House price inflation at 26%. Avg London House £400K. How long can this really go on?

[weltweit]

The point you're missing is the question of why they can get away with it and why that's so much more than it used to be.

They are getting away with it because renters are paying bigger and bigger proportions of their available funds on rent rather than on other things. That is certainly the case for me, my rent goes up, every year, every year I have less and less left over for other things.

As an answer to that question 'it's affordable' really doesn't help - you can take it to mean 'every last penny you can squeeze out of someone.' but that's about all. So it's wrong in that sense. But it also carrys the implication that it's OK. If rents are going up because people have more money that's not such a problem is it? It might be nice if they didn't but hey, they can afford it. And that's clearly not what's happening.

I think there should be some kind of limit to rents, perhaps a percentage of someone's income and no more. That morally would probably be the right thing to do, but I suspect it would be a nightmare to actually design a system like that.

 

[DotCommunist]

not really, a fair rents act can and has been in place in the past- its not the effort its the political will

 

[weltweit]

not really, a fair rents act can and has been in place in the past- its not the effort its the political will

But how would or did it work?

I think there should be a maximum percentage of someone's income for housing. There would need some kind of subsidy for people on lower incomes - I can't really see another way.

 

[existentialist]

They are getting away with it because renters are paying bigger and bigger proportions of their available funds on rent rather than on other things. That is certainly the case for me, my rent goes up, every year, every year I have less and less left over for other things.


I think there should be some kind of limit to rents, perhaps a percentage of someone's income and no more. That morally would probably be the right thing to do, but I suspect it would be a nightmare to actually design a system like that.

I don't think a per-tenant rent scheme would be workable, no. But, as others have said, there have been laws to control rents in the past - they seemed to have their own problems, but it's going to need either that or for the housing market to be flooded with new homes, and I don't see that happening any time soon.

 

[ViolentPanda]

What people can afford for housing could be totally impoverishing, because on a list of basic imperatives, shelter comes absolutely number one, higher than food, higher than utilities, higher than transport.

So, as I've said earlier, it's not what they can actually afford, it's what they're compelled to pay.

 

[Poi E]

From a national perspective it's a gross waste of capital having all this dosh going into a relatively unproductive part of the economy. And it also means loads of shit building work is being done.

 

[Favelado]

not really, a fair rents act can and has been in place in the past- its not the effort its the political will

Scrapped by Thatcher purely on ideological grounds. I can't recall news stories about problems being created by rent controls being in place.

http://www.bigissue.com/features/2080/time-rent-control

Rent caps were introduced during the Second World War, then held in place in the aftermath to stop landlords exploiting the millions of soldiers returning home. After a long post-war period of an uncontrolled market, the Rent Act of 1977 gave tenants greater rights and stability, and local authority officers had some powers in setting maximum rents. The cycle ended in 1988 when the Thatcher government, convinced the private rented sector had become too restricted, abolished all controls.

Ken Livingstone was lambasted for proposing a “living rent” for London (rents to be no more than one-third of take home pay) during last year’s Mayoral contest with Boris Johnson. The idea has gained little traction in the Labour Party since, although Islington MP Jeremy Corbyn has launched a Private Members Bill advocating rent control. Corbyn has warned the government’s policy of capping benefits is “leading to social cleansing” in parts of London poor people can no longer afford to live.

When rent controls went wrong in New York City, that was only because everything was going wrong at the same time there. Their failure was only a symptom of wider failure, they weren't inherently a flawed concept.

 

[Quartz]

Scrapped by Thatcher purely on ideological grounds. I can't recall news stories about problems being created by rent controls being in place.

As I recall, the problem at the time was that landlords weren't letting, because they couldn't get a decent rent and it was very difficult to evict tenants. I remember that when one elderly woman went into care in the very late 70s, to pay for it her daughter would only let her flat out to corporations - a so-called company let - because of this (I earned a few pennies helping move and clean).

