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Rents Soar Up Up And Away As H P I Gains Momentum

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http://news.independent.co.uk/business/new...ticle620254.ece

Residential rents surge at fastest rate for five years

By David Prosser, Personal Finance Editor

Published: 27 May 2006

The cost of rented accommodation rose at its
fastest pace for five years
over the three months to the end of April, figures from the Royal Institute of Chartered Surveyors (Rics) show. A fifth of landlords raised rents over the quarter, the group's latest survey revealed yesterday, as the housing market continued to strengthen.
Rics said improving economic growth and rising employment had boosted demand for rental property in recent months, while the number of immigrants coming into the UK had also continued to add to pressures in the sector.
At the same time, the supply of rented property has failed to keep pace with the rise in demand for accommodation, with investors in the buy-to-let market remaining cautious about the housing market's prospects.
Rents rose fastest in London during the quarter, where demand from tenants has increased to twice its historical average this year. However, the pattern was repeated across Britain, with
significant numbers of landlords in both the north of England and Scotland also reporting rent rises.
Jeremy Leaf, a spokesman for Rics, said further rent increases could tempt buy-to-let investors back into property, though yields remain relatively static because house prices have so far risen at a similar pace.
"Economic prosperity and population migration have increased rental demand, making conditions better for property investors," Mr Leaf said.
"The recent choppy ride for equities means interest rates are less likely to rise, which is good news for investment."
Rising house prices in the first few months of the year have also
boosted the number of would-be first-time buyers who are forced to rent property,
Rics said, adding to the upwards pressure on rents.
Figures from the British Bankers' Association, published yesterday, suggested the housing market was continuing to perform strongly. The number of mortgages approved in April was 10 per cent higher than in the same month last year, with the average advance 9 per cent up at just over £140,400.
The BBA said that while the total value of mortgage approvals was down to £5bn last month compared with March's 21-month high of £5.5bn, this was partly the result of a statistical oddity, because April included five fewer working days.
Howard Archer, chief economist at Global Insight, said: "Higher house prices are already pushing affordability ratios back up, along with moderate earnings growth and increased utility bills."
Mr Archer
now
predicts further modest house price rises over the coming months.
The cost of rented accommodation rose at its fastest pace for five years over the three months to the end of April, figures from the Royal Institute of Chartered Surveyors (Rics) show. A fifth of landlords raised rents over the quarter, the group's latest survey revealed yesterday, as the housing market continued to strengthen.

Gordon "Miracle Economy" Brown will be basking in the glow of this news this morning! "Price 'em out of owning and price 'em out of renting is what I say!" Keep the migration flowing to fill the empty houses and keep spinning the stats to convince the sheeple that the miracle will last for ever.

The only flaw in the "Miracle" is that employment is not improving but deteriorating because of affordability issues and the need for companies to export jobs to Asia and E Europe where wages are lower. The CBI have been called into address the crisis in the West Country as workers can no longer afford to live in the area on normal wages. The Midlands is shutting down most of its manufacturing with the car industry leading the exodus out.

Gordon Brown's idea of lower IR to keep HPI and MEW going in perpetuity is not realistic as the world is moving up due to inflation in most economies including the UK.

RICS can try to counter the trend but hyping cannot beat the economic cycle. When basic housing reaches the point of unaffordability, trying to generate demand through mass immigration will fail unless wages are hyper-inflated to meet costs. Even Gordon wouldn't inflate the economy to keep HPI and MEW going--would he?

IMO, this is a dramatic attempt by RICS to keep the market from crashing this summer. They know insolvency is exploding and affordability is a problem that will not go away. The property ads in our local papers are showing "price reduced" and SSTC coming back on the market due to failed chains. In short, this article reeks of desperation.

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Guest Riser

I read an interesting article onKitco this morning which blamed the jump in US CPI inflation figures on rising rents, I wonder if rental costs are included in the UK CPI data, in which case this could help edge up the UK inflation measures.

