Independent: What's really happening to rents?

Jason74

mayonnaise wrote: »

HTB 1 increases supply of new builds by increasing effective demand for new builds.

HTB 1 has been shown to have a negative effect on new build inflation.

http://www.mortgagestrategy.co.uk/news-and-features/sectors/products/products-news/help-to-buy-1-slows-new-build-price-inflation/2008498.article

HTB2 is another matter, agreed.

While the issue of new build inflation is not as clear cut as you suggest (as it is quite likely that the provision of HTB1 has resulted in a greater propootion of new build properties being at the cheaper end of the maket), it's hard to argue with the idea that HTB1 has provided a much needed supply boost. As you say, HTB2 is another matter entirely.

As such it's possible to see HTB1 as being a great idea, while being against HTB2. That's certainly my position, and while it's not for me to speak for Graham, I always got the impression that it was his too. Don't want to turn this into an HTB thread though, we've done that to death elsewhere.

theEnd

Graham_Devon wrote: »

Hamish, you have written so many threads concerning these "housing shortage deniers".

Who are they?

It seems everyone on this board would welcome more housing.

I'm a denier.

No harm building more houses, but the main reason for the house price increases was the huge increase in credit availability and the subsequent inflation of the money supply.

Rents, which are more pegged to wages have not moved in the same way. In my own personal experience (SW London), they hardly moved in nominal terms over the 10 years of the major HPI.

Graham_Devon

Jason74 wrote: »

As such it's possible to see HTB1 as being a great idea, while being against HTB2. That's certainly my position, and while it's not for me to speak for Graham, I always got the impression that it was his too. Don't want to turn this into an HTB thread though, we've done that to death elsewhere.

You would be correct. I assume you have this impression because that's what I've said many times!! Not that I have said HTB1 was a great idea mind it's just pushed up new build prices, but I don't take too much issue with it. HTB2 on the other hand....

robmatic

Generali wrote: »

There is clearly something strange going on: an index of existing rents shouldn't continue to diverge with new rents as it becomes ever more profitable and thus tempting to kick out an existing tenant to put in a new one.

I'm tempted to say that one or other has been badly done in some way.

I would imagine that existing rents are stickier than you suggest.

I have a tenant and I wouldn't be in a hurry to kick him out for a new tenant, even if this would be rational, because

A) It's a bit of a ****ish thing to do
Installing a new tenant would be a relative ball-ache and would incur costs that would take time to recover

When the tenancy comes to a natural end though, I would absolutely be looking to charge the highest rent that the market would bear.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Not that I have said HTB1 was a great idea mind it's just pushed up new build prices,.

And new housing starts are up 34% in the last year as well.....

the_flying_pig

robmatic wrote: »

I would imagine that existing rents are stickier than you suggest.

I have a tenant and I wouldn't be in a hurry to kick him out for a new tenant, even if this would be rational, because

A) It's a bit of a ****ish thing to do
Installing a new tenant would be a relative ball-ache and would incur costs that would take time to recover

When the tenancy comes to a natural end though, I would absolutely be looking to charge the highest rent that the market would bear.

yeah, i mean, a way in which the 'new tenancies' average is problematic is that it new tenancies seem to me fairly likely to be kinda correlated with higher than average [the average void period is according to google 3 weeks per year] void periods, late payments, & whatnot, making it a little bit of a tricky thing to rely on.

this said i suppose the 'overall average' figures are no doubt contaminated a little bit by having 100k or so [i.e. not all that many] regulated tenancies in them.

it'd also be quite interesting to see an index that stripped out HB claimants.

etc.

HAMISH_MCTAVISH

robmatic wrote: »

I would imagine that existing rents are stickier than you suggest.

Not only that but new tenancies are a small percentage of the market, so will always be vastly diluted by existing ones in the ONS data.

Generali

robmatic wrote: »

I would imagine that existing rents are stickier than you suggest.

I have a tenant and I wouldn't be in a hurry to kick him out for a new tenant, even if this would be rational, because

A) It's a bit of a ****ish thing to do
Installing a new tenant would be a relative ball-ache and would incur costs that would take time to recover

When the tenancy comes to a natural end though, I would absolutely be looking to charge the highest rent that the market would bear.

Maybe. I assume there would be a point at which you would raise the rent though.