Extortionate rents

[alice]

SJ 'have you (not you Londonmix -a rhetorical "you) got a house? well done, now chill, don't buy anymore and let other people find their own way.

so that would mean no rental housing except for the council and theyve got 20000 on the waiting list [ in southwark]

chaos

[Loz]

"rent controls existed in this country before and in many others - it's not science fiction to suggest them "

I'd rather see more social/council housing built. But I can never see enough being built in London - there are too many people wanting to live here.

[Mick Mac]

StraferJack Wrote:

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> "Its a business. "

>

> no, no it isn't

From a tax perspective its categorised as an investment, with specific tax treatment on income, being a different treatment from that of a trade.

[StraferJack]

". But ?200? ?300? Quantifying that value is difficult."

only if you are greedy and you let it

It's nothing to do with politics and everything to do with not being a bad human being. If you are taking a decision which effectively makes a family homeless you are quantifiably a Bad Person

If you have an empty house and you choose to let at market rates preventing some families from renting it, that is different. Nothing was taken away that they already had

But if you are a tenant and your landlord forces you out for no reason other than greed? Irredeemable

(and I'm not speaking from no experience. I was that landlord with that possibility of triple figure increases)

markets operate to keep the cost of food down. But they are operating to push house prices up and up (with a customer base that has extremely polarised opinion of wether that is a good or bad thing). So you can't compare the two

[StraferJack]

"so that would mean no rental housing except for the council and theyve got 20000 on the waiting list [ in southwark]

chaos"

nonsense - that would leave a lot of people who for reasons already outlined who happen to have a second home for non investment reasons

plus that waiting list would be much reduced if property were more affordable to buy

[LondonMix]

Exactly-- London has more social housing than the country in general as a percentage of the housing stock. However, with London creating more jobs than other regions, the demand to live in London by those who can't afford market prices is likely to outstrip supply.

Anyway, the real solution is to make other parts of the country more desireable by increasing economic vitality and job creation, particularly up north. That and building more houses. Everything else is just tinkering at the edges and ignoring the fundamental issue.

Loz Wrote:

-------------------------------------------------------

> "rent controls existed in this country before and

> in many others - it's not science fiction to

> suggest them "

>

> I'd rather see more social/council housing built.

> But I can never see enough being built in London -

> there are too many people wanting to live here.

[LondonMix]

Not true-- food prices and other commodities do go up often and with real consequences in the developing world. Demand and supply are always at work. The difference is that its easier to increase the supply of food for various reasons in repsonse to a spike in demand (and hence prices and profits that incentivise this action). For housing, planning laws have a significant role to play. Why aren't enough houses in London being built? That's the question that needs to be asked.

StraferJack Wrote:

>

> markets operate to keep the cost of food down. But

> they are operating to push house prices up and up

> (with a customer base that has extremely polarised

> opinion of wether that is a good or bad thing). So

> you can't compare the two

[Loz]

StraferJack Wrote:

-------------------------------------------------------

> markets operate to keep the cost of food down. But they are operating to push house prices up and up

> (with a customer base that has extremely polarised opinion of wether that is a good or bad thing). So

> you can't compare the two

Of course you can. Why do you think prices for basics such as wheat, soy, etc have gone up so much over the past decade? Because demand is up, especially with new markets in the BRICS countries opening up. The price hasn't gone up because production costs or anything have risen, it is purely the market. It's exactly the same.

In fact, food is worse when you consider that 32% of bread purchased in this country is thrown out, so people are buying more than they need to the complete detriment of others.

[Jeremy]

StraferJack Wrote:

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> But if you are a tenant and your landlord forces

> you out for no reason other than greed?

> Irredeemable

I'm with you on that one... and you'd think it could be tackled fairly easily...

[brain_opera]

Gentrification. And now it's coming to Nunhead, because we have a deli or something.

[duchessofdulwich]

a lot of the places do not rent out for the advertised asking price. Landlord's often accept much lower offers rather than leave a place empty.

[Otta]

KidKruger Wrote:

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> Rents in London are ridiculous - it's not an SE22

> thing.

SE22 is significantly higher than surrounding areas. Although nowhere is what I'd call reasonable. It's friggin impossible to save anything significant whilst paying these rents.

