God help you if you're unemployed.

[biffvernon]

...a rent judged fair in the market by the local land agents. It has been waiting for tenants for a few months. He is unsure what to do.

If it's been empty for a few months (say four) he would have been better off setting the significantly lower (say -25%) and having a tenant. An occupied property at any rent is better than an empty one.

That's the obvious conclusion but it ain't necessarily so. There are actually very few people who want to live in this location. No broadband, dodgy mobile reception, far from local services, an old cottage that has many, er, querks that make it unsuitable for many. It is not at all certain that reducing the rent asked for would produce more potential customers. It may be best to hang on for the right tenant who will stay the for a long time. It's not an easy judgement.

[clv101]

There are only two options; either it is too expensive for what it is (considering broadband, phone, services, querks etc.) or it hasn't been marketed well enough.

The 'fair' market price may not have correctly factored in the above features - or the many folks who would accept the querks were the price low enough simply haven't heard about it.

[JohnB]

It's in the letting agents interest to keep rents as high as possible too, so maybe the fair local rent is somewhat below what they recommend. If someone actually charged a lower rent, it could be the start of a slippery slope leading to lower profits for the agents.

[kenneal - lagger]

Perhaps the best thing that can happen to houses prices is that they should remain the same for many years, and preferably, indefinitely. General inflation will then reduce the cost of them to the buyer without putting many people into negative equity. Large numbers of people in negative equity is just as bad as having too high house prices. This would require people to have pay rises that reflect the inflation rate.

There is likely to be a slight drop in houses prices outside London, at least, as the reality of the financial situation slowly sinks in and sellers go for any sale rather than "what the house is worth". London still has a significant overseas sales push at the top end which finds its way down the price scale so there will be problems there long term. All the more reason for business to move out of London.

[Blue Peter]

Perhaps the best thing that can happen to houses prices is that they should remain the same for many years, and preferably, indefinitely. General inflation will then reduce the cost of them to the buyer without putting many people into negative equity. Large numbers of people in negative equity is just as bad as having too high house prices. This would require people to have pay rises that reflect the inflation rate.

There is likely to be a slight drop in houses prices outside London, at least, as the reality of the financial situation slowly sinks in and sellers go for any sale rather than "what the house is worth". London still has a significant overseas sales push at the top end which finds its way down the price scale so there will be problems there long term. All the more reason for business to move out of London.

Your plan will only work if there is wage inflation, which will tend not happen because companies will be squeezed by other inflation and the high price of property.

We are basically a high-cost, low growth economy. The only way to "improve" this is to reduce costs - principally the artifically-inflated costs of property, which affect everything,


Peter.

[biffvernon]

There are only two options; either it is too expensive for what it is (considering broadband, phone, services, querks etc.) or it hasn't been marketed well enough.

The 'fair' market price may not have correctly factored in the above features - or the many folks who would accept the querks were the price low enough simply haven't heard about it.

The market, as you know, is not perfect.

Say you are hoping for a long term tenancy of x years
If you charge £a per year you will in total get £ax in income.
If you charge £b per year you get £bx
Assume a>b
The probability of getting a tenant at price £a in time m is P1
The probability of getting a tenant at price £b in time m is P2
Total income will now be either £ax-P1max or £bx-P2mbx

Unfortunately you don't know the values of P1 or P2, you have to chose values for m and for £b. All you have is a value for £a suggested by the estate agent, who may or may not have good judgement but doesn't have values for the missing variables either.

What does the farmer, who, irrelevantly, knows a great deal about the market for organic beef, do?

(My head hurts.)

Setting a price for housing where the property in question is of a rare type and the potential customers are very few in number is a frequently encountered problem in this neck of the woods. The market for a standard newish property on a large estate is much easier to determine. There's quite a rational sentiment that goes 'if I wait long enough, the right buyer will come along willing to pay what I'm asking'. Knowing whether and when to drop the price is tricky.

[Little John]

Perhaps the best thing that can happen to houses prices is that they should remain the same for many years, and preferably, indefinitely. General inflation will then reduce the cost of them to the buyer without putting many people into negative equity. Large numbers of people in negative equity is just as bad as having too high house prices. This would require people to have pay rises that reflect the inflation rate.

There is likely to be a slight drop in houses prices outside London, at least, as the reality of the financial situation slowly sinks in and sellers go for any sale rather than "what the house is worth". London still has a significant overseas sales push at the top end which finds its way down the price scale so there will be problems there long term. All the more reason for business to move out of London.

Wont work, wages are going nowhere.

[JavaScriptDonkey]

The market, as you know, is not perfect.

Work out what the average salary of a likely tenant would be and then factor the rent as a 1/4 of that. £20k pa -> ~£100pw

Then vote for a political party that will tax land owners at 100% on asking rent for all unoccupied homes, stand back and watch the market fall.

[SleeperService]

The market, as you know, is not perfect.

Work out what the average salary of a likely tenant would be and then factor the rent as a 1/4 of that. £20k pa -> ~£100pw

Then vote for a political party that will tax land owners at 100% on asking rent for all unoccupied homes, stand back and watch the market fall.

My God JSD, something else I agree with you on!

Round here that would mean rent at about £75 a week rather than the £1000 a month currently demanded by buy to let landlords greedy for profit. Lots of empty houses but nobody budging on the rent.

Interestingly I have had two offers for my place recently, both fell through as there's a covenant(?) preventing the house being split into flats.

Interesting times.

[emordnilap]

Here's an interesting article from dem LibDems about land value taxation.

Site value tax, as it's called currently over here, is mooted as a preferable alternative to the property tax, which is to introduced in the imminent Irish budget. And I agree - it is a lesser of evils.

Empty properties should not be exempt, no matter what the system.