Rents to soar again in 2012...

geneer

HAMISH_MCTAVISH wrote: »

Which of course is utterly meaningless.

From 2008 to 2009 rents fell with the recession and wider economic collapse.

We all know that.

However in 2010 and 2011 rents have risen significantly faster than wages, and at about the same rate as general inflation, rising nearly 10% in just 2 years.

Last year rents rose nearly three times faster than wage inflation.

And dragging up 4 year old data to try and make the picture look better doesn't change that fact one little bit.;)

Its quite funny, isn't it, when you see Hamish frapping on about sky rocketing rents, and you realises he's only talking about a few quid a month. :rotfl:

chewmylegoff

HAMISH_MCTAVISH wrote: »

Which of course is utterly meaningless.

From 2008 to 2009 rents fell with the recession and wider economic collapse.

We all know that.

However in 2010 and 2011 rents have risen significantly faster than wages, and at about the same rate as general inflation, rising nearly 10% in just 2 years.

Last year rents rose nearly three times faster than wage inflation.

And dragging up 4 year old data to try and make the picture look better doesn't change that fact one little bit.;)

It's meaningless if you are only interested in the nominal increase in rents in the last 2 years, in order to persuade people to agree with you that rents are soaring.

Incidentally I looked at local rental prices last night and seems to me that properties round my way are about the same as they were in early 2009. Either I have been massively overpaying for 2 years or Richmond upon Thames is immune from the soaring rents.

chewmylegoff

IveSeenTheLight wrote: »

So what your saying is rents has fallen in relation to the price of cheese etc.

I would ask you to consider the profit the LL is making given mortgage interest costs have reduced.

It means that the profit per rental property has actually "soared" when compard to inflation

I don't really mind what profit the landlord is making to be honest it doesn't make any difference to me and if they can make a good return on their capital then good luck to them. All that matters is how much it costs me.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Which of course is utterly meaningless.

From 2008 to 2009 rents fell with the recession and wider economic collapse.

We all know that.

However in 2010 and 2011 rents have risen significantly faster than wages, and at about the same rate as general inflation, rising nearly 10% in just 2 years.

Last year rents rose nearly three times faster than wage inflation.

And dragging up 4 year old data to try and make the picture look better doesn't change that fact one little bit.;)

You seem to be suggesting that rents increasing less than inflation is meaningless.

Then go on to make your case using real terms rent increases (rent vs wages)?

IveSeenTheLight

chewmylegoff wrote: »

I don't really mind what profit the landlord is making to be honest it doesn't make any difference to me and if they can make a good return on their capital then good luck to them. All that matters is how much it costs me.

It can make quite a bit of difference as it may mean you landlord has not needed to increase rents as his profits are already increasing.

I currently lease out two properties.

One has been leased to the same family for 5 years now and I have not increased their rents in all that time.
they are good tenats, look after the property and I am happy with the profits on the property.

The second property has seen a turnover in tenants every year or two.
I increase the rents between tenants to almost keep up with the market rate. It's still a very good rent for tenants and ensures that I have 0 voids.

So you can see on an individual basis, you could have one proprty that has 0 increases, whilst others increase in line with the market.

The average obviously in between and lends to the arguments that rents are falling in real terms by some who do not consider that the LL's profits (and that's what they're in business for) is increasing without the need to up income as expenditure is reduced.

chewmylegoff

IveSeenTheLight wrote: »

It can make quite a bit of difference as it may mean you landlord has not needed to increase rents as his profits are already increasing.

I currently lease out two properties.

One has been leased to the same family for 5 years now and I have not increased their rents in all that time.
they are good tenats, look after the property and I am happy with the profits on the property.

The second property has seen a turnover in tenants every year or two.
I increase the rents between tenants to almost keep up with the market rate. It's still a very good rent for tenants and ensures that I have 0 voids.

So you can see on an individual basis, you could have one proprty that has 0 increases, whilst others increase in line with the market.

The average obviously in between and lends to the arguments that rents are falling in real terms by some who do not consider that the LL's profits (and that's what they're in business for) is increasing without the need to up income as expenditure is reduced.

this is all very well, but if you decided you were not making enough profit, and tried to rent your property for 20% above the market value, it wouldn't work would it?

market rents are not decided by landlords deciding how much their profit margin should be this month, they are decided by a balance of supply and demand. landlords requiring a certain return might affect supply, but it is not the ultimate determinant.

also, it is only natural that a landlord will look at his return on capital, whereas a tenant only be concerned about the cost of rent relative to everything else.

finally, i'm not sure where your final line comes from. the average increases in rent from 2008 to present are what they are.

Graham_Devon

IveSeenTheLight wrote: »

The average obviously in between and lends to the arguments that rents are falling in real terms by some who do not consider that the LL's profits (and that's what they're in business for) is increasing without the need to up income as expenditure is reduced.

Sorry, but what has the landlords profits got to do with anything?

If a loaf of bread falls by 5p, it falls by 5p. As a buyer, my bread costs have fallen by 5p.

If Hovis are making an extra 7p per loaf, it doesn't mean that bread isn't actually falling in real terms.

Rents ARE falling in real terms, regardless of how you try to dress this one up, with strange analogies such as the above. Granted, there are other things falling harder in real terms and not many things increasing more than inflation apart from a select few shares.

IveSeenTheLight

Graham_Devon wrote: »

Sorry, but what has the landlords profits got to do with anything?

If a loaf of bread falls by 5p, it falls by 5p. As a buyer, my bread costs have fallen by 5p.

If Hovis are making an extra 7p per loaf, it doesn't mean that bread isn't actually falling in real terms.

Rents ARE falling in real terms, regardless of how you try to dress this one up, with strange analogies such as the above. Granted, there are other things falling harder in real terms and not many things increasing more than inflation apart from a select few shares.

Yes Graham,

I've agreed before that rents may be falling in "real terms", however I simply justified that by saying that it's not affecting the BTL businesses as many will have seen their outgoings reduce by much more.

On one of my properties, I was making circa £500 pcm profit in 2007.
I've not increased the rents, thus the rents are falling in real terms.
However my mortgage costs are significantly lower, meaning I'm now getting approx £1000 PCM profit on that property.

Potnetially, if rates had not reduced, you might have seen rent inflation being higher.
As it is, many landlords are benefitting far more now than they were at "peak" without the hassle of re-negotiating.

IveSeenTheLight

chewmylegoff wrote: »

this is all very well, but if you decided you were not making enough profit, and tried to rent your property for 20% above the market value, it wouldn't work would it?

market rents are not decided by landlords deciding how much their profit margin should be this month, they are decided by a balance of supply and demand. landlords requiring a certain return might affect supply, but it is not the ultimate determinant.

also, it is only natural that a landlord will look at his return on capital, whereas a tenant only be concerned about the cost of rent relative to everything else.

finally, i'm not sure where your final line comes from. the average increases in rent from 2008 to present are what they are.

I can accept most of this, however I wonder what would be the effect on the market rate if mortgage rates had increased instead of decreased.

Would we have seen higher rent inflation as we have in the cost of everything else?

chewmylegoff

IveSeenTheLight wrote: »

I can accept most of this, however I wonder what would be the effect on the market rate if mortgage rates had increased instead of decreased.

Would we have seen higher rent inflation as we have in the cost of everything else?

possibily, although its very difficult to know, as if we had had higher interest rates the whole macro-economic landscape may have been different.