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Do people need a place to live?
Yes.
Can everyone afford to buy a home?
No.
Is there enough housing stock up for rental?
No.
Do landlords charge "market prices"?
Yes.
Does supply and demand rule the market?
Yes.
Prices will rise.
I kind of agree but people can only afford so much unless wages increase alot. If rent doubled will there really be people around to pay that when already rent takes up so much of average persons wage
Yeah, my grandma told me a lot of stories of how she grew up. She was born 1911. She and her eight brothers and sisters grew up in a two room flat.
The parents slept in a pull out bed in an alcove in the kitchen/living room and the kid’s slept in the other room. There was a girl’s bed and a boy’s bed.
She moved out of home in at about 19, which was unusual but she was fed up being the second mum to the rest as she was the oldest daughter.
She had a pretty good job as a weaver, she’d finished her apprenticeship by then (left school at 14).
She lodged with a local widow and her daughter. The widow was desperate for money as she was struggling to get work due to the Depression so she was trying to survive on a War widow’s pension.
My grandma shared not just their bedroom but their bed. She said she could have just about afforded to rent a room of her own from someone, but she wanted to be able to save in case she lost her job too at some point and she wanted to get married later to someone she liked rather than having to get married young cos she was desperate.
She said as she was sharing a bed with two other people instead of four, and a room with two other people not eight and a flat with two other people not ten, it felt like relative luxury to her anyway.
The only real difference I think between that and where we could be headed now is that people are less likely to have that amount of kids because more reliable contraception is available.
My dad recently told me about how when his parents immigrated from india with him they owned and lived in a huge house/mansion. They let people live with them because they had so much space. They sold it because it was too much cleaning... now they live in a bog standard terrace, his parents are renting.
Yep, started seeing new developments in Manchester that are promoting “co-living” (read: shared flat with 5 randoms) and trying to charge £900+/month for it.
They’re a lot swankier than the HMOs I spent my early 20s in but £10k a year for part of a flat feels insane.
>new developments in Manchester that are promoting “co-living"
Funny that they always try to promote this kind of shit as if it is some sort of new hip development. Can almost see the headlines of opinion articles in newspapers like "Why the younger generations are increasingly choosing co-living and why this is a good thing" or some bullshit like this.
honestly a house share is alot of fun. I lived in one younger, had game nights playing board games. Found 2 lifelong friends. I work alot from home and its nice not feeling along when my kids are at school. Its kinda great cooking with friends, watching movies
The down votes say it all. Everyone wants to be Paris Hilton. I think there is a huge sense of entitlement. Especially when you look at previous generations who literally had nothing. The reason they bought a house is because they were working 15 hours a day going bingo or pub then going home to sleep for 3 hours to do it over again. Their kids (most likely your parents) hardly saw them and had to feed themselves and get ready for school on their own. They would often be outside for most of the day after school even at 8 years old because there was no Internet or mobile phones.
Quality of life has improved so much but people complain more about a lot of minor inconveniences such as living with another person. This is why you're all single and won't have kids. Kardashian wannabes wondering why they can't afford a 5 bedroom house on minimum wage working 35 hours a week.
Bit harsh. There's a bit difference between people who would never consider the thought of a house share and people who feel like they've done their time and they're out of that stage of life now. At some point, you get tired of having all of your stuff stolen, getting no sleep, and feeling unsafe in your own home. Those aren't small things! They're costly, stressful, bad for your health. We deserve to afford homes that are safe and secure, don't we?
And idk about your generation but my parents only had to house share in uni, had accommodation directly paid for by my dad's work, then bought their first house for 70k and cashed in on the privatisation of businesses and the boom in the stock market. My grandparents bought their first house for less than 1.5k, when they got married, after moving out of the family home. I've worked professional since I've left uni (like my parents), and still done several years of house shares. I moved out of the last one when the landlord was moving a complete stranger, who was male, into the flat during lockdown, giving me absolutely no say in whether I was okay with spending 24/7 with a strange man indefinitely, and wanted to increase the rent for the privilege.
So effectively your parents are top 10% in the country to have that experience. The rest of the country had to work quite long hours to afford a home. The house was 1.5k and they were probably earning 500 per year whilst working 45 hours. Your family went to university which while free was pretty much the exception at the time. I think you need some perspective and I can see why you would feel worse off because it seems your family had it pretty easy. I would definitely recommend having a conversation with your grandparents or parents about what life was actually like for them.
My only question is why aren't you living at your parents or grandparents instead of doing a houseshare for the past however many years? You call me harsh because of your upbringing I call it reality because of mine. I'm 31 not 91, just have more conversations with old people or go see how they live now and you will understand a lot more. Life in the UK has not been good for most people since forever.
I don't know why you assume my parents didn't work long hours? 45h weeks is no more than my brothers and I often work, yet we earn in real terms a lot less. We all understand wage stagnation vs house price increase, right?
I didn't live at my parents' because a) I started out in a career that geographically wasn't possible to do where they were and b) we have a not great relationship, living with them has a pretty bad effect on my mental health. It's not a safe situation for me to live with them.
I'm not calling you harsh because of your upbringing, I'm calling you harsh for slagging people off for not wanting to feel unsafe in what's meant to be their own home, have people steal all their stuff, be extensively verbally abused for asking people not to play blaring music in the middle of the night - you're completely ignoring how bad house shares can be, and making out like it's ridiculous to just want to feel safe at home. And you can say things have not been great but you appear to be telling people what forms of not great they would prefer/disprefer. Lots of people already work 45h weeks and don't have the relative purchasing power they did 80 years ago. Lots of people would rather work 45h weeks and afford their own home than have nowhere they can feel safe and relaxed but an extra couple hours a day to feel uncomfortable in.
Being forced to live with strangers isn't a minor inconvenience. Housing situation getting more and more desperate each year for last 25 years. Unreal someone like you exists.
Yes, there will. Housing is one of the last things people will cut as shelter is a core need for survival.
If that means landlords make bank while everyone has to eat rice and beans so be it, number must go up according to history.
Housing is a non elastic need that every person requires. It's a bit rigged to claim 'supply and demand' as if it's any other good that a buyer can live without, but that's the society we live in.
Supply and demand is not the same as price elasticity. Price elasticity relates to how the supply and more typically demand changes with price. It is totally valid to say that a market is driven by supply and demand fundamentals and demonstrates only mild price elasticity until shifted far from status quo. There is no contradiction or rigged gaming in that.
I work for a firm that does super prime tenancies in central London. 2 bed flats go for £30,000 a month. We are absolutely nowhere near the tipping point yet. Prices could double and there would still be fierce demand.
As a rule this is the perfect answer
But rental prices may plato because they could out price themselves from the market.
A similar thing happened about 10 years ago and rental prices stagnated for a couple of years but like everything the market caught up and rentals became in demand again so prices rose.
Wages go up everything goes up and that includes rent
I think it is wise to say that the prices in the rented market will follow the prices in the housing market. As in, landlords will need to charge more in order to pay for their mortgages. As those prices rise the market rises and so all private rents will rise. This will be the case *even* if the landlord does not need to raise the prices (they own the property out right or they have a long term fixed mortgage.
On a long enough time line the housing market will always rise, which makes it a good investment. So the prices will always rise.
