Londonland rents - the average

This London rent thing has been bugging me for a week or so. I was going to let it go, but last night þere was a piece on whatever BBC news program about gentrification in Brixton and how rising rents were forcing out the natives, so market traders were getting people buying fruit and veg like they used to in the old days.

Brixton

On the one hand I feel for the fruit and veg sellers, on the other hand (like Iron Man might say) businesses go out of business all the time, þere's no need to be a pussy about it. But with pieces on the BBC, something didn't feel right.

Rents going up, rich people moving in, the native population being forced out due to rising rents, that's the general line from the BBC.

Brixton is part of Lambeth.

According to figures scraped from rightmove.com average rents in Lambeth for two bedroom properties have fallen by about 3% between May 2012 and May 2013, from £1,745 to £1,695 per month for a two bedroom property. This is mainly because þere are around 17% more properties on the market þere, for two bedroom properties þere were 830 this time last year and þere are 970 this year.

Its possible that average rents in Brixton have risen, but in the rest of Lambeth have fallen even more so, so the borough average is down, but its unlikely. Likewise, its possible that average rents for properties with more or fewer than two bedrooms have risen disproportionately to two bedroom properties, but its unlikely. So either my figures are wrong or the figures the BBC used are wrong.

Falling rents

At this point, I'd like to veer off and discuss the nature of rents. For individuals, rents hardly ever come down, your landlord is only ever going to keep the rent you pay the same or they'll raise it. If for example their mortgage rate falls, they're not going to voluntarily pass the reduction on to their tenants. Pretty much the only occasion where an individual rent will fall is if the tenant has a change of circumstance: "sorry guv' I lost my job and the missus is up the duff, we're going to have to move out if you don't reduce the rent, an' we've always been such good tenants, and never caused no one no bother."

For properties, rents do come down, if they're sat empty on the market for a while the landlord might offer a lower rent, that is, if þere is no demand at one price point. Or if the property has turned crap, developed faults, got fucked up by the previous tenants or is in need of modernisation, the rent may fall, or if the area has become crap. But this only happens if the property is empty.

For average rents in a specific area, average rents could fall only if þere are a lot of empty properties on the market, or if new properties have been brought to market.

So if an an area is in decline, or if a lot of people for some reason have decided to invest selflessly creating in low value housing, for very low returns.

Anyhoo, with these points in mind, for the rest of the article when I refer to rents falling or rising, I mean in general, on average for two bedroom properties that are on the market and not secret.

I live in a nice flat in Walthamstow, it has two bedrooms and a garden and I pay £800 per month. The rent hasn't changed for three years, despite the average rising by £50.

LSL Property Services

Moving on. At the moment, whenever you search twitter for 'London rents' þere are dozens of people fretting about news articles that regurgitate a press release and paper by LSL Property Services, with a headline factoid about London rents increasing by 7% year on year.

This is at odds with the figures I scraped from Rightmove where London rents are up around 3%, broadly in line with inflation and also highly variable within the London boroughs. Some are down 3% some are up 7%, but broadly, they follow inflation.

I believe the methodology used by LSL and their consultants Wriglesworth, is to blame. We're looking at different things. Whilst I'm scraping the prices of every property listed on Rightmove for all of London, some 30,000 properties on the market, LSL use a sample of 18,000 properties from all over the UK with tenants currently paying rent.

Its like I said earlier about how my rent hasn't changed but the rental market in Walthamstow has gone way higher.

LSL split their sample of 18,000 properties into 11 regions in England and Wales which suggests a sample size of between 1,600 to 2,600 properties per region. For London this could amount to a sample of between 50 and 100 properties per borough, covering all property sizes, one bedroom, two bedroom and more.

Tower Hamlets has 3,000 two bedroom properties on the market, so maybe an order of magnitude more than that with sitting tenants which LSL are trying to model. I believe LSL's sample size is a bit small for the level of accuracy they proclaim. But hey, we're counting different things.

Maybe, like political polling companies, they're have a really well crafted representative sample of rental properties. Maybe

Still, their report on rents has been very successful in the media, with coverage in The Evening Standard, The Independent and the BBC.

