Employed to be given council house "priority"

[ViolentPanda]

If anyone is interested, I found an interesting review of the literature on the topic here;

http://www.csun.edu/~economics/2009-01-jenkins-reach_concl.pdf

An interesting paper, but it has no relevance to rent control legislation in the UK, it's about the US, where "rent control" means something entirely different, often (but not always) rents that are below market value due to covenants on the freehold.

 

[marty21]

An interesting paper, but it has no relevance to rent control legislation in the UK, it's about the US, where "rent control" means something entirely different, often (but not always) rents that are below market value due to covenants on the freehold.

so, not relevant to this discussion then

 

[ViolentPanda]

so, not relevant to this discussion then

Indeed.
The third sentence of the opening abstract read "This paper organizes the judgments of economists regarding the impact of rent controls in the American context." (my emphasis).

So, sweet fuck all to do with what we in the UK understand by the phrase "rent control".

And, to be frank, anyone who believes, given the wealth of evidence otherwise, that rent controls, rent officers and rent tribunals kept rental prices artificially low in the UK really do not know what they are talking about. At best, our rent controls forced the most egregiously bad landlords to pull their socks up on maintenance, otherwise all they did was prevent excessive rents and rampant tenant insecurity.

 

[_angel_]

maybe it's area dependent then but certainly everyone I know up here who's renting is paying more than everyone I know who's got a mortgage on similar sized properties.

Isn't it depend mainly also on when the person bought the house - obviously house prices can go up or down. Not heard of many tenants getting rent decreases tho!

 

[ItWillNeverWork]

An interesting paper, but it has no relevance to rent control legislation in the UK, it's about the US, where "rent control" means something entirely different, often (but not always) rents that are below market value due to covenants on the freehold.

Fair enough.

 

[Grandma Death]

I show flats atm under CBL, haven't got any figures to hand, but a fair percentage ime of the applicants are working - less than half though tbf - on the Estate I manage, I'd say at least 40% are on HB or partial HB.

Not the same for the ALMO I work for...some 67% IIRC of all of our tenants are out of work.

 

[marty21]

Not the same for the ALMO I work for...some 67% IIRC of all of our tenants are out of work.

it does vary quite a bit I'd say.

 

[mentalchik]

I dont think the BTL landlords are to blame as such. They are pawns competing with each other in the market driven by ever higher mortgages and bank lending.

The problem is the lack of alternative to BTL especially as they can usually outbid first-time buyers for houses that come up for sale.

Lack of council housing which kept prices down is the main problem. Or rent controls which amounts to the same thing.

Which is why RTB was brought in in the first place............inflated housing market, vested interests making huge wads of cash, bye bye to people being able to afford to live on one wage !

 

[DownwardDog]

I bought a flat in 1997 because rent was £550/month and mortgage was £280, both for a one-bed flat. It's unusual for rents to be that much higher than a mortgage - and that was in a part of the SE with a particularly fucked up rental market - but it's not uncommon for them to be higher, or on a par, with mortgage repayments, especially following a house price crash.

1997 was the bottom of the UK property market though - real house prices have more than doubled since then. As soon as IRs move off the bottom there will be plenty of -ve yield BTL portfolios.

 

[ymu]

1997 was the bottom of the UK property market though - real house prices have more than doubled since then. As soon as IRs move off the bottom there will be plenty of -ve yield BTL portfolios.

It was also following a crash, which is generally when rents do shoot up as mortgages get cheaper.

And that's the point. BTLers will be hurting. They're amateurs, and their capital got sucked in to maintain an overheated property market which they could not afford to be in. Chewed up, spat out, someone else has pocketed their cash whilst the rest of us pay for it.

 

[lighterthief]

It was also following a crash, which is generally when rents do shoot up as mortgages get cheaper

Why would rents go up if mortgages are cheaper? Or do you mean rents increase in relative terms compared to mortgages?

 

[ViolentPanda]

Why would rents go up if mortgages are cheaper? Or do you mean rents increase in relative terms compared to mortgages?

A crash usually (but not always) means a short glut of property on the market as individuals are repossessed, and mortgage-lenders look to liquidate the asset. The end of a crash (usually but not always, the "credit crunch" being a case in point) often brings cheap mortgages, but business is better placed than individuals to take advantage of this post-crash, so investment for rental makes sense.
That being so, rents in a demand-led market won't lessen, and are likely, due to speculative pricing on new rental properties, to at least attempt to increase.

 

[marty21]

http://www.insidehousing.co.uk/ihstory.aspx?storycode=6513468

fairly relevant to the debate

Tories have announced a change in social housing funding
The government has set out details of the payments councils in England will have to make to move to a self-financing system for council housing.

Stock owning local authorities will have to take a share of £21.428 billion of debt that is currently held by central government. In return they will be allowed to keep all rental income.

not sure if this is a good deal or not - they get to keep the rental income, so it's simpler, and supposedly self-financing - but have to take on Government debt in return - which isn't good.

 

[Streathamite]

Why would rents go up if mortgages are cheaper? Or do you mean rents increase in relative terms compared to mortgages?

cheaper Mortgages=more homes bought=fewer to rent=rents rise

 

[marty21]

cheaper Mortgages=more homes bought=fewer to rent=rents rise

if those cheaper mortgages attract BTL buyers - could also be an increase in rented properties - and if they are not profiteering - lower rents to cover the cheaper mortgages

 

[ViolentPanda]

if those cheaper mortgages attract BTL buyers - could also be an increase in rented properties - and if they are not profiteering - lower rents to cover the cheaper mortgages

Huge "if" though, marty. A new landlord on the scene is far more likely to regularise his rent to the local average (or even the local apex) than offer his place cheaper, unless he's in one of the few areas where supply and demand are fairly well-balanced.

 

[marty21]

Huge "if" though, marty. A new landlord on the scene is far more likely to regularise his rent to the local average (or even the local apex) than offer his place cheaper, unless he's in one of the few areas where supply and demand are fairly well-balanced.

I know it's a big if - does depend on landlords being 'fair minded' and that is an elusive beast

 

[ymu]

A crash means lots of people being repossessed and a (temporary) tightening of the credit rules, so there are more people looking to rent and fewer people looking to buy a home, whilst the investors pile in on cheap property in the hope of getting into the next bubble before it inflates. There has been more downward pressure on rents this time around than usual because it's in the context of a much wider economic failure, and interest rates are very low (unlike in the early 1990s). But the upward pressure of people needing somewhere to live and not being able to buy is still there. How big the effect is depends on the area - big university cities in areas where property boomed will be more affected than areas with a more balanced local economy and housing market.

 

[marty21]

Policy wonks working overtime at Westminster atm

http://www.insidehousing.co.uk/ihstory.aspx?storycode=6513466

they want to give more priority to long-term residents of Westminster - 10 years plus