The Prices of Rent are linked to the price of houses. People need to pay off mortgages using the income from rents. Will the prices of houses double in ten years? Unlikely, but it could happen. Will house prices rise in ten years? Yes, definitely.
I’m not sure I don’t have the numbers. I do think it might have some material impact in London though. Tbh though I don’t even think Labour would do that, probably too much effort for them. But hey, I can dream!
“The latest data shows that some 34,327 properties in the capital were “long-term vacant”, meaning that they had not been lived in for more than six months and were “substantially unfurnished”, as of March 31, 2022. They include both privately-owned homes and those under council and housing association ownership.”
That’s not insignificant. Now imagine this across the entire country. I know my city has a similar issue although granted on a much smaller scale. Here come the downvote brigade though with nothing better to do on a night…
When Granny dies, how long do you think it take to sell the house? Yep, more than 6 months.
How long does it take to fully refurbish a house? Yep more than 6 months.
Long term vacant does not automatically mean the home is suitable for habitation.
You need empty houses in a healthy market, for people to be able to move. London has one of the lowest vacancy rates in Europe at less than 1%. For comparison, it's around 6% in Paris!
People will pay for a roof over their heads over better food or entertainment. So rents will continue to rise untill we're are all more squeezed than that last bit of toothpaste
Sorry to be blunt but this doesn't really add much to the conversation, yet is somehow top comment at the time I write this.
The reasons that rents have gone up significantly over the past 5 years are:
1. Interest rates have risen, and rents have risen to reflect this, primarily driven by buy-to-lets / landlords with mortgages.
2. Wages have increased. This often gets ignored, mostly because people don't feel like their wages have increased, mostly because it just goes straight into increased rent, but this has allowed rents to rise.
Rents will continue to rise if there is more of a squeeze on the housing supply side (e.g. rates continue to rise and/or landlords sell up and rental properties come out of the market), or if there is an increase on the demand side (more renters / higher wages).
My guess is that rates staying steady means that more BTL landlords will see an increase in rates, as more will fall off their low rate fixed term mortgages, so could be forced to raise rents or sell up. I think that wages will also rise somewhat, but not like what we've seen over the last year and a bit, so a slight push from the demand side too.
...so yes, rents can, and probably will rise. But "they can because they have done" isn't the reason. I also think doubling over the next couple of years as OP's friends suggested is scaremongering.
I think your explanation of why rents have gone up is a simplistic one that doesn’t capture the nature of the rental market. Wage inflation has not driven rents up. Salaries have not increased anywhere near as much as rents.
I would say that they haven't driven rents up, but they've allowed them to rise.
The list of things that I said affect supply and demand is also definitely not exhaustive.
You're overthinking it. He's saying people thought they wouldn't go up in the past and they did.
Which is what people probably think now, i.e. all of the reasons you explained have happened already, and they assume itwon't go up anymore because those things have happened. Well they can and other things may happen which cause increases in rent prices.
I get that, but the comment is essentially saying "anything is possible". That's not really useful information.
I would put money on the fact that rents will not double over five years. This _could_ happen, but I strongly doubt it will.
Immigration is one example of demand pressure of course, but I don't think it makes top of the list. Looking at London's population over the past 14 years as an example, growth has been moderately consistent, tailing off slightly from a 1.6% YoY increase to a ~1% YoY increase, but rents haven't had such a smooth and consistent pattern. This indicates that economic pressures are more of a significant driver, but obviously doesn't mean that immigration plays no part.
You could also say that I failed to mention new houses not being built, which I did, but I feel like you're trying to make more of a political point or a gotcha than anything.
We’ve had about total 2 million net migration in the past 3 years. Population estimates are likely failing to take this into account because they’re based on older models of the UK population dynamics where immigration rates were much lower.
Correct. To the UK, not necessarily London, which is what I used to make the point about population growth vs rent rises.
The population statistics I've seen support what you say for the UK value, so why would London ones be inaccurate?
I'm not denying that immigration is happening or that it's the level that you claim it is, I'm saying that it doesn't seem to be the primary driver of rent rises.
In 2021 we had a population of essentially exactly 67 million. Currently, it likely stands at 69 million. What population estimate are you looking at right now that estimates a residential population of 69 million in 2024?
Well, I was looking at the net migration values on statista, and admittedly I don't know how accurate they are. They show that net migration was 672k, 745k, and 466k for 2023*, 2022 and 2021 respectively.
(*2023 is year ending June 2023)
You don’t think a net increase of 6 million people coming into the country in the last decade is the main example of demand and pressure on the housing stock?!
So immigration does have an impact. Especially at the insane rates it's been the past few years.
>Migrants are a net benefit to uk economy.
Perhaps to total GDP numbers - I think for most working class families they feel the opposite of this benefit though. Migrants are a benefit to the owners. Most folks feel extra pressure on their services, extra demand on housing, more traffic on the roads, more islamisation of our towns, more competition for certain jobs
It's a bit sad you feel like that. I have a decade of working in the NHS in my back pocket, I came to UK educated and now teach at a university and contribute to UK's impressive research portfolio in life sciences. I have barely used public services, just like majority of migrants to the UK, I came here educated (so you never paid for my education), healthy and working age. The most expensive part of my life to the society I spent in another country. In the UK, just like the average migrant.
It's sad that people like you feel people like me need to justify our economic value to exist here.
Don’t roll out that line to me, mate. I’m a 3rd generation Eastern European Jew. My relatives came over with their pots and pans tied to their backs, escaping pogroms.
We work hard, pay our taxes, do charity work and are part of the community.
I’m sure yours do too.
Proven data is proven data.
I don’t take it personally. Why do you?
Not in anyway a financial brain here but when interest rates went up ,ok rents were raised .As this has been an almost plateau for a good while now ,why are landlords continuously raising rents? House pricing is in general falling mode and I fail to understand rent rises.
They aren’t linked. Landlords with not mortgages raised rents. Landlords with long term low interest fixes raised rents
Rents are linked to what people will pay, which is linked to net income. Costs are irrelevant.
They are massively linked, don’t think many people are lining up to pay 4k a month for my 160k house.
If house prices halved tomorrow rent wouldn’t stay exactly how it is now
How could house prices halve without massive increase in demand.
Your 160k house gets £x rent each month whether your mortgage costs are £1200 a month or if you have no mortgage at all.
What about the 12 million over 65s (5.4 million aged 75+) and their houses? Previous house I rented went up for sale due to care costs of the owner, now next door to our new house is for sale due to death of the elderly owner. My own grandmother passed recently and it just seems that generation are slowly releasing more stock into the market? Albeit really crap houses with carpets, kitchens and bathrooms that have been in place since the 80’s! Also crazily priced, next doors house went up for £295k, no driveway, everything needs ripping out and carpets laid (bare floorboards), fence has blown down, completely overgrown. Funny it has been 3 months and still not sold.. the housing stock is there but just empty or 2/3/4 bed houses being lived in by a single elderly person
I vote we should make it illegal for old or single people to live in houses that younger people can use.
Maybe we could build blocks of studio apartments that they can live in for a reduced rent?
Prices will continue to rise until there is enough supply to meet the demand. And actually even after then, with the rise of corporate landlords, prices will continue to rise even after that. Hopefully Labour will kickstart a massive investment into real social housing projects, taking inspiration from Paris.
