Rents fell in December but expected to climb again

Generali

DOBP annual series:

DOBP
1987 103.6
1988 111.2
1989 121.4
1990 136.1
1991 152.9
1992 166.7
1993 179.5
1994 189.5
1995 200.2
1996 209.3
1997 216.4
1998 223.1
1999 229.9
2000 237.5
2001 245.7
2002 252.1
2003 255.9
2004 261.6
2005 270.5
2006 278.4
2007 287.7
2008 298.2
2009 304.2
2010 308.5

The numbers are slightly different from mine as I used the monthly data not the annual.

It's interesting to note that nominal rents have never fallen according to the annual data. Perhaps someone can be bothered to work out the inflation adjusted rents. That would be interesting (for me) to see.

IveSeenTheLight

Generali wrote: »

Perhaps someone can be bothered to work out the inflation adjusted rents. That would be interesting (for me) to see.

Ah, the power of csv files

Year____Base Rate Annual interest increase
1987____103.6
1988____111.2____7.34%,
1989____121.4____ 9.17%,
1990____136.1____ 12.11%,
1991____152.9____ 12.34%,
1992____166.7____ 9.03%,
1993____179.5____ 7.68%,
1994____189.5____ 5.57%,
1995____200.2____ 5.65%,
1996____209.3____ 4.55%,
1997____216.4____ 3.39%,
1998____223.1____ 3.10%,
1999____229.9____ 3.05%,
2000____237.5____ 3.31%,
2001____245.7____ 3.45%,
2002____252.1____ 2.60%,
2003____255.9____ 1.51%,
2004____261.6____ 2.23%,
2005____270.5____ 3.40%,
2006____278.4____ 2.92%,
2007____287.7____ 3.34%,
2008____298.2____ 3.65%,
2009____304.2____ 2.01%,
2010____308.5____ 1.41%


Overal Rent increase from 1987 to 2010 = 197.78%

Graham_Devon

Generali wrote: »

Wages rose by 2.1% last year so rents have risen by less than wages on average, ie the average rent has become more affordable. Wage rises have been higher amongst the lowest paid than the highest. The lowest are, I would imagine, more likely to rent.

I'm not sure how this is all being worked out.

However, rents, including the drop in decemeber, are apparently up 3.8% this year.

Wages rose by 2.1%, as per your link.

That's what I was using in suggesting rents had risen more than inflation.

IveSeenTheLight

Graham_Devon wrote: »

I'm not sure how this is all being worked out.

However, rents, including the drop in decemeber, are apparently up 3.8% this year.

Wages rose by 2.1%, as per your link.

That's what I was using in suggesting rents had risen more than inflation.

Graham, surely you can see the flaws in your comparison.

Generali compared wages (gov stats) with rents (again gov stats).

Your trying to compare wages (generali gov stats link) with rents (LSL stats, a totally seperate entity, methodology and facts to base on)

Can you find more detail on the LSL stats?
Do they have the same historical and methodology information as the gov stats?

It would be interesting to understand as the only link I found (again another source) appeared to show the average available properties for rent and not the actual rents received.

IveSeenTheLight

While trying to find more LSL data, I found this interesting link from last year
http://www.yourmortgage.co.uk/news/3626627

Buy-to-let yields average 10.6%

Typical rents have risen by 3.2% in the last 12 months, roughly in line with inflation.
According to the latest buy-to-let index from LSL Property Services, rents increased by 0.3% in February to an average of £658 a month.
The index revealed that yields rose to an average 4.8% and the total return from investing in buy-to-let over the last year increased to 10.6%, despite February’s slight drop in house prices.
That is the highest return recorded in the last two years. However, there are large regional variations.
The index shows that the North is lagging far behind the South, with southern areas “storming ahead” as northern ones languished.
LSL spokesman, David Brown, said the disparity in returns was more a symptom of rising property values than rapid rent increases, while the picture on rents has been much more mixed with no particular regional pattern emerging.
He says: “The recovery in the South began much more quickly than in the North – the ripples from the housing downturn are still affecting the market in the North, whereas the South has been enjoying a new wave of optimism over the last year.
“We would expect returns to improve in the North as the recovery in the South spreads out, but it may lag behind for a few months yet.”
LSL predicts that new entrants to the buy-to-let market would make an annual return of 8.5% (or £14,000 on a typical property) over the next 12 months.

IveSeenTheLight

Another LSL link

http://www.mortgageintroducer.com/mortgages/238899/238/Buy-to-let/Buy-to-let_confidence_boosted_by_tenant_demand.htm

Buy-to-let confidence boosted by tenant demand



Landlords’ confidence in buy-to-let has risen in the last three months, according to the latest landlord sentiment survey conducted by LSL Property Services plc.




According to the survey, 48% of landlords think now is a good time to invest in property, an increase from LSL’s previous sentiment survey in Q2 2010 (42%).
Just 1 in every 100 landlords believes it is now a good time to reduce their portfolios. Almost three-quarters (72%) of landlords polled by LSL Property Services plc are planning to maintain or expand the size of their portfolios over the next twelve months. Growing demand for rental accommodation is the main reason for the increase in confidence. With supply limited, as rents are being pushed up and landlords are less concerned that their properties will be unoccupied. In the past three months, 50% of landlords have seen a rise in tenant demand and 69% expect demand to grow in the next twelve months.

