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/

Im not saying that LL should charge under market value to be deemed 'good'. My parents also sort everything out and resolve any problems regardless of the issues and every landlord should do the same in my opinion. My parents have found a gem of a tenent and want to keep them which is why they do what they do.

The problem landlords tend to be the ones who want to make pure profit and don't give a shit which is what gives genuine landlords a bad name. How many house programmes have people watched where an auction property is purchased and it's just painted white or the 'investors' who lets fave it get away with what they do because they are either abroad or a multi national. Look at how much property is owned by companies or foreign nationals who don't live in the uk.

Lots of things are owned internationally now including businesses, utilities and schools. Again, it's all to do with raising capital for investment. By the same token, lots of British people own property abroad or shares in foreign companies too. It's a globalised world and investment is often a great thing. There is also nothing wrong with a developer buying a house, painting it white (which is often an improvement) and renting it out. This country needs low cost rental properties and this is often the best way to achieve this. Spending loads of time and money putting in super fancy fixtures and fittings will only lead to higher rents.

Problematic landlords come in all forms but in my opinion are most often found at the bottom end of the rental market where tenants feel that they have no choice. I'm not really sure what the answer is as often the reason why the rent is so cheap is because the landlord hasn't invested in arguably necessary upgrades. If they did upgrade then the housing would become unaffordable for the tenants.

The problem is there are not enough tax payers and the number is dropping. Only 46% of the population pay any tax at all and 53.8% of all UK individuals were net recipients (living in households receiving more in benefits than they paid in taxes).

In short we have too many takers and not enough givers.

“I think a survey found the increase in ftbs was majorly down to the number of elderly dying in Covid so that the ftbs had inherited sufficient funds for a large enough deposit to pass affordability checks. It wasn’t about them suddenly being willing to buy because of availability of properties. It was about a family member dying and leaving them a pile of cash.”

@KestrelMoon I don’t agree. A lot of people moved back home to live with family once lockdown started. Yes some inherited but most were able to save a substantial amount moving out of paying rent or moving to cheaper cities/towns when working from home became the new normal.

I recall posters saying that they had cleared all their credit cards, had realised how much that work lunch of a latte and sandwich/salad had cost them monthly so had become more frugal and saved up deposits.

Their train/bus fares vanished.

It really was a reset financially for many.

I definitely agree there's pressure to return to the office (to be clear I'm a teacher so no working from home for me anyway), but I also think companies have to be realistic. My friend (who is very well qualified in their field, and deliberately lives in a cheaper area) recently went for a job interview and negotiated down from 3 days in the office to 2- I think that's pretty standard.

For people with in demand skills, who are more experienced (i.e. not fresh grads living at home), I think to some extent, companies will have to suck it up or accept they won't get the best possible employees?

From friends being asked to go into the office more often in their current jobs, there is a lot of resistance- especially as commuting costs have gone up too. It's essentially seen like a pay cut, or a reduction in the overall benefits package. I'm not saying some people won't be forced back in, but I don't think it's going to be as easy as some companies expect?

TBF, I still lived at home at 25- ten years later I have moved out and bought- I think there is a real issue for early 20 somethings who can't live at home, for whatever reason. It puts them at a massive disadvantage at the start of their adult life.

If it's any comfort both my grandparents lived at home until early thirties back in 1932 they married moved into a rented house and never left. This was in Ireland they were both farm children but my grandmother hated farm work so stayed in the town, my grandfather commuted to his parents farm. They had two children who did buy houses in the sixties.

My other grandparents when their home was destroyed in the London blitz were offered a new home in Essex. They never purchased either. Whereas three of their children went on to buy.

I'm talking about a different era. We maybe going back to long term rentals because our kids don't live at home anymore saving money.

I agree companies have to be realistic @Postapocalypticcowgirl and can't be too rigid if they want to be attractive as an employer but equally, more seem to be demanding 2 days in the office say as opposed to 1. Which obviously makes it harder for staff who moved a long way away thinking they could work from home forever, or who are contemplating such a move now.

Not denying that some people work from home full time of course. It's just that there seems to be more of a push in some sectors to move to more of a mixed model with roughly half the week in the office.

It was optimistic to move away IMO

Yes I agree.

Something has to change the cost of housing does impact our economy. A room in my flat was recently advertised and several tenants were parents who had kids and they were looking at house shares. I know everyone on Mumsnet is very pro house sharing but I think people on a wage say above £40,000 should be able to at least rent a one bed flat in somewhere like London.