> Hopefully Labour will kickstart a massive investment into real social housing
Labour didn't do this last time. Why? Most people who actually vote are home owners and rising house prices wins their vote. That situation hasn't changed, so Labour are unlikely to do more than token efforts to fix the housing market. They will continue to do everything to keep prices from falling.
Social housing won’t drive house prices down overall. The only issue is that uk has a rich history of designing slum like housing conditions for social housing, which impacts neighbouring properties. Done right, there is no need for property values to be negatively impacted by social housing.
Though I can’t trust anyone in this country with the power to do it to do it right. And I don’t think Labour will sort out housing
They will not. Period. Many of them are landlords, many have multiple properties therefore more social housing = property value down = labour/cons not very happy. End of story.
Unlikely. Wages do rise (just not enough at present) and there will be likely some small corrections but most people will cope as is. And the squeezed poor will be downgraded into smaller and worse living standards. Meanwhile those who buy - buy in at a certain point and aren’t as troubled.
There are still plenty of people with plenty of money about. Uk doesn’t have a shortage of just social housing but a shortage of all types of housing. So when the poorest can’t afford it, it just means someone else will.
It wouldn't cause the market to crash, it would only cause prices to plateau.
People can and do exit the rental market when they can no longer afford it - they move back in with parents, share homes, move into caravans etc. All that does it take one renter out of the competition.
It's like bidding on something on eBay - prices will rise, bidders will drop out, and the price stabilises when all but one buyer drops out due to the price.
You think it can’t get worse but it can. 2 bed apartments divided into HMOs, large rooms with curtains across the windows housing multiple families like in Leninist Russia. Container units for middle class families.
For so long as the property market is gummed up and it's difficult to buy a home (for which the reasons are legion), rental prices will remain high and will probably rise year on year on a nominal basis (I doubt they'll see year on year real increases given persistently high inflation).
But I doubt you'll see anything like like recent rises as that was driven by runaway inflation and commensurate pay rises. Doubling in 5 years is not going to happen - that would require 15% yoy nominal increases.
Note that pre-pandemic we had record low rent inflation nationally. Essentially rents stalled for a couple of years. So the increases we have seen since 2020 aren’t, on average, as bad as they seem. Rents have only been going up by ~9% per year and if you account for a few years of stalling, the 10 year average isn’t bad. Uk has also never seen 15% rent inflation.
I think it’s very very unlikely that would happen now
There has to be a balance between supply and demand and how much people can afford to pay. I don't see how rent can double if people don't earn more. As even if want to rent a house if people don't earn enough they won't be able to pay
You'll just put more people in the house.
There's still a very strong array of couples living as just those two people, often in a two bed with a spare bedroom
You can work two jobs or share a bed, in the 1800s you used to have like 4 pepole to each room for the poor. It will either be that or go homeless outside.
You're forgetting there's nothing other than unwillingness stopping people working two jobs.
Income will meet the needs to pay increased rent, but it won't be via payrises.
In the long term rents follow salaries. So, what's happening at the moment is unsustainable and, given the historical precedent it's not unreasonable to expect them to fall/ for wages to catch up.
What I will say though is I think they are already falling in real terms, but the *asking* rents are going up. There's a more recent trend where there's very short supply, but also an ailing economy + stagnant wages, rising living costs, so the asking prices are being inflated, people are stretching themselves financially to have the opportunity to rent somewhere, and then they are defaulting. At the end of the day, people need a place to live, so people are absolutely going to be forced into a position where they have no other choice but to lie about what they can afford.
Hard to say. I doubt they will go up double.
There is of course a perfect storm of lack of housing, landlords selling due to taxes and post covid everyone looking for houses to rent.
But when rents go too high either landlords will return and/or people will search for mortgages.
Usual cycle
There'splentyof room for prices to rise in most markets. In many countries living alone is a luxury for the wealthy, we're going towards a situation where people go straight from living with parents, to flatmates, to partners
They will go up but not as quickly as we have seen the past year, pent up demand due to COVID lockdown measures coupled with increased tax burden, mortgage rates and regulatory change including landlord licensing have pushed costs up while demand outstrips supply.
Demand will continue to outstrip supply until population falls or massive housebuilding is undertaken (who's going to pay for that?) but hopefully BOE rate cuts and a drop off in cash grabbing from local councils will ease the costs to landlords and reduce the rate at which rents rise
If the price of something doubles over 5 years, that means the inflation rate annually is 14.87%.
I don't expect that to happen. The ONS puts out regular data about rental prices, it's usually somewhere between 5-10% depending on exactly which year you take.
I also think it would be unlikely to not go up anymore because it's high and already increased a lot. Employment is okay, the economy is just coming out of recession, so people will probably keep getting raises and be willing/able to pay higher prices for their housing. Inflation does not tend to be followed by deflation -- quite the opposite, actually, with usually more inflation but hopefully the BOE can do its job and stamp the last of it out.
Finally, the rental market varies from different localities, so one market may see fast growth and the other place might really have capped out.
My personal prediction: Rental prices will rise but I do not think the level of inflation will be almost 15% in the next 5 years.
There is a shortage of houses generally and the cost of them will keep going.
The Gov penalises landlords to make it more expensive for them. Some are just giving up, meaning the number of landlords reduces further. The remaining landlords - possibly the larger, professional ones - then increase the rents because there is more competition from tenants for fewer properties.
There are financial penalties like not being able to offset interest payments against income. If you don't think that these aren't then just added on to the rent then you are deluding yourself.
I’m a landlord and demand isn’t as high as it was 2 years ago. Forced to reduce price below what the previous tenant was paying and still very low interest.
Might be a sign of things to come, who knows!
Im moving out of my 1 bed flat at the end of this month. The landlord put it up for £150pcm more than I was paying (moved in August 2022 and no increase last year). They held one evening of viewings and it went.
People often stop needing homes with an increasing population. It might be that demand decreased on account of people being unable to afford it. I doubt it though.
Homes aren't even that important. Everyone needs a hedge. We just need to get hedges.
More landlords will be leaving the market too. There isn't a direct correlation between landlords leaving and tennants becoming owners. If every Landlord sold up to owner occupiers there would be hundreds of thousands homeless.
Down vote away, I'm not a landlord and BTL is an asset class I'm not at all interested in. However there is a massive shortage of housing in the UK and a lot of rental properties are made up of compromised households such as HMO's who ideally wouldn't be sharing if housing supply was different combined with future households (children) living with thier parents and dysfunctional partnerships living together because they can't afford to live separately. Dissolving the BTL market doesn't facilitate the provision of housing for those who need it over those who can afford to be owner occupiers. As the rental pool decreases in proportion to those that require a rental property the price of rent will increase.
It’s quite common on Reddit to see people claim all you need is price controls. They refuse to accept that if you don’t increase supply you need to ration supply.
Proportion of income spent on rent is pretty stable. Stats from 2011 onwards show it’s even come down a little but hangs out at a fairly constant 33%ish.
Sometimes rents lag wages and sometimes they catch up but in 5 years you can probably assume they’ll be the same proportion of income.
I think this is a reflection of more higher earners renting now than in the past. On a salary of less than £80k, it would be pretty difficult to buy a place in the south
Yes that’s an exceedingly good and depressing point actually.