Four looming surprises Money and Markets Friday, May 26, 2006

Looming Surprise #2 - An Inflation Spike

The latest Consumer Price Index (CPI) report is out, and there’s no sugar-coating the facts — they were awful:

The overall CPI jumped 0.6% in April after rising 0.4% a month earlier.

The Fed’s beloved “core” CPI climbed 0.3% for the second month in a row.That means core inflation hit an annualized rate of 3.2% over the past three months — a big acceleration from last year.

The pundits seem to think this is as bad as it could get. So they actually gave the impression that they “welcomed” the news.

The big surprise ahead: The CPI numbers, especially the “core” ones, could just keep getting worse.

Reason: Rents and estimated rents are a major component of the CPI measure. And these rents have been suppressed for a long time due to the housing market boom. Anyone with a pulse could buy a home, leaving many rental units vacant. But not now! Now, we’re seeing rents climb as homes become unaffordable and consumers flock back to rentals.

It’s not like the Fed can just ignore rent, either. Officials try to ignore food (as if nobody eats). They try to ignore gas (as if nobody drives). But can officials really say — with a straight face — that our most well-known inflation figure should exclude the cost of keeping a roof over your head?

No way! The rising rents are going to pop up in the CPI. And the inflation surge is going to surprise everyone.

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http://news.independent.co.uk/business/new...ticle620254.ece

Residential rents surge at fastest rate for five years

By David Prosser, Personal Finance Editor

Published: 27 May 2006

The BBA said that while the total value of mortgage approvals was down to £5bn last month compared with March's 21-month high of £5.5bn, this was partly the result of a statistical oddity, because April included five fewer working days.

Someone will have to explain this one to me. I thought the easter weekend was one of the busiest for house buying and so the fewer 'working days' should boost the figures, not cause them to drop!

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Nightmare scenario for perma bears, rising rental costs and little sign of a crash.

:huh:

Quick edit: My ex-landlord tried to hit me with a 25% increae in rents and many were doing the same in the area that I live in. His house is now up for sale, many months after we left.

:)

Edited by Golden Shower

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I read an interesting article onKitco this morning which blamed the jump in US CPI inflation figures on rising rents, I wonder if rental costs are included in the UK CPI data, in which case this could help edge up the UK inflation measures.

Four looming surprises Money and Markets Friday, May 26, 2006

ipods and plasma screens, that's all the CPI measures.

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There's a myth on this board that renting is 'cheap'.

Yes, often cheaper than buying in many parts but still brutall high.

We pay 800PCM for something you could have bought for a 400PCM mortgage in 1999. Rent or buy - you're still faced with a massively inflation-busting rise just to live in a modest hovel.

For the low-waged even bedsits are too expensive and 'doubling up' is becoming more and more common.

Seeing as China 'free market, totalitarian government' seems to be the model the West wants to follow, here are the homes of the future.

http://news.bbc.co.uk/1/hi/business/4541116.stm

Mr Tung, who is not married, lives in a "bed cage" consisting of a single bed in a room with a dozen other single men.

All his possessions are in a shelf above the bed, including a suitcase, a radio, and utensils for cooking. He pays HK$700 ($90) per month in rent.

Go to it, slumlords - meet that demand.

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I just emailed this to the Observer in response to their RICS/Ea advertisement:

