Help With Paying The Rent

[Albert Tatlock]

Estimating trends on rent levels is difficult, as rents tend to increase if mortgages are generally more difficult to obtain (and mortgage difficulty is linked to levels of: interest rates, bank willingness to lend, houses available, number being built, immigration/emmigration, number seeking to buy, salary levels, employment/unemployment levels, and of course uncertainty in an economy etc.).

 

Even then rents don't respond overnight in terms of large increases or decreases, and tend to move more slowly over a couple of years. Many on work permits here tend to rent, and yet a decrease from 10K work permits to around 7K Per Annum in a couple of years does not yet seem to have had a major impact decreasing rent levels - though fewer houses being built over that period, a rise in unemployment and a rise in uncertainty - may be the obvious significant counters to that at the moment.

 

The real key issues I think on the island, will be, firstly, working population level - immigration/emmigration majorly impacting supply and demand, impacting rents AND property values (inclding probably 2K fewer work permits) - secondly, unemployment levels including how many of the 8000 CS/PS and those supporting government via current contracts lose their jobs, and thirdly tax rates and the impact on business or/and the working population. When the true extent of the cuts arrive here, I can see the working population level decreasing by around 2000 to 3000 over 5 years (IMO a combination of 2K fewer work permits, unemployment and around 1000 of the working population, and certain businesses leaving).

 

If interest rates stay low (and they are artifically low at the moment IMO, trying to hold off the inevitable, despite higher inflation and currency demands), this will only add to the uncertainty and maintain the current state of house price/rent level delusion. I expect over the next 5 years we will see a further decrease in people on work permits maybe down to 5K Per Annum, as well as a further rise in unemployment, and even fewer houses being built. Together, this will do nothing but add to the uncertainty, and ensure people rent in the near term and maintain rent levels.

 

If interest rates start to rise and 2000 - 3000 people 'leave', and more and more people start to default, this might well 'flood' the island with vacant properties, and the remaining population will reap the benefits of a property correction as both rents and house prices trend down together. This I see as the most likely outcome of the next 5 years, given the severe levels of cuts, and demands for tax increases and government revenue. The island is very different to the UK, in that no one can go to 'another area' within it for work, like people can and do in the UK (Scotland to London, London to Manchester etc.). Though I do expect the first major cuts in rents and property prices will be in areas such as Ramsey, as people snap up what becomes on offer in Douglas, and those that could only afford rents out there come back.

 

Also, skewing the equation here, are now a significant number of people here who were once on work permits, but now are qualified as IOM workers - as well as their dependents. IMO, these people are likely to be the first to upsticks if the need arises, as they tend to have other areas to naturally head to (e.g. family areas in UK) if things get tight or uncomfortable for them.

 

As I said, there are so many factors and unknowns especially until the next couple of budgets (and the emergency budget I fully expect in October).

 

My overall view, and the one I would put my money on, is that over the next 3 years, the working population will decrease, interest rates will at some time in the next few years have to increase, unemployment will hit 2000, and there will be a number of tax rises here - all resulting in a major property crash - forcing down both house prices and rent levels. I would certainly not be looking to buy at the moment, even if relative to the last few years, something I could purchase looked like a 'bargain'. There will be plenty of real bargains to come. It will be very interesting to see, when published, if the 2011 census bears any of this out so far, as I think there will be much to glean from its' detail.

 

P.S. - On rates - I wouldn't be ruling out any review of expenditure over this next 5 year term - including reviewing the rates and rating system, and which areas of national and local government get a slice of it all. They'll be looking down the back of settees and everywhere for cash, and IMO, no area will be 'sacred'.

[pongo]

The island is very different to the UK, in that no one can go to 'another area' within it for work, like people can and do in the UK (Scotland to London, London to Manchester etc.).

 

I do not believe this is true. There is no difference between working away during the week from,say, Scotland to the south of England vs working away during the week from IOM to anywhere else in the British Isles. Lots of people work away from home during the week all over the British Isles.

 

Lots of people who live here already do some or all of their work over the horizon. This should be encouraged since it is a practical and realisic way of diversifying the local economy.

[Albert Tatlock]

The island is very different to the UK, in that no one can go to 'another area' within it for work, like people can and do in the UK (Scotland to London, London to Manchester etc.).

 

I do not believe this is true. There is no difference between working away during the week from,say, Scotland to the south of England vs working away during the week from IOM to anywhere else in the British Isles. Lots of people work away from home during the week all over the British Isles.

 

Lots of people who live here already do some or all of their work over the horizon. This should be encouraged since it is a practical and realisic way of diversifying the local economy.

I meant in terms of the economy being different across different UK regions. My point being that the economy is the economy here across 30 X 10 miles and its' 220 sq miles v the 94000 square miles of the UK and completely different/diversified counties/councils, north/south divide etc. etc.

 

Of course many people across the UK drive 15 or more miles just to get to their work 'locally', and I agree many travel and stay much farther afield.

 

I do not believe that the number of people based here and regularly working in the UK during the week is a significant number. A couple of hundred at most if even that, not a scientific calculation, but based on my own experience of 8 years doing just the same and 500 trips back and forth over that period and the numbers on the boat/plane and the types travelling. Business trips are not the same category.

 

Maybe being based here and travelling to work in the UK will become more popular and essential for some. But for the majority I don't think there is that choice, as it simply cannot be done without severely impacting the average wage.

 

The danger here is that you are introducing a 'solution' with such travel/work choices available only to a minority, and skewing reality. For most people the choice would be live on the island or live in the UK.

[pongo]

Maybe being based here and travelling to work in the UK will become more popular and essential for some. But for the majority I don't think there is that choice, as it simply cannot be done without severely impacting the average wage.

