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

kabayiri

Significantly lower rents, few evictions

Isn't this once again a problem which affects the unique situation in London more than other areas?

High rent prices; richer supply of jobs; large differential between the top and bottom earners; demand for housing as investment from foreign buyers.

It doesn't really sound like a problem you'd have in Leeds or Manchester say.

There are probably a number of reasons, but the conclusion remains....the housing market in London is skewed and this distorts the rental market. Maybe London needs it own unique solution?

HAMISH_MCTAVISH

Mass Evictions, little change in rents

kabayiri wrote: »

Isn't this once again a problem which affects the unique situation in London more than other areas?

Applicants exceed available rentals in 70% of the country, according to ARLA, as rental supply hits an all-time record low.

http://www.arla.co.uk/events/news_details.aspx?id=142

Still, at least now we know why landlords don't seem to be remotely worried about the upcoming benefit cuts.:cool:

Generali

Mass evictions and significantly lower rents too..

HAMISH_MCTAVISH wrote: »

Applicants exceed available rentals in 70% of the country, according to ARLA, as rental supply hits an all-time record low.

http://www.arla.co.uk/events/news_details.aspx?id=142

Still, at least now we know why landlords don't seem to be remotely worried about the upcoming benefit cuts.:cool:

Rents don't seem to be increasing particularly according to the ONS inflation numbers. Falling supply must be being met by falling demand.

HAMISH_MCTAVISH

Mass Evictions, little change in rents

Generali wrote: »

Rents don't seem to be increasing particularly according to the ONS inflation numbers. Falling supply must be being met by falling demand.

Unless the ONS numbers are incomplete or skewed by relying on limited sources, such as housing benefits?

Because other sources are reporting rents rising much faster, up one percent in June alone.....

The average rent across the UK increased 1% in June as constraints on supply boosted prices to their highest level since 2008, according to LSL Property Services.

LSL revealed that rents have risen for the fifth month in a row and are now 3.2% higher than a year ago. The average rent now stands at £673 per month, the highest price since November 2008.


London lead the surge in June, with rents in the capital increasing 1.9% to an average £942, while rents in the North and North East rose 1.4% and 1.3% respectively.

http://www.mortgagesolutions-online.com/mortgage-solutions/news/1722990/rising-rents-return-2008-levels

Generali

Mass evictions and significantly lower rents too..

HAMISH_MCTAVISH wrote: »

Unless the ONS numbers are incomplete or skewed by relying on limited sources, such as housing benefits?

Because other sources are reporting rents rising much faster, up one percent in June alone.....

http://www.mortgagesolutions-online.com/mortgage-solutions/news/1722990/rising-rents-return-2008-levels

The ONS weightings are based on the Family Expenditure Survey which asks 6,500 households to keep a diary of their spending. My guess is that fixed or large spends such as mortgage, rent, car repayments etc should be measured very accurately and they certainly have a statistically valid sample.

Are you seriously trying to suggest that a letting agents' group has better numbers than the ONS? I know you like to take a one-eyed view of the numbers out there but that would be plain dumb and I think you're no idiot.

HAMISH_MCTAVISH

Mass Evictions, little change in rents

Generali wrote: »

The ONS weightings are based on the Family Expenditure Survey which asks 6,500 households to keep a diary of their spending..

So assume somewhere between 1/6th to 1/12th of those have experienced a change in rent at any given month, possibly far less. Being the government it also may well lag, just as LR does.

500 to 1000 households..... Versus potentially many thousands or tens of thousands in industry samples. Neither of us know how big is big enough to be statistically significant in this case.

I'm not claiming the ONS is wrong, just questioning it's methodology (which you've answered) and now noting industry groups may well have access to a larger sample size with more timely information.

I also note the LSL study suggests prices are up by 3.2% in a year, with 5 consecutive months of rises now, and last months rise at 1%. Perhaps an accellerating trend that ONS have not yet picked up on.

Generali

Mass evictions and significantly lower rents too..

HAMISH_MCTAVISH wrote: »

So assume somewhere between 1/6th to 1/12th of those have experienced a change in rent at any given month, possibly far less. Being the government it also may well lag, just as LR does.

500 to 1000 households..... Versus potentially many thousands or tens of thousands in industry samples. Neither of us know how big is big enough to be statistically significant in this case.

I'm not claiming the ONS is wrong, just questioning it's methodology (which you've answered) and now noting industry groups may well have access to a larger sample size with more timely information.

I also note the LSL study suggests prices are up by 3.2% in a year, with 5 consecutive months of rises now, and last months rise at 1%. Perhaps an accellerating trend that ONS have not yet picked up on.

As I say, the weightings come from the FES. The rents themselves will come from a variety of sources: FES, Estate Agencies, Local Government, HAs, charities like the Guiness and Peabody Trusts and many, many more. The one weakness of the ONS is as you suggest a lag as to process the quantity of data they do takes time.

From memory, the ONS had a y-o-y figure of rents rising by about 2.5% in the last number so of the same order as 3.2% rise you cite. It is hard to see what would be driving rents higher at a faster rate given that the UK's economy isn't great right now. We'll see what the ONS's response is when they release their detailed numbers for the period.

RDB

Significantly lower rents, few evictions

IveSeenTheLight wrote: »

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.

That only makes sense if the buyers are going to live there and not rent them out themselves.

This wont start happening until house prices fall a significant amount.

Isnt it still something like 80% of first time buyers cant afford to buy?

So who is going to buy all these newly empty properties not new BTLers if rents are falling so much.

Gorgeous_George

For many areas of London (and other over-priced towns/cities), the cap on LHA will mean that the unemployed claimants will be forced out. Not too much of a problem because they are unemployed and don'y need to live in expensive areas.

Lower paid workers will also be forced out, leaving their employers with a huge problem. Businesses that rely on low paid workers to survive will also need to move out to cheaper areas.

Rents in the most attractive areas cannot fall enough to make them affordable. However, they are likely to fall.

GG

RDB

Significantly lower rents, few evictions

Gorgeous_George wrote: »

Lower paid workers will also be forced out, leaving their employers with a huge problem. Businesses that rely on low paid workers to survive will also need to move out to cheaper areas.

Rents in the most attractive areas cannot fall enough to make them affordable. However, they are likely to fall.

GG

Very good point and IF this thing goes the way some voted for that of mass evacuation from these areas then what about local shops, cafes etc?

It would have such a huge impact if everyone on low wage or unemployed would have to move out of that area.

I cant see that happening. Rents will have to come down.