How high will inflation go ?

[MBE2017]

And this is my problem with contactless payment - i think it is yet another thing that makes people spend more than they would of if they actually had to count out the tenners and think how many hours work it took to create that money

My daughter, unlike most of her friends is debt free and in a well paid job. She is saving for a house deposit, but was struggling, so I suggested she reverted to cash only payments.

She now only draws £100 per week to live on for food and fuel, and using this method despite saying she would struggle on this weekly amount, she now saves most weeks from the cash.

 

[IanSuth]

My daughter, unlike most of her friends is debt free and in a well paid job. She is saving for a house deposit, but was struggling, so I suggested she reverted to cash only payments.

She now only draws £100 per week to live on for food and fuel, and using this method despite saying she would struggle on this weekly amount, she now saves most weeks from the cash.

Son was going to do the same but the uni bars & shops offer a 10% discount for paying using your student ID card (and now staff ID card) which doubles as a contactless card (i am sure their research shows them they make more than that extra in the additional purchases)

Instead of linking it to his main current account like most, he has it linked to a revolut account that he only tops up with a set amount each week. He also gave his banking app a stupidly long password. That means he doesnt overspend as if drunk enough to think it a good idea to transfer extra the time taken to accurately enter the password makes him think twice

 

[MBE2017]

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.

Spoke to a contact today who had come out of a meeting with the minister supposedly in charge of this rent freeze in Scotland. When asked for more details, when, where, how etc, he admitted he had no clue as to how it would work, they are now working on the details.

Basically announced to get pressure onto our PM and seem relevant.

 

[Justin Smith]

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.

Tenants already know the balance of power is way in their favour.
Latest thing I heard, a friend of mine has a house she rents out. The tenants moved out and want their £1200 deposit back. But they have done a whole load of stuff, nothing malicious but enough to take all that £1200 to get the house back to its standards when they moved in about 4 years ago.
But, as landlords know, they no longer hold the deposit, it's a separate government scheme and some of their rules are unbelievable. E.g. (amongst other things) an iron was dropped on the carpet, right in the middle of the room so the whole carpet obviously need replacing, but the managing agents said she'll get very little because the deposit company will work out the area of the carpet damaged and the fact it's 4 or 5 years old (betterment and all that). But it's in a bedroom ! How often does a bedroom carpet need replacing ! It's cobblers.

 

[MBE2017]

How often does a bedroom carpet need replacing ! It's cobblers.

Personally I change any carpet after four years as standard when a tenant moves out, it makes renting properties much easier than trying to clean old dirty ones with furniture imprints and different shades all over them.

I put down top quality underlay but mid value carpets on top, you can strip the carpet that way and reuse the underlay, which is the most important thing quality wise.

 

[Justin Smith]

Personally I change any carpet after four years as standard when a tenant moves out, it makes renting properties much easier than trying to clean old dirty ones with furniture imprints and different shades all over them.

I put down top quality underlay but mid value carpets on top, you can strip the carpet that way and reuse the underlay, which is the most important thing quality wise.

I wouldn't expect a carpet to be that dirty after four years, depending on what the tenants were like of course !
I agree with you about the underlay, a carpet fitter I know told me always go for decent underlay as it makes the carpet last longer. Though that would not be relevant if planning to change the carpet every 4 years ! Apart from the cots, surely doing the latter is not environmentally friendly though ?

 

[IanSuth]

Well i am surpised

Apparently due to the fall in petrol and diesel despite food price inflation the official inflation estimate for August is 9.9% which has us at the bad end of the decent sized European economies but better than Spain" So i would say if there is a Brexit effect on inflation it looks to only be about 1-2% (taken ona single month figure)

From my post last week

Germany 8.8
Ireland 8.9
France 6.5
Spain 10.3
(EU average 9.1)

I reckon ours will be 11-11.5% most likely 11.2

 

[Newchodge]

Well i am surpised

Apparently due to the fall in petrol and diesel despite food price inflation the official inflation estimate for August is 9.9% which has us at the bad end of the decent sized European economies but better than Spain" So i would say if there is a Brexit effect on inflation it looks to only be about 1-2% (taken ona single month figure)

From my post last week

Germany 8.8
Ireland 8.9
France 6.5
Spain 10.3
(EU average 9.1)

I reckon ours will be 11-11.5% most likely 11.2

I think you need to take into account that not everywhere measures inflation in the same way. For example, if inflation in this country were measured by price increases in food staples and energy it would be at about 125%!

 

[IanSuth]

I think you need to take into account that not everywhere measures inflation in the same way. For example, if inflation in this country were measured by price increases in food staples and energy it would be at about 125%!