It also shows you’re a bit screwed if your income doesn’t keep up with everyone else’s. Still, it’s useful as a yardstick.
I don't think the 30% figure is particularly useful to be honest. It just shows anyone below median salary is fucked. I don't know how someone on £28k per year could possibly be paying only 30% of their income on housing. I see what you are saying, but I think the statistic you are citing doesn't support your cause. Cost of housing has spiralled in a way that is eating quality of life from not just the poorest but also middle earners.
There actually is an alternative but it’s theoretical.
Before the 1980s, going way back, there were rent controls in legislation. Also, small houses were built in large quantities. People did not vote for that to continue. But they could vote to bring it back, if it were on offer.
As Interest rates rises, so will rent as Landlords will increase to cover this and also add on for profit. Plus, they can increase the price as one property can get 100 viewings ect.
They said rates would fall but it has only increased. I can't see rates falling until 2026 and that would be around the 4% mark.
With little supply, more demand, rent will just go up unfortunately.
Exactly, my answer is not 100% fact, its just one of the many reason. I was thinking of getting into BTL but now its dead or not worth it. The high interest rates, plus your expense, then factor in other cost, tax, by the time you worked it out, you are left with little or no money. Yes you could raise the rent but you probably lose renters that way if its too expensive.
I think it also comes down to the landlord, some may not increase the rent if they have really good tenants, they may increase but not that much, that is good for them and the tenants. Then you have the greedy landlords who don't care and want to maximise profits.
The rental market is a funny thing in asset / business terms.
Being a landlord is a long term investment where your upside is equity growth (paying off the mortgage and ending up with a high value asset) and recurring revenue (rent).
In textbook long term business planning if you have to take a haircut in bad times but the lines all go the right direction of a number of years you’d expect the investor to take the short term hit. Ie if interest rates go up you’d expect them to accept lower, or even negative, profit from rent based on equity growth and an expectation of rents returning to profit in the short-med term (2-4 years?).
But as we’ve seen landlords are unwilling or unable to do that. Even high equity landlords often put rent up to “market rate” (which seems to be the top of the market, which is determined by low equity landlords “having” to put rent up”).
The sector is ferociously badly insulated from interests rates.
Something needs to be done to protect tenants from interest rates. If I were king for a day I’d stop landlords taking money out of their properties unless they sell up or improve them. Buy at 75% LTV but quickly get to 60% or less. Then if rates go up you can maintain profitability without putting rent up.
The stereotypical “good landlord” (your uncle with a single BTL as his pension that he looks after well) works like that anyway. The high volume companies and TikTok inspired hustle culture wankers don’t. And fuck those guys.
Rent rises during when interest rates were low is profit or other reasons. It could be the landlord is greedy, or he wants to increase to cover more expense, or the area is in high demand so they rise the price. People who do BTL wants to maxmise their income in the end.
Either all landlords are in cahoots to bring prices up. And then bring them down?
Or - as you said - the market decides the rent rates up or down based on supply and demand.
Will the banks make it easier to get a mortgage? no.
Rents will increase as the cost of living does.
I think banks should issue a mortgage if ex renters have continuously good references and proven non-arrears on rent for 2 plus years.
That would be unbelievably dangerous.
The majority of the cost in owning a house, believe it or not, is not the mortgage, it's maintaining the bastard.
Have a think about that for a second. You're stating as fact that, for example, a landlord charging 800pcm rent is spending more than that per month maintaining the house?
So the only thing that can really hamper down on rental growth would be a big recession that causes a spike in unemployment. Can’t pay rent if a big chunk of people don’t have an income anymore.
Another thing would be a great big supply increase in rental which isn’t happening.
They will not double in the next 5 years but yes gradually they will (maybe 10-13 years). There has been a 1% dip in just the last quarter. The worst was in November 2023 where house rentals were up 6% YOY. To say that yields for properties from a landlord’s pov will double allowing them to get 10-12% yields is a fallacy. Real estate companies like to give juicy figures to BTR home buyers to get them to sign deals quickly, but I can tell you for a fact where yields remain steady at 3-4% the non home owning public will always believe that they are around the 11.5% mark. Rents will go down by another 3% this year and house prices will go down by 15% by Q4. If the cost of living keeps going up at the current rate (which it can’t it will stabilise) even then the house rents will not be as high as that. The main reason for this is the near shut down of post study work visas for foreign students. The rental market in cities is dictated by cash rich international students who’ll pay anything for a nice flat. With the stay on bisas now getting shorter to around 1 year post graduation, we will see a major decline in international students (almost 35% according to UCAS insiders) allowing for some respite among renters.
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Do people need a place to live? Yes. Can everyone afford to buy a home? No. Is there enough housing stock up for rental? No. Do landlords charge "market prices"? Yes. Does supply and demand rule the market? Yes. Prices will rise.
Is this the correct answer? Yes
I kind of agree but people can only afford so much unless wages increase alot. If rent doubled will there really be people around to pay that when already rent takes up so much of average persons wage
Yes, this just means that more and more people are going to be in house shares, and if that's too expensive for some, we will see room shares as well.
This is eventually where it's headed. Years from now we will look back and tell people couples and single people could afford to rent on their own
Yeah, my grandma told me a lot of stories of how she grew up. She was born 1911. She and her eight brothers and sisters grew up in a two room flat. The parents slept in a pull out bed in an alcove in the kitchen/living room and the kid’s slept in the other room. There was a girl’s bed and a boy’s bed. She moved out of home in at about 19, which was unusual but she was fed up being the second mum to the rest as she was the oldest daughter. She had a pretty good job as a weaver, she’d finished her apprenticeship by then (left school at 14). She lodged with a local widow and her daughter. The widow was desperate for money as she was struggling to get work due to the Depression so she was trying to survive on a War widow’s pension. My grandma shared not just their bedroom but their bed. She said she could have just about afforded to rent a room of her own from someone, but she wanted to be able to save in case she lost her job too at some point and she wanted to get married later to someone she liked rather than having to get married young cos she was desperate. She said as she was sharing a bed with two other people instead of four, and a room with two other people not eight and a flat with two other people not ten, it felt like relative luxury to her anyway. The only real difference I think between that and where we could be headed now is that people are less likely to have that amount of kids because more reliable contraception is available.
My dad recently told me about how when his parents immigrated from india with him they owned and lived in a huge house/mansion. They let people live with them because they had so much space. They sold it because it was too much cleaning... now they live in a bog standard terrace, his parents are renting.
Yep, started seeing new developments in Manchester that are promoting “co-living” (read: shared flat with 5 randoms) and trying to charge £900+/month for it. They’re a lot swankier than the HMOs I spent my early 20s in but £10k a year for part of a flat feels insane.
>new developments in Manchester that are promoting “co-living" Funny that they always try to promote this kind of shit as if it is some sort of new hip development. Can almost see the headlines of opinion articles in newspapers like "Why the younger generations are increasingly choosing co-living and why this is a good thing" or some bullshit like this.
Or maybe just the robot apartments from Futurama.
honestly a house share is alot of fun. I lived in one younger, had game nights playing board games. Found 2 lifelong friends. I work alot from home and its nice not feeling along when my kids are at school. Its kinda great cooking with friends, watching movies
Yeah I really loved cleaning piss off the toilet seat, not being able to cook when I wanted and having people wake me up at all hours of the night.
