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

[Jason]

This RICS release is a little misleading to say the least. The "highest rise in rents in 5 years" is actually the highest proportion of surveyors saying rents are rising in 5 years.

The actual claim is "highest for the 3 months to April". According to the ONS rents rose 1.61% in those three months (2.81% annually). Last year they rose 1.77% in the same period (3.6% annual). Hardly "Up Up and Away".

T&T

Do you have a link to the ONS data for rents? I can't find it.

[the_duke_of_hazzard]

Yes, rents are lower in other countries, but salaries aren't necessarily as high in other countries.

My auntie works full-time in Austria as a primary school teacher. She has twenty years' experience and earns the equivalent of about 10K a year.

[www]

I think we'll see a lot of landlords turn to crossdressing as a way of externalising their angst at being emasculated by higher interest rates. Time to Raise The Corsets.

[ToilAndTrouble]

Do you have a link to the ONS data for rents? I can't find it.

I used this. Select 2.1 (RPI since '87) then DOBP (rents).

T&T

[Jason]

I used this. Select 2.1 (RPI since '87) then DOBP (rents).

T&T

Thanks

[AteMoose]

Thanks

lovel data set, admire the cost of rent against the cost of the interest

on a morgage, based on 87 at 100. Recently it has got more expensive

to buy than rent....

[astos]

I can't understand hoe anyone can say rents are going up?! Here in the SE there's plenty of rented around. I've just renewed my tennancy with a 6 month upfront payment with the same discount I got as last time. They're hardly loads of Polish plumbers trying to find a place - well certainly not here!

spoonerist

[ronnie]

People say rents and house prices are too high,if this is the case then it must be the case that theres a shortage of housing in UK market as a whole. if only prices were too high and there wasnt a shortage of housing then prices would fall as renting was cheaper and competing homes would be on market.

[debtfree]

People say rents and house prices are too high,if this is the case then it must be the case that theres a shortage of housing in UK market as a whole. if only prices were too high and there wasnt a shortage of housing then prices would fall as renting was cheaper and competing homes would be on market.

if thats true, then there must be a shortgage of estate agents ?

[binkybonka]

No.I havent read the whole of this thread but rents up mean good news for landlords.

If people are put off buying by high prices, high interest rates or whatever it means that they will rent.

Means landlords are happy and can take the dive in prices and the rise in rates and sit it out.

Until prices rocket again

[ToilAndTrouble]

No.I havent read the whole of this thread but rents up mean good news for landlords.

If people are put off buying by high prices, high interest rates or whatever it means that they will rent.

Means landlords are happy and can take the dive in prices and the rise in rates and sit it out.

Until prices rocket again

I'll summarise for you. RICS say rents up, ONS disagrees, shows rent growth 1-2% less than wage growth for a good number of years now.

T&T

[Time to raise the rents.]

I'll summarise for you. RICS say rents up, ONS disagrees, shows rent growth 1-2% less than wage growth for a good number of years now.

T&T

Exactly what I have been saying for quite a while now. Rents have fallen in real terms for several years now. Tenants should stop complaining and be thankful for the competition amoungst LL's that's made this possible.

But the tide can & will turn soon enough as once people have a desire to rent rather than own, they see their position as longer term & are more willing to bid up rents to get themselves a decent place rather than just a temporary solution.

Sinces rents have fallen in real terms, tenants are now in a position to bid them up.

[Justice]

TTRTR

"Sinces rents have fallen in real terms, tenants are now in a position to bid them up."

and your logic is ?

DVD's went down and few people ran out to bid them up, it's all related to pay packets and interest rates.

I think you may soon see even more empty properties and even more people trying to rent property out as an last ditch attempt to stay solvent. Rents didn’t go up during the 1989 bust/crash/correction. I know as I was a landlord at the time.

Edited May 29, 2006 by Justice

[Guest prudence]

My rent in one of the best areas of London has been frozen for three years. Next review - 2008! That freeze includes 10 percent discount to asking rent when I moved in in 2005! Rent was due to be increased in 2006. When I said to the landlords that not only did I not want to pay any increase but I wanted my initial rent to stay in place until 2008 they agreed!.............

[right_freds_dead]

yeah but what about rooneys 'metartarsal' ?

surley this is better than being bothered about 'silly' house prices and inflation.

[Without_a_Paddle]

yeah but what about rooneys 'metartarsal' ?

surley this is better than being bothered about 'silly' house prices and inflation.

But don't you see? His foot isn't really broken!

it's all just VI spin and lies by the BBC... and NuLabour....and Rightmove.... and BTL journalists ...and middle aged homeowners

It's a pyramid scam...

Ponzi lies and deceit in order to raise interest and viewing figures for newspapers and the BBC.

Personally, I blame Kirsty and Gordon Brown for all of this.

