Forthcoming increases in rents will ...

padington

W

mwpt wrote: »

No, it's the article that is myopic. Here are some examples.



He then goes on to talk about buying in Camden, as if that was the poorest of the poor. Like none of the other even poorer boroughs existed back then. Then he talks about multiples. Stats don't lie Simon, average multiples are what, 10 or 11 times average earnings today, the highest they've ever been. I'm sure his anecdote is great for trying to prove his point though.

And another:


I think we can Simon. I would rather have bought at low multiples and high rates than the other way round. When you have high rates and low multiples, you can make massive dents into the mortgage and pay it off far more quickly than you can when the price is enormous but interest rates are low.

So let's examine his claim. I'm going to make up some figures but the maths is the same regardless of the figures I pick for salary.

He claims mortgage was 40% of income (not sure if he means net or gross but I'll just ignore tax for this purpose). If I make up a figure of £6k pa salary, his income is £500 pm, of which 40% is £200. At 17% repayments, 25 year mortgage that implies he borrowed £14k with deposit of 15% = total house cost of £16500. Which is less than three times his salary. Not the more than four times he claims. And as his salary rose, even small amounts, it made a massive difference in his ability to pay down that mortgage very quickly because his salary was a high proportion of the total debt. A 3% rise in salary was a big chunk extra of his total housing cost.

So what does that look like today at rates of 2%? We keep everything else the same (salary, etc). The same flat would cost £56500, you'd need a much larger deposit (£8k) which would take you far longer to save, and your ability to pay off large chunks quickly would be very much diminished. And, the property would now be 9.4 times earnings. About what the stats tell us now. And a 3% rise in salary, is a small chunk of the total housing cost.

Simon is a jerk.

Taxing landlords is only going to rise rents though, that is indisputable. However I guess Osborn is making a country where there will be more owner occupiers and will be helping them enjoy a lodger bonus also which is nice. Very handy actually especially when rents will be so fricking high.

Woe betide anyone who will fail to sail on the owner occupiers Noah's arc though. It's not going to be pretty.

chucknorris

Crashy_Time wrote: »

Nobody mentioned your properties?

I was obviously addressing the issue of why some landlords rent below the market rent, it isn't always due to desperation.

mwpt

padington wrote: »

Taxing landlords is only going to rise rents though, that is indisputable.

I've disputed it. Rents have risen every year since I've been in London, in the absence of any extra taxes on landlords and in the presence of massive cuts to their costs in the form of sinking rates. So rents just always seem to go up, which is what you'd expect in a supply/demand market. In order for these changes to make a huge difference to already increasing rents we'd need to see that highly leveraged landlords make up a significant enough proportion of private rental properties. I don't know those stats so I can't say I agree that these changes will definitely push up rents any more than they would have otherwise risen.

Crashy_Time

chucknorris wrote: »

I was obviously addressing the issue of why some landlords rent below the market rent, it isn't always due to desperation.

IME the rent has nothing to do with how people behave. If they are clowns it is up to landlord/neighbours/police/council to tell them to leave.

Crashy_Time

mwpt wrote: »

I've disputed it. Rents have risen every year since I've been in London, in the absence of any extra taxes on landlords and in the presence of massive cuts to their costs in the form of sinking rates. So rents just always seem to go up, which is what you'd expect in a supply/demand market. In order for these changes to make a huge difference to already increasing rents we'd need to see that highly leveraged landlords make up a significant enough proportion of private rental properties. I don't know those stats so I can't say I agree that these changes will definitely push up rents any more than they would have otherwise risen.

The idea of the new taxes is to make some landlords exit the market, not faff about with their rent.

chucknorris

Crashy_Time wrote: »

IME the rent has nothing to do with how people behave. If they are clowns it is up to landlord/neighbours/police/council to tell them to leave.

I think perhaps you are missing my point, I don't want to end up with 'clowns' that I have to evict. I want to have a wide choice of tenant, so I can choose a good tenant, so I don't have to evict anyone. I want tenants that also want hopefully a long term good landlord tenant relationship. Most of my tenants stay for quite a few years.

cells

mwpt wrote: »

I've disputed it. Rents have risen every year since I've been in London, in the absence of any extra taxes on landlords and in the presence of massive cuts to their costs in the form of sinking rates. So rents just always seem to go up, which is what you'd expect in a supply/demand market. In order for these changes to make a huge difference to already increasing rents we'd need to see that highly leveraged landlords make up a significant enough proportion of private rental properties. I don't know those stats so I can't say I agree that these changes will definitely push up rents any more than they would have otherwise risen.

renters set rents by bidding against each other, not landlords

so will renters in say 5 years time be willing to bid more than they otherwise would had the tax changes not happened?

mwpt

cells wrote: »

renters set rents by bidding against each other, not landlords

so will renters in say 5 years time be willing to bid more than they otherwise would had the tax changes not happened?

I don't know. I can't predict a chaotic system.

padington

cells wrote: »

renters set rents by bidding against each other, not landlords

So when a landlord sets a rent to advertise he or she didn't really do that, the renters did ?

... and when cigarette companies set the prices of cigarettes, they didn't really do that, the smokers did ?

... and when the petrol stations set the price of petrol, they didn't really do that, drivers did ?

... and when governments set the taxes they didn't really do this, tax payers did ?

... Or would it be truer to say the seller sets the price, which is tempered by the needs of the buyers, who in turn are tempered by the needs of other sellers ?

Jon_B_2

I see someone mentioned Bristol. Unfortunately now own a house, but to give you an idea - in North Bristol rents on 3 bed terraces have gone from around £650-700 in 2010 to around £950-1000 now.