[bawdy-nan]

The thing is - the more rents rise, the more working people on lower and middle incomes will be able to access subsidy via Housing Benefit. This is paid for by Southwark which is funded partly by the govt but also partly by council tax payer - ie all of you nonchalantly asserting the power of market forces.

Housing is not an entirely market issue. It remains, in part, a local authority issue, partly because of the legal duties that are attached - re homelessness and administering local housing allowance.

Rising rents, especially in the "family", 2/ 3 bed private rental sector essentially means a drain on local authority resources (ie your resources) into buy to let landlords financial instruments.

Irrespective of your delight at gentrification and your assertions that the market must prevail in the face of social good, your need for middle income workers: teachers, health worker, local authority workers, etc etc etc must demand, surely that they be housed?

This is a London wide situation, of course. But even if you have cleverly found yourself in a position to buy before the rest and are gleefully pulling up your ladder and stamping on the hands below I don't think its an especially attractive prospect.

There used to be security of tenure and fair rent allocations and certainly, the climate for buy to let landlords wasn't especially tempting but in the absence of social housing and the growth of bizarre international property deals "something" surely needs to be done?

Even Boris expressed alarm at the pogrom of the poor or "social cleansing", as he described it, he believed would be ushered in by the benefits caps. Remember, and to return to my original point , the "benefits" system, especially for London private renters with families, is a system engaged with by people in work.

Southwark did some analysis recently (2012) about what income would be required to afford market rents. Based on the government's suggestion that you spend 25% of gross income on rent in order to rent a 3 bed property at 80% of market rate (ie lower than market rate) you'd need to earn ?62631 pa. This is LOWER than many other nearby postcodes in southwark including SE1, SE5, SE11, SE15, SE16, SE17 and SE21. (For a 2 bed you'd need to be earning over 50k).

Average income in 2012 was around 26k.

In 2013 these figures were updated. In order to afford rent at 80% of market on a 3 bed house and paying 25% of your gross salary you'd need to be earning ?74800. More expensive postcodes in Southwark were: SE1, SE11, SE16. SE17 and SE24. (not, note se21!).

For a 2 bed this was ?51800.

You can see the full pdf reports if you google "southwark affordable rents"

[Alex K]

@Loz: "When considering rents, you have to look at the rate of return on the investment, i.e. the property value. Generally, a landlord would be looking at a fair return of about 6%. Remember, this is not 'profit', as costs such as repairs, insurance, voids, mortgage, etc have to come out of it.

"So, if you are renting a property worth ?500k, then a 'fair' rent would be about ?2500 pcm."

Indeed. We were able to acquire an ED property at ?250K five years ago and have rented it at ?1.3K / mo ever since, to rise to ?1.4K this coming year. That it notionally is worth rather more crosses our minds now and again -- but we're making our 6%, the tenants are lovely, and Mrs Doasyouwouldbedoneby is still one of our heroines.

[bawdy-nan]

Alex K Wrote:

-------------------------------------------------------

> @Loz: "When considering rents, you have to look

> at the rate of return on the investment, i.e. the

> property value. Generally, a landlord would be

> looking at a fair return of about 6%. Remember,

> this is not 'profit', as costs such as repairs,

> insurance, voids, mortgage, etc have to come out

> of it.

>

> "So, if you are renting a property worth ?500k,

> then a 'fair' rent would be about ?2500 pcm."

>

> Indeed. We were able to acquire an ED property at

> ?250K five years ago and have rented it at ?1.3K /

> mo ever since, to rise to ?1.4K this coming year.

> That it notionally is worth rather more crosses

> our minds now and again -- but we're making our

> 6%, the tenants are lovely, and Mrs

> Doasyouwouldbedoneby is still one of our heroines.

Perhaps this just illustrates that small scale private financial speculation in a giddy and bubbling market isn't the best or most cost effective way to provide housing?

[Jeremy]

TBH bawdy-nan I think most people would agree that these high property prices (both rental and purchase) are detrimental to society. But I am struggling to see what we can do about it. In an affluent city where many people CAN afford to pay high prices and even buy investment properties too. There are certain things which might make a small difference (key worker schemes, etc), but isn't it essentially a manifestation of the wider issue of social inequality?