For the point of view of those stats the EU ones are compiled by intrastat all to the same formula and I believe we are still using the same (it is the UE agency that keeps track of everything as it is used for some things like budget contributions and was used for the rebate as well)

 

[MBE2017]

Saw this article today and have put part of it below, in answer to those that believe landlords are just greedy.

“NRLA chief executive Ben Beadle We are already seeing a shrinking private rented sector – 260,000 homes have left the sector in the last five years, and look at what we are seeing: costs increase across the board, demand massively outstripping supply, yet rents are rising 3.2%, a rate lower than the social sector which was 4.1% in April.

Ian Maitland, president of the South West Landlords’ Association added that the people who drew up the legislation were clearly unfamiliar with the standard of build in areas such as the West Country.

“Some of their properties are horrendous and you will never get them to an EPC of D, never mind a C. Cornwall is a really good example. There is a dire shortage of housing, and they still can’t bring them up to a C.​

“Does the local authority stamp on them and stop them letting them, so increasing the homelessness level? That’s the council saying that, not us. It’s not been well thought out.”

Mr Maitland said he had taken advantage of the Covid-era Green Homes grant, and applied external cladding to some of his terraced Victorian properties in Plymouth, at a cost of around £18,000-£20,000 per building.

Yet despite the new cladding, together with double-glazing and central heating, they still don’t meet a EPC rating of C.”

So as I have mentioned, shortly, unless the Government changes the legislation this country will see many people thrown onto the street, since the homes they are currently living in simply cannot be brought up to this C rating standard.

Things are not always as they first appear. In the meantime many landlords in this vacuum of policy and direction are selling up, reducing the number of rental properties, hence increasing the rents through reduced competition.

The new PM has indicated she believes private landlords have been treated unfairly by previous Governments and wants to create a less hostile environment. Let’s hope she does something quickly.

 

[Justin Smith]

Saw this article today and have put part of it below, in answer to those that believe landlords are just greedy.

“NRLA chief executive Ben Beadle We are already seeing a shrinking private rented sector – 260,000 homes have left the sector in the last five years, and look at what we are seeing: costs increase across the board, demand massively outstripping supply, yet rents are rising 3.2%, a rate lower than the social sector which was 4.1% in April.

Ian Maitland, president of the South West Landlords’ Association added that the people who drew up the legislation were clearly unfamiliar with the standard of build in areas such as the West Country.

“Some of their properties are horrendous and you will never get them to an EPC of D, never mind a C. Cornwall is a really good example. There is a dire shortage of housing, and they still can’t bring them up to a C.​

“Does the local authority stamp on them and stop them letting them, so increasing the homelessness level? That’s the council saying that, not us. It’s not been well thought out.”

Mr Maitland said he had taken advantage of the Covid-era Green Homes grant, and applied external cladding to some of his terraced Victorian properties in Plymouth, at a cost of around £18,000-£20,000 per building.

Yet despite the new cladding, together with double-glazing and central heating, they still don’t meet a EPC rating of C.”

So as I have mentioned, shortly, unless the Government changes the legislation this country will see many people thrown onto the street, since the homes they are currently living in simply cannot be brought up to this C rating standard.

Things are not always as they first appear. In the meantime many landlords in this vacuum of policy and direction are selling up, reducing the number of rental properties, hence increasing the rents through reduced competition.

The new PM has indicated she believes private landlords have been treated unfairly by previous Governments and wants to create a less hostile environment. Let’s hope she does something quickly.

As I have said before I would not be a landlord out of choice, it's just too much hassle, the balance of power between the tenant and the landlord and all the extra red tape (and its associated costs), and it's getting worse all the time. Plus, and its even worse at the moment, getting hold of decent tradesmen who will do a job quickly, reliably, well and at a reasonable cost, is a nightmare.
Latest farce, my friend's house, where the tenant is disputing the cost of repairs, the managing agent said if the tenant does not come to an agreement and it goes to the Deposit company "it could go on for 5 months".

>>The new PM has indicated she believes private landlords have been treated unfairly by previous Governments and wants to create a less hostile environment.<<

She is unquestionably right about that, but whether she'll do anything about it I very much doubt. She'll have all the Guardian readers up in arms using the example of the relatively few bad landlords to justify causing much hassle and expense to all landlords.
Take the EICR electrical reports, they really are a very expensive and bureaucratic sledgehammer to crack a relatively insignificant nut (hardly anyone gets killed by electrocution and they cost up to a quarter of a billion pounds a year just for the inspections.....), but I would eat my hat if they ever got rid of them now. In fact it's more likely they'll introduce even more stuff in the same vein.

