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  • FIRST POST
    • Eternal1
    • By Eternal1 4th Jul 18, 7:23 PM
    • 9Posts
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    Eternal1
    How much should the rent be for a given house price?
    • #1
    • 4th Jul 18, 7:23 PM
    How much should the rent be for a given house price? 4th Jul 18 at 7:23 PM
    If a house costs 250,000 to buy, what would you expect the rent to be if you could rent it?

    What about a 1million house etc? What is the average rent to buy price for houses and flats? Is it based on an average mortgage period of 25 years?

    So a property which costs 2,500 a month should cost about 750,000 to buy?
Page 1
    • sal_III
    • By sal_III 4th Jul 18, 7:30 PM
    • 263 Posts
    • 233 Thanks
    sal_III
    • #2
    • 4th Jul 18, 7:30 PM
    • #2
    • 4th Jul 18, 7:30 PM
    The average is useless figure without details like location, size, state of the property.

    The rent price is based on market conditions. Not on property prices or mortgage rates.
    • SG27
    • By SG27 4th Jul 18, 7:31 PM
    • 2,265 Posts
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    SG27
    • #3
    • 4th Jul 18, 7:31 PM
    • #3
    • 4th Jul 18, 7:31 PM
    It will obviously vary quite widely by location, but a rough estimate is 4% gross yield so a 250,000 house would be 10,000 per year or 830 per month.
    • Eternal1
    • By Eternal1 4th Jul 18, 7:42 PM
    • 9 Posts
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    Eternal1
    • #4
    • 4th Jul 18, 7:42 PM
    • #4
    • 4th Jul 18, 7:42 PM
    It will obviously vary quite widely by location, but a rough estimate is 4% gross yield so a 250,000 house would be 10,000 per year or 830 per month.
    Originally posted by SG27
    Is the 4% gross yield for most of the UK or could you expect 6% or 8% in places like London or Central London?
    • 00ec25
    • By 00ec25 4th Jul 18, 7:46 PM
    • 6,632 Posts
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    00ec25
    • #5
    • 4th Jul 18, 7:46 PM
    • #5
    • 4th Jul 18, 7:46 PM
    Is the 4% gross yield for most of the UK or could you expect 6% or 8% in places like London or Central London?
    Originally posted by Eternal1
    what is your background and why are you asking

    if you seriously think that a single formula will give an "average" for the whole UK that has any meaning whatsoever you are very mistaken.

    Are you asking from naivety or because you have read an article and think you know?
    • theartfullodger
    • By theartfullodger 4th Jul 18, 7:48 PM
    • 9,620 Posts
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    theartfullodger
    • #6
    • 4th Jul 18, 7:48 PM
    • #6
    • 4th Jul 18, 7:48 PM
    897:53/month - approx estimate, based on ARLA data & gov.uk trends. Perhaps a little less for an excellent tenant.
    Last edited by theartfullodger; 04-07-2018 at 7:50 PM.
    • sal_III
    • By sal_III 4th Jul 18, 7:54 PM
    • 263 Posts
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    sal_III
    • #7
    • 4th Jul 18, 7:54 PM
    • #7
    • 4th Jul 18, 7:54 PM
    Is the 4% gross yield for most of the UK or could you expect 6% or 8% in places like London or Central London?
    Originally posted by Eternal1
    If anything the % is likely lower for London. The prices are absurd, while people that rent can only afford that much.
    • Eternal1
    • By Eternal1 4th Jul 18, 8:15 PM
    • 9 Posts
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    Eternal1
    • #8
    • 4th Jul 18, 8:15 PM
    • #8
    • 4th Jul 18, 8:15 PM
    what is your background and why are you asking

    if you seriously think that a single formula will give an "average" for the whole UK that has any meaning whatsoever you are very mistaken.

    Are you asking from naivety or because you have read an article and think you know?
    Originally posted by 00ec25
    I believe the question marks in my posts make it pretty obvious I'm asking and not asserting. So yes, I'm asking out of naivety.

    I was just asking if there was some rough ratio of rent to buy price. For example if a house costs 1million to buy obviously the rent isn't going to be 1,000 a month... Likewise a property that costs 250,000 isn't going to cost 5,000 a month.

