How high will inflation go ?

[UKSBD]

Why is one bed flat worth 190 thousand pound ? in what reality is that sustainable

In a reality when the mortgage to buy it is £300 a month but the rent to live in it is £600 a month

Rental prices need to drop for housing prices to drop

Housing prices need to drop for rental prices to drop

Which has to happen 1st though?

 

[MBE2017]

In a reality when the mortgage to buy it is £300 a month but the rent to live in it is £600 a month

Rental prices need to drop for housing prices to drop

Housing prices need to drop for rental prices to drop

Which has to happen 1st though?

Increase supply, the market will adjust automatically, supply is the issue.

If you want a two bedroom home in a town and there are only say 20 on sale or rent, but new homes increase that to say 100, all rents and values will automatically adjust.

As Maggie Thatcher used to say, you cannot buck the market.

 

[simon field]

The only reason property has not gone down is because for the last 50 years we have been persuaded that property is a safe investment and we should do all we can to place our trust in property as a safe ever appreciating asset.
That is logically wrong - the country is not producing ever increasing amounts of wealth (or rather the increase is not at anywhere near the same speed as the rise in housing prices)
The ONLY reason we have long term house price inflation > real inflation is because the government has pumped money into the market. From the original Right to buy, via help to buy, shared ownership schemes, relaxation of pension investment rules, relaxation of bank lending rules and stamp duty holidays the various governments have been pumping up the housing market.

Because of this couples now NEED both to work to produce the income to allow a multiplier for a mortgage so they can also jump into the bubble. At some point it will burst, economic logic says it has to. The issue is that no government (particularly a conservative one that since Maggie has been built on the promise of home ownership) wants it to be on their watch, so they keep coming up with schemes to punt it down the road a bit - that punting is getting harder and with each extra inflation of the bubble the burst will be more spectacular.

Oh absolutely I agree. But if the current bunch of incompetents can keep it going, then anyone can!

I think the days of people in the uk being obsessively fixated on ‘owning’ a house are numbered personally. Much more normal to rent on the continent.

 

[UKSBD]

If you want a two bedroom home in a town and there are only say 20 on sale or rent, but new homes increase that to say 100, all rents and values will automatically adjust.

The problem is - Why is a property developer going to build 100 new homes if it means the value of them when finished (and before sold) has dropped?

More should be done to stop developers sitting on land and more should be done to make developers build the types of properties needed rather than the ones that make them most profit

 

[japancool]

More should be done to stop developers sitting on land and more should be done to make developers build the types of properties needed rather than the ones that make them most profit

Equally, I've seen many of these so-called "starter homes" come up nearby. They're shoeboxes, barely the kind of homes you'd want to raise a family in.

But even these shoeboxes are going for ridiculous amounts of money.

And if you're a larger family, they're not fit for purpose. What are councils doing about increasing the stock of social housing? Is there even any incentive for councils to do so, if they're just going to have to flog them off at a knockdown price?

 

[MBE2017]

The problem is - Why is a property developer going to build 100 new homes if it means the value of them when finished (and before sold) has dropped?

More should be done to stop developers sitting on land and more should be done to make developers build the types of properties needed rather than the ones that make them most profit

Why does it have to be a property developer? Social housing is the fastest and most expedient method. Any Government should announce a 1 million house building programme straight away, tens of thousands of jobs created, set up thousands of apprenticeships at the same time.

There are other methods, but the above is the easiest.

 

[UKSBD]

Why does it have to be a property developer?

It doesn't, but they (and land owners) are the ones sitting on the land

Once land owners and developers know the only way they will ever get planning permission is by building cheaper/social housing the value of the land drops and the cost of the houses drop

Made up figures just for example

If a plot of land can have £10m of property built on it, the land owners sells it for £1m

If the same plot of land can have £20m of luxury property built on it, the land owners sells it for £2m

Result = Land owner just sits on land and waits until permission for luxury homes is granted

If it is made 100% clear that £20m or luxury property will never be allowed, the land owner sells for £1m and the right sort of properties for the area are built and eventually prices drop.

As property is seen as such a good long term investment, I've never understood why councils and Government don't actually own it and rent it out.

 

[simon field]

As property is seen as such a good long term investment, I've never understood why councils and Government don't actually own it and rent it out.

Our local council lost millions on a housing deal that went bad. Nobody has been held accountable, and we haven’t got our money back. Says it all really.

 

[MBE2017]

It doesn't, but they (and land owners) are the ones sitting on the land

Once land owners and developers know the only way they will ever get planning permission is by building cheaper/social housing the value of the land drops and the cost of the houses drop.

I would happily support such conditions being imposed, say planning permission only granted if enough land was offered if certain types of houses were to be built, otherwise, compulsory purchase the land. Permitted development rights have been a step in the right direction.

The Gov and it’s various departments, such as the MOD, probably have more land going spare than many developers, add the various Councils into that and it would free up a lot of land. Another simple thing that could be done is to allow VAT to be reclaimed from renovations, save demolishing many perfectly serviceable buildings.

As property is seen as such a good long term investment, I've never understood why councils and Government don't actually own it and rent it out.

Like many things, local and national Gov is not very efficient, it’s harder to develop property than it first looks. Many council houses are in an awful state of repair, yet the councils do not clamp down on their own stock as eagerly as private landlords. Strange that.

 

[IanSuth]

No need to do any real legislation

The current housing market is governed by the supply and demand of capital not houses

Stop new initiatives to hand out more free capital (stamp duty holidays and help to buy)

Stop pestering the BofE and regulators to let lenders lend more freely.

If any legislation is needed it should be set a salary multiplier cap on an absolute floor of minimum % of new estates that need to be affordable and a local salary multiplier to set the price for those. Let the market decide after that.

NOTHING else is needed, that tightening of capital supply would solve things in a not too dramatic manner alongside the changes to letting / buy to let regulations which are squeezing off the price pressure from BuyTo Let speculators, they will be looking to sell not buy which will depress prices

 

[japancool]

Higher interest rates will also depress the market.

 

[Casually made]

Shame the government can't print more houses

All of our problems would be solved overnight

 

[simon field]

227,000 homeless currently.

 

[IanSuth]

Higher interest rates will also depress the market.

By depressing the demand for capital

As I said house prices respond to the supply and demand of/for capital more than of/for houses

 

[simon field]

I didn’t realise that only a third of uk population own their homes.

Reckon that’s going to go down even more as renting becomes the norm.

 

[DazRave]

I didn’t realise that only a third of uk population own their homes.

Reckon that’s going to go down even more as renting becomes the norm.

Does "own their homes" mean paid off? Because if it does it's much higher than I thought but I assume it's just mortgaged homes.

 

[simon field]

Does "own their homes" mean paid off? Because if it does it's much higher than I thought but I assume it's just mortgaged homes.

Yes, those who own their homes outright (as opposed to the bank)

 

[WaveJumper]

It doesn't, but they (and land owners) are the ones sitting on the land

Once land owners and developers know the only way they will ever get planning permission is by building cheaper/social housing the value of the land drops and the cost of the houses drop

Made up figures just for example

If a plot of land can have £10m of property built on it, the land owners sells it for £1m

If the same plot of land can have £20m of luxury property built on it, the land owners sells it for £2m

Result = Land owner just sits on land and waits until permission for luxury homes is granted

If it is made 100% clear that £20m or luxury property will never be allowed, the land owner sells for £1m and the right sort of properties for the area are built and eventually prices drop.

As property is seen as such a good long term investment, I've never understood why councils and Government don't actually own it and rent it out.

We have several large developments going on right now here with new prices around 700/800k the "starter" homes seem to come in at around 425/450k hardly what you would call 'affordable' for a first time buyer, however every time my youngest and his girl friend tried to get a foot on the ladder last year these were sold before the developers had even laid the first course of bricks. We began to think in reality they never existed or where purchased by their own teams.

Something on the topic of how the developers get around the rules:

How private developers get out of building affordable housing

Local authorities say how much affordable housing developers have to provide. So why isn't it getting built?

neweconomics.org

 

[fisicx]

Same around here. Big developments with tiny numbers of 1 and 2 bed properties that don’t even appear on the listings. Also seeing more gated communities to keep the proles out.

 

[IanSuth]

We have several large developments going on right now here with new prices around 700/800k the "starter" homes seem to come in at around 425/450k hardly what you would call 'affordable' for a first time buyer, however every time my youngest and his girl friend tried to get a foot on the ladder last year these were sold before the developers had even laid the first course of bricks. We began to think in reality they never existed or where purchased by their own teams.

