah, I can see now, renting is SO MUCH cheaper.......

:lol::lol::lol:

Edited by Time to raise the rents.

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yeah renting is currently cheaper.

my annual rent is around 6k.

houses in my area dropped 20k last year.

im saving 14k currently each year i rent at todays price falling levels or even static stagnation.

i save more as inflation expands my income but not my future house price..

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Fair enough, in your case you have possibly seen the World in the last 7 years, renting beach huts as you go along.

I can't argue with that philosophy. It's the 'unwise' ones who still stayed here in the usual rat race and rented instead of buying 7 years ago that I was referring to. There's probably quite a few out there...

It's not strictly true to say that I couldn't have bought 7 years ago. However, I was 23yrs old and had just started my first permanent/legit job, for around 10k/yr I recall.

I know that I have 'missed' opportunities to buy before, but then again I wasn't really looking for them.

No regrets (in this sense) - I remain confident that the cycle will play out as it always has and that my time will come again. In the meantime, I simply have to remain flexible and imaginative.

Anyway, if I owned a house, it's unlikely that I'd have ever have got to know such a lovely bunch of people as can be found on this site! I'm definitely wiser for the choices I have made

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Anyway, if I owned a house, it's unlikely that I'd have ever have got to know such a lovely bunch of people as can be found on this site! I'm definitely wiser for the choices I have made.

yes.

deep welsh chior begin to hum in background....

[crowd of HPCrs slowly enter stage left carrying candles and gather around gently resting lamb]

...."ohh come all ye faithful. joyful and triumphant, oh come all ye faithful...."

Edited by right_freds_dead

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Any rent charged that is much greater than a LA or HA rent for a similiar property according to location.

Example: In laws rent for one bed LA flat £260 per calendar month with no subsidy or housing benefit.

Same flat in the block a RTB and now let out by owner £500 per calendar month.

The difference would have been much smaller prior to the 1988 Housing Act.

please go on???

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yes.

deep welsh chior begin to hum in background....

[crowd of HPCrs slowly enter stage left carrying candles and gather around gently resting lamb]

...."ohh come all ye faithful. joyful and triumphant, oh come all ye faithful...."

... and the HPC moderators urge them to sing faster.... this stage is rented by the hour!!!

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  • 333 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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