Place your bets..... Mass Evictions or Lower Rents

Generali

Mass evictions and significantly lower rents too..

chucknorris wrote: »

I think it means from the range (in value) of the rents in your local area 0% being the lowest and 100% being the highest, where the rent is on the 30% mark, so towards the lower end (however I could have misunderstood it, perhaps someone could confirm).

Yes in your example it would be reduced to £290 in April then possibly a bit further too depending on that 30th percentile figure for the area conserned

That's about it.

This is the way this sort of thing was explained by my stats teacher at uni who I think was an English Professor rather confusingly.

Take all the rents in an area for a particular type of property and list them in numerical order with the lowest rent at the start and the highest rent at the end. Then go 30% of the way along the numbers and stop. That is the 30th Percentile.

For example, imagine an area being surveyed where 10 2 bed flats are being rented. The rents are: £100, £150, £120, £200, £3,000, £145, £1,500, £180, £20, £110.

List them in numerical order:
£20, £100, £110, £120, £145, £150, £180, £200, £1,500, £3,000

As 30% of 10 is 3, the 3rd number in the list will be where the 30th Percentile is. In this list it is £110. By chosing the 30th Percentile the ConDems are knocking off the very cheapest and most expensive places and leaving the bottom end of what remains which sounds pretty reasonable to me - in general terms, if you expect the rest of us to pay your rent then don't expect to live anywhere too flash.

chucknorris

Generali wrote: »

By chosing the 30th Percentile the ConDems are knocking off the very cheapest and most expensive places and leaving the bottom end of what remains which sounds pretty reasonable to me - in general terms, if you expect the rest of us to pay your rent then don't expect to live anywhere too flash.

Which IMO is exactly the way it should have been all along, not to force people to live in dumps but also not paying for them to live in better accommodation than those footing the bills with their taxes.

Generali

Mass evictions and significantly lower rents too..

chucknorris wrote: »

Which IMO is exactly the way it should have been all along, not to force people to live in dumps but also not paying for them to live in better accommodation than those footing the bills with their taxes.

I think this is what most taxpayers really want/expect to happen. People don't want to see their fellow citizens and neighbours thrown out of their homes just because they lost their job. However, they don't want people supported by their taxes getting a better deal than they do.

Acheiving that is easier said than done. These changes to housing benefit are a step down that road, especially the idea that it should be reduced after a while.

chucky

silvercar wrote: »

I predict tenants moving to cheaper areas.

it's a shift of demand to the area they're moving to and an increase in supply in the area they've left.

local areas may see a difference but i can't see it being noticed on the macro level - i doubt it will lead to repossesions.

one thing that we can't predict the impact of is the removal of this money from the rental system - i guess it depends if it's concentrated in areas or if it's pread out across the country.

CLAPTON

silvercar wrote: »

I predict tenants moving to cheaper areas.

interesting
although there is an overall cap on the rents ; as long as you are below that cap there seems nothing to stop people from moving to more expensive areas

maybe the law of unintended consequences will see a rise in the cost of housing benefits

IveSeenTheLight

Generali wrote: »

I reckon evictions first then, as landlords have trouble letting their properties, falling rents. Fundamentally by removing a subsidy on rented accommodation you are cutting demand. That means lower rents and fewer places rented.

The next stage after that is that some landlords might sell, reducing the stock of rented properties, which in turn is likely to raise the rents.

So I see, some evictions, a slight lowering of rent in some areas, a reduction in leased properties then a rise in rents

IveSeenTheLight

chucky wrote: »

it's a shift of demand to the area they're moving to and an increase in supply in the area they've left.

The thing is, there is only a limited supply of properties in the cheaper area.
Unless there is an upsurge in landlords wishing to take on cheaper area properties.

Let's say theres 20 renters.
10 in the cheaper area, 10 in the more expensive area.

4 of those in the more expensive area find the HB does not cover the rent so look to rent in the cheaper area.
They however find that the demand in the cheaper area goes up and thus the landlords could opt to charge more

The more expensive area finds that it is over supplied.
So the LL's could try and lower their rents to fill the void, but also the extra supply in the cheaper area, may find they need a property and have to compensate the rent to secure the property.

The more expensive area could see the LL's selling up if there is limited demand or falling rents.

Going back to Generali's list

List them in numerical order:
£20, £100, £110, £120, £145, £150, £180, £200, £1,500, £3,000

I think you could see the lower end rates rising, the higher end lowering thus a closing of the gap, also a reduction in the higher end but an increase in the 30th percentile

As an example
List them in numerical order:
£50, £130, £140, £150, £160, £170, £1,200, £2,500

The 30th percentile is now between £130 and £140 instead of the previous list of £110

Graham_Devon

I predict sod all will happen.

Couple of sob stories in the left leaning papers. Few landlords adjusting their rents.

But on the grand scale of things....will just continue as it has been due to the clause everyone seems to be missing when they talk hysterically about mass evictions and social cleansing.

chucky

Graham_Devon wrote: »

I predict sod all will happen.

my thoughts exactly but... that's a lot of funds that is going be removed from the rental system. i'm not sure who's going to be impacted more - tenants or landlords.

Generali

Mass evictions and significantly lower rents too..

chucky wrote: »

my thoughts exactly but... that's a lot of funds that is going be removed from the rental system. i'm not sure who's going to be impacted more - tenants or landlords.

Economic theory says both will be impacted. On average, tenants will pay a little more and landlords receive a little less. I would expect that for properties around the new limits, tenants will be more impacted as demand is probably quite inelastic. That means that a change in price has little impact on quantity demanded. That sounds right to me for something like cheaper rented accommodation.