Rents hit new high

Graham_Devon

But the pace of increase is slowing.

The cost of renting a home in England and Wales hit another new high in October although the pace of rent rises slowed, a survey has suggested.

LSL Property Services said that the "heat" had come out of the rental market as the quieter season for new tenants approached.
It said typical rent stood at £744 a month in October, up 0.4% on September.

Charity Shelter said that the increasing cost "piles on the pressure" for hard-pressed families.

"This news is yet more proof that life is becoming more difficult for renters. In a week when inflation figures revealed a tighter squeeze on family budgets, every rent rise piles on the pressure," said Campbell Robb, chief executive of Shelter.

"With the property ladder remaining out of reach for many, these figures are bad news for our growing population of reluctant renters."

The biggest increase are in London and the South East, with drops being seen in the Midlands and the North....mimicking house price data.

Does this suggest lower house prices woul see lower rents? I guess it's too early to tell, but certainly seems that way, something which provides polarised opposites of opinions.

the_flying_pig

Graham_Devon wrote: »

...Does this suggest lower house prices woul see lower rents? I guess it's too early to tell, but certainly seems that way, something which provides polarised opposites of opinions.

quite a complicated question. on balance i'd be inclined to say 'dunno'.

some of the stuff that influences the price of renting & buying is totally the same, the key one being total GDP, which reflects both how many people there are in the economy & how much money they earn on average. more GDP means more demand for both types of housing tenure - there's more people 'wanting' them, and more money available to enable people to satisfy those wants.

some of the stuff that only directly influences the demand for renting [e.g. housing benefit] also indirectly influences the demand for housebuying - higher rents means more returns to be made from landlording, means more demand for buying houses, which means higher prices...

some of the stuff that increases the demand for house buying only [e.g. lower interest rates, expectations of HPI] actually on the one hand puts downward pressure on rents, because it'll mean more rental properties popping onto the market, i.e. more supply... conversely 'mortgage rationing' reduces the demand [money available] for housebuying & then indirectly increases the demand for renting, because fewer people can buy...

but then on the other hand something that goes the opposite way is that renting & owning are substitutes - more [less] demand for house buying makes it more expensive [cheap], which makes renting more [less] attractive, which increases [reduces] the demand for it, which...

IveSeenTheLight

Graham_Devon wrote: »

Does this suggest lower house prices woul see lower rents? I guess it's too early to tell, but certainly seems that way, something which provides polarised opposites of opinions.

The house sale and rental markets, although opperating in teh same location, will be impacted by different markets in terms of the quantity of properties each have and the level of demand each have.

It may be that where there's an over supply of properties for sale, there is also an over supply of rental properties.

I wouldn;t take this article as a directly proportional link though.