    I hope you understand what I'm trying to say.
    • bowlhead99
    • By bowlhead99 4th Jul 18, 8:27 PM
    • 8,063 Posts
    • 14,684 Thanks
    bowlhead99
    • #9
    • 4th Jul 18, 8:27 PM
    • #9
    • 4th Jul 18, 8:27 PM
    If anything the % is likely lower for London. The prices are absurd, while people that rent can only afford that much.
    Originally posted by sal_III
    Yes the yields are pretty low in a lot of parts of London as the affordability of renters hasn't gone up to match what buyers can currently afford with the interest rates having been on the floor for the last howevermany years.

    In my development you may have to pay 450-500k for a 2-bed (the better ones can be quite a bit more than that), but people can and do afford that (especially if they have some equity from moving up from another place that they've owned elsewhere in London). However the renters for that sort of a place don't have more than 20k a year to blow on rent, as that's 33k of gross salary before they pay their 40% tax on it, and it's not super luxury prime central London. So a headline figure of 20k ish rent (400pw) might be about 4% on a 500k flat.

    However, the landlord in these sort of developments might be paying 3k a year in service charges so he only nets 17k from the 20k rent bill (taking the yield down to 3.4%)... and then if he has an agent managing it he's down to 3%... and assuming there is ongoing maintenance and empty periods etc he won't be making as much as 3% on it.

    One in my building that's up for rent at the moment would probably sell for 450k+ and the landlord's agent started marketing it back in Feb for a pretty ambitious 2000 a month rent; but now four months later it's still empty so they've now dropped the advert to 1700pm (similar to the 20k/yr level mentioned before) and whoever takes it will probably haggle that down a little.
    • Slithery
    • By Slithery 4th Jul 18, 8:31 PM
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    Slithery
    Somewhere between 1% and 20%.
    • 00ec25
    • By 00ec25 4th Jul 18, 8:49 PM
    • 6,632 Posts
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    00ec25
    I believe the question marks in my posts make it pretty obvious I'm asking and not asserting. So yes, I'm asking out of naivety.
    Originally posted by Eternal1
    which does not answer the question - what is your background and why do you want to know?
    Before wasting time explaining basic economic theory, market forces, what is "yield", how do you calculate it, and how to interpret it, it would be good to know what you do and don't already understand or have read. Otherwise this thread is just another load of hot air.

    I was just asking if there was some rough ratio of rent to buy price. For example if a house costs 1million to buy obviously the rent isn't going to be 1,000 a month... Likewise a property that costs 250,000 isn't going to cost 5,000 a month.

    I hope you understand what I'm trying to say.
    Originally posted by Eternal1
    I do - the answer is there isn't one, therefore, without accounting for a host of variables, these are 2 perfect answers:

    897:53/month - approx estimate, based on ARLA data & gov.uk trends. Perhaps a little less for an excellent tenant
    Somewhere between 1% and 20%.
    given your question a year ago about interest I'm guessing school's out for the holidays
    Last edited by 00ec25; 04-07-2018 at 8:56 PM.
    • Eternal1
    • By Eternal1 4th Jul 18, 9:00 PM
    • 9 Posts
    • 3 Thanks
    Eternal1
    which does not answer the question - what is your background and why do you want to know?
    Originally posted by 00ec25
    What's it to you? It's none of your business why I'm asking the question.

    Before wasting time explaining basic economic theory, market forces, what is "yield", how do you calculate it, and how to interpret it, it would be good to know what you do and don't already understand or have read. Otherwise this thread is just another load of hot air.

    I do - the answer is there isn't one, therefore, without accounting for a host of variables, these are 2 perfect answers:




    given your question a year ago about interest I'm guessing school's out for the holidays
    Originally posted by 00ec25
    I'm not here for a crash course on economics mate, if I'm wasting your time then don't reply. Besides others have posted what they feel is a rough average.

    Cheers.
    • G_M
    • By G_M 4th Jul 18, 9:04 PM
    • 44,706 Posts
    • 53,159 Thanks
    G_M
    What's it to you? It's none of your business why I'm asking the question.

    It IS our business because YOU are asking US to help you.

    I'm not here for a crash course on economics mate, if I'm wasting your time then don't reply. Besides others have posted what they feel is a rough average.
    Originally posted by Eternal1
    If you want help or advice, it is politic to be friendly, not rude.


    It also makes sense to provide background to your question (ideally from the start, but if not, then in response to subsequent posts).


    'nuf said - I'm off!
    • Eternal1
    • By Eternal1 4th Jul 18, 9:25 PM
    • 9 Posts
    • 3 Thanks
    Eternal1
    If you want help or advice, it is politic to be friendly, not rude.


    It also makes sense to provide background to your question (ideally from the start, but if not, then in response to subsequent posts).