 

[existentialist]

As I recall, the problem at the time was that landlords weren't letting, because they couldn't get a decent rent and it was very difficult to evict tenants. I remember that when one elderly woman went into care in the very late 70s, to pay for it her daughter would only let her flat out to corporations - a so-called company let - because of this (I earned a few pennies helping move and clean).

Yep. The thing is, this is a dynamic balance, albeit one that is swung way over to one side at the moment; let it swing too far back the other way and, potentially, you create a situation where it simply isn't economic for people to rent out housing.

 

[SpookyFrank]

And it also means loads of shit building work is being done.

Competition within the market is supposed to keep quality high, but when demand outstrips supply like it does with housing the motivation to build decent houses disappears, even if you build shit that won't last thirty years you can still sell it for a small fortune.

If it's in the right part of the right town you can sell it as 'executive housing' or whatever at an even bigger mark up, even if it's built to standards that wouldn't even have been tolerated on a 1960's council estate.

 

[ItWillNeverWork]

If under a rent-cap system landlords refused to rent out their properties then they should be forced to rent them out, otherwise force them to put the property on the market. Simple as that. There is no need to own more than one house, and there is no excuse for sitting on properties for speculative reasons.

 

[Favelado]

If under a rent-cap system landlords refused to rent out their properties then they should be forced to rent them out, otherwise force them to put the property on the market. Simple as that. There is no need to own more than one house, and there is no excuse for sitting on properties for speculative reasons.

Wouldn't you then have to limit the price they could sell the house for as well? Otherwise they could put the property on the market for an unrealistic price to sit on it.

 

[ItWillNeverWork]

Wouldn't you then have to limit the price they could sell the house for as well? Otherwise they could put the property on the market for an unrealistic price to sit on it.

Good point. You certainly have a knack for spotting how to play the system. I guess there would have to be a limit on the sale price of the house, yes.

 

[marty21]

Under the old fair rent system you had to apply to have the rent registered, landlords would be tempted to drop the rent to avoid a registered rent . This could work today, drop my rent to x or I'll have it registered when it will probably be even lower than x , puts more power in the hands of the renters .

 

[ItWillNeverWork]

Also make it a legal obligation for landlords to maintain properties to a certain standard. After all, we have minimum food standards so why not minimum rental standards?

 

[existentialist]

Also make it a legal obligation for landlords to maintain properties to a certain standard.

And establish a mechanism to ensure that the law is applied. One of the big problems we have - just look at the DWP - is the way in which authorities are often either not applying the law, or actively setting out to impede its application.

 

[ChrisFilter]

Competition within the market is supposed to keep quality high, but when demand outstrips supply like it does with housing the motivation to build decent houses disappears, even if you build shit that won't last thirty years you can still sell it for a small fortune.

If it's in the right part of the right town you can sell it as 'executive housing' or whatever at an even bigger mark up, even if it's built to standards that wouldn't even have been tolerated on a 1960's council estate.

'Even'? 50s and 60s council houses are solid as fuck.

 

[ItWillNeverWork]

And establish a mechanism to ensure that the law is applied. One of the big problems we have - just look at the DWP - is the way in which authorities are often either not applying the law, or actively setting out to impede its application.

Absolutely. Local authorities that fail to implement these standards should be liable to prosecution. In fact, we should have a social constitution that binds all future governments to certain principles regarding housing, healthcare, education, employment and the general well-being of the population.

 

[marty21]

Competition within the market is supposed to keep quality high, but when demand outstrips supply like it does with housing the motivation to build decent houses disappears, even if you build shit that won't last thirty years you can still sell it for a small fortune.

If it's in the right part of the right town you can sell it as 'executive housing' or whatever at an even bigger mark up, even if it's built to standards that wouldn't even have been tolerated on a 1960's council estate.