Something on the topic of how the developers get around the rules:

How private developers get out of building affordable housing

Local authorities say how much affordable housing developers have to provide. So why isn't it getting built?

neweconomics.org

When my mother in law was selling her small farm in devon and downsizing she became aware a lot of the houses she was looking for (un modernised big square blob with high ceilings) were being privately sold under the table when people died. The developers had most of the local estate agents who dealt with deceased estate sales on deal where if they told them upfront before the house went to general market they would get a set fee no matter what the sale price. Bit of easy money, house went for under market value and was immediately converted into several flats for holiday lets

 

[MBE2017]

Well with Nicola Sturgeon just introducing a rent freeze and zero evictions until at least next March, she will cause many problems down the road. It might make a nice soundbite on the news, but before anyone rejoices too much ask yourself the simple questions.

Did the landlords cause a cost of living crisis?
Did the landlords increase energy prices by 80%?
Why are the councils and Governments not providing houses etc, instead of landlords?

All this will do is dry up the supply of rental properties even more with many landlords considering their futures, rents will increase above the norm as soon as possible, and the landlords left will be putting harsher restrictions on who they let too in the future. All in rents will almost certainly become a thing of the past.

Once the dust settles, the big banks and Blackrock will move in.

 

[MOIC]

Well with Nicola Sturgeon just introducing a rent freeze and zero evictions until at least next March, she will cause many problems down the road. It might make a nice soundbite on the news, but before anyone rejoices too much ask yourself the simple questions.

Did the landlords cause a cost of living crisis?
Did the landlords increase energy prices by 80%?
Why are the councils and Governments not providing houses etc, instead of landlords?

All this will do is dry up the supply of rental properties even more with many landlords considering their futures, rents will increase above the norm as soon as possible, and the landlords left will be putting harsher restrictions on who they let too in the future. All in rents will almost certainly become a thing of the past.

Once the dust settles, the big banks and Blackrock will move in.

Sturgeon speaks before she thinks the consequences of her actions through.
Tenants can essentially stop paying rents with the knowledge they can’t be evicted until at least the end of March.

Most landlords have mortgages to pay, so with rising interest costs and utilities, will landlords survive?

Will she also freeze the banks increasing their interest rates and utility companies freezing prices?

Nope, Blackrock getting ready. . .

 

[WaveJumper]

Well with Nicola Sturgeon just introducing a rent freeze and zero evictions until at least next March, she will cause many problems down the road. It might make a nice soundbite on the news, but before anyone rejoices too much ask yourself the simple questions.

Did the landlords cause a cost of living crisis?
Did the landlords increase energy prices by 80%?
Why are the councils and Governments not providing houses etc, instead of landlords?

All this will do is dry up the supply of rental properties even more with many landlords considering their futures, rents will increase above the norm as soon as possible, and the landlords left will be putting harsher restrictions on who they let too in the future. All in rents will almost certainly become a thing of the past.

Once the dust settles, the big banks and Blackrock will move in.

Currently have a family member viewing properties for their portfolio and the distinct impression I get is there are more landlords trying to dispose of their properties than those looking to buy which not going to help the supply of available rentals if this is the current trend I would have thought.

 

[The Byre]

Rent control and rent price freezes are the norm in most of Europe. The UK is the exception.

 

[IanSuth]

And Scotland is not England

They have totally different property laws and traditions - they even have a legal requirements for solicitors finacne staff to be members of SOLAS (society of law accountants scotland) with all sorts of rules and regs regarding the accounting for rents and service charges etc plus ringfencing of client monies

 

[Casually made]

My heart isn't exactly bleeding for "landlords"

Many have tried to leverage BTL as a get rich quick scheme at the expense of the rest of society , they aren't liked because they are too greedy a roof over someones head can't be used as a means of extortion

These landlords cramming people into multiple occupancy's and charging tenants 5-600 for 4 walls is quite frankly disgusting

Did the landlords cause a cost of living crisis?
Did the landlords increase energy prices by 80%?
Why are the councils and Governments not providing houses etc, instead of landlords?

No they didn't but they are the ones who the government knows can be penalised without too much grievance from the public

 

[simon field]

My heart isn't exactly bleeding for "landlords"

Many have tried to leverage BTL as a get rich quick scheme at the expense of the rest of society , they aren't liked because they are too greedy a roof over someones head can't be used as a means of extortion

These landlords cramming people into multiple occupancy's and charging tenants 5-600 for 4 walls is quite frankly disgusting


No they didn't but they are the ones who the government knows can be penalised without too much grievance from the public

Hey! I’m a ‘landlord’.

