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Hammonds attack on the Self Employed


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On 13/10/2018 at 18:46, georgist said:

Disagree. In a situation of shortage of good homes, rents are based on the ability to pay. This is why prices have gone up whilst rents have been more muted. Prices are based on access to credit / ability to pay the interest (and as rates go lower the landlord can service more debt). Rents are based on ability to pay from wages, which have been flat.

Rents (and prices) are absolutely not based on costs + some "fair" profit. If rates go up and landlords presently charging 1500 a month need to get 1800 to cover their costs, if the market cannot bear this price then they will have to lose money. Every month.

Thanks for the brief but important lesson in economics.

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31 minutes ago, Dave Bloke said:

Thanks for the brief but important lesson in economics.

It's why prices are based on what a BTLer was able to borrow as they weren't bright enough to understand that businesses aim to maximise profits by buying low and selling high not out bidding everyone and hoping for the best...

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On 13/10/2018 at 17:46, georgist said:

Disagree. In a situation of shortage of good homes, rents are based on the ability to pay. This is why prices have gone up whilst rents have been more muted. Prices are based on access to credit / ability to pay the interest (and as rates go lower the landlord can service more debt). Rents are based on ability to pay from wages, which have been flat.

Rents (and prices) are absolutely not based on costs + some "fair" profit. If rates go up and landlords presently charging 1500 a month need to get 1800 to cover their costs, if the market cannot bear this price then they will have to lose money. Every month.

~80% of UK rents are driven by housing benefits.

Reduce HB/benefits and rents falls.

Its that simple. And any IO BTL moron who does not grasp this is fucked.

 

 

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1 hour ago, spygirl said:

~80% of UK rents are driven by housing benefits.

Reduce HB/benefits and rents falls.

Its that simple. And any IO BTL moron who does not grasp this is fucked.

Housing benefit is currently set to the lower of the 30th percentile or existing the LHA rate. It's remarkable how close the 30th percentile is to the LHA rate and how small the difference is between the 30th percentile and the 50th or even 70th percentile.

http://lha-direct.voa.gov.uk/ListofRents.aspx?SearchResultsPageParameters=true&LocalAuthorityId=74&LHACategory=999&Month=12&Year=2018&SearchPageParameters=true&BrmaId=67 gives you some charts to look at...

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https://lha-direct.voa.gov.uk/SearchResults.aspx?LocalAuthorityId=36&LHACategory=999&Month=12&Year=2018&SearchPageParameters=true

LHA Category Number of rents Minimum Rent £pw Maximum Rent £pw LHA Rate £pw
Three Bedrooms 1253 £103.56 £1265.75 £151.78

3%20Bedrooms.gif

one of the problems with having wide areas is the variation. The centre of Manchester (I assume) accounts for the insane rents.


 

 

 

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The problem is that if a significant amount of households are claiming LHA, LHA quickly becomes the driver of rents. In London over half of all renting households claim LHA. Which is ridiculous. Another way of looking at it, is that half of all renters can’t actually afford to live there.

Believe it or not when LHA increased, asking rents on all rentals went up by a similar amount. Since they’ve been frozen rents have gone nowhere. 

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5 hours ago, Castlevania said:

The problem is that if a significant amount of households are claiming LHA, LHA quickly becomes the driver of rents. In London over half of all renting households claim LHA. Which is ridiculous. Another way of looking at it, is that half of all renters can’t actually afford to live there.

Believe it or not when LHA increased, asking rents on all rentals went up by a similar amount. Since they’ve been frozen rents have gone nowhere. 

It's obvious from how the calculation for next years LHA works. Sadly without depopulation there is little chance of LHA rates as the LHA will always be the lower of the two rates used in the calculation. I suppose we should be glad it's the current LHA rate and not an inflation adjusted version....

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