    'nuf said - I'm off!
    Originally posted by G_M
    If you want help or advice, it is politic to be friendly, not rude.


    It also makes sense to provide background to your question (ideally from the start, but if not, then in response to subsequent posts).


    'nuf said - I'm off!
    Originally posted by G_M

    Background
    I was born and raised in Chelmsford, I'm 26 and have 3 siblings. My favourite subjects at school were ICT and Design Technology but I never really saw myself becoming a builder or anything of that nature.

    I did 3 A-levels, ICT, English and mathematics but I ended up changing mathematics for history, never really been great at maths. I got my first job when I was 16 working on the weekends as a labourer and hated every second of it, that was when I realised that I wanted an office based job. After I finished my A-Levels I went to uni and studied computer science, didn't do too well and ended up with a 2:2 but luckily I was able to find an entry level programming job pretty quickly.

    I have 23,000 in savings which is invested in the stock market and a little bit of cryptocurrency and I don't have much investment experience, I just throw some money into the Vanguard LS every now and then. I currently rent a 1 bedroom flat for 700 a month which isn't too bad because the decor is nice and it's pretty close to where I work.

    I don't drive at the moment but I'm looking at getting my licence in the next year or so, just so its easier getting around.

    My hobbies are pretty average, I enjoy football, going out with friends and gaming. I'm currently in a relationship.

    Reason for asking the question
    Curiosity.

    Now that you have this background information and I've provided a reason for my question, I hope this allows you to provide me with a more detailed and informative answer that you couldn't provide previously.
    Last edited by Eternal1; 04-07-2018 at 9:31 PM.
    • G_M
    • By G_M 4th Jul 18, 9:27 PM
    • 44,706 Posts
    • 53,159 Thanks
    G_M
    : rotfl:
    • sal_III
    • By sal_III 4th Jul 18, 9:29 PM
    • 263 Posts
    • 233 Thanks
    sal_III
    I believe the question marks in my posts make it pretty obvious I'm asking and not asserting. So yes, I'm asking out of naivety.

    I was just asking if there was some rough ratio of rent to buy price. For example if a house costs 1million to buy obviously the rent isn't going to be 1,000 a month... Likewise a property that costs 250,000 isn't going to cost 5,000 a month.

    I hope you understand what I'm trying to say.
    Originally posted by Eternal1
    A designer home in the sticks with a sizeable land plot might cost 1mil, but the demand for such property to rent is low, so you might struggle getting more than 2k.

    On the other hand you can get a 4bed house for 200k in say Norwich and rent it out to students as HMO for 4x400
    • theartfullodger
    • By theartfullodger 4th Jul 18, 9:33 PM
    • 9,620 Posts
    • 12,953 Thanks
    theartfullodger
    Take up drink, get a relationship going, spend some money and life a little.... ( IMHO....)



    Best wishes to all
    • lookstraightahead
    • By lookstraightahead 4th Jul 18, 9:52 PM
    • 279 Posts
    • 286 Thanks
    lookstraightahead
    I definitely look at the value of a house when renting. I expect a landlord to cover their mortgage but if I think they are in fairytale land I don't rent from a greedy landlord. In my village properties stay vacant for months from wannabe landlords and they obviously lose out. But that's just me - there is obviously supply and demand to consider
    • eddddy
    • By eddddy 4th Jul 18, 10:58 PM
    • 6,595 Posts
    • 6,466 Thanks
    eddddy
    If a house costs 250,000 to buy, what would you expect the rent to be if you could rent it?

    What about a 1million house etc? What is the average rent to buy price for houses and flats? Is it based on an average mortgage period of 25 years?

    So a property which costs 2,500 a month should cost about 750,000 to buy?
    Originally posted by Eternal1
    It varies.

    Some properties make good rental properties, so will achieve a higher yield (or rate of return).

    Other properties don't make good rental properties, so achieve a lower yield.

    Properties in some areas achieve a high yield, but low capital growth (e.g. currently in some northern towns)

    Properties in other areas achieve a low yield, but high capital growth (e.g. currently in many parts of London)


    Part of the job of being a landlord is to decide your investment goals, and find the best properties (and locations) to achieve those goals.
    • getmore4less
    • By getmore4less 4th Jul 18, 11:02 PM
    • 32,390 Posts
    • 19,460 Thanks
    getmore4less
    Gross yield 10% was the target to give a reasonable ROI after costs for the rental business.

    With the low cost of borrowing and people prepared to make a loss on the rental business hoping long term capital appreciation will eventually make the profit has dropped the gross yields.
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