UK ONS releases an experimental Index of Private Housing Rental Prices

The biggest gripe landlords, tenants and agents have with rental property is pricing: no one has a real clue as to what something will go for.

Agents have the closest idea, because they are 'market participants'; but even they are sticking a finger in the air and guessing.

So while any information is welcome, indices are not ideal. In the world of real estate, they are highly misleading. That's why Zoopla's property prices feature is so woefully off-the-mark the vast majority of times: they base the data on indices.

An Index of real estate prices gives an indication of average price. But the problem is most property is just not transacted very often; for sales or rentals.

So what is wrong with averages and why are they misleading? This rental housing index says rents have gone up 1.0% in the year to June 2014. As an average across all rental property, that's probably right.

But if you are renewing your tenancy, you're likely to face a 5%+ hike. Even worse, if you're moving, the price you will negotiate to will be much more than 5% higher than the last tenant.

An index is just the wrong tool for this. People want to know what they will be paying, or expecting to be paid. That's all that really matters.

A better approach would be to display current market rents for property size (number of bedrooms) and type (flat or house that is purpose built or in a period property). That way people can compare like-for-like in their area of choice.

But please, people at the Office of National Statistics, don't release another Index based on averages: it's just plain wrong.

Here is the ONS Index of Private Housing Rental Prices for June 2014: