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  • Property Yields

    Rents rise 25% in South East since 2011



    Average rents for a two bedroom property increased 25% since 2011 in South East England a new GMB study claims:

    The average rents for two bedroom apartments in Dartford has risen from £650 per month in 2011 to £900 in 2017, an increase of 38.5%. This is the highest increase in 67 local areas in South East England.

    Next in the league for the increase in the average rents for two bedroom property between 2011 and 2017 is Reigate and Banstead at 32.7%, followed by Wycombe at 32.7%, Epsom and Ewell at 31.6%, Tandridge at 29.4% and Chiltern at 29.4%.

    As a result of these increases the average rents for two bedroom apartments has now  risen to more than a third of gross average earnings of residents in 36 South East local authorities.

    These are Oxford, Runnymede, Brighton and Hove, Epsom and Ewell, Guildford, Adur, Slough, Sevenoaks, Reigate and Banstead, Woking, Spelthorne, Crawley, Tunbridge Wells, Tandridge, Reading, Windsor and Maidenhead, Elmbridge, Wycombe, Bracknell Forest, South Bucks, Rushmoor, Chiltern, Canterbury, Eastbourne, Southampton, Lewes, Worthing, Milton Keynes, Arun, West Oxfordshire, Chichester, Dartford, Mid Sussex, Maidstone, Portsmouth and Havant.

    In Oxford the average rent for a two bedroom property is 46.3% of the gross average earnings of residents of the borough. This is the highest in the South East.

    Next highest are 46% in Runnymede, 45.5% in Brighton and Hove, 43.3% in Epsom and Ewell, 43% in Guildford, 42.5% in Adur and 41.4% in Slough.

    In the South East as a whole, workers are paying out 34.1% of their earnings on rent, up from 28.7% in 2011. This is significantly higher than the England average figure of 27.4%.

    Paul Maloney, GMB Southern regional secretary, said,

    "These figures demonstrate the extent of the squeeze felt by workers and their families in the South of England since the financial crisis in 2008. Rents have surged upwards as pay has been stagnant or falling.

    Pay has to rise to allow workers to afford these ever rising rents so the public sector pay cap and the below inflation pay rises in both the public and private sectors has to end to avoid a drop in consumer spending, which,  if not checked will lead to a further recession

    In addition, they show that a massive programme to build more homes, especially homes for rent, by the South of England authorities is absolutely essential in all parts of the region and has to get underway without delay.

    We have been talking about this problem for far too long, there can be no excuses for not providing housing to people that they can afford to live in on average wages.

    The decisions of the Thatcher government in the 1980’s to sell council housing stock,  and not replace it, and to pay landlords housing benefit instead of providing social housing directly has been a huge and expensive mistake.

    Last year, for example, £24 billion was spent on housing benefit, with much of this public money ending up untaxed in bank accounts in offshore tax havens. If a fraction of that amount had been spent on social housing for rent, the strain on the tax payer would be less and people would have housing they can afford to live in.

    These mistakes need to be corrected without delay, fair and affordable housing is a basic aspiration for all."

    SEE ALSO  -        The North/South property divide

    UP NEXT -            South East set for property boom!

    DON'T MISS -      Spotlight on cash flow and yield

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    I don't believe any LL believes that the sell off of social housing was and is a wise thing to do.

    Selling the 'family silver' was and is an economically illiterate policy as MacMillan recognised.

    But then of course it was entirely a political policy.

    It was a very naive one.

    Most of those who took advantage of free state capital to buy their council property have long since either sold up or been repossessed.

    It has to be a society recognition that the state needs to provide a safety net for those who cannot afford private renting or to buy.

    Call it part of the social contract which all taxpayers are signed up to.

    HB going to private LL contributes nothing to future social housing.

    Necessarily the state via its various means should provide that safety net where it will remain as a state asset to house those vulnerable and incapable for whatever reason to be able to afford private renting.

    Using HB in an attempt to replace social housing has massively backfired.

    Now those LL don't even wish to house those HB tenants.

    Now there is insufficient social housing.

    The Govt needs to buy back the 'family silver' even if it means going to the open market and buying back the properties that have been sold off in previous decades.

    Govt can amortise the cost of building and buying up stock for social housing over say 50 years.

    Govt can keep the HB lower by paying lower rents for social housing it provides.

    We really don't need private LL attempting to house those for whom private rents are increasingly impossible to achieve.

    I'm sure if Govt announced that it would buy those LL properties affected by S24 with no CGT payable then many of those LL would sell up to Govt.

    Of course then there would be a massive shortage of rental property who do not qualify for social housing, but nobody cares about them.

    They will have to return hone to live with Mummy and Daddy!!

    But at least the HB bill would reduce and there would be a new supply of social housing.

    RTB must be stopped now unless it is for full market value and the sales proceeds spent on new social housing stock.

    I am an arch capitalist and believe in maximising rental profits as vest I can.

    But even I recognise the PRS is not the answer for low waged tenants be that via benefits if just low wages or invariably both.

    The bullet needs to be bitten.

    We need a massive reinvestment in social housing funded by the taxpayer from Central Govt funds.

    Eventually it will pay for itself as the Govt can keep social rents low.

    LL will divest themselves of social tenants as there will he no money in it and there will be sufficient social housing stock to not require PRS supply.

    That is as it should be.

    A return to the old days.

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