Luckily i don’t rent out a property in Scotland. What’s your problem exactly?

 

[Casually made]

Hey! I’m a ‘landlord’.

Luckily i don’t rent out a property in Scotland. What’s your problem exactly?

Read the post.

 

[IanSuth]

Hey! I’m a ‘landlord’.

Luckily i don’t rent out a property in Scotland. What’s your problem exactly?

I am guessing his point is that like all investments the value can go down as well as up but over the last 30 years people have ASSUMED that the underlying asset value would rise and stupidly (yes totally that word) based their investment decisions on that.

I am thinking of those who get a BTL mortgage cram in as many renters as possible in an HMO use the proceeds to get another BTL and keep expanding with it all built on a pyramid of debt serviced by the renters.

When the renters can't pay enough to service the debt it will crash and the stupid investor is left realising the only person who will have made money will be the bank and the people worse off will have been the renters who basically serviced all that debt

 

[MBE2017]

And Scotland is not England

They have totally different property laws and traditions - they even have a legal requirements for solicitors finacne staff to be members of SOLAS (society of law accountants scotland) with all sorts of rules and regs regarding the accounting for rents and service charges etc plus ringfencing of client monies

In England and Wales all deposits have to legally be put into separate accounts, all rents included on tax reports so I see little difference.

No they didn't but they are the ones who the government knows can be penalised without too much grievance from the public

Agreed.

Whilst few will have any sympathy, how many of you business people would appreciate such controls being put in place arbitrarily with no consultation or consideration. Not the first time wee krankie likes to put pressure on the UK PM, the timing of this announcement was not accidental.

 

[MBE2017]

When the renters can't pay enough to service the debt it will crash and the stupid investor is left realising the only person who will have made money will be the bank and the people worse off will have been the renters who basically serviced all that debt

Unless of course they have insurance for non payment, like any sensible person in any business should consider if available. The argument for not converting a house into a HMO is a stupid one.

It’s like saying only have one aisle in a supermarket. Do supermarkets or any other business not use their assets to there maximum efficiency? Where do all those people who cannot afford a whole house live? You are arguing to make tens of thousands of people homeless, hence why greater supply is required first.

 

[IanSuth]

In England and Wales all deposits have to legally be put into separate accounts, all rents included on tax reports so I see little difference.

I used to deal with a company that wrote legal practice management software - their usp was they had written it for the scottish market whose regulation was far far far more robust than the english system so you could know it was fully compliant and would allow far easier auditing and tracking of funds etc.

it is not just tennant deposits which are ringfenced in scotland

I am not good at explaining it - but the entire scottish legal framework around property is different from England&Wales - just look at the process of buying a house in Scotland for example but a lot also because of tenements i think

 

[IanSuth]

Unless of course they have insurance for non payment, like any sensible person in any business should consider if available. The argument for not converting a house into a HMO is a stupid one.

It’s like saying only have one aisle in a supermarket. Do supermarkets or any other business not use their assets to there maximum efficiency? Where do all those people who cannot afford a whole house live? You are arguing to make tens of thousands of people homeless, hence why greater supply is required first.

No I am saying there are a large number too leveraged - their renters cant keep paying more and more rent, especially those on benefits (hence why so many landlords refuse to look at those on UC) so at some point the demand for higher rent to cover higher interest payments will exceed supply of that rent

What do you think is a fair rental (not including utilities) for a room in a victorian stock housing HMO in a large town/city in the SE (excluding london) where a standard admin jobs pays about £22-24k

 

[MBE2017]

No I am saying there are a large number too leveraged - their renters cant keep paying more and more rent, especially those on benefits (hence why so many landlords refuse to look at those on UC) so at some point the demand for higher rent to cover higher interest payments will exceed supply of that rent

What do you think is a fair rental (not including utilities) for a room in a victorian stock housing HMO in a large town/city in the SE (excluding london) where a standard admin jobs pays about £22-24k

There will be a small number of amateurs leveraging themselves to the max, if they go under, like any business, that is the way it goes. You cannot get a BTL mortgage over a 75% leverage, there is a reason for that. Even in previous property corrections, house prices have never dipped 25% in my memory, if they ever have not for very long, so the banks are safe, hence the term safe as houses.

As for a fair rent, one someone is willing to pay for the size, condition and location of the property. How much the person earns is irrelevant, I would like a Bugatti Veron, but I cannot justify one on my earnings. The market decides, it always does.

