Rents to soar over next 3 years

[Twiglets1]

As reported in the Telegraph today, the Resolution Foundation has calculated that rent will rise at almost double the rate of earnings between now and 2027. The think tank said tenancies for new and existing lets are expected to grow by 13% over the next three years – almost double the 7.5% growth in average earnings, as forecast by the Office for Budget Responsibility.

The cost of rent for new tenants has increased by 18% since January 2022, but this burst of growth is yet to work its way through the whole private rental sector.

Cara Pacitti, senior economist at the Resolution Foundation, said: “Millions of families agreeing new tenancies across Britain have faced surging rents in recent years, as we have emerged from the pandemic.
“Those rises for new tenancies are starting to slow but how much renters actually pay will continue to outgrow how much they earn for some years to come as those not yet exposed to higher prices are hit.
“With more families renting privately, and renting for longer too, these rent surges are a bigger problem for Britain, and require bolder solutions from policymakers.”

The question is, with mortgages & rents both becoming unaffordable to many, could the next election be won or lost on the issue of the property market crisis?

https://www.telegraph.co.uk/money/property/buy-to-let/tenants-face-three-more-years-of-soaring-rents/

Interested why you’ve no faith in Labour. See this said a lot but Labour haven’t been in power for years and when they were they weren’t mired in as much corruption as the tories and they at least tried to improve things.
Vote reform maybe or Lib Dem’s who knows ? It seems that people are disillusioned with the Tories and somehow Labour are roped in as well because…well.

Lol so you just vent at people on SM then going off your past posts 😂

I'm old enough that I remember when Labour were last in power and it started really well with people feeling so optimistic about Tony Blair's leadership and ended... not very well.

Sorry - I'm old and cynical. My son is really hopeful for what a Labour government will do and I have to try not to be too negative. But in my heart I think Starmer seems quite weak on the policy front and very weak on charisma. Hope I'm proved wrong.

Reform don't appeal and Lib dems don't have a serious chance of winning. It's between Labour & Conservatives I'm afraid and (trying to get back on track!) have either of them said anything convincing about how they will tackle the housing crisis?

They’ll bring in rent controls Twiggy. They will also reform council tax (all the councils are going bust anyway) into land value tax, carbon tax etc.

They’ll force the boomers out of rattling around in their 4 bed houses.

I’ve no problem with landlords who own outright. They are shielded from increased rates and inflation.

I’ve a major problem with leveraged BTL as a ‘investment’ which should never have been allowed in the first place. They will continue to try and push their increased costs onto the tenant and end up with voids.

It won’t end well for all parties involved.

@Twiglets1 You say you’re cynical but the choice is between Labour and the Conservatives ? Really ? Not that cynical then ….
Labour haven’t released their manifesto so maybe they will have some ideas about rent control. They’ve had decent policies but they’ve been watered down and used by the tories hence the reticence presumably.
I’m old too and charisma means nothing to me. We had Johnson who was allegedly charismatic.

Well they’ll have no tenants as it’s already too high!

Just being realistic - the choice effectively IS between Labour and the Conservatives isn't it? Who else is likely to get elected?

Didn't Labour do a u turn on rent controls last year?

https://www.theguardian.com/politics/2023/jun/28/labour-leadership-lisa-nandy-accused-u-turn-rent-controls

I’ve no problem with landlords who own outright

That doesn't mean the rents they charge won't go up as the market changes, it just means they are putting more in their pocket. I don't see how making a profit if you don't have a mortgage is different from making a profit if you do have a mortgage? Besides, the rent that can be charged is driven by demand for property, not how large or small the landlord's mortgage is.

Hopefully not the tories ! I just feel that constant flipping pessimism doesn’t help. I don’t think Labour are anything like New Labour were (rightly or wrongly) but Starmer just seems similar to how potential PMs were years ago, hopefully fairly upright, well meaning and capable, certainly not charismatic like Thatcher, Blair or Johnson. I just worry that if a future labour government doesn’t solve everything immediately people will slate them.

It’s driven by credit availability and affordability. You can wish upon a star on how much rent you’ll think you’ll get to cover your costs. The market decides and affordability is tapped out.

My mortgage is has increased 13 times in 18 months, I'm in Aus, with all the rate rises. I'd assume that in order to be able to continue with owning a rental property, they will have to be increased as well by most people who own them in order to also cover the insurance, and ongoing costs/ repairs. Housing is such a big concern for everyone just now, and doesn't seem like there is much relief for anyone no matter what their situation

meh...I've already apologised for being cynical about how different the two main "choices" really are, and I think @HappiestSleeping summed it up better than me.

As I said before, I hope to be proved wrong as do expect Labour to win the GE.