 

[fisicx]

Take the EICR electrical reports, they really are a very expensive and bureaucratic sledgehammer to crack a relatively insignificant nut

Sparky who does ours charges very little for repeat inspections. And they are a business expense so the end results is we pay less tax. Divide the cost by 12 and include it in the rent. End result: doesn't cost us anything.

 

[Talay]

Sparky who does ours charges very little for repeat inspections. And they are a business expense so the end results is we pay less tax. Divide the cost by 12 and include it in the rent. End result: doesn't cost us anything.

Of course it costs you something as otherwise you could charge the rent you are charging and not pay the stupid EICR fees.

You cannot magic away a cost just because you think someone else is paying it !

 

[MBE2017]

Of course it costs you something as otherwise you could charge the rent you are charging and not pay the stupid EICR fees.

You cannot magic away a cost just because you think someone else is paying it !

Not really the case, fewer overheads, competition would force the market rate down.

 

[Justin Smith]

Sparky who does ours charges very little for repeat inspections. And they are a business expense so the end results is we pay less tax. Divide the cost by 12 and include it in the rent. End result: doesn't cost us anything.

I got two quotes for the two EICRs I need, one at £145 each and one at £150 each.
I am pretty sure both electricians will want another £145 odd when they need reinspecting in five years time, though, of course, there is no reason at all why these ridiculous inspections need doing every 5 years. It's just a big money making exercise combined with lashings of virtue signalling and excess risk aversion.
I did a back of the envelope calculation that EICR inspections (and that's just the inspections, not any work that is required) could cost over a quarter of a Billion pounds a year for all the rental properties in the UK. And if that money was instead put into the NHS it would save far far more lives than the odd few a year it might in fact save. EICR reports are a gargantuan waste of money.

But it doesn't even end at the cost of the inspections, they then recommend work that needs doing to pass the EICR, and that was £1200 thanks very much. The most expensive part was two new consumer units "because the existing ones aren't up to the latest regulations" (and the latter are a moving feast if ever there was one) due to the fact they do not have RCDs on them. Well the consumer unit on my own house isn't RCDed and I am intensely relaxed about it, because, and whisper this quietly, it's actually pretty difficult to get killed by mains (240V) electricity and I used to be a TV engineer so I do know a bit about it. It's funny how (just) fused consumer units were considered perfectly safe for nearly 100 years but now they are, apparently, dangerous ! It's BS.

Yes you can claim back the tax on it (assuming you pay any tax) but that doesn't make it "free" it just means most people can claim back about 25% of the cost.

If you could get away with putting up the rent you would do so anyway, and keep the £145 every five years.....

 

[Newchodge]

I am intensely relaxed about it, because, and whisper this quietly, it's actually pretty difficult to get killed by mains (240V) electricity

Are you ignoring the risk of fire due to the fuses failing to break when they should?

 

[gpietersz]

Apparently due to the fall in petrol and diesel despite food price inflation the official inflation estimate for August is 9.9% which has us at the bad end of the decent sized European economies but better than Spain" So i would say if there is a Brexit effect on inflation it looks to only be about 1-2% (taken ona single month figure)

Its really not a single months number: it is inflation over the year to August. The monthly number is 0.5%.

Euro area inflation was 9.1% https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Inflation_in_the_euro_area

The EU average was 10.1%, higher than inflation in the UK: https://ec.europa.eu/eurostat/databrowser/view/prc_hicp_manr/default/table?lang=en

Is the Brexit effect lower inflation then? Other countries in the EU, but outside the Euro had inflation rates similar to the UK (Sweden with 9.5%). and many both outside the Eurozone (Poland) and inside (Belgium, the Netherlands, Poland) had higher inflation rates.

I see no way of deducing where in this range the UT would have been. The implication of a 1% top 2% Brexit effect is that if we had stayed in the EU, we would have had one of the lowest inflation rates in the EU. I find that hard to believe.

 

[DontAsk]

Are you ignoring the risk of fire due to the fuses failing to break when they should?

Fuses? So 1970s.

You need to be worried about the nails used to replace the fuses that did break.

 

[DontAsk]

I see no way of deducing where in this range the UT would have been.

Lies, damn lies and statistics. Take your pick

 

[IanSuth]

Its really not a single months number: it is inflation over the year to August. The monthly number is 0.5%.