Residential rents surge at fastest rate for five years
27th May 2006
Dear Sirs,
The above article paints a very grim picture of the UK housing market. The bottom line is that FTBs and most young people are now priced out of owning and renting a home. The situation is only going to get worse according to the Estate Agents/RICS due to rising employment and low interest rates. Add in mass migration and demand will become so great that even more people will be priced out of the market in the coming months. The CBI were called into the West Country last week to discuss the crisis with employers who cannot hire or retain workers due to the fact that people are priced out of their own homes with average prices at over 198k.*
It is difficult not to notice that the press publish these stories as if they were "good news" for the country. Far from good news, it is a human tragedy that is adding a great deal to the anger felt by millions of people, mostly the young, who have no hope of owning a home or, as is the case now according to RICS, of renting either. We had better hope that the BNP do not become the next party of government.
But are the views of RICS valid or is the article heavily biased toward the housing industry? Recent statistics from the ONS do not point to an improving employment situation but the reverse.** You well know that employment in the West Midlands is deteriorating rapidly with the closure of car manufacturing, namely Rover and Peugeot. Land Rover will be closing their West Midlands facility this November. Thousands of service sector jobs are being lost with NTL the most recent with 6,000 jobs lost across the country. The NHS? Thousands more. And so on.
Interest rates? The entire world are moving up and the Bank of Japan are shortly to begin hiking their rates which will have an impact on Europe due to the simple fact that it has been their money that has been pumping liquidity into our system that has in turn fueled house price inflation in the first place.*** The US has hiked 16 times and their housing market is beginning to correct with dramatic falls being seen in the "froth" markets that include the coastal areas. In every house price crash since 1950 the US and UK have risen and fallen together--and for the same reasons. Too much debt, unaffordability, slowing employment and rising interest rates. The last two crashes saw oil prices as an important catalyst in the correction. We are there again.
The ODPM reported quarterly house price falls in my area (Stratford) of 8.2% (Detached).**** This is a dramatic fall and yet not a single newspaper would touch the story. Similar falls have been experienced in my old home county of Surrey where detached fell 7% (Waverley district--upscale commuter homes). One can only imagine the impact such statistics would have on the people RICS/estate agents who have been led to believe that the "Miracle Economy" based on house price inflation and massive equity withdrawal can last forever.
In the grand spirit of good old fashioned journalism, lets see some real reporting that digs deeper into the real state of the market without RICS/Estate Agent hype. I come from a line of famous journalists who were not afraid to "publish and be damned" no matter how counter-government or anti-vested interests the news happened to be.
Best regards,
*http://www.thisisdevon.co.uk/displayNode.jsp?nodeId=143632&command=displayContent&sourceNode=142719&contentPK=14525490&folderPk=91672
**http://www.statistics.gov.uk/CCI/nugget.asp?ID=12
***http://news.ft.com/cms/s/93508fea-ed1e-11da-a307-0000779e2340.html
****http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm

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There's a myth on this board that renting is 'cheap'.

Yes, often cheaper than buying in many parts but still brutall high.

Frankly, this site would not be anywhere near as active as it is if private rentals in the uk were by any definition "cheap".

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I wonder if the RICS have cherry picked their data. My own experience is that rents are still sliding.

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Frankly, this site would not be anywhere near as active as it is if private rentals in the uk were by any definition "cheap".

Ain't it the truth?

People often say how happy the Europeans to rent, which is no sort of comparision.

1. Most Europeans buy - just often a little later in life when they have a family and most out from the city centre.

2. Most Euopean rentals are cheaper, and social housing is easier is easier to come up. A friend rents a one bed apartment in paris for e900 in a pretty nice, upscale area, while some other French friends didn't have to wait more than a year to get a e500 council flat (you wouldn't even know it was council - it didn't form part of a large estate), despite having two reasonably well-paid jobs.

Small wonder teen pregnancy rates are so high in the UK - elsewhere it's not the difference between having a home or not.

Once there was a small chance we'd move to Luxembourg - one of the most expensive places around. Rentals here were STILL significantly cheaper than the grimey London fringe where we live now. My wife was interviewed for a good PA job, and I was going to doss about improve my French, teach a bit of EFL, while perhaps casually looking for a job with some multinational. Even with my downgrading my employment in this way we'd still have been better off than the UK and live in a high-quality of life area.

Renting in much of Europe and the Uk is chalk and cheese. Rip-Off Britian sometimes makes my blood boil. I don't know why people don't revolt against the whole mess.

