Written by Daniel Latto in Property Coaching

January 5, 2015

So I wrote this as a response to a post on Facebook, so thought i’d share it here.

Why are rents so high ?

Well, rental prices are based around consumption (not greedy landlords – sorry).

If there was an over supply of properties, then the rents would come down.

But, seeing as we haven’t built homes really for the last ten years (and even 10 years ago we were behind on home building) – it’s meant that rents have risen as the access to mortgages has dwindled. It’s a direct correlation.

Once mortgages are available again, people who rent will buy, and free up rented housing stock and we may see rents start to drop a little.

This will then of course mean that house prices start going again as the supply of available housing stock for sale dwindles – and so it continues in a continuous cycle.

Why Are Rents So High

Mum, Dad, how much was your first house ?  What !!!

I’ve asked my own parents this, and their answer was “about £2,500”.

And when my kids ask me how much mine was (£40,000) they’ll be just as amazed.

This cycle of rents and house prices pushing higher and higher each time is a consequence of living in a society based around capitalism.

Im not here to say which is best (both communism and capitalism has a lot going for them, and a lot going against them), i’m just here to explain why it is.

 

Author : Daniel Latto

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