 

You make some good points as always and certainly working away would not be for everyone. But look at something like the construction industry for example which is all about people working away during the week on contracts. And the cost of travelling from, say, Scotland to the south is little different relative to a wage vs the cost of travelling from IOM.

 

My point being that the economy is the economy here across 30 X 10 miles and its' 220 sq miles v the 94000 square miles of the UK and completely different/diversified counties/councils, north/south divide etc. etc.

 

In terms of white collar work and contracts - well look at something like accounting or book-keeping for example. There is no longer any reason why your client needs to be local. Business here does not need to be all about tax avoidance and whatnot. In that context it makes no difference that the island is somewhat economically semi-detached.

[theman]

The land lord,s are just greedy pig,s ! And they never want to give there deposit,s back..

I just hope the greedy fook,s die a slow death!

[ballaughbiker]

The land lord,s are just greedy pig,s ! And they never want to give there deposit,s back..

I just hope the greedy fook,s die a slow death!

 

Wot, all landlords? or was it supposed to be humorous.....

[Blade Runner]

Are rents that bad here?

 

If you look around you can find some right bargains IMO and just your basic 1-2 bed modern flat can be had for about £5-600/month is that expensive?

 

Detached cottages in the country for about £800.00.

 

When you rent you are not expected to pay for the usual things like property maintenance and rates in some cases, often the rent includes white appliances that all adds up at the end of the day.

 

When you take the above into consideration I dont think rents here are bad at all.

[Tarne]

As a single mid twenties person, I find the rents and quality of accomodation v.bad compared to other places I've lived. 500 a month for a one bedroom flat is utterly daft. *shrugs*

[oldmanxfella]

Apparently Allan Bell is suggesting the government should look at ways to help people paying high rents in the private sector?

 

If rents are too high should they not be regulated by fair rent tribunals rather than giving people help to pay them?

 

We might as well be Cuba. Every problem with the free market is cured with a government grant. There is no chance that reality can set in here until government stops meddling in economics with our money and just let's the market fall naturally as it should. Rents are too high and there are too many apartments on the market - just let the laws of supply and demand determine what is an acceptable rent or not.

[iom_cb]

As a young single person on the island I find rents prohibitively expensive to the point that I'm going to have to move back home.

 

You're looking at £400pcm usually just for a room in a house-share, then your bills etc, never mind saving for a mortgage! I'd really like to just have my own modest flat in Douglas, but that seems very much out of my reach at the moment. Many of my friends, all in their early twenties, live at home still because of the cost of renting somewhere.

 

I'd like to see "rent-to-buy" schemes encouraged on the island, I think it would help considerably.

[Blade Runner]

I am not a mid twenty something, so will probably be looking at rent differently to someone that is, but what would you Twenty Somethings consider as an affordable rent for say a one bed modern apartment?

 

What would the going rate be somewhere like Manchester? I dont know, but would guess that if it is a lot cheaper than here, you will be renting in an area where venturing out at night would be a hazardous occupation.

 

The rents on the island IMO are about right when you consider the price of buying property and if they were much cheaper then where is the incentive for the landlord/investor to buy, maintain and offer to rent their property's?

[Max Power]

It sounds like it's sour grapes from those who are locked into a mortgage??

 

Think of it more as resentment to having to subsidise someones living arrangements through the Tax system.

 

And not everyone living outside of subsidised accomodation is tied into a mortgage. Some of us have to make do with something called "private" rental, you know the type that isn't made cheaper by government hand outs and maintained out of governement funds.

 

Think of it as resentment for people who "need assistance paying their rent" but need no assistance spending the money they save on their rent on holidays and shiney new cars.

If you'd read the whole post you would see that I suggested increaing council rents if they were considered too low, they are obviously at a realistic level as they are? As I said, low rent is not the primary for taking a council house, there simply are not enough reasonable homes to let in the private sector offering any kind of security!

[hboy]

You're looking at £400pcm usually just for a room in a house-share, then your bills etc, never mind saving for a mortgage! I'd really like to just have my own modest flat in Douglas, but that seems very much out of my reach at the moment. Many of my friends, all in their early twenties, live at home still because of the cost of renting somewhere.

 

I think £100 p/w is quite cheap for something new build and reasonably well equipped. You would pay that in Manchester for an equivalent Dandara built apartment.

[Matt Bawden]

You're looking at £400pcm usually just for a room in a house-share, then your bills etc, never mind saving for a mortgage! I'd really like to just have my own modest flat in Douglas, but that seems very much out of my reach at the moment. Many of my friends, all in their early twenties, live at home still because of the cost of renting somewhere.

 

I think £100 p/w is quite cheap for something new build and reasonably well equipped. You would pay that in Manchester for an equivalent Dandara built apartment.

 

I second that I was paying pretty much that amount for a shite 1 bedroom flat and that was over 15 years ago, you should think yerself quite fortunate to only have to pay £100 per week.

[Alias]

As a young single person on the island I find rents prohibitively expensive to the point that I'm going to have to move back home.

 

You're looking at £400pcm usually just for a room in a house-share, then your bills etc, never mind saving for a mortgage! I'd really like to just have my own modest flat in Douglas, but that seems very much out of my reach at the moment. Many of my friends, all in their early twenties, live at home still because of the cost of renting somewhere.

 

I'd like to see "rent-to-buy" schemes encouraged on the island, I think it would help considerably.

Your mates could afford to move out from home, they just don't want to because of the hit on their disposable income (flash car/holidays/whatever). 7k maximum including bills, is possible even on minimum wage (~12k/year). OK you may not be able to save, but that's on minimum wage - I'm guessing they're not. Whilst it might be that they're living at home to save for a mortgage, it's a lifestyle choice - they aren't priced out of the market.