[GinaG3]

I'm a 'browse property sites for fun' sort of person, I get left completely disheartened each and every time. We moved in to our private rented 2 bed SE22 flat with 1x3m balcony (oh joy!) in 2009, at the grand old cost of ?1,050pcm. Pretty reasonable by current standards. Now, if only everything with the property was in order and up to standard. We've been looking for a new property for upwards of 2 years, but we just cannot afford it. I'm hard pushed to move with my partners job or further away from our daughters school which is already proving to be a ridiculous journey in itself. I'm trying to get closer to the Herne hill end of Dulwich but its just out of the question money wise. We are currently on the border of Forest hill, just about.

I've seen squats, quite literally, renting at ?1,600pcm. Our budget is dictated by the council as is our room allowance although I've sometimes seen 3 beds cheaper than 2 beds (this is against the rules as a tenant on LHA). FYI, within southwark this amount of ?241pw maximum. Another thing that gets me about the London market. There is such a plethora of professionals that landlords know they can outright refuse tenants in receipt of benefits, your completely stuck. We are a full time working household, pulling in enough to cover half our rent and all of our council tax and all our expenses but we need help. This automatically deems us as DSS tenants, therefore no-one will house us. Sick of finding a flat, just within our price range or slightly above but works for us and then the bottom of the ad displays NO DSS.

Being in this situation makes it double difficult. To come away from the situation and solely be able to take responsibility for our rent we would have to be taking ?2,500 a month in wages. For us a ?13 per hour pay rise is needed. While the markets are growing we are working on it, by which point the rent on a 2 bed without a garden will probably be ?2k a month. Your definitely covering your mortgage with that, even a buy to let.

[DaveR]

I hope there are very few people who simply think the market should be left entirely unchecked. On the other hand, a return to old style Rent Act tenancies is probably not the way forward; secure tenancies for ever and artificially low rents drive good landlords (and good properties) out of the rental market altogether.

There is obviously a supply issue, and financial incentives for established housing associations to develop brownfield sites would be a positive step, maybe in partnership with commercial developers for a mix of housing types. Incentives for longer term residential tenancies would also be a positive step - it doesn't have to be either tenancy for life or 12 months and then out on a month's notice. And key worker schemes do make a difference, even if only a small one.

However, none of this is going to make London a cheap place to live - there's just too much money chasing property here for that to happen. Like it or not, in large part it's a function of the success of the city (with a small 'c').

Specifically with regard to SE22, and despite bawdy nan's post above, the fact is that ED has got expansive and there are many other places that are cheaper. No one is forced to live here, as the regular posts on here from folks who have chosen to move on and benefit from cheaper housing costs demonstrate.

[LondonMix]

These ratios are better than I would have anticipated actually. It really just says that to afford a family home in London you need two working parents.

When demand outstrips supply everything you do (including housing benefit) has consequences. I personally would never want to see social housing eliminated from London. However, I recognize that the consequence of this is that the overall cost in the private sector ends up like-for-like more expensive.

In a simplfied model of London's housing market, there are 20 families who want to live in the capital but there are only 10 houses. Without any intervention, the result would be that the 10 richest families would end up living in the city with the rest forced to live else where.

If we allocated 30% of housing for social housing for example based on need, what we end up with is the 3 poorest families living in London along with the 7 richest families. The price the 7 richest families on average pay for the housing will be competed up based on the reduced private sector housing available. The middle 10 families are pushed out of the city.

An alternative would of course be that we go for a lottery or a list in which all 20 families sign up for housing and we allocate who gets it based on some system we agree on, though if that is a better long term solution for allocating housing is questionable.