A little too successful perhaps, its quite a specific report for a small niche, buy-to-let investors who want someone else to manage their property. The report is good for the sort of returns investor can hope to receive, and its good for whipping up hysteria about the market, less so for people looking to rent.

Average London rent

The other headline factoid in the LSL report is that 'average' rents in London have reached an all-time high of £1,110 per month. Maybe it is for the properties that they manage, but no explanation of what sort of properties that refers to, residential or industrial, how many bedrooms or whereabouts. For buy-to-let investors, the intended audience for the LSL it doesn't really matter, but for people looking to rent in London, its more significant.

Its misleading.

For people actually looking for somewhere to live, for somewhere to rent, the mean average two bedroom rent is £1,957 per month, the median two bedroom rent is about £1,925

For one bedroom flats, the mean average monthly rent is £1,617, the median is about £1,475.

As has been pointed out previously the spread of rents is a bit skewed, þere aren't many cheap places, but þere's no limit to how much you can pay.

Here's a chart showing the market profile in London for one- and two bedroom properties

Despite the high demand for cheap / affordable housing in London, the market seems unable to offer many two bedroom places below £1,000 a month.

Market distortions

It is my belief that Housing Benefit, in London, artificially distorts the market and provides a rent floor below which no properties are available at any standard, be they rat infested, moldy or just really small, all are available for £1,000 or more.

This means that anything not rat infested, moldy or really small is on the market for a lot more than £1,000.

I'm not sure how to demonstrate or prove this market distortion, but perhaps playing round with the data some more will help.

So, despite demand and all the bluster from politicians, the number of two bedroom properties on the market London for lets than £1,000 a month has fallen.

Skilmo - like FourSquare but for crafts and hobbies

Since last October I've been working on developing a crafts and skills website, and its quite presentable now. Its called SKILMO


Its like Foursquare or Indie Eyespy, but for crafts, skills and hobbies, so instead of getting points for checking off places you've been or people you've seen, you get point for learning to knit, or do origami, or playing guitar.

For me, the site has been a voyage of discovery in html, php, javascript and css, learning new tricks and figuring out how to do things. Adding more and more features as they become necessary.

But for you, the user, its just supposed to look nice and be easy to use. Feel free to have a click around

At weekends it has a lovely Morrison tartan background rendered in css, but during the week, it has a more sensible polka dot or checked pattern, except on Thurdays when its all floating flowers.

Signing up

Anyhoo, say you think yourself a crafty, arty kind of soul, then feel free to sign up. You'll need to click on the 'Register here' link on the home page, and it will take you to the great checklist of skills.

The list is a bit comprehensive and long so its got all the skills grouped into many categories. Graphic Arts for things like drawing, painting and printing; Textile Arts for knitting, crochet, cross-stitch and so forth; Photography for various genres, achievements and skills; Music for different musical instruments and performance related achievements.

You don't have to check off everything, you can add more strings to your bow later.

When you're content, click on one of the 'Calculate score' buttons. That will calculate how many points your skills are worth. The theory is that the more esoteric your skills are, the more points they're worth.

From the score page you'll be able to chose a username and password and sign up, so you can come back later and add more skills and crafts. You don't have to sign up, its not a biggie.

Members

Anyhoo, if you sign up with a username, you'll show up on the 'Members' page, and you'll have a profile page which lists all the skills you've checked off, and will let you upload jpeg images of the stuff you've done.

To check off more skills, like if you learn how to do double knitting, or manage to play a sold-out gig, or even figure out what chromolithography is, you can either go back to the checklist page, or you can go through the 'Categories' link to find the page for that specific skill, and then click on the 'I can do this skill' button.

There isn't much to stop you from just clicking on everything, and racking up all the points, except no one will believe you. You can prove you've done stuff, or just show off your first efforts at new crafts by uploading photos. At the moment the site only accepts jpegs and can only upload photos for skills that you've already checked off.

Photos

Once you've uploaded  images, there's this awesome whole side of the website where you can browse all the photos that anyone's uploaded and upvote or downvote the best and worst.

For each picture, you can see the top five highest rated images for that skill and the top five highest rated images uploaded by that user.