I even looked at buying in somewhere like Kent or renting in Kent, but the cost of a season ticket just didn't make sense for the cheaper rent or buying.

Even my hometown is expensive to rent and buy in we just need more social housing. I think council's in London spend around 90 billion on temporary accommodation costs, that is ridiculous.

Sadly they aren’t being realistic and are taking advantage of the fact that the job market isn’t great so they know people are desperate to keep their jobs.

I know someone whose company is drastically moving from being fully remote to now enforcing a 3 day a week mandate and the other 2 days becoming virtual office days where you’re sat on a call being watched.
It’s absurd.

Wealthy people just cannot grasp the concept of cost of living crisis. They do everything to frustrate the lives of their employees.

In my industry salaries are steadily reducing year after year as well. A job that paid say 35k a couple years ago is now being advertised at 23k. But these companies continue making record breaking profits year after year

Private rentals are hugely subsidised by the tax payer though, through high levels of housing benefit, plus the provision of emergency and temporary accommodation when people get into impossible rent arrears because benefits dont cover the amount. People who are working on lower and middle incomes are receiving benefits to help them pay basic rent.

I agree that the government/local government should be aquiring the properties that current LLs want to offload to put them to use as social housing properties

Another poster said that when LLs get rid of their properties because they're unattrative as a business anymore, they will 'back into the market'

What market, to be bought by who? The shop assistant on low income who needs benefits to help pay their rent? How would they get a mortgage? The person who is flitting from town to town to town to follow short term work contracts, they also dont want to buy?

Another poster said that when LLs get rid of their properties because they're unattrative as a business anymore, they will 'back into the market'

That might have been me. There is a shortage of all housing, not just rentals. I will be selling mine, but it is unlikely to be bought by a first time buyer, or anyone on a low income. It will likely be bought by a family with a dual income, or maybe a couple on the way to being a family. It is possible an investor will buy it, but I doubt it as it isn't really in their target market. I only kept it due to a quirk of fate. I didn't ever set out to be a landlord.

I’m staggered at the cost of the housing benefit that the government are paying out!

I wonder just how many homes could be built with that money…

As a LL, good tenants are worth their weight in gold. My first tenants were fantastic, looked after the house, got on well with the neighbours and we had a good working relationship. I was sad to see them leave.

It’s a terraced house in a very friendly street.

Since then (and about 6 tenants later…), I’m waiting for the next ‘golden’ tenant.

The others have irritated the neighbours on both sides, trashed the front garden, had a rabbit living in the house (without my knowledge), snapped light fittings, dribbled wax all over a granite fireplace which will never come out, blocked toilets with nappies and Lego, flooded the bathroom which collapsed the ceiling in the kitchen.

Out of their rent come my costs…

Britain needs to build a lot more housing, including all the types that people tend not to name when thinking about this issue. Building "luxury/executive homes" is good - people who upgrade to these properties will free up other properties. Building student accommodation is good - at the moment, a lot of houses are subdivided up and occupied by house-sharers, so providing purpose-built flats will free these up.

Building social housing is nice too, but the UK actually has a relatively high % of social housing as a proportion of its total housing stock compared to other European countries. Fundamentally, it's a supply issue - more homes are needed.

(The UK's vacancy rate is also among the lowest in Europe, so it is not true that "this is a vacancy problem, not a supply problem." Vacancy rates cannot really fall below a certain level, because you need at least a little vacancy in order to create sufficient flex in the market to allow people to actually move from one property to another).

For what it’s worth, I work with a number of graduates who live at home and independently.

It’s pretty obvious which grads are living at home and which ones are living in a flat share or with their significant other. It’s quite often that those living with their parents will need to rush off to get the last train, decline networking events after work, and generally less likely to put in the long hours. They might need to go home for dinner or for XY family event.

Of course it varies massively. Whilst I understand why people live at home to save money, the grads at work earn enough to afford to live out and have their own fully independent adult lives. We find those who live at home are slightly less mature/more expecting to be molly coddled.

No doubt that those grads who earn less than our grad scheme students who start on 60k might have more pressing needs to live at home for financial reasons. But I personally think independence and development in your early 20s is worth far more than saving £12k in rent a year. You only live once.

I agree @Reptor . DD23 is in a grad scheme in London and rents with 3 friends. They all pay about £900-£1k a month which is quite shocking but she’s having the best time and has grown up so much. Don’t t know how she’ll ever save but she won’t have it any other way.