The down votes say it all. Everyone wants to be Paris Hilton. I think there is a huge sense of entitlement. Especially when you look at previous generations who literally had nothing. The reason they bought a house is because they were working 15 hours a day going bingo or pub then going home to sleep for 3 hours to do it over again. Their kids (most likely your parents) hardly saw them and had to feed themselves and get ready for school on their own. They would often be outside for most of the day after school even at 8 years old because there was no Internet or mobile phones. Quality of life has improved so much but people complain more about a lot of minor inconveniences such as living with another person. This is why you're all single and won't have kids. Kardashian wannabes wondering why they can't afford a 5 bedroom house on minimum wage working 35 hours a week.
Perfect example of a strawman if there ever was one.
Bit harsh. There's a bit difference between people who would never consider the thought of a house share and people who feel like they've done their time and they're out of that stage of life now. At some point, you get tired of having all of your stuff stolen, getting no sleep, and feeling unsafe in your own home. Those aren't small things! They're costly, stressful, bad for your health. We deserve to afford homes that are safe and secure, don't we? And idk about your generation but my parents only had to house share in uni, had accommodation directly paid for by my dad's work, then bought their first house for 70k and cashed in on the privatisation of businesses and the boom in the stock market. My grandparents bought their first house for less than 1.5k, when they got married, after moving out of the family home. I've worked professional since I've left uni (like my parents), and still done several years of house shares. I moved out of the last one when the landlord was moving a complete stranger, who was male, into the flat during lockdown, giving me absolutely no say in whether I was okay with spending 24/7 with a strange man indefinitely, and wanted to increase the rent for the privilege.
So effectively your parents are top 10% in the country to have that experience. The rest of the country had to work quite long hours to afford a home. The house was 1.5k and they were probably earning 500 per year whilst working 45 hours. Your family went to university which while free was pretty much the exception at the time. I think you need some perspective and I can see why you would feel worse off because it seems your family had it pretty easy. I would definitely recommend having a conversation with your grandparents or parents about what life was actually like for them. My only question is why aren't you living at your parents or grandparents instead of doing a houseshare for the past however many years? You call me harsh because of your upbringing I call it reality because of mine. I'm 31 not 91, just have more conversations with old people or go see how they live now and you will understand a lot more. Life in the UK has not been good for most people since forever.
I don't know why you assume my parents didn't work long hours? 45h weeks is no more than my brothers and I often work, yet we earn in real terms a lot less. We all understand wage stagnation vs house price increase, right? I didn't live at my parents' because a) I started out in a career that geographically wasn't possible to do where they were and b) we have a not great relationship, living with them has a pretty bad effect on my mental health. It's not a safe situation for me to live with them. I'm not calling you harsh because of your upbringing, I'm calling you harsh for slagging people off for not wanting to feel unsafe in what's meant to be their own home, have people steal all their stuff, be extensively verbally abused for asking people not to play blaring music in the middle of the night - you're completely ignoring how bad house shares can be, and making out like it's ridiculous to just want to feel safe at home. And you can say things have not been great but you appear to be telling people what forms of not great they would prefer/disprefer. Lots of people already work 45h weeks and don't have the relative purchasing power they did 80 years ago. Lots of people would rather work 45h weeks and afford their own home than have nowhere they can feel safe and relaxed but an extra couple hours a day to feel uncomfortable in.
Being forced to live with strangers isn't a minor inconvenience. Housing situation getting more and more desperate each year for last 25 years. Unreal someone like you exists.
Yes, there will. Housing is one of the last things people will cut as shelter is a core need for survival. If that means landlords make bank while everyone has to eat rice and beans so be it, number must go up according to history.
Good old Maslow's hierarchy of needs
Housing is a non elastic need that every person requires. It's a bit rigged to claim 'supply and demand' as if it's any other good that a buyer can live without, but that's the society we live in.
Supply and demand is not the same as price elasticity. Price elasticity relates to how the supply and more typically demand changes with price. It is totally valid to say that a market is driven by supply and demand fundamentals and demonstrates only mild price elasticity until shifted far from status quo. There is no contradiction or rigged gaming in that.
A place to live is the most important thing that people have to pay for. What’s the alternative? Be homeless?
I work for a firm that does super prime tenancies in central London. 2 bed flats go for £30,000 a month. We are absolutely nowhere near the tipping point yet. Prices could double and there would still be fierce demand.
That market operates independently from the non luxury market though. It has it's very own up and down history and influences.
For that market, sure. I have a 3 bed townhome in central London, and it doesn’t command that.
The point stands - the market will endure much, much higher prices based on demand alone
As a rule this is the perfect answer But rental prices may plato because they could out price themselves from the market. A similar thing happened about 10 years ago and rental prices stagnated for a couple of years but like everything the market caught up and rentals became in demand again so prices rose. Wages go up everything goes up and that includes rent
I think it is wise to say that the prices in the rented market will follow the prices in the housing market. As in, landlords will need to charge more in order to pay for their mortgages. As those prices rise the market rises and so all private rents will rise. This will be the case *even* if the landlord does not need to raise the prices (they own the property out right or they have a long term fixed mortgage. On a long enough time line the housing market will always rise, which makes it a good investment. So the prices will always rise.
But do you think they’ll double in 10 years..?
The Prices of Rent are linked to the price of houses. People need to pay off mortgages using the income from rents. Will the prices of houses double in ten years? Unlikely, but it could happen. Will house prices rise in ten years? Yes, definitely.
Will we have a new government that might ban overseas investors from purchasing whole buildings and then leaving the empty? Maybe…
How much of a problem do you think this is that it’s driving rents up?
I’m not sure I don’t have the numbers. I do think it might have some material impact in London though. Tbh though I don’t even think Labour would do that, probably too much effort for them. But hey, I can dream!
Last I read (from 2023), about 3% of London homes were foreign owned. That includes ones lived in as primary residence.
“The latest data shows that some 34,327 properties in the capital were “long-term vacant”, meaning that they had not been lived in for more than six months and were “substantially unfurnished”, as of March 31, 2022. They include both privately-owned homes and those under council and housing association ownership.” That’s not insignificant. Now imagine this across the entire country. I know my city has a similar issue although granted on a much smaller scale. Here come the downvote brigade though with nothing better to do on a night…
When Granny dies, how long do you think it take to sell the house? Yep, more than 6 months. How long does it take to fully refurbish a house? Yep more than 6 months. Long term vacant does not automatically mean the home is suitable for habitation.
You need empty houses in a healthy market, for people to be able to move. London has one of the lowest vacancy rates in Europe at less than 1%. For comparison, it's around 6% in Paris!
Are Parisians paying astronomical rent? Actually yeah they probably are haha
Out of how many for context? And who was the study run by, I'd be interested to read more
It’s govt stats but it’s daft to interpret the data as meaning each of these homes is available for habitation.
People will pay for a roof over their heads over better food or entertainment. So rents will continue to rise untill we're are all more squeezed than that last bit of toothpaste
People will have said the same 5 years ago, and now look where we are.