So you'll be able to spend literally minutes browsing through literally dozens of photos of skills and crafts.

You might be inspired to try something new, or make something better.

These crafts and skills aren't difficult, anyone/everyone can do them.

And beyond

So I mostly created the site off my own back, with a bit of guidance on css from Robbie, without whom the site would still look like this.

There's still loads of functionality I ought to add, but really I could do with more people using the site and playing around with it, and finding bugs and problems, and little bits that could be better, easier, and more intuitive.

Londonland Rents - A year later

One of the most popular posts on this site, as you can see from the sidebar, is my post from May 2012 about the average rents in each London borough. Admittedly a lot of traffic comes from google sending people here looking for a map of London boroughs, but anyhoo, its still an interesting topic.

The other day, on twitter, Sarah retweeted comment from Emma Jackson about how rents in London were crazy and average rents in Newham had shot up 39% the last year. Alas this information came from a press release a year ago, but it got me wondering about what rents were like now that the Olympics is firmly in the past, and how rents have changed from last year.

So I dug out my old spreadsheet, went through the rightmove.com property website, and counted up how many two bedroom flats there were in each London borough at each price point, weaved some Excel magic and well here's a list of average rents last year and this year, and their percentage change.

Borough	10 May 2012	08 May 2013	Change
Merton	£   1,581.29	£   1,766.93	111.74%
Redbridge	£   1,080.05	£   1,193.77	110.53%
Hillington	£   1,112.92	£   1,201.08	107.92%
Bexley	£     858.70	£     914.26	106.47%
Enfield	£   1,135.41	£   1,201.74	105.84%
Croydon	£   1,014.19	£   1,063.27	104.84%
Westminster	£   2,796.06	£   2,918.95	104.40%
Greenwich	£   1,332.97	£   1,387.40	104.08%
Waltham Forest	£   1,092.00	£   1,134.49	103.89%
Barnet	£   1,419.80	£   1,465.49	103.22%
Southwark	£   1,840.94	£   1,899.17	103.16%
Barking	£     967.14	£     994.93	102.87%
Kensington and Chelsea	£   2,856.73	£   2,907.43	101.77%
Ealing	£   1,578.19	£   1,606.16	101.77%
Sutton	£   1,029.41	£   1,046.86	101.70%
Hounslow	£   1,785.18	£   1,808.97	101.33%
Hackney	£   1,876.80	£   1,898.31	101.15%
Lewisham	£   1,224.56	£   1,236.24	100.95%
Camden	£   2,359.67	£   2,375.90	100.69%
Kingston Upon Thames	£   1,402.73	£   1,412.13	100.67%
Brent	£   1,483.54	£   1,491.47	100.53%
Harrow	£   1,248.56	£   1,253.38	100.39%
Bromley	£   1,127.81	£   1,131.87	100.36%
Havering	£     967.49	£     963.83	99.62%
Islington	£   2,217.82	£   2,185.26	98.53%
Lambeth	£   1,745.46	£   1,708.09	97.86%
Haringey	£   1,432.51	£   1,401.14	97.81%
Richmond	£   1,927.33	£   1,878.68	97.48%
Tower Hamlets	£   2,066.11	£   2,011.83	97.37%
Newham	£   1,410.63	£   1,373.49	97.37%
Wandsworth	£   1,844.08	£   1,756.62	95.26%
Hammersmith and Fulham	£   2,102.78	£   1,993.76	94.82%
City of London	£   2,817.34	£   2,474.32	87.82%

Its perhaps more useful to see this on a map,

So average rents for two bedroom properties have risen in most of the suburban boroughs, broadly in line with inflation, and average rents for two bedroom properties nearer the centre of town have fallen, but its a mixed bag. One wonders why.

At this point I'd like to announce a new statistical product, GilMove Index of Average London Rent levels for two bedroom properties. This is basically the percentage the market has moved for the whole of London from a benchmark set in May 2012.

The GilMove Index for May 2013 is 103.31

That is, based on data scraped from RightMove.com for the whole of London average rents have risen by 3.31% With inflation in mind that's broadly to be expected.