Edited by CrashedOutAndBurned

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Rics said improving economic growth and rising employment had boosted demand for rental property in recent months, while the number of immigrants coming into the UK had also continued to add to pressures in the sector.

RICS ramp buy-to-let. Im stunned.

Yawn.

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S'funny cos I'm still living in a flat twice the size of the one I lived in 5 years ago. And paying £25 a month less rent.

carry on renting then. why bother even looking at this web site?

i cant believe the number of people who come on here and claim renting is such a good deal - if it was such a good deal why are they interested in a house price crash at all?

another point to be remembered about peoples attitude towards renting - despite all the protestations of those who bought their houses off the council when thatcher instigated the right to buy that it was some kind of principled issue of owning their own home - it really was bloody difficult for the tories to sell these places off initially - in the end they had to flog them off at well below market rates for a take up to occur - people will quite contentedly rent permanently IF the price is right!

Edited by Milkshock

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carry on renting then. why bother even looking at this web site?

i cant believe the number of people who come on here and claim renting is such a good deal - if it was such a good deal why are they interested in a house price crash at all?

either you are a bonafide grade 'A' halfwit, or you are deliberately trying to wind people up. Either way, you are about as interesting as the quarter inch of mold I found on an old croissant behind the sofa last week.

I lean towards the first explanation of your boring pointless post. After all, if you had 3 neurons to fire together in a chain, you'd be able to work out the answer to your own stupid question.

BTW, how are things in Foxtons nowadays? Still getting someone else to tie your big fat shiny windsor knot?

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either you are a bonafide grade 'A' halfwit, or you are deliberately trying to wind people up. Either way, you are about as interesting as the quarter inch of mold I found on an old croissant behind the sofa last week.

I lean towards the first explanation of your boring pointless post. After all, if you had 3 neurons to fire together in a chain, you'd be able to work out the answer to your own stupid question.

BTW, how are things in Foxtons nowadays? Still getting someone else to tie your big fat shiny windsor knot?

ummm no i am saying both renting and buying in this country are currently over priced.......

IF it was a good deal to buy compared to renting then people (non-BTLs) WOULD DO THAT - in my opinion it is currently NOT a good deal to buy, when you consider wages compared to prices.

BUT the myth that is propogated by a section of posters on this site (and presumably you include yourself in this group) is that renting is somehow "cheap" or good value when in reality it will STILL siphon away 40% of take home pay in many cases!

Edited by Milkshock

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I've noticed big hikes in rental asking prices in **some areas** around where I live. A few agents have started quoting weekly rents rather than the traditional monthly and sneaked in considerable price increases. Combined with no capital gains in house prices, this is a nightmare scenario for landlords who bought recently. Rents do feature in CPI and this will push it up and bring with it massive increases in interest rates, which will eat into their margins and precipitate a correction in house prices.

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I've noticed big hikes in rental asking prices in **some areas** around where I live. A few agents have started quoting weekly rents rather than the traditional monthly and sneaked in considerable price increases. Combined with no capital gains in house prices, this is a nightmare scenario for landlords who bought recently. Rents do feature in CPI and this will push it up and bring with it massive increases in interest rates, which will eat into their margins and precipitate a correction in house prices.

The dying gasps of a desperate market? Trying to raise rents when IR are headed up while employment rates are headed down is a poison pill.

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The UK is a divided society, run by an elite, with a poltical chioce of exactly the same policies, just different personailties, and one theme of unlimited immigration.

The increases in rents obvoiusly mean houseprices will rise further.

There will be civil unrest as more and more of your earnings are taken away from you as rent.

The ID cards and population database is planned to hit the population around the same time I forecast the impact of these rent rises (2 years ago), at the same time civil unrest will become more pronounced.

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Guest muttley

No rent rises here. A property we looked at in December remains empty despite lowering the rent.

The property we left in December remains empty at the same rent as June 2004.

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Given that in 1998 the average mortgage payment on a FTB'er Purchase was 400pcm and rents today average 800pcm, ask yourself this simple question.