Until more housing is developed and/or less people want to live in London every decision we make on housing policy is going to involve these types of trade-offs. Too much demand is concentrated in London. Some of this is foreign demand but at the heart of it is that London generates jobs and people from all over the UK move here to get on in life. Regional growth and development throughout the UK is therefore a key part in solving the London housing crisis. That, and of course building more houses.

bawdy-nan Wrote:

-------------------------------------------------------

> Southwark did some analysis recently (2012) about

> what income would be required to afford market

> rents. Based on the government's suggestion that

> you spend 25% of gross income on rent in order to

> rent a 3 bed property at 80% of market rate (ie

> lower than market rate) you'd need to earn ?62631

> pa. This is LOWER than many other nearby postcodes

> in southwark including SE1, SE5, SE11, SE15, SE16,

> SE17 and SE21. (For a 2 bed you'd need to be

> earning over 50k).

>

>

> Average income in 2012 was around 26k.

>

[LondonMix]

I am sure it?s not much consolation but a lot of the times it?s not the landlords but rather the banks. I have friends who have buy to let mortgages and it?s an explicit provision within their mortgage docs that they cannot let to DSS- which surprised them. I'm not sure how the banks can legally do this (seems discriminatory).

GinaG3 Wrote:

> Sick of finding a flat, just within our

> price range or slightly above but works for us and

> then the bottom of the ad displays NO DSS.

>

>

[Cyclemonkey]

Agreed but the problem with that it that communities suffer if people have to move on everytime the market changes. I moved to London because house prices are high and job opportunties are low in the small Kent village i grew up in.

I moved to Nunhead/Peckham as it was affordable and now it is becomming rapidly less so, when out rental contract is up i will have to move on as i cannot afford soem of the rents i am seeing round here. Fair enough you say but i will leave an area i have put down roots in over the last ten years. Communities need a stable population for all sorts of thing, community involvement, helping out older and more vulnerable residents, volunteering - increasingly the transience of youth is beginnng to apply to people in the 30s and 40s and soaring rents and house prices force people to move on regularly in search of cheaper housing. This does not do communities any good and if it continues many areas such as East Dulwich will suffer very soon.

People will always have to make choices and sacrifices but communities suffer if people are constantly on the move. My Dads small village is now a vilalge of old people as young families cannot afford to live there.

Even expensive areas need people to do the lower paid jobs. Whislt those us us with salaried central london 9-5 jobs can afford to move out further and commute, that's often not an option for the lower paid or those on shift work.

For example if you work in East Dulwich/Peckham earning ?8 an hour (as many catering, cleaning and bar jobs do) and maybe you start at 4am or finish at 3am the cost and time implicatiosn of travelling any distance automatically make that job unviable.

[LondonMix]

I think your point about stability is a well recognized one and the social benefits that acrrue with stable communities is behind many countries' policies trying to increase the rate of home ownership in their populations.

Not saying that's appropriate but just agreeing with you.

[Cyclemonkey]

The problem is Londonmix that home ownership is beginning to fail on that one - the way London house pices are soaring people can only afford a one bedroom flat so are forced to move out of the area if their families expand (or are even started) There was a good article in the Guardian about just that at the weekend. I'm not saying that anyone has the right to a house they can afford anywhere but communities that are full of the very rich and very poor or just an aging popualtion that managed to buy cheap 20 - 30 years ago are no good. There are some rural villages now in high house price, low job areas that are increasingly aging as young people cannot afford to stay there.

[Otta]

LondonMix Wrote:

-------------------------------------------------------

> I am sure it?s not much consolation but a lot of

> the times it?s not the landlords but rather the

> banks. I have friends who have buy to let

> mortgages and it?s an explicit provision within

> their mortgage docs that they cannot let to DSS-

> which surprised them. I'm not sure how the banks

> can legally do this (seems discriminatory).

>

> GinaG3 Wrote:

>

> > Sick of finding a flat, just within our

> > price range or slightly above but works for us

> and

> > then the bottom of the ad displays NO DSS.

> >

> >

How odd. I've always thought it was stupid to deny DSS applicants. Surely you know you're going to get your rent money paid.

[LondonMix]

I agree with you 100% Cyclemonkey. Moreover, I think everyone realises squeezing the middle earners out of London will utlimately be bad not just socially but economically for the city. The good thing, is that I think everyone agrees on that. The bad thing is there are no fast or easy solutions. There is clearly a need for more housing. We need a lot more housing being developed in London just to keep pace with demand. As people live longer, the demographic pressures are only going to increase. It really is a crisis.