 

[IanSuth]

There will be a small number of amateurs leveraging themselves to the max, if the go under, like any business, that is the way it goes. You cannot get a BTL mortgage over a 75% leverage, there is a reason for that. Even in previous property corrections, house prices have never dipped 25% in my memory, if they ever have not for very long, so the banks are safe, hence the term safe as houses.

As for a fair rent, one someone is willing to pay for the size, condition and location of the property. How much the person earns is irrelevant, I would like a Bugatti Veron, but I cannot justify one on my earnings. The market decides, it always does.

And the market is saying the country can not on average afford the rents on average and someone needs to take the hit - in Scotland Sturgeon has decided it will be landlords

And as for property prices in 1991 my ex boss bought a house for £78k, 1 road from where i bought in 1993 for £50k, he sold his for £48k the same year having seen a low point of £42k

That is well over a 25% correction

 

[Casually made]

Agreed.

Whilst few will have any sympathy, how many of you business people would appreciate such controls being put in place arbitrarily with no consultation or consideration. Not the first time wee krankie likes to put pressure on the UK PM, the timing of this announcement was not accidental.

Well thats kind of what happened to all of us in lockdown wasn't it

there was little consultation and next to no consideration to the economic damage that was about to be done.....it was just panic stations and print as much money as we can for 2 years ....

It was painstakingly obvious from around june 2020 only over 50's needed to be locked down and with a vast majority of over 60's in retirement anyway the economic cost could have easily been mitigated by sending everyone else to work

Instead we continued the pantomime for a further 18 months ..... and here we are talking about the ramifications now

 

[IanSuth]

Sold House Price Trends in Reading 2025 | Home.co.uk

View sold house price trends for Reading. Historical Land Registry data showing completed transactions.

www.home.co.uk

doesnt go back to 91 but look at this and say you can't see a greater than 25% fall is possible (in fact preferable) first price 95 2nd 22

Terraced

£59,477

£372,372

+526%

in 1995 an admin role paid about £14-5k in reading, the same jobs are now £22-24k

Rental of a single room has gone from c£150-175 to c£500-600 min in the same time period

 

[The Byre]

Many have tried to leverage BTL as a get rich quick scheme at the expense of the rest of society

At the bottom of this debate is the unwillingness of some societies to look at how other nations do things and learn from them - assuming of course that they do things better. Most noticeably, US and UK societies are completely convinced that how they do things is the only possible way and other systems are not to be even discussed.

For the UK, the total failure that is the NHS is a case in point. Property laws are another. I shall not go into the various differences between national property laws, but allowing landlords to play fast-and-loose with BTLs on a mortgage is not how you maintain a stable and healthy property market. Also, allowing the likes of Blackrock and Vanguard to suck up vast stretches of the rental property markets in the UK and the US and dump them at the first signs of a downturn in property prices causes great economic damage to a nation.

It is the blatant financialisation of a human right - the basic right to have a roof over your head - a decent place to live!

And when it comes to inflation, governments everywhere went mad with C19. They were caught up in hysterical overreaction that bore no relationship to the original infection or its effects. Yes, it killed the infirm and the morbidly obese, including two friends of mine. As sad as that is, so do many things. But I calculated the cost to the UK economy of those deaths and it came to £17bn.

Only now are we getting a handle on the enormous cost of the lockdowns and of money-printing and love-bombing people with unearned freshly printed money! The resultant inflation is going to kill a great deal more people than C19 ever could!

We all caught C19 anyway - so we crashed our economy for a completely pointless exercise!

And nobody wants to mention Switzerland. No lockdowns, no QE, no borrow and spend. Result - 3.4% inflation (and they have to import just about everything, including energy!)

 

[NickGrogan]

Even in previous property corrections, house prices have never dipped 25% in my memory, if they ever have not for very long, so the banks are safe, hence the term safe as houses.

The average price of all houses hasn't dropped 25%, but people don't own all houses, they own a house or a group of houses.

Plenty of houses have fallen in value by far more than 25%, if you're unlucky enough to own one of them, you're in trouble, whatever happens to the average.

https://www.channel4.com/programmes/the-1-houses-britains-cheapest-street

I'd assume that these houses were worth more than £1.25 at some point.

 

[simon field]

Read the post.

I did. You seem angry. Are you a poor tenant, paying £600 ‘for four walls’?

I don’t fit into any of your special criteria, and nor do other mates of mine who rent places out.