Euro area inflation was 9.1% https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Inflation_in_the_euro_area

The EU average was 10.1%, higher than inflation in the UK: https://ec.europa.eu/eurostat/databrowser/view/prc_hicp_manr/default/table?lang=en

Is the Brexit effect lower inflation then? Other countries in the EU, but outside the Euro had inflation rates similar to the UK (Sweden with 9.5%). and many both outside the Eurozone (Poland) and inside (Belgium, the Netherlands, Poland) had higher inflation rates.

I see no way of deducing where in this range the UT would have been. The implication of a 1% top 2% Brexit effect is that if we had stayed in the EU, we would have had one of the lowest inflation rates in the EU. I find that hard to believe.

I specifically said you would need to compare us to just comparable countries and listed them - unless you feel the UK economy has more similarities with Slovenia et al

Our inflation appears to be lower than I had guessed (and i listed my wrong guess very clearly) but it is still higher than the countries we have to compare ourselves with France and Germany due to their size and Ireland due to proximity (massive changes in respective pricing or excised goods would lead to smuggling).

I also stated clearly IF we were 11% then that would mean a 1-2% Brexit related inflation as we have not hit that it looks liek if there is any Brexit related inflation it is negligible or equally spread across those big EU countries and us. I am happy to admit when I have made a wrong prediction and in this instance I have.

 

[Newchodge]

Fuses? So 1970s.

You need to be worried about the nails used to replace the fuses that did break.

I think we used paperclips, straightened out, of course!

 

[gpietersz]

I specifically said you would need to compare us to just comparable countries and listed them - unless you feel the UK economy has more similarities with Slovenia et al

What makes a country comparable? Why is France more like the UK than the Netherlans or Sweden (apart from population which is not very relevant to inflation rates)?

I am inclined to think there is no clear evidence of a Brexit effect, but I do not think you can prove there is none either. Its just to small in comparison to covid effects.

 

[MBE2017]

Not sure comparisons with France is that easy. They already had capped rates very low, and have now allowed a 15% increase. Compare that to a doubling of our rates, it makes all comparisons hard. Both countries probably measure inflation using different items at different percentages.

Put simply, all European countries inflation is growing at an alarming rate, save for possibly the odd country.

 

[Talay]

.... Yes you can claim back the tax on it (assuming you pay any tax) but that doesn't make it "free" it just means most people can claim back about 25% of the cost.

If you could get away with putting up the rent you would do so anyway, and keep the £145 every five years.....

When folks fail economics 101 and think everything is free if they can offset it against tax.

I wouldn't give such people sharp objects to play with.

 

[Justin Smith]

Are you ignoring the risk of fire due to the fuses failing to break when they should?

A good point, and I am sure more people die from fires caused by faulty electrics than from electrocution, but I suspect that is still a low number. Furthermore many (most ? ) of them will be stuff like bodged together mains leads and over loaded mains adaptors, which are not covered by an EICR.
How would a faulty light switch buried in a wall cause a fire anyway (even if the tenant was stupid enough not to report his flickering light(s) for weeks on end) ?

 

[IanSuth]

A good point, and I am sure more people die from fires caused by faulty electrics than from electrocution, but I suspect that is still a low number. Furthermore many (most ? ) of them will be stuff like bodged together mains leads and over loaded mains adaptors, which are not covered by an EICR.
How would a faulty light switch buried in a wall cause a fire anyway (even if the tenant was stupid enough not to report his flickering light(s) for weeks on end) ?

Playing devils advocate a bit but

Mice/Rodents in cavities nibble wires, that damage does tend to be picked up on an EICR before it gets to shorting out/setting fire to the guilty party.

Also as they like to next near warm things they are apt to build a nice nest of tinder near any electrical components that get warm (like my old dimmer switch that had an earth leak for years before i noticed that the wall paper has discoloured from the gradual heat damage

But as I dais, really playing devils advocate

 

[DontAsk]

Furthermore many (most ? ) of them will be stuff like bodged together mains leads and over loaded mains adaptors, which are not covered by an EICR.

Correct, and for the same reason Part P of building regs has very little meaningful effect in a domestic setting.

 

[Justin Smith]

Playing devils advocate a bit but
Mice/Rodents in cavities nibble wires, that damage does tend to be picked up on an EICR before it gets to shorting out/setting fire to the guilty party.
Also as they like to next near warm things they are apt to build a nice nest of tinder near any electrical components that get warm (like my old dimmer switch that had an earth leak for years before i noticed that the wall paper has discoloured from the gradual heat damage
But as I dais, really playing devils advocate

How would the EICR inspection find where rats were chewing through cables which are probably behind skirting boards or whatever ?