Have wages gone up 100% since 1998?.

I would suggest they have not, but clearly Council Tax has risen 100%, Food has risen 65%, Petrol 65%, Train Fares 100%, in fact if you think about it everything in terms of household expenses has increased.

So, where to go from here?. The answer is obvious, however many will not see it till its all over.

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Little bit of anecdotal - guy in my house (well-paid E European computer guy, lives v. cheaply and saves) is moving to a chavier part of town to pay less rent. He has Slovakian cleaners in his office which is how I hear about some of these things. He was here a few years ago, went back, came back for a new contract, so he has a few years' experience of the rental market here. Me, I've been renting here (Cambridge) for about two-and-a-half years.

HMO/shared room rents haven't risen in 21/2 years at the mid-upper range - that's £300-£500 a month all in, including bills. (For those saying renting is brutally expensive, £400 a month excluding bills for a double room - shared kitchen and bathroom - is not uncommon, which makes an iPad at £80k look like a bargain. Frankly I'd buy one tomorrow at £60k if it was close enough.)

However, what's happened apparently is a compression in prices. I'm told the houses at £55/60pw have all dried up and £65pw is now the floor; and there aren't many of those. So £70 pw is now the de facto norm. On this basis yes, HMO yields will have risen, as property values are pretty much static, and if this ripples through the system it will flatter BTL yields. But only for slumlords renting at the bottom end of the market. So this won't help TTRTR as he's a man of quality. Indeed.

Other thing I've noticed is people offering rooms in their own houses where clearly they have financial problems. Overall the impression I get is that there's a need to be wary of these figures. If all they mean is that rents for scummier HMOs/house shares have been compressed in this way due principally to mass immigration it isn't going to do much for HPI. However it might lead to wage pressures on employers or, if that doesn't work, reduced immigration and maybe some emigration as slumming it in the UK becomes financially less attractive.

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Guest Alright Jack

carry on renting then. why bother even looking at this web site?

i cant believe the number of people who come on here and claim renting is such a good deal - if it was such a good deal why are they interested in a house price crash at all?

For the record I think this is a perfectly good point to make.

Clearly it is the non-homeowners that have an axe to grind. So when long time HPCers come out with this stuff about renting being cheaper and that they're much happier renting and that renting is more flexible and fantastic etc, I do wonder who it is they're trying to convince.

I don't see a www.rentpriceboom.co.uk full of people moaning about scummy tenants who don't pay enough rent because of government favoritism or some other ill-founded reason.

The Jack is Back!

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For the record I think this is a perfectly good point to make.

Clearly it is the non-homeowners that have an axe to grind. So when long time HPCers come out with this stuff about renting being cheaper and that they're much happier renting and that renting is more flexible and fantastic etc, I do wonder who it is they're trying to convince.

The truth is that anyone who has never bought and has rented for the last few years has lost out big time.

You could not have made up for hpi through investing your rent savings over the years.

Even STRs with some equity to invest will have struggled recently. (unless they have had bucketfuls of equity to invest and/or they got big returns over 30% pa)

looking forward I guess it all depends how the housing market corrects over the next few years.

If the cheap lending continues along with hidden inflation then it could be a repeat of the 1970s type crash again.

This will mean big falls in house prices in inflation adjusted terms but not in nominal terms (i.e. price in £££)

This will crush any savers or long term renters. I've tried to offer this scary scenario on here many times and it is not well received by the bears....

