Jump to content
House Price Crash Forum
Guest wrongmove

U.k. Rental Prices Reach Record

Recommended Posts

Guest wrongmove

After the Nationwide figures, might as well get some more bad news out of the way

U.K. Rental Prices Reach Record, Chartered Surveyors Say

Aug. 31 (Bloomberg) -- "The cost of renting property in the U.K. rose the most in at least eight years in the three months through July, driven in part by immigration from Eastern Europe, the Royal Institution of Chartered Surveyors said today.

The number of surveyors reporting an increase in rental costs was 30 percent higher in the quarter ending last month than those reporting a decline, up from 20 percent in the three months through April, RICS said in an e-mailed statement today. The July figure was the highest since the survey began in 1998......

..... The Home Office estimates about 427,000 workers have come to the U.K. since the European Union expanded to 25 member states two years ago, pushing up demand for places to live. The wave of immigration also helped drive the U.K.'s 0.8 percent economic growth in the second quarter, the fastest in two years.

Still, the number of first-time home buyers dwindled to a 25-year low of 320,000 last year as surging home values limited affordability, according to estimates by HBOS Plc, Britain's largest mortgage lender.

Investors who are buying to rent may be taking the place of new buyers to some extent, supporting the housing market. The number of mortgages issued to such investors in the first half of the year jumped 17 percent from the second half of 2005, to 152,500, the Council of Mortgage Lenders said Aug. 16. "

I apologise in advance for posting this and for not spinning it. I am renting and sitting on a decent deposit, hardly the actions of a raging bull, but I prefer to see all the news, not just the bits that the uber bears spin for us.

Share this post


Link to post
Share on other sites

I do think rising rents would is the biggest bull argument for BTL. Although it doesn't say the % YoY change, i'm surprised as there is a huge amount to rent in large towns and cities. I can see rents rising in the country and small towns, as there is very little to rent (but the again yields are pathetically low on country properties).

Share this post


Link to post
Share on other sites

I apologise in advance for posting this and for not spinning it... but I prefer to see all the news, not just the bits that the uber bears spin for us.

Who or what exactly is stopping you from posting and spinning whatever you want.

If you can find news that is worth posting then do it.

Stop insisting that the "uber bears" do it for you and whining when they will naturally prefer to post and spin what they see as relevant and which supports their views.

Nobody owes you a 'spin free' forum matey boy...

Edited by CrashDive

Share this post


Link to post
Share on other sites

Yes, with inflation now gaining momentum rents will soar. Sadly though, for BTLers their income continues to drop with yields now at a 5 year low:

http://business.guardian.co.uk/story/0,,1854607,00.html

Thinking of buy-to-let? Do the sums

Safe as houses? Yields have fallen, interest rates are rising - yet people still think it is a sure bet

Ashley Seager

Monday August 21, 2006

The Guardian

If something looks like a bubble and smells like a bubble, there's a good chance it may be a bubble. Figures out last week showed a renewed frenzy of buying in the buy-to-let market, an area of the economy that is flashing warning signs as never before.
But a small rise in rents does not alter the fact that the economics of buy-to-let are now very unfavourable, as they have been for some time. At the heart of every investment decision should be a consideration of return, or yield. This is when you divide the income flow by the price you pay for the investment. In the case of rental property, you take the purchase price and divide it by the rent. For example, if a property costs £100,000 and you can get £10,000 a year in rent, the yield is 10%.
The main reason that the buy-to-let craze started a few years ago was because rents were high relative to property prices, giving nice fat yields of 10% or more. Now, after years of strong price rises, and some periods where rents fell as new landlords found themselves competing for tenants, the average yield in Britain is down to 5%, with London at 4.5%, according to the Royal Institution of Chartered Surveyors. That is bang in line with interest rates, also known as the cost of capital.
That is a gross yield. Once you deduct running costs, agents' fees and so on, you get to an average net yield of 4%. If you have a month or two without a tenant,
your yield in one year could fall to 3% or lower
. You also have to pay stamp duty and solicitors' fees on the way into the investment, and capital gains tax, estate agents' fees and more solicitors' fees if and when you sell. All of which eats into your returns.

Not only are 3% yields scary there is the additional burden of HMO regulations which local councils have the discretion to expand to smaller properties--which they will to add to the big hikes this coming year for council tax. As inflation begins to soar BTLers will be better off to sell as soon as they can and deposit the proceeds in a bank account that is currently yielding almost twice the 3% yield and likely to grow as inflation tightens its grip. :(

Share this post


Link to post
Share on other sites

I can't say I've noticed rents going up around here. (West Cornwall)

It's only newer landlords who will have to put rents up and they will be pricing themselves out of the market. Many of the older, more established landlords are happier to keep good, reliable tennants than to try and stiff them for every penny they can get.