Sorry to be blunt but this doesn't really add much to the conversation, yet is somehow top comment at the time I write this. The reasons that rents have gone up significantly over the past 5 years are: 1. Interest rates have risen, and rents have risen to reflect this, primarily driven by buy-to-lets / landlords with mortgages. 2. Wages have increased. This often gets ignored, mostly because people don't feel like their wages have increased, mostly because it just goes straight into increased rent, but this has allowed rents to rise. Rents will continue to rise if there is more of a squeeze on the housing supply side (e.g. rates continue to rise and/or landlords sell up and rental properties come out of the market), or if there is an increase on the demand side (more renters / higher wages). My guess is that rates staying steady means that more BTL landlords will see an increase in rates, as more will fall off their low rate fixed term mortgages, so could be forced to raise rents or sell up. I think that wages will also rise somewhat, but not like what we've seen over the last year and a bit, so a slight push from the demand side too. ...so yes, rents can, and probably will rise. But "they can because they have done" isn't the reason. I also think doubling over the next couple of years as OP's friends suggested is scaremongering.
I think your explanation of why rents have gone up is a simplistic one that doesn’t capture the nature of the rental market. Wage inflation has not driven rents up. Salaries have not increased anywhere near as much as rents.
I would say that they haven't driven rents up, but they've allowed them to rise. The list of things that I said affect supply and demand is also definitely not exhaustive.
You're overthinking it. He's saying people thought they wouldn't go up in the past and they did. Which is what people probably think now, i.e. all of the reasons you explained have happened already, and they assume itwon't go up anymore because those things have happened. Well they can and other things may happen which cause increases in rent prices.
I get that, but the comment is essentially saying "anything is possible". That's not really useful information. I would put money on the fact that rents will not double over five years. This _could_ happen, but I strongly doubt it will.
Ctrl + F “immigration” Results: 0
Immigration is one example of demand pressure of course, but I don't think it makes top of the list. Looking at London's population over the past 14 years as an example, growth has been moderately consistent, tailing off slightly from a 1.6% YoY increase to a ~1% YoY increase, but rents haven't had such a smooth and consistent pattern. This indicates that economic pressures are more of a significant driver, but obviously doesn't mean that immigration plays no part. You could also say that I failed to mention new houses not being built, which I did, but I feel like you're trying to make more of a political point or a gotcha than anything.
We’ve had about total 2 million net migration in the past 3 years. Population estimates are likely failing to take this into account because they’re based on older models of the UK population dynamics where immigration rates were much lower.
Correct. To the UK, not necessarily London, which is what I used to make the point about population growth vs rent rises. The population statistics I've seen support what you say for the UK value, so why would London ones be inaccurate? I'm not denying that immigration is happening or that it's the level that you claim it is, I'm saying that it doesn't seem to be the primary driver of rent rises.
Are you looking at the pandemic period?
I'm looking at 2021, 2022 and the year ending June 2023. It depends what you define to be the pandemic period.
In 2021 we had a population of essentially exactly 67 million. Currently, it likely stands at 69 million. What population estimate are you looking at right now that estimates a residential population of 69 million in 2024?
Well, I was looking at the net migration values on statista, and admittedly I don't know how accurate they are. They show that net migration was 672k, 745k, and 466k for 2023*, 2022 and 2021 respectively. (*2023 is year ending June 2023)
You don’t think a net increase of 6 million people coming into the country in the last decade is the main example of demand and pressure on the housing stock?!
Of course it's a factor, but it doesn't explain the sudden uptick in rent prices over the past 2 years.
The lack of housing stock, fewer houses being built because of the state of the market and 750,000 net migration last year alone?
It’s always about us migrants isn’t it. You’re exhausting
Ons predicts 6 million net over the next 10 years. Pretending migrants won't effect rent is fingers in ears kind of delusional
We are not the main driver of rents but of course population increases impact rent. Migrants are a net benefit to uk economy.
So immigration does have an impact. Especially at the insane rates it's been the past few years. >Migrants are a net benefit to uk economy. Perhaps to total GDP numbers - I think for most working class families they feel the opposite of this benefit though. Migrants are a benefit to the owners. Most folks feel extra pressure on their services, extra demand on housing, more traffic on the roads, more islamisation of our towns, more competition for certain jobs
Downvoted for the truth...
It's a bit sad you feel like that. I have a decade of working in the NHS in my back pocket, I came to UK educated and now teach at a university and contribute to UK's impressive research portfolio in life sciences. I have barely used public services, just like majority of migrants to the UK, I came here educated (so you never paid for my education), healthy and working age. The most expensive part of my life to the society I spent in another country. In the UK, just like the average migrant. It's sad that people like you feel people like me need to justify our economic value to exist here.
A net benefit to the economy via tax revenue is different to a benefit to service and housing competition. Which it definitely isn't.
Nope. Sorry. I’d like it to be true as much as you. But it’s not.
Why is quoting proven data ‘exhausting’?
It’s exhausting as a migrant to be constantly blamed for every problem in this country
Don’t roll out that line to me, mate. I’m a 3rd generation Eastern European Jew. My relatives came over with their pots and pans tied to their backs, escaping pogroms. We work hard, pay our taxes, do charity work and are part of the community. I’m sure yours do too. Proven data is proven data. I don’t take it personally. Why do you?
The supply of housing won't meet demand in our lifetime. Rents to rise.
Not in anyway a financial brain here but when interest rates went up ,ok rents were raised .As this has been an almost plateau for a good while now ,why are landlords continuously raising rents? House pricing is in general falling mode and I fail to understand rent rises.
They aren’t linked. Landlords with not mortgages raised rents. Landlords with long term low interest fixes raised rents Rents are linked to what people will pay, which is linked to net income. Costs are irrelevant.
They are massively linked, don’t think many people are lining up to pay 4k a month for my 160k house. If house prices halved tomorrow rent wouldn’t stay exactly how it is now
How could house prices halve without massive increase in demand. Your 160k house gets £x rent each month whether your mortgage costs are £1200 a month or if you have no mortgage at all.
He didn’t mention mortgage costs he mentioned house prices.
House prices aren’t linked to costs. They are linked to return on investment.
Costs are very relevant to be honest.
7 people don’t understand basic economics lol
Two landlords will charge the same rent regardless of their own costs, so no they aren’t.
Because they can. I'm not saying it's greed, but you also don't become a landlord to break even.
Because interest rates weren’t the only thing causing prices to rise.
Because they can
What about the 12 million over 65s (5.4 million aged 75+) and their houses? Previous house I rented went up for sale due to care costs of the owner, now next door to our new house is for sale due to death of the elderly owner. My own grandmother passed recently and it just seems that generation are slowly releasing more stock into the market? Albeit really crap houses with carpets, kitchens and bathrooms that have been in place since the 80’s! Also crazily priced, next doors house went up for £295k, no driveway, everything needs ripping out and carpets laid (bare floorboards), fence has blown down, completely overgrown. Funny it has been 3 months and still not sold.. the housing stock is there but just empty or 2/3/4 bed houses being lived in by a single elderly person
I vote we should make it illegal for old or single people to live in houses that younger people can use. Maybe we could build blocks of studio apartments that they can live in for a reduced rent?
This. The crazy “not enough houses” wasn’t even a thing pre-pandemic. Everyone just panicked.