The latest LSL Buy-to-let Index also showed that this contributed to rents reaching a record high in September, of £689 per month, following eight consecutive months of rises.
David Brown, commercial director of LSL Property Services, commented: “Optimism is growing amongst landlords underpinned by very strong tenant demand, which has pushed up rents to new heights. With mortgage lending conditions so tight and uncertainty over the direction of house prices, many would-be buyers are choosing to stay in the private rented sector for the time being.
“The majority of landlords anticipate that tenant demand will increase further in the next year. The government’s spending review last month is expected to swell the ranks of tenants as potential social tenants opt to enter the private rented sector, instead of facing long waiting lists for social housing where they can expect to pay 80% of market value. An increase in the supply of rental accommodation will be necessary to meet this demand – and many landlords recognise this as an opportunity for investment.” The principal obstacle to even greater investment for landlords is ongoing mortgage finance constraints. 71% of landlords who have recently attempted to raise mortgage finance think it is more difficult to secure than a year ago. Only one in twenty landlords (4.8%) believe it is now easier to obtain mortgage finance. However, there is some evidence that this situation may be starting to ease, as a number of new buy-to-let products have been released by lenders in recent weeks.

IveSeenTheLight

One more LSL for balance and reflecting on the 1.2% drop
http://www.lettingagentnews.co.uk/buy-to-let-rents-and-yields-slump-for-investors-1276

Buy to let rents and yields slump for investors

Posted on 21 January 2011 by LAN editorial team
Buy to let rents slipped by a few pounds as savvy landlords cut rents to tempt tenants to move in to new homes rather than leave them standing empty over the holidays.
The tactic reflected a 1.2% drop in average rents to £684 per month – the lowest average monthly recorded since July – and halted the 12-month rise in rents enjoyed by landlords up and down the country.
Yields also fell slightly to 4.9% for December, in line with falls in rents and house prices, according to the latest Buy-to-Let Index from LSL Property Services, that owns the country’s largest lettings agent network, including Your Move and Reeds Rains.
The outlook was not bad for all buy to let investors.
Rents dropped away faster in Wales, down 2.6%, while average rents also dropped in the south east (2.5%) and London (2.3%), but landlords in other areas saw income increase – rents were on the up in the west midlands (2.2%) and south west (1.7%), while there were smaller increases in the east midlands and north east.
Tenants owe £276 million in unpaid rent
Christmas also had a negative impact on tenant finances. 11.7% of all UK rent was unpaid or late by the end of December, rising from 9.7% in the previous month. Unpaid rent totalled £276 million across the UK in December, the highest total since December 2009.
Following a steady fall in property prices over the past three months, the total annual return on a property has dropped to 7% in December – the lowest return since November 2009. This is now the equivalent to £11,431 – £7,332 in rent, and £4,099 in capital gains.
LSL director David Newnes said: “The slowdown in rents is due to landlords offering properties during the holiday season often lower the asking rent to avoid a costly void.
“If a landlord cuts the rent by 5% to fill a property immediately, he will save £275 over the year rather than seeing their property vacant for the duration of the month.
“Nevertheless, with the supply of mortgages to both first-time buyers and would-be landlords still constrained, we are likely to see rents re-start their upwards march before the spring.”

Graham_Devon

IveSeenTheLight wrote: »

Graham, surely you can see the flaws in your comparison.

Generali compared wages (gov stats) with rents (again gov stats).

Your trying to compare wages (generali gov stats link) with rents (LSL stats, a totally seperate entity, methodology and facts to base on)

Yer. The one that's been used all year to show rents are up...the one used in this OP. The one I was basing my original thoughts on, before the other stats were bought to the table.

The one you are using now to link up to.

IveSeenTheLight

Graham_Devon wrote: »

Yer. The one that's been used all year to show rents are up...the one used in this OP. The one I was basing my original thoughts on, before the other stats were bought to the table.

The one you are using now to link up to.

In discussion and debate, if better stats that can be viewed and reflected on are brought to the table, why dismiss them?

My personal viewpoint is that there is more transparency with the gov stats, which generali showed to be rising less than wages.

Surely that's good for tenants.

If your adamant that wages are increasing more than wages, then surely your advocating why BTL can be an interesting investment

My personal view on LSL, the stats are still needed to be better understood

Graham_Devon

IveSeenTheLight wrote: »

In discussion and debate, if better stats that can be viewed and reflected on are brought to the table, why dismiss them?

My personal viewpoint is that there is more transparency with the gov stats, which generali showed to be rising less than wages.

Surely that's good for tenants.

If your adamant that wages are increasing more than wages, then surely your advocating why BTL can be an interesting investment

My personal view on LSL, the stats are still needed to be better understood

Depends what the stats are made up of.

I don't know, but I'd guess, the government stats would also use government based rental prices.

Whereas the LSL won't. I was specifically talking about landlords. The figures in the LSL figures are specifically from landlords.

Not gonna argue it out. I was talking about one thing, before other figures, including no doubt, other types of rental property, were bougth to the table. I;ve shown that wages were increasing less than the LSL reported rent increase, talked about in the OP. I don't think these private landlord rent increased (based on LSL figures, as thats what it was all about) are sustainable.