Rents Continue Rising

HAMISH_MCTAVISH

abaxas wrote: »

You dont need electricity to survive, you however do need shelter.

You don't need to rent a house if you're planning on surviving without electricity.

A tent or caravan will do just fine.

abaxas

HAMISH_MCTAVISH wrote: »

You don't need to rent a house if you're planning on surviving without electricity.

A tent or caravan will do just fine.

So where exactly are you going to put the tent or caravan? Maybe you have to rent that land from someone?

Generali

Ironically, the retail electricity price is one of the things whose price, in most countries the UK included, isn't set by market forces as regulators are involved in setting prices.

Rents are set in the free market for the most part. Tax treatment of finance and subsidising mortgages and rents via the benefits system will have an impact on rents but the price isn't fixed as such.

HAMISH_MCTAVISH

abaxas wrote: »

So where exactly are you going to put the tent or caravan? Maybe you have to rent that land from someone?

Never seems to be a problem for the travelers.

Pitch your tent/caravan, live there for a few weeks, get moved on, repeat process.

DervProf

chewmylegoff wrote: »

You know, you're right after all. Let's write another list shall we:

List of things whose cost is set by market forces

1. Rent

ahhhhh !!!!!!

You won't hear these things from most sensible, everyday folk.....

1. "Good, Electricity is going up in price".

2. "Hurray, Bread is going up in price".

3. "Fantastic, rent is going up in price."

Well you might, from people who have vested interests in those items.

And I doubt that the shareholders in energy companies, or food manufacturers visit internet forums to celebrate their personal gains - they'd be a bit strange if they did.

Generali

DervProf wrote: »

And I doubt that the shareholders in energy companies, or food manufacturers visit internet forums to celebrate their personal gains - they'd be a bit strange if they did.

People regularly post on share bulletin boards about increased dividends which can be a result of higher prices, lower costs due to people losing their jobs and other not so great things.

ruggedtoast

To be fair to McTavish, which isnt something I like to make a habit of, he didnt actually gloat in his post;just reported a news story.

julieq

No VAT on rent either, so that is a big increase. It's not about greed, there is no moral aspect to this, it's simply what happens if you have fewer homes created than households and you suppress demand for owner occupation via mortgage rationing. The demand has to go to the alternative if something is essential, you increase competition and prices rise.

And in turn it will raise the value of houses, because yield just went up too. Not by enormous amounts, but it will have an effect.

There was a very funny thread on HPC about BTL a few days ago. Someone was asking why yield is attractive on leveraged BTL when they could only see 3 or 4% in their area based on purchase price to rental. There was a lot of sage nodding of heads and saying the sums don't add up. What they missed was that rents go up and that increase compounds exponentially, and borrowing remains at a nominal value, so that yield increases during ownership of a house proportionally. Classic straight line thinking.

That's the problem with rent: it increases. There are many potential first time buyers who could easily afford mortgage repayments but who are being removed from the market by high deposit requirements. Meanwhile prices aren't reducing nominally and most likely will start to rise strongly next year as deposits start to arrive past the magic barrier. That's the scandal really: a misguided moral panic about UK mortgage lending has condemned quite a number of young people to perpetual rental.

julieq

DervProf wrote: »

You won't hear these things from most sensible, everyday folk.....

1. "Good, Electricity is going up in price".

2. "Hurray, Bread is going up in price".

3. "Fantastic, rent is going up in price."

Well you might, from people who have vested interests in those items.

And I doubt that the shareholders in energy companies, or food manufacturers visit internet forums to celebrate their personal gains - they'd be a bit strange if they did.

You're quite right. The thing is that in the UK we've de facto moved to a property backed currency, because it's the security for a very large proportion of lending. This is where it's fascinating to compare gold with housing, and attitudes to it. Housing has more practical value than gold for most people, it's therefore a better store of wealth. Yet for some reason gold is viewed as intrinsically valuable - that's for historical and cultural reasons probably, and houses aren't.

So given the economy is backed by the value of housing stock to a large degree, it's as sensible to wish for house price falls as it would be for gold price crashes if we had a gold standard.

I don't think many people here, Hamish included probably, want rampant HPI incidentally. Big falls are damaging economically, they cause serious knock on effects on employment as we've seen. Stagnation is fine, light HPI is probably better, but what we'll actually see if we don't build more homes is more above inflation HPI over the next 10 years or so.

chucknorris

julieq wrote: »

There was a very funny thread on HPC about BTL a few days ago. Someone was asking why yield is attractive on leveraged BTL when they could only see 3 or 4% in their area based on purchase price to rental. There was a lot of sage nodding of heads and saying the sums don't add up. What they missed was that rents go up and that increase compounds exponentially, and borrowing remains at a nominal value, so that yield increases during ownership of a house proportionally. Classic straight line thinking.

.

I've had to explain that a few times on here and emphasise, it's not about the year one yield.

Some bear's have even mocked the 'it's a long term investment' phrase, but that's what it's all about, rents rising over time and producing a very good yield on the inital investment (which in reality is the deposit and other monies invested rather than the market value of the property).