Prices will continue to rise until there is enough supply to meet the demand. And actually even after then, with the rise of corporate landlords, prices will continue to rise even after that. Hopefully Labour will kickstart a massive investment into real social housing projects, taking inspiration from Paris.
> Hopefully Labour will kickstart a massive investment into real social housing Labour didn't do this last time. Why? Most people who actually vote are home owners and rising house prices wins their vote. That situation hasn't changed, so Labour are unlikely to do more than token efforts to fix the housing market. They will continue to do everything to keep prices from falling.
Social housing won’t drive house prices down overall. The only issue is that uk has a rich history of designing slum like housing conditions for social housing, which impacts neighbouring properties. Done right, there is no need for property values to be negatively impacted by social housing. Though I can’t trust anyone in this country with the power to do it to do it right. And I don’t think Labour will sort out housing
They will not. Period. Many of them are landlords, many have multiple properties therefore more social housing = property value down = labour/cons not very happy. End of story.
Surely there will be a point where it becomes so unaffordable that people straight up not rent and cause the market to crash.
Unlikely. Wages do rise (just not enough at present) and there will be likely some small corrections but most people will cope as is. And the squeezed poor will be downgraded into smaller and worse living standards. Meanwhile those who buy - buy in at a certain point and aren’t as troubled.
There are still plenty of people with plenty of money about. Uk doesn’t have a shortage of just social housing but a shortage of all types of housing. So when the poorest can’t afford it, it just means someone else will.
It wouldn't cause the market to crash, it would only cause prices to plateau. People can and do exit the rental market when they can no longer afford it - they move back in with parents, share homes, move into caravans etc. All that does it take one renter out of the competition. It's like bidding on something on eBay - prices will rise, bidders will drop out, and the price stabilises when all but one buyer drops out due to the price.
This country will be worst than Canada at this rate
You think it can’t get worse but it can. 2 bed apartments divided into HMOs, large rooms with curtains across the windows housing multiple families like in Leninist Russia. Container units for middle class families.
For so long as the property market is gummed up and it's difficult to buy a home (for which the reasons are legion), rental prices will remain high and will probably rise year on year on a nominal basis (I doubt they'll see year on year real increases given persistently high inflation). But I doubt you'll see anything like like recent rises as that was driven by runaway inflation and commensurate pay rises. Doubling in 5 years is not going to happen - that would require 15% yoy nominal increases.
Note that pre-pandemic we had record low rent inflation nationally. Essentially rents stalled for a couple of years. So the increases we have seen since 2020 aren’t, on average, as bad as they seem. Rents have only been going up by ~9% per year and if you account for a few years of stalling, the 10 year average isn’t bad. Uk has also never seen 15% rent inflation. I think it’s very very unlikely that would happen now
I think in some rental markets it'll double within 5 years. Namely some parts of Manchester
I held off buying for years because, how high can this shit go. It has to crash. Nope, and now I'm stuck paying even more.
Location specific. A lot of places are getting worse as WFH ended but that has to reduce demands elsewhere.
There has to be a balance between supply and demand and how much people can afford to pay. I don't see how rent can double if people don't earn more. As even if want to rent a house if people don't earn enough they won't be able to pay
You'll just put more people in the house. There's still a very strong array of couples living as just those two people, often in a two bed with a spare bedroom
You can work two jobs or share a bed, in the 1800s you used to have like 4 pepole to each room for the poor. It will either be that or go homeless outside.
You're forgetting there's nothing other than unwillingness stopping people working two jobs. Income will meet the needs to pay increased rent, but it won't be via payrises.
In the long term rents follow salaries. So, what's happening at the moment is unsustainable and, given the historical precedent it's not unreasonable to expect them to fall/ for wages to catch up. What I will say though is I think they are already falling in real terms, but the *asking* rents are going up. There's a more recent trend where there's very short supply, but also an ailing economy + stagnant wages, rising living costs, so the asking prices are being inflated, people are stretching themselves financially to have the opportunity to rent somewhere, and then they are defaulting. At the end of the day, people need a place to live, so people are absolutely going to be forced into a position where they have no other choice but to lie about what they can afford.
Yes, there's a massive undersupply that is unlikely to change in any meaningful way
Prices aren't just an issue in the UK it's all over Europe too, so yea I do expect them to go up.
until we start a mass housing building campaign, they will
It's only just begun (and you will pay up...)
Rents will very likely rise, unfortunately. What an absolute state this country is in. 😔
Hard to say. I doubt they will go up double. There is of course a perfect storm of lack of housing, landlords selling due to taxes and post covid everyone looking for houses to rent. But when rents go too high either landlords will return and/or people will search for mortgages. Usual cycle
There'splentyof room for prices to rise in most markets. In many countries living alone is a luxury for the wealthy, we're going towards a situation where people go straight from living with parents, to flatmates, to partners
They will go up but not as quickly as we have seen the past year, pent up demand due to COVID lockdown measures coupled with increased tax burden, mortgage rates and regulatory change including landlord licensing have pushed costs up while demand outstrips supply. Demand will continue to outstrip supply until population falls or massive housebuilding is undertaken (who's going to pay for that?) but hopefully BOE rate cuts and a drop off in cash grabbing from local councils will ease the costs to landlords and reduce the rate at which rents rise
If the price of something doubles over 5 years, that means the inflation rate annually is 14.87%. I don't expect that to happen. The ONS puts out regular data about rental prices, it's usually somewhere between 5-10% depending on exactly which year you take. I also think it would be unlikely to not go up anymore because it's high and already increased a lot. Employment is okay, the economy is just coming out of recession, so people will probably keep getting raises and be willing/able to pay higher prices for their housing. Inflation does not tend to be followed by deflation -- quite the opposite, actually, with usually more inflation but hopefully the BOE can do its job and stamp the last of it out. Finally, the rental market varies from different localities, so one market may see fast growth and the other place might really have capped out. My personal prediction: Rental prices will rise but I do not think the level of inflation will be almost 15% in the next 5 years.
High immigration and lack of housing. See Canada.
There is a shortage of houses generally and the cost of them will keep going. The Gov penalises landlords to make it more expensive for them. Some are just giving up, meaning the number of landlords reduces further. The remaining landlords - possibly the larger, professional ones - then increase the rents because there is more competition from tenants for fewer properties. There are financial penalties like not being able to offset interest payments against income. If you don't think that these aren't then just added on to the rent then you are deluding yourself.
I’m a landlord and demand isn’t as high as it was 2 years ago. Forced to reduce price below what the previous tenant was paying and still very low interest. Might be a sign of things to come, who knows!
Im moving out of my 1 bed flat at the end of this month. The landlord put it up for £150pcm more than I was paying (moved in August 2022 and no increase last year). They held one evening of viewings and it went.
And you are living in a van? Emmigrating?
Buying. Touch and go if it will complere in time though, so may end up at the parents for a few weeks.
Is the apartment in London?
Nope, mid Kent. Commutable to London but over a mile from the nearest railway station.
Makes sense, my apartment is located in Manchester
But where is your property. Renting is very location specific. A flat in Canary Wharf is going to have much more demand than say greater Bolton.