Politicians say a lot of things then they U-turn accordingly to the wider consensus (and the boomer demographic is dying out, the younger generation will be the voter majority)

But council tax reform for land value tax is certainly on the agenda

https://labour.org.uk/wp-content/uploads/2019/06/12081_19-Land-for-the-Many.pdf

Yes I agree it seems obvious really that owners of rental properties will increase rents if their mortgage payments rise (or even if they don't as most LLs would expect to get more or less market rent, maybe slightly less for established good tenants).

I think rent is more driven by supply and demand. Sure, the interest rates affect rental prices, but not because landlords do or do not have mortgages, but because the people who might have been able to afford to buy cannot and so need to rent.

Those who could never afford to buy are subsequently squeezed further.

Edited to add that the more landlords who sell up because it is now less profitable means that supply is reduced while demand increases.

Christ! What is this country coming to?

The more controls that are put on landlords the more will leave the sector & make the supply even less

It's unfortunate that being a landlord is a 'job' that suits people with very little talent or skills and the UK has no shortage of such people.
But if rent is to soar then surely, so are wages? Most renters are barely able to afford the rents they currently pay, they don't find their rent in the crack of their arse, after all.
I'm getting ready to put my house on the market and move, and I was shocked by how many people.told me I should rent it out instead. This property suited me for a first time buy and it should go to someone else who is ready to have their own home. But then again, I have a job which makes me of value to society, something the majority of landlords do not have.

@Lagoony love the way you assume all landlords have no value to society. Bizarre. You sound rather sanctimonious.

You have no idea what the majority of them do and even if they are only landlords, then their properties are needed to be let out as homes.

Oh i have quite a good idea about what they do, they buy up properties because they got there first and/ or got a leg up in some way and then invest and grow their money by preventing other people from being able to invest their own. They operate the same way a malignant tumour operates.

I don’t know where the people commenting “we are not paying enough tax” are getting this from.
We very much are paying too much tax. The working class at least.
The issue is the millionaires and billionaires are not being taxed enough and many big businesses evading tax one way or another.

Our progressive system is just not skewed well.

2nd issue is the mismanagement of resources and finances. The current Tory government is one of the most corrupt I’ve experienced. Public finances are being mismanaged and looted for personal gain. It just seems they are focused on seeing how much money they can possibly make while in power as well as helping their friends do the same rather than caring for public issues.

I think a complete overhaul of the whole housing system could potentially be a massive vote winner. Buying and selling in England is a long, convoluted process of chains that can break down or take endless months. The government tampering with stamp duty during covid pushed prices up even more. There are issues with short term holiday lets in tourist hotpots. Theres a massive massive shortage of council housing (3,000 families on the housing list just in my town, 20,000 families waiting in the whole county) Individual landlords are leaving the market due to tax changes, mortgage rates, etc.

My local city is seeing a building boom, but its all either purpose built student accommodation (our universities main income stream) or massive "executive housing" of 4 to 5 bed detached family home estates which they then attempt to sell for close to a million pounds per house. There is nothing affordable or realistic neing built as a kind of entry level starter home, either to buy or to rent.

There are approximately 60,000 inhabitants in my city, ive just done a quick search on Zoopla for properties to rent. Ive excluded a room in a shared house and retirement homes in the filters. There are a grand total of 22 properties available to rent - ranging from £975pcm for a 1 bed flat to a 3 bed for £1850pcm at the top. I can easily see more than 22 people wanting or needing to move, they will all be chasing these properties and so landlords can be picky about who they rent to, demand is high enough to increase how much they can charge, leading to utter misery for those who just want somewhere to live.

End rtb in England that would be a start and save some of the best housing stock.rtb ended in 2015 in Scotland and is one of the few sensible things the SNP have done.

You say this but there are also a lot of ftb’s on the market. We’ve seen a lot of young people get on the ladder since 2020.

The more available properties become, the more renters will be willing to take the leap into ownership.

I do agree that the not everyone wants to buy and not every renter can afford to buy.

The ultimate solution for our current housing crisis will be the availability of more social housing and not focussing on landlords.
@midgetastic said it best.

“What is needed is social/council housing that is not for profit and available for any who needs it as that puts an upper limit in what rents can be charged and a minimum standard “.

Yes there are a few good landlords but there’s more bad than good.
It’s rare you’ll find a landlord that is in the business out of the goodness of their heart. People invest in property as a way to make money.
Rent is charged at profit and not cost.
I watched a video recently where some landlords were interviewed about their portfolio and rent increases. Everyone except 1 in that video said they increased rent not because they had to but because the EA told them they could get more so of course they went for it.

Yes IR have shot up considerably making mortgage repayments more expensive but the truth is many landlords have increased rent significantly not because they have to or because of rising costs but because it is a business at the end of the day.