Share this post


Link to post
Share on other sites
Guest wrongmove

Who or what exactly is stopping you from posting and spinning whatever you want.

If you can find news that is worth posting then do it.

Stop insisting that the "uber bears" do it for you and whining when they will naturally prefer to post and spin what they see as relevant and which supports their views.

Nobody owes you a 'spin free' forum matey boy...

Thanks for the permission to post CD. Much appreciated. :P

I was just making the point that not all bears are blinkered, and that posting bullish news when it occurs does not proove that I must be a raging bull. Rental income is an important fundamental in the modern housing market, where BTLs have partly replaced FTBs at the low end.

Nobody owes me a spin free forum, but I reserve the right to point it out, bullish or bearish, when it occurs.

If that's alright with you, of course, fella-me-lad ? :lol:

Share this post


Link to post
Share on other sites

More inflation for the ONS to remove from the magic basket

Will they use hedonics to bring down the effect of these increases? Rents are increasing, but these days you get a shinny new build 'apartment' for "young professionals" insted of a 'flat' so in CPI-world rents have actually fallen

No inflation for MPC to worry about here!

Share this post


Link to post
Share on other sites
Guest Cletus VanDamme

..... The Home Office estimates about 427,000 workers have come to the U.K. since the European Union expanded to 25 member states two years ago, pushing up demand for places to live. The wave of immigration also helped drive the U.K.'s 0.8 percent economic growth in the second quarter, the fastest in two years.

And yet locals are saying they can't get jobs because the incomers are undercutting them. While at the same time complaining they are being priced out of the rental market by incomers. Surely both can't be true?

Share this post


Link to post
Share on other sites
Guest wrongmove

More inflation for the ONS to remove from the magic basket

Will they use hedonics to bring down the effect of these increases? Rents are increasing, but these days you get a shinny new build 'apartment' for "young professionals" insted of a 'flat' so in CPI-world rents have actually fallen

No inflation for MPC to worry about here!

I believe rents are included in RPI, but not CPI. If this is correct, they will not affect rate decisions.

Share this post


Link to post
Share on other sites

I believe rents are included in RPI, but not CPI. If this is correct, they will not affect rate decisions.

If they aren't, I'm sure Gordon will be moving them pretty sharpish

Share this post


Link to post
Share on other sites

I can't say I've noticed rents going up around here. (West Cornwall)

It's only newer landlords who will have to put rents up and they will be pricing themselves out of the market. Many of the older, more established landlords are happier to keep good, reliable tennants than to try and stiff them for every penny they can get.

I must be living a parralel universe. In North Kent, rents aren't exactly rising, in fact they're coming down as a load more of these ghost developments come on stream and the BTL need to get the wonga in to cover their loans.

As for the consumer comeback and the high street boom. I'm sorry, but that doesn't tally with me either. I was chatting to the CEO of a large retail chain and he didn't believe all this guff about another boom and said sales were only holding up because of heavy discounting.

London is however going through yet another credit frenzy and rents have risen here but that little party will soon be over - I hope!

Share this post


Link to post
Share on other sites

And yet locals are saying they can't get jobs because the incomers are undercutting them. While at the same time complaining they are being priced out of the rental market by incomers. Surely both can't be true?

Of course it can - if more people live in the same space. 1000 immigrants living 10 to a house will reduce the housing supply by 100. In order to compete locals will have to start living 10 to a house as well. Unfortunately Globalization tends to work to the lowest common denominator, China has seen massive growth due to low wages, no benefits, no environmental controls etc. Immigration in turn is a huge step up for some even if they lived 100 to a house, without water, electricity.

Perhaps the government plan is to compete with China by eroding wages to virtually nothing, (except the lauded entrepreneur of course)!

Share this post


Link to post
Share on other sites

I think of all the news coming out at the moment, this news on rents gutted me the most.

At first I didn't believe it, then I checked the block of flats where I live in West London. A flat which was £750 per month 6 months ago is now up for £950 per month. 25% rise in 6 months! Thats insane. Then I noticed a shortage of flats despite many flats and houses being bought buy to let in the last year - I know because you see the for sale/sold/to let signs in a row.

Well when mine comes up for renewal, they can stuff it if they want more money. I'm going to get out of London. They'll be mass exodus from the South East at this rate. Here I am trying to keep up with HPI by saving my deposit and now I'm going to be screwed by the landlord too. This whole dam situation it's so big and out of control it scares the hell out of me.

This goverment. They've let the whole country down. It's disgusting. Honestly they really don't give a ****.

Neil

Share this post


Link to post
Share on other sites

Yep, the government have created the perfect conditions for property investors. Tax breaks, ever increasing HPI, ever increasing demand via mass immigration and artificially low interest rates. Its a disgrace but I expect nothing else from Nu Labour, unfortuantely most people are greedy and want their houses to keep increasing, so keep voing them in.

Edited by simon99

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.