(and I thought bears knew everything)

[eric pebble]

I can't understand hoe anyone can say rents are going up?! Here in the SE there's plenty of rented around. I've just renewed my tennancy with a 6 month upfront payment with the same discount I got as last time. They're hardly loads of Polish plumbers trying to find a place - well certainly not here!

Same in SW -- LOADS of properties on rental market - many just sit there empty....... as I said above -- RENTS ARE GOING DOWN - DESPITE the PR cr@p put out by the VI's.........

[Als]

I lived in London during the major house price increases from 2000-2004 and rents did not increase at all. A recent gander at a London Loot confirmed that rents have still not increased. When I moved down to London in 2000 tenants had to move quick to get accomodation. When I left in 2004 landlords were struggling to find tenants. RICS are what people used to call Liars!

[Ignorant Steve]

The rents are very depressed here in the W Midlands due to employment losses at Peugeot...............

On what do you base this claim? What proportion of Peugeot workers from Ryton were renting? Most I've heard being interviewed have mortgages in Coventry. If anything they'll be forced sellers and add to the demand for cheap rented accomodation. Unfortunately for them.

[Si1]

Some good points here, but I'm interested in your BTL idiot example.

You see, (and I'm still doing the sums in my head as I type) there may be a tax advantage there.

Suppose the BTL owner(s) is a 40% taxpayer. (your wages only have to hit a mere £33k these days to qualify)

If they have £100k tied up in the BTL they are losing out on £5k a year interest (i.e. if they simply stayed at home and put the £100k in the bank and didn't do BTL). But they only 'see' £3k of this after tax.

£3k a year is £250pm. Keep this figure in mind.

Now if they have a BTL they can do the following:

They can claim tax relief on the part of rental income that is used to pay the interest on the loan on the BTL.

If the BTL is 'worth' £166k (they have a £66k IO loan to buy it) they can expect to get >£8.3k a year in rent.

This is maybe £700pm.

The IO mortgage on the £66k costs them around £275pm.

700-275 = £425pm.

remember, any rental income that exceeds the interest payments is subject to 40% tax.

£425pm is a lot more than £250pm

but they would get taxed 40% on the £425. A fair chunk of the tax bill can be offset against the wear and tear and maintenance on the BTL. (eg 10% of the rent can be claimed on wear and tear at £83pm)

Knock off another £100pm maintenance and they only get taxed on 425-183 = £240. so they only pay 40% of £240 = approx £100pm. the BTL can claim travelling expenses, advertising costs etc etc for tax relief.

So they pocket £325 of that £425 each month.

OK, they have to pay £100pm maintenance etc but they still at least break even each month wrt the £100k in the bank.

Now if they are smart they will have bought the BTL at a low price (auction or repo)

This makes the figures look better for them.

Don't forget that the £100k sat in the bank is devaluing at the real rate of inflation which is much more than the CPI inflation of 2% per year. The BTL income will rise with rents. Also the property will rise in value over the the long term.

I think they can also claim relief from void periods by declaring losses. so any mortgage interest they have to pay during voids can be reclaimed fairly quickly from the next lot of monthly 'rent profit' that would have been taken by the inland revenue as tax.

I hope these figures are OK, I'm sat out here in the sun listening to the radio with a beer so I may have c0cked up somewhere...

nice figures (except where are the transaction fees?), but you're hardly comparing apples with pears - is the £75 / month extra earned worth it compared to the extra risk and work involved. If money is in bank, then just put the hours in that would otherwise be spent managing your property as overtime etc.

Also, as I said not comparing apples with pears - if you want to reproduce this risk in a parallel investment cash in the bank is hardly a worthy comparison (I accept that you may not have chosen this comparison yourself), compared to stockmarket etc - with a bit of homework.

If I had invested in my area in the way you've described, then I'd be sitting on a capital loss on my property of 10-15k so far this year, quite bad for 100k down and all the effort involved. Similarly with the stockmarket. Cash would have done much better.

[mercsl]

One of my BTL's was advertised recently (Central london)by myself (no agents), stuck £285pw on it(had been £265), lots of interest and went within a couple of weeks at full whack..up up and away

Edited May 30, 2006 by mercsl

[gearoidmm]

Situation in Dublin is a lot worse

Currently rents are about 60% of the cost of buying the same property. I'm living in a 2-bed near the city centre. Costs E1350 to rent. Similar property in the same development sold the other day for >800,000 euros.

No-one who bought a BTL in the past 6 months is managing to pay the mortgage with the rent but despite this, investors still make up 30-40% of the market. Nominal rents have only started to increase again in the past few months having fallen by 10-15% since 2002 suggesting a fall of around 25-30% in real, inflation adjusted terms.

You guys have no idea what a crazy housing market looks like