 

[MBE2017]

How would the EICR inspection find where rats were chewing through cables which are probably behind skirting boards or whatever ?

It wouldn’t, it might pick up an electrical fault due to damaged cables etc, but the real point, end of the day, this is a legal requirement.

It doesn’t matter if you want to do them or not, you just have too.

 

[Justin Smith]

It wouldn’t, it might pick up an electrical fault due to damaged cables etc, but the real point, end of the day, this is a legal requirement.
It doesn’t matter if you want to do them or not, you just have too.

I know that, I am just pointing out EICRs are (yet another example) of incredibly expensive, restrictive, bureaucratic regulations that are simply not required and are restricting economic growth, and, with relevance to this thread, contributing to inflation.

 

[Newchodge]

I know that, I am just pointing out EICRs are (yet another example) of incredibly expensive, restrictive, bureaucratic regulations that are simply not required and are restricting economic growth, and, with relevance to this thread, contributing to inflation.

Unless the cost has risen a lot (which has not been suggested) I don't see how it can contribute to inflation?

 

[IanSuth]

Unless the cost has risen a lot (which has not been suggested) I don't see how it can contribute to inflation?

Well everything additional and superfluous contributes to inflation BUT it will be a really small amount in this case.

Although it may be c£250m that is only about £4 per person per year which compared to many many things is tiny and a lot of that money is going straight back into the economy as a lot of the inspectors are quite small outfits more likely to spend their income than squirrel it away

 

[Newchodge]

Always assuming the government doesn't intervene AGAIN with a helpful scheme to help people to buy, that only serves to increase prices even further beyond the reach of ordinary people.

And there we have it. Stamp duty to be cur in case house prices start to drop.

 

[Newchodge]

Well everything additional and superfluous contributes to inflation BUT it will be a really small amount in this case.

Although it may be c£250m that is only about £4 per person per year which compared to many many things is tiny and a lot of that money is going straight back into the economy as a lot of the inspectors are quite small outfits more likely to spend their income than squirrel it away

Additional costs and increasing costs contribute to inflation. Ongoing but superfluous costs contribute to cost, not to cost increases.

 

[IanSuth]

Additional costs and increasing costs contribute to inflation. Ongoing but superfluous costs contribute to cost, not to cost increases.

Well when you bring them in it is inflationary and if those suppliers having rising labour costs then they will rise prices again adding to inflation - as I said tiny amounts but they do all add up. What you would have to look at, if you really wanted an accurate picture, would be if insurance underwriters factor in EICR as reducing risk in any way (even in terms of if overall risk may have dropped since they were introduced - i don't know) as if hat extra £250m of cost to landlords (and thus tenants) has reduced yearly insurance claims by £100m then the net cost to the economy is smaller.

Economies are complicated things

 

[IanSuth]

BUT

Does anyone here think cutting stamp duty will help anyone ?

In my opinion it will just continue to fuel the house price bubble for a bit longer and make it bigger before it bursts - it is purely a political policy as Truss foresees any house price drops as being bad at the polls and so wants to kick the can down the road

 

[simon field]

What has stamp duty been cut to?

 

[Newchodge]

What has stamp duty been cut to?

I don't think it will be formally announced until Friday.

 

[Justin Smith]

Although it may be c£250m that is only about £4 per person per year which compared to many many things is tiny and a lot of that money is going straight back into the economy as a lot of the inspectors are quite small outfits more likely to spend their income than squirrel it away

On that basis, since it won't actually cost the economy anything, and in fact counts as increased economic activity, can we introduce a regulation that all TV aerials need inspecting every 5 years ? And it won't cost £145 either, it'll be half that. Even better, because it counts as economic activity (and therefore expanding the economy and therefore I am doing everyone a favour) I can tell myself that not only am not ripping off the customers but I deserve a tip ! !

 

[IanSuth]

On that basis, since it won't actually cost the economy anything, and in fact counts as increased economic activity, can we introduce a regulation that all TV aerials need inspecting every 5 years ? And it won't cost £145 either, it'll be half that. Even better, because it counts as economic activity (and therefore expanding the economy and therefore I am doing everyone a favour) I can tell myself that not only am not ripping off the customers but I deserve a tip ! !

Actually I have recently thought a really good business would be a van and ladder and go around offering to remove old roof top aerials now laying across roofs or half supported on rusting brackets - before they fall and crash through a roof. You might even be able to get a kick back from insurers like the windscreen repair people as it will save money in the long run.

I mean just look next time you drive down a residential street at the number of now disused aerials just sat there waiting to fall