Thursday, 24 July 2014

"London workers boost rents in home counties"

More Ricardo's Law of Rent in today's City AM:

IMPROVING job prospects and growing demand from London workers hunting for homes outside of the capital has sent rents in the home counties soaring this year.

Figures released today by Knight Frank show that prime rents jumped 2.6 per cent in the three months to June, a marked increase on the 0.7 per cent growth in the first quarter.

The number of tenancies agreed across the home counties was 50 per cent higher year-on-year, led by demand from people working in London...

“UK tenants are still the largest proportion, with many looking to move out of London to the home counties for a bit more space,” [Knight Frank’s Oliver Knigh] said.

Despite two consecutive quarters of rental growth, rents are still 3.8 per cent down over the 12 months to June. But returning business confidence is expected to further boost rental demand in the UK as companies push ahead with expansion plans.

“I expect that we’ll see further rent increases as the year progresses as demand shows no sign of slowing,” Knight said.


Lola said...

Quite. From wiki:

This law has a number of important implications, perhaps the most important being its implication for wages. The Law of Rent implies that wages bear no systematic relationship to the productivity of labor, and are instead determined solely by the productive capacity of marginal land,[3] as all production in excess of that amount will be appropriated by landowners in rent.

If ever there was a screaming hint for LVT this is it.

Mark Wadsworth said...

L, ah yes, but the Faux Libs then claim that "we are not an agricultural economy".

The point is that Ricardo was actually talking about urban land and "wages net of housing costs".

This prediction holds true to this very day, even The Daily Mail doesn't deny it.

Homeys bat it aside on the basis that they have no housing costs, they bought cheap and have paid off the mortgage.

Because young people don't exist and it's all their own fault etc.

Lola said...

MW Whoa there. 'Of course' mortgage free homeys are paying 'rent'. They just cannot see it. Their 'rent' is the opportunity cost of all the cash they have tied up their land/houses.

I appreciate that this sort of cancels out if you consider the rent that they'd have to pay to live where they live, but it still an opportunity cost.

Mark Wadsworth said...

L, yes of course, completely agreed.

It is a very real cost to them and also a massive cost saving.

They are "owner-occupiers". The owner collects rent and the occupier pays it. What if, for example, the husband owns the house and stays at home and charges his wife rent?

And even if we accept that they derive little net cash benefit from their home, the Homeys in high price areas are benefitting from the fact that they live in a high wage area. Because their wages are higher than they otherwise would be.

And that extra income is rent, it cannot be anything else.

Lola said...

MW Jeez. Don't tell Mrs L that - she owns our house (it's a man of straw/defending myself from capricious bureaucrats thing) and she'd leap at the chance to charge me rent...