Saturday, April 16, 2011

Average rents rise as first-time buyers struggle to raise deposits

Average rents rise as first-time buyers struggle to raise deposits

Rents are now 4.2% higher than last year, according to the LSL index, with the average £25,000 deposit proving too much for hopeful buyers

Posted by happy mondays @ 11:54 AM (2110 views)
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11 thoughts on “Average rents rise as first-time buyers struggle to raise deposits

  • Does anyone know whether or not this ‘index’ is based upon actual let prices or landlords asking prices?

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  • They own a large letting agency, so they do have access to actual let prices.

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  • My rent has increased a penny in seven and a half years. I am also fully aware however that it has not reduced either. If I’d bought instead of thinking that I was some smartassed sold to renter that knew better, my mortgage would have decreased by now. I am finally accepting that I was wrong. The great crash that was always coming just never did and I look like a complete plonker that has spent £56k in rent.

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  • *Hasn’t increased a penny!!!

    We so need an edit function

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  • [email protected] “they do have access to actual let prices.”

    Indeed and, leaving aside statistical sample sizes, they also have one or more incentives to prefer to use landlords asking prices.

    Going back to the LSL site … it is not clearly stated. Having managed to negotiate rent reductions in my last two rentals – I think there is variability per locality.

    Finally, 4% is an inflation rise not a real terms growth. Alright if the tenant income rises by RPI or even CPI.

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  • letthemfall says:

    vindicated
    I wouldn’t say you were wrong. You made a rational judgement, but none of us can predict for sure what will happen. The circumstances we have now are exceptional. What will happen over the next couple of years we don’t know for sure. If prices do continue to ease, or maybe drop faster, then your decision, along with that of many of us here, may turn out the be the right one.

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  • Just how much can they be squeezed (the renters)!

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  • Vindicated you are sounding less than! If you sold in 2003 hindsight suggests you may have been early. Also one has to wonder if the initial upward trend in house prices was in fact a rational move from a very under priced position in the mid/late 1990’s. I think here in Scotland we will return to something like 2002/2003 prices in many areas but the time to get there will be more or lessequal to the time it took for prices to rise from to 02/03 and then peak, approximately 5-6 years, so on that basis we could be looking at 2013/2014 with the downward trend of the past 2+ years continuing.

    This is based on the last leg of house prices increases being a bubble and bubbles tending to form symmetrical patterns – see even the graph of house prices on front page of site where period from trough to peak tend to be eerily similar to period from peak to next trough. This is a phenomenon that has been observed in other markets – Jeremey Grantham is worth a read on the topic.

    Even if this doesn’t happen there willI think at very least be an environment of individiual instances of well priced property – this is already happening to some extent, and estate agents in particular are now keen to drive this trend to get properties off their books and commission on.

    If your rent is more or less what you would have paid in interest, you might wonder whether you would be as well hanging on for a while yet.

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  • @4 and @8

    bellwether, well said “If your rent is more or less what you would have paid in interest, you might wonder whether you would be as well hanging on for a while yet”. This is a point many property purchasers miss. They think that rent is a waste of money but so is interest payment. You are either paying the rent to the landlord or the bank. “You pays the money and takes the choice”. It is the capital repayment that matters most as this increases your equity in any asset purchases.

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  • @ vindicated

    The trouble is that since 2007 the government has kept on moving the goalposts about. It seems that is nothing they will not do to try and preserve the housing bubble.

    This makes rational planning almost impossible.

    What you did was not a mistake, but made according to the best information you had at the time. That’s the best any of us can do.

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  • 10. peter said, ‘What you did was not a mistake, but made according to the best information you had at the time. That’s the best any of us can do.’

    ~ Well said.

    And now? Will we ever be able to make sound financial judgements in this kind of envirorment other than relying on highly profitable

    conspiracy leaks or are we all now running around the slaughter house pushing the next man forward in a (wait and see…) frenzy.

    I feel that the butcher has us just where he wants us.

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