I saw a 2 bed flat in a council block in kings x advertised at about £750k a week or so ago, standard council block, probably built in the 30s . I know council tenants very well having worked in social housing for 20 years, I'm against RTB but something amuses me about someone laying out that sort of money for a council flat, where they could be living next door to a nightmare tenant I love my tenants but they can be a lot of hassle

 

[Mitre10]

Own and live in a two bed flat I bought 16 years ago, good location in Chelsea just off Kings Road.

Having another kid on the way, would like to move to a three-bed house but here it's a £1m step from my flat to that house.

Not possible. Prices have gone nuts. Would rather my house had stayed the price I bought it for and a small house an extra £60k for me to move up and accommodate my family.

First world problems I know.

 

[ChrisFilter]

Why not sell and move somewhere normal?

 

[Favelado]

Own and live in a two bed flat I bought 16 years ago, good location in Chelsea just off Kings Road.

Having another kid on the way, would like to move to a three-bed house but here it's a £1m step from my flat to that house.

Not possible. Prices have gone nuts. Would rather my house had stayed the price I bought it for and a small house an extra £60k for me to move up and accommodate my family.

First world problems I know.

Your flat is likely to be worth more than a million quid. The idea that this even qualifies as a first world problem is a bit of a stretch. Good luck with your new baby though.

Or is this a wind-up?

 

[Mitre10]

Going to do exactly that, move back out to the east end of the central line where I first lived when I came to London over 20 years ago.

My only point in posting was to note that how, if you were lucky enough to buy in a postcode that has enjoyed ridiculous property inflation, you are still as screwed when trying to " move up the ladder", in my case from a 2 bed flat to a 3 bed house as anyone else.

Ok, the figures are bigger but they are still as unaffordable - I bought my place years ago on a 3.5x mortgage. To buy it now, I'd have to be on 12x. To buy a 3 bed - probably 20x (excluding all equity).

Totally crazy.

 

[Favelado]

You are not as screwed as someone who has no chance of ever getting on the property ladder and could generate a few hundred thousand quid by selling their house in one of the world's most exclusive districts and moving to a cheaper area.

The average price for a two bedroom flat in Chelsea SW is 1.4 million. If you moved to Hainault you can buy a 3 bedroom house for 700,000 there.

I think you're going to be just fine.

 

[Mitre10]

I know I'll be fine, in the short term anyway, I've been stupidly lucky.

Only thing that hurts is that when we move I'll have to change schools for my first two. Had to do that myself at the age of 10 and still remember how hard it is to lose your friends at that age.

Don't want to put my own kids through it but no choice.

 

[SpookyFrank]

'Even'? 50s and 60s council houses are solid as fuck.

Yep, and now we're going backwards fast

 

[Poi E]

'Even'? 50s and 60s council houses are solid as fuck.

Yup, now with steel framing, bit of insulation, sprayed fibreboard and shitty flashing. Old council blocks give me a sense of reverence for the workmanship and philosophy that lay behind them. And some of them are wonderful examples of modernist/brutalist architectural creed.

 

[quimcunx]

Wouldn't you then have to limit the price they could sell the house for as well? Otherwise they could put the property on the market for an unrealistic price to sit on it.

I think currently 2nd homes (that little holiday cottage in Corwall for instance) you get a discount on the council tax because it is not the main home and is empty for much of the year. That could stop, for starters. people who can afford a 2nd home can afford the council tax. There could be punitive taxes for leaving properties empty too.

 

[Quartz]

I think currently 2nd homes (that little holiday cottage in Corwall for instance) you get a discount on the council tax because it is not the main home and is empty for much of the year. That could stop, for starters. people who can afford a 2nd home can afford the council tax. There could be punitive taxes for leaving properties empty too.

Surely anyone who has earned enough to afford a second home is sufficiently sensible to rent it out for the rest of the year?

 

[quimcunx]

Surely anyone who has earned enough to afford a second home is sufficiently sensible to rent it out for the rest of the year?

possibly. They can still be taxed. In theory. It's not like the political will is there, for any of this.