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http://news.independent.co.uk/business/new...ticle620254.ece

Residential rents surge at fastest rate for five years

By David Prosser, Personal Finance Editor

Published: 27 May 2006

The cost of rented accommodation rose at its
fastest pace for five years
over the three months to the end of April, figures from the Royal Institute of Chartered Surveyors (Rics) show. A fifth of landlords raised rents over the quarter, the group's latest survey revealed yesterday, as the housing market continued to strengthen.
Rics said improving economic growth and rising employment had boosted demand for rental property in recent months, while the number of immigrants coming into the UK had also continued to add to pressures in the sector.
At the same time, the supply of rented property has failed to keep pace with the rise in demand for accommodation, with investors in the buy-to-let market remaining cautious about the housing market's prospects.
Rents rose fastest in London during the quarter, where demand from tenants has increased to twice its historical average this year. However, the pattern was repeated across Britain, with
significant numbers of landlords in both the north of England and Scotland also reporting rent rises.
Jeremy Leaf, a spokesman for Rics, said further rent increases could tempt buy-to-let investors back into property, though yields remain relatively static because house prices have so far risen at a similar pace.
"Economic prosperity and population migration have increased rental demand, making conditions better for property investors," Mr Leaf said.
"The recent choppy ride for equities means interest rates are less likely to rise, which is good news for investment."
Rising house prices in the first few months of the year have also
boosted the number of would-be first-time buyers who are forced to rent property,
Rics said, adding to the upwards pressure on rents.
Figures from the British Bankers' Association, published yesterday, suggested the housing market was continuing to perform strongly. The number of mortgages approved in April was 10 per cent higher than in the same month last year, with the average advance 9 per cent up at just over £140,400.
The BBA said that while the total value of mortgage approvals was down to £5bn last month compared with March's 21-month high of £5.5bn, this was partly the result of a statistical oddity, because April included five fewer working days.
Howard Archer, chief economist at Global Insight, said: "Higher house prices are already pushing affordability ratios back up, along with moderate earnings growth and increased utility bills."
Mr Archer
now
predicts further modest house price rises over the coming months.
The cost of rented accommodation rose at its fastest pace for five years over the three months to the end of April, figures from the Royal Institute of Chartered Surveyors (Rics) show. A fifth of landlords raised rents over the quarter, the group's latest survey revealed yesterday, as the housing market continued to strengthen.

Gordon "Miracle Economy" Brown will be basking in the glow of this news this morning! "Price 'em out of owning and price 'em out of renting is what I say!" Keep the migration flowing to fill the empty houses and keep spinning the stats to convince the sheeple that the miracle will last for ever.

The only flaw in the "Miracle" is that employment is not improving but deteriorating because of affordability issues and the need for companies to export jobs to Asia and E Europe where wages are lower. The CBI have been called into address the crisis in the West Country as workers can no longer afford to live in the area on normal wages. The Midlands is shutting down most of its manufacturing with the car industry leading the exodus out.

Gordon Brown's idea of lower IR to keep HPI and MEW going in perpetuity is not realistic as the world is moving up due to inflation in most economies including the UK.

RICS can try to counter the trend but hyping cannot beat the economic cycle. When basic housing reaches the point of unaffordability, trying to generate demand through mass immigration will fail unless wages are hyper-inflated to meet costs. Even Gordon wouldn't inflate the economy to keep HPI and MEW going--would he?

IMO, this is a dramatic attempt by RICS to keep the market from crashing this summer. They know insolvency is exploding and affordability is a problem that will not go away. The property ads in our local papers are showing "price reduced" and SSTC coming back on the market due to failed chains. In short, this article reeks of desperation.

This is a TYPICAL ruse by the VESTED INTERESTS: Put an article like this into the media - so that the impression is that, as a real trend, rents are up all over the UK. THIS IS PLAINLY NOT TRUE.

THIS IS PR, PEOPLE. just plan old PR, PR, PR, PR: [Public Relations!!! HA HA HA!!!] i.e. PROPAGANDA in the interests of THE VESTED INTERESTS'........So that they can keep the whole property scam - pyramid selling scam - rolling on and on and on......... DON'T FALL FOR IT. JUST HAGGLETHAT RENT DOWN -- VERY EASY TO DO - LANDLORDS ARE DESPERATE TO COVER THEIR @RSES WITH RENTAL INCOME. VOIDS ARE EVERYWHERE.

Edited by eric pebble

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  • 301 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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