Right now, RightMove.com lists about 29,500 properties in London, that's up 6,300 from a year ago, or 27.3%. Well done London. If there's a shortage of houses, the problem is being addressed.

Westminster seems to have over a thousand more properties on the market since last year, from 2,200 in May 2012 to 3,500 in May 2013. Is it because they evicted all the social tenants and put the properties in the private sector? Seems unlikely that that would account for so many properties, a few hundred I could understand.

Other boroughs with huge increases of  two bed properties on the market are Kensington and Chelsea with around 800 more, Camden with around 600 more and Richmond with 500 more.

So, could it be that in areas where more properties have come onto the market since last year, the average rents have changed the most. That there is some kind of correlation between these two things? Well, no. I ran the numbers and is absolutely no correlation between the two variables.

The only correlation I can see is that boroughs with very few two bedroom properties on the market have the lowest average rents, and boroughs with the most properties on the market have the highest rents.

I guess its a relatively free market, with supply and demand acting as they do. Less desirably places are cheap and with not much going down, desirably places are in demand and have lots of properties available.

Anywho, it was all pretty settled, until on Friday there was a tweet from a chap called Murray who was tweeting a link to an article in the Evening Standard about how in order to afford to rent a one bedroom property in London, you'd need an annual income of £38,000, and average income in the UK is £26,000.

Alarm bells in my head started ringing, firstly, its based on a government diktat that you ought to only spend a third of your income on rent, which is fine if you acknowledge it, but not really relevant to the way people live their lives. Some people will want to spend a greater proportion on their earnings on a more desirable location, some people may be willing to live in a cheap place to allocate their resources elsewhere. People are free to spend their money in many different ways. It riles me when the government says I can't afford something when clearly I'm in a better position to decide.

Secondly, it seems a bit rum to compare national wages with regional rents, London prices are almost like being in a different country to the rest of the UK. A more appropriate comparison would be London rents to the average wage in London, a bit of googling had the London mean wage being £40,000, so no problem renting an average one bedroom property.

Of course its arguable that you should use the median wage rather than the mean which is hellish skewed in London. But then the property market is similarly skewed, so you should use the median rent for a valid comparison.

Look, mean average one bedroom rents in Motherwell are £348 per month, you'd need to earn about half the average income to afford one, you could afford one if you had a minimum wage job without much of a struggle.

Anywho, I quickly clicked through Murray's link to find the Evening Standard with a rather short sensational article about London rents and wages.

The figure follows a Standard report last month that revealed rents in the capital are rising eight times faster than wages.

Wait... what. I've already established that rents in various London boroughs are all over the place, some rising, some falling and generally the rise is in line with inflation, 3.31%. But even then, we're getting toward the margin of error to say that average national wages are only rising at 0.41%. Its a bit of a stretch.

It seems the latest Evening Standard article just reproduces a press release from a website called Rentonomy which is...

an easy-to-use site that looks at London in a totally new way and gives you all the tools you need to find the right area for you

Awesomeness!

However I question Rentonomy's director of research, David Butler's use of national average wages for regional rents. Its inappropriate, sensationalistic, and crap.

The original Evening Standard article from April uses rent data from a different source lettings agency network LSL Property Services. They quote

Last month the average monthly rent in London stood at £1106, a rise of 7.9 per cent in a year and the highest level ever recorded.

I don't have my own data for rent levels in April 2013 or April 2012, so I can't vouch for its accuracy, but LSL's figures seem way different from rent levels from my figures from May to May. Maybe that's the figure for all properties, regardless of number of bedrooms. *shrug*

David Newnes, director of LSL Property Services, owners of estate agents Reeds Rains and Your Move, seems a bit disingenuous when he says:-

“Rents in London are red-hot. With only modest improvements in the UK’s housing supply, rents will keep being forced upwards.”

As I have previously established, London rents are nothing special compared to a year ago, more stable than in the Olympic year, were rents in London white-hot in 2012? Also, the London housing supply seems to have increased in several boroughs since last year. Up 27% overall, how is that 'modest', I reckon 'dramatic' would be a better word.

Maybe, it's all happened in the last month, and he was right back in April.

References
Source data on google spreadsheet here
Scraped from the RightMove property website