Buy to let and the myth of rising rents

andrewmp

!!!!!!? wrote: »

You should really be looking around to get a lower rent.

Ideally, max 1/3 of disposable income on accommodation costs (rent or mortgage) otherwise you won't be able to save.

I'm paying about 22% of my net income on renting where I live - leaves me with nice cushion to save. It hasn't gone up since I started renting 18 months ago and is unlikely to do so any time soon.

There is nothing in this area and you are right, i can't save. Luckily I do have a "deposit" already.

Obviously if I earned more money it would be less percentage of my income, it's just a shame I'm low paid. Seeing as I have a deposit I'm considering buying if a decent place comes up at a "decent" price. Also only if I can lock in the rate long term to cope with any future negative equity. It goes againt everything I beleive though as I'm sure the market will fall a lot further.

mircea

Pobby wrote: »

Nearly two thirds of salary on the mortgage. Frightening.

Another fine example of the ever widening gap between the rich and poor in this country.

Absolutely right there. A lot of people say house prices are too high. I say wages are too low!

Generali

mircea wrote: »

Absolutely right there. A lot of people say house prices are too high. I say wages are too low!

If prices and wages both go up it's inflation and a Bad Thing.

PasturesNew

JayZed wrote: »

If your rent went up by 20% you'd be paying 42% of your wages. It would need to go up by 40% before you get close to 50% of your wages.

Nit picker. I was in a hurry, I didn't think there'd be somebody who would bother to work it out

PasturesNew

!!!!!!? wrote: »

You should really be looking around to get a lower rent.

Ideally, max 1/3 of disposable income on accommodation costs (rent or mortgage) otherwise you won't be able to save.

I'm paying about 22% of my net income on renting where I live - leaves me with nice cushion to save. It hasn't gone up since I started renting 18 months ago and is unlikely to do so any time soon.

Nice idea about 1/3rd of disposable income for rent. But if you're in the smallest property possible and it's already more than 1/3rd you don't get to choose.

Of course, for couples, it's a lot easier with two incomes.

Gorgeous_George

For years we have had renters saying that their rent was good value because mortgage interest would cost more than rent. Amateur landlords were subsidising tenants.

Many LLs set rents based on costs and not house prices. The cost of mortgages has increased and therefore rents need to rise. Would be buyers need larger deposits to secure mortgages with higher rates. Since the alternative to renting costs more (or is further out of reach) , it makes sense that rents can rise.

GG

WTF?_2

Generali wrote: »

If prices and wages both go up it's inflation and a Bad Thing.

Sorry, but prices went up as a result of inflation.

Wages going up are just another result of inflation. They typically follow cost-of-living price rises.

The line trotted out at the moment is that the inflation is out of the control of the Government or BoE ... well, in that case what's the problem with seeing higher wages then?

Yes, employers aren't too happy paying higher wages. Yet they'll pay more for raw materials (they have no choice in the matter) so workers should give them no choice when it comes to wages..... Maybe that will teach the powers that be to keep inflation under control in the first place.

WTF?_2

Gorgeous_George wrote: »

For years we have had renters saying that their rent was good value because mortgage interest would cost more than rent. Amateur landlords were subsidising tenants.

Many LLs set rents based on costs and not house prices. The cost of mortgages has increased and therefore rents need to rise. Would be buyers need larger deposits to secure mortgages with higher rates. Since the alternative to renting costs more (or is further out of reach) , it makes sense that rents can rise.

GG

If wages rise - absolutely. Rents will rise 'with inflation'.

If wages don't rise - you'll find that people economise by house-sharing, moving in with parents/family etc. People will simply get poorer and therefore you can't get any more out of them. Rents may even fall but of course a lot depends on supply and demand. Maybe we'll see rental supply curtailed by forced sales (to OOs) of BTL properties?

As it stands, chances are people will simply get poorer. I don't see that with the demise of the unions and increased levels of personal debt that workers are going to be able to exert enough pressure for rises - in general. Those who are well organised however will be able to make sure their wages keep pace with the increased cost of living.

m00m00

when I lived in york, I was paying just over 300 a month for a property now worth about 450k

there was a landlord who valued a good tenant, over every penny income.

IveSeenTheLight

There is a lot of good posts above.
Summarising in my opinion: -

1) Ladlords with Good tenants will not increase rents to keep those good tenants (I only increase rents between tenants)
2) Some properties have not had rent increases for a number of years, therefore are subject to rent increases when changing tenants
3) Rents to disposable income ranges from 22% to 42% (data from this thread). This would also suggest that either properties may be liable for rent increses / decreases or more probably that the disposable income can vary and depending on the type of property rented
4) If rents are too high, people will share, go home to mum & dad etc

It would be good to see a poll on where people prioritise on their disposable income. Roof over head, Food, clothing, leisure & entertainment, cigarettes and Alcohol, Cars, Petrol, Utilities (Gas / Electricity), etc, etc

My opinion is that roof, food and utilities (heating) would be high up on the priority and when times get harder, I'm sure most people would think the same