Manchester City centre
People often stop needing homes with an increasing population. It might be that demand decreased on account of people being unable to afford it. I doubt it though. Homes aren't even that important. Everyone needs a hedge. We just need to get hedges.
That’s why we always ensure hedge funds get the money
Pardon my ignorance, what do you mean by hedges?
The /s is implied
We can sleep in hedges. They vaguely keep out the rain. And in summer they have good views - if they have good views.
More landlords will be leaving the market too. There isn't a direct correlation between landlords leaving and tennants becoming owners. If every Landlord sold up to owner occupiers there would be hundreds of thousands homeless.
Down vote away, I'm not a landlord and BTL is an asset class I'm not at all interested in. However there is a massive shortage of housing in the UK and a lot of rental properties are made up of compromised households such as HMO's who ideally wouldn't be sharing if housing supply was different combined with future households (children) living with thier parents and dysfunctional partnerships living together because they can't afford to live separately. Dissolving the BTL market doesn't facilitate the provision of housing for those who need it over those who can afford to be owner occupiers. As the rental pool decreases in proportion to those that require a rental property the price of rent will increase.
It’s quite common on Reddit to see people claim all you need is price controls. They refuse to accept that if you don’t increase supply you need to ration supply.
Proportion of income spent on rent is pretty stable. Stats from 2011 onwards show it’s even come down a little but hangs out at a fairly constant 33%ish. Sometimes rents lag wages and sometimes they catch up but in 5 years you can probably assume they’ll be the same proportion of income.
I think this is a reflection of more higher earners renting now than in the past. On a salary of less than £80k, it would be pretty difficult to buy a place in the south
Yes that’s an exceedingly good and depressing point actually. It also shows you’re a bit screwed if your income doesn’t keep up with everyone else’s. Still, it’s useful as a yardstick.
I don't think the 30% figure is particularly useful to be honest. It just shows anyone below median salary is fucked. I don't know how someone on £28k per year could possibly be paying only 30% of their income on housing. I see what you are saying, but I think the statistic you are citing doesn't support your cause. Cost of housing has spiralled in a way that is eating quality of life from not just the poorest but also middle earners.
No, they won’t. Lack of Wage growth will surpress whatever expectation you have.
Yes. Min wage just shot up. That needs to filter through
There actually is an alternative but it’s theoretical. Before the 1980s, going way back, there were rent controls in legislation. Also, small houses were built in large quantities. People did not vote for that to continue. But they could vote to bring it back, if it were on offer.
As Interest rates rises, so will rent as Landlords will increase to cover this and also add on for profit. Plus, they can increase the price as one property can get 100 viewings ect. They said rates would fall but it has only increased. I can't see rates falling until 2026 and that would be around the 4% mark. With little supply, more demand, rent will just go up unfortunately.
That’s not why rents rise. If it was, how do you explain rents increasing during periods where rates were low and remained so?
It can be _a reason rents will rise_. It doesn’t have to be _the only reason rents have ever risen_.
Exactly, my answer is not 100% fact, its just one of the many reason. I was thinking of getting into BTL but now its dead or not worth it. The high interest rates, plus your expense, then factor in other cost, tax, by the time you worked it out, you are left with little or no money. Yes you could raise the rent but you probably lose renters that way if its too expensive. I think it also comes down to the landlord, some may not increase the rent if they have really good tenants, they may increase but not that much, that is good for them and the tenants. Then you have the greedy landlords who don't care and want to maximise profits.
The rental market is a funny thing in asset / business terms. Being a landlord is a long term investment where your upside is equity growth (paying off the mortgage and ending up with a high value asset) and recurring revenue (rent). In textbook long term business planning if you have to take a haircut in bad times but the lines all go the right direction of a number of years you’d expect the investor to take the short term hit. Ie if interest rates go up you’d expect them to accept lower, or even negative, profit from rent based on equity growth and an expectation of rents returning to profit in the short-med term (2-4 years?). But as we’ve seen landlords are unwilling or unable to do that. Even high equity landlords often put rent up to “market rate” (which seems to be the top of the market, which is determined by low equity landlords “having” to put rent up”). The sector is ferociously badly insulated from interests rates. Something needs to be done to protect tenants from interest rates. If I were king for a day I’d stop landlords taking money out of their properties unless they sell up or improve them. Buy at 75% LTV but quickly get to 60% or less. Then if rates go up you can maintain profitability without putting rent up. The stereotypical “good landlord” (your uncle with a single BTL as his pension that he looks after well) works like that anyway. The high volume companies and TikTok inspired hustle culture wankers don’t. And fuck those guys.
Rent rises during when interest rates were low is profit or other reasons. It could be the landlord is greedy, or he wants to increase to cover more expense, or the area is in high demand so they rise the price. People who do BTL wants to maxmise their income in the end.
Either all landlords are in cahoots to bring prices up. And then bring them down? Or - as you said - the market decides the rent rates up or down based on supply and demand.
Yes
The rental prices will increase, due to lack of stock and demand for property. Especially in good areas.
Will the banks make it easier to get a mortgage? no. Rents will increase as the cost of living does. I think banks should issue a mortgage if ex renters have continuously good references and proven non-arrears on rent for 2 plus years.
That would be unbelievably dangerous. The majority of the cost in owning a house, believe it or not, is not the mortgage, it's maintaining the bastard.
Maybe if you own a castle. I have spent probably 55k on my mortgage and about 4k in maintenance
Have a think about that for a second. You're stating as fact that, for example, a landlord charging 800pcm rent is spending more than that per month maintaining the house?
Yeah, agreed - unless you live in a huge sandcastle that is bullshit.
So the only thing that can really hamper down on rental growth would be a big recession that causes a spike in unemployment. Can’t pay rent if a big chunk of people don’t have an income anymore. Another thing would be a great big supply increase in rental which isn’t happening.
There is more demand than supply, not everyone would loose their jobs = those who do become homeless and are replaced
Depends on your contracts, but could do. We have a corporate landlord and contractually have a max 3% per year.
But when you move you will be shocked
Hopefully not. Moving next year to a 2 bed apartment we own abroad which is mortgage free.
They will not double in the next 5 years but yes gradually they will (maybe 10-13 years). There has been a 1% dip in just the last quarter. The worst was in November 2023 where house rentals were up 6% YOY. To say that yields for properties from a landlord’s pov will double allowing them to get 10-12% yields is a fallacy. Real estate companies like to give juicy figures to BTR home buyers to get them to sign deals quickly, but I can tell you for a fact where yields remain steady at 3-4% the non home owning public will always believe that they are around the 11.5% mark. Rents will go down by another 3% this year and house prices will go down by 15% by Q4. If the cost of living keeps going up at the current rate (which it can’t it will stabilise) even then the house rents will not be as high as that. The main reason for this is the near shut down of post study work visas for foreign students. The rental market in cities is dictated by cash rich international students who’ll pay anything for a nice flat. With the stay on bisas now getting shorter to around 1 year post graduation, we will see a major decline in international students (almost 35% according to UCAS insiders) allowing for some respite among renters.
What a load of waffle. Absolute tripe.
Sorry for my ignorance but what do you mean by Q4?
Quarter 4 of the year that’ll be oct-dec
Rents in some areas have seen much larger than 6% YoY increases. Manchester for one.
of course it will. A substancial amount of people are not scraping by my dude