I think 60k a year is a lot more than most young people in their 20s earn @Reptor

My son is also a graduate and earns about 35k so the problem remains that rent is unaffordable for many young people no matter how much it helps their independence & development.

We don't need to fund more social housing or support more people into homes it should be normal to stay at home until you can afford to move out. We bought our 1st home in our early 20 it was run down wreck that we still own and rent out. We worked full time spending evenings and weekends doing it up, we've repeat that process until we got our forever home in our 30s.

We have been saving a small despot for DS since the day he was born but he's welcome to stay home until he's ready to move out hence we bought a house where he has his own games room that can grow with him.

In Asian cultures multigenerational living is normal and it's something we could learn from.

We also need tenants to be realistic we once spent 2 weeks in winter without a boiler which shock horror as we own our home was just one of those things. If you read on here a tenant in that situation would be told they can run to the council to get it sort now and can't be expect to live like that......it needed a part no one could get hold of for weeks and it wasn't a)cost effective or b) environmentally friendly to replace the boiler instead of waiting. I also have a cupboard door in our utility that falls off frequently and we have blown windows in the conservatory..........tenants expect that fixed ASAP we live with it until we get chance to fix it.

We also bought our first flat in my early 20s @sleepyscientist but the point is young people can’t afford to do that anymore especially if they live in more expensive areas like London or the South East. They can’t afford to buy and increasingly, are struggling to afford to rent as well.

And with respect, it’s a bit different going without a working boiler for 2 weeks because you know you are waiting for a part to come into stock than waiting for a boiler to be fixed because your landlord isn’t engaging with the problem of getting it fixed so you don’t know how long it could take for them to consider your welfare their priority.

@Twiglets1 not everyone needs to live in the south east tho it might mean picking a house share if you want a particular career or living at home if your desperate to stay in the area. That's not a new idea people have been living in grotty house shares or house boats for generations.

It's also about not thinking kids are not your responsibility once they are 18 we will support our son until he doesn't need it anymore as is normal. Hence we have one child to make it feasible for him to do what he wants.

It's not all that different, yes we were waiting for a part but countless owners have to wait until they can afford a repair or the insurance pays out. They also have to live with less than ideal conditions from time to time. All reforms are doing is making it less attractive to be a landlord which is driving up prices, as a country we can't afford to socially house everyone who wants it (we are already in debt) so what is the answer?

To me it's a combination of taking responsibility for your own family and accepting lower standards. Maybe something like the hotel star rating on properties/landlords that is linked to the price of the property. I.e 5 new build property from a landlord with a proven track record who has a maintenance contract in place at 1.5k a month vs 1* new land lord on a Victorian terrace HMO that needs work

Not everyone needs to live in the South East but some do or how would we have schools, hospitals, communities there?

People can’t necessarily afford to live in London itself even if their jobs and families are there, that I accept. But the answer to overpriced housing in the South East can’t be for all the young people to leave! We need graduate teachers, doctors, nurses etc in all parts of the country, not to mention other key workers like care home workers & supermarket staff. They can’t all just leave the South East.

I’m not going to take your suggestion of living on a house boat seriously @sleepyscientist but re moving into a grotty house share, yes that is an option. Not a very nice one which I guess is a reason why so many young people are now choosing to live at home well into their 20s, 30s and beyond. I don’t think that’s good for society - let alone them, which is why so many people are upset about the housing crisis in this country.

In Asian cultures multigenerational living is normal and it's something we could learn from.

I live in Asia. Multigen living and "stay at home till you get married" is not a great idea once a culture has given up on the idea of arranged marriages - it results in "parasite singles" living at home for decades because they get themselves into a comfort zone and it becomes increasingly hard to accept the drop in standard of living which will ensure if you move out and have to start housekeeping by and for yourself. Not great for demographics.

Agree with PP about the slower maturing that happens when people stay at home, and the difficulties in dating, networking and having an active social life.

I think "hence we bought a house where he has his own games room that can grow with him" pretty much sums up the kind of thing I'm talking about - no offense, but you sound like you're talking about an 11yo. A grown young man should not be spending so much time hanging around at home that a games room becomes something that parents think they should plan for.

Don't even get me started on the issues that result when multiple adults in the same house all end up running a car each, resulting in housing estates where every inch of road and pavement has got vehicles jammed all over it and neighbors are having turf wars about parking....