So are Landlords finished?
Discussion
98elise said:
You can get 6% with high yielding stocks or funds. My Lloyds shares yield 6% and are up 20%+ in a month. I actually trade in and out so my overall gains are much bigger. Alternatively spread your cash over a few decent funds and let the pros make you money.
I do agree with the diversity of having both and it's much easier to click a mouse, but housing tends to be more consistent e.g. when there's a downturn with the stock markets people still need houses. Plus there's the capital growth that often accompanies the yields. I'm not sure this is the best time with equities at all time highs to get in. Anyway... I digress.
The issue with landlords is so many have problems with debt and judging risk. We're being offered blocks of apartments and other larger opportunities because "professional" developers have taken on far too much debt and are in trouble.
Social housing is interesting (which is contracted over the long-term from the Local Authority). Up to 10% net yield and pretty much totally hands off. We have three to give them a try and so far so good. Can't be mortgaged, though, and usually have favourable Options to be bought out by a fund within 3 years.
Edited by MrBogSmith on Wednesday 24th April 14:08
Astonishingly, the Green MP suggestion of a minimum EPC "C" rating, actually sounds quite sensible.
Not letting them ask for guarantors is daft though. As is the student housing thing. Yes you aren't there for most of the summer, but equally a LL can't exactly do much with 3 months going spare. All that will happen though is "weekly" rents going up to equalise.
Not letting them ask for guarantors is daft though. As is the student housing thing. Yes you aren't there for most of the summer, but equally a LL can't exactly do much with 3 months going spare. All that will happen though is "weekly" rents going up to equalise.
Biggy Stardust said:
NerveAgent said:
Careful, landlords are a very fragile people.
Many, sick of the incessant attacks, have got out of BTL. This has caused shortages & rent rises. Ireland is several years ahead of us on this path and is now beginning to realise the consequences of their actions against landlords.The solution for UK is not to continue the attacks.
nickfrog said:
What's your source for this pearl of wisdom?
My source is the oft posted on PH simpleton statement of: 'I'm selling up my BTLs, that's X less rental properties available'. This is self evidently nonsense because:a) Some may be bought by other landlords, so they will remain as rentals
b) If they are sold to buyers then this will (somewhere along the chain) allow renters to transition to buyers. So there may be less rental stock, but there is an equal reduction in the number of renters.
White-Noise said:
It's a serious problem. Landlords are moving out of the rental market increasingly due to the changes being made and its helping push rents up. Folks can't afford to rent let alone buy. A lot of people are not laughing on both sides.
It's shifting the key problem around, not making it worse. If you make BTL less attractive you are increasing the supply of property for FTBers. The key problem underlying the cost of rent and the cost of purchase is that there are too many people chasing too few homes. The solution is to make more homes available and that isn't something that BTLers generally do (i.e. they don't create new homes). The specific problem caused by too much BTL is that it drives the overall cost of homes up as BTLers are extracting rent from the system in what is effectively a credit arbitrage. BTLers can use their better credit rating to out-compete FTBers, so the would-be FTBers remains tennants and end up financing the mortgages that the lenders weren't prepared to extend to them directly. The BTLers effectively are just sitting in the middle being overpaid to provide credit guarantees to the lenders.Biggy Stardust said:
See the next stage, where they ask why there is such a lack of private rental property & why rents have risen drastically.
Exactly. Put all rents in the hands of huge organisations and see what happens. It will be like phone contracts they will increase by inflation plus 3% every year and they will have a monopoly so who’s going to stop them? Olivera said:
nickfrog said:
What's your source for this pearl of wisdom?
My source is the oft posted on PH simpleton statement of: 'I'm selling up my BTLs, that's X less rental properties available'. This is self evidently nonsense because:a) Some may be bought by other landlords, so they will remain as rentals
b) If they are sold to buyers then this will (somewhere along the chain) allow renters to transition to buyers. So there may be less rental stock, but there is an equal reduction in the number of renters.
MrBig said:
98elise said:
. You can get 5% returns on cash these days!
This is the crux of it. 5% return guaranteed, no worries about tenants smashing the place up, disappearing without paying or worse, staying without paying.Unless you own the property outright, it seems like a massive PITA for no advantage.
nickfrog said:
^ indeed. Quite weird. Why would someone be anti Landlord in the first place?
Renting is an essential part of society for mobility or while saving to buy a property. Other countries don't seem to have that issue with renting.
Anti landlord is a completely wrong framing of the issue, it's one of excess landlords (and capital) having a socially and economically detrimental effect. The Conservatives agreed, hence they instigated several measures to dampen demand for the asset class, Labour also agree so we'll inevitably see more when they are in power.Renting is an essential part of society for mobility or while saving to buy a property. Other countries don't seem to have that issue with renting.
Olivera said:
nickfrog said:
What's your source for this pearl of wisdom?
My source is the oft posted on PH simpleton statement of: 'I'm selling up my BTLs, that's X less rental properties available'. This is self evidently nonsense because:a) Some may be bought by other landlords, so they will remain as rentals
b) If they are sold to buyers then this will (somewhere along the chain) allow renters to transition to buyers. So there may be less rental stock, but there is an equal reduction in the number of renters.
What do you think has happened to the cost of rent from the time that my landlord put the flat up for sale til it was sold? Up 50% from £1250 to £1800 per month. I’m lucky that I no longer have to rent, but I can’t see how landlords selling up will help renters in the long run. It’ll simply create increased demand resulting in higher rents. Higher rents mean folk will have to pay a larger percentage of their income on rent. Not good.
Landlords are an easy target. Politicians don’t have to deal with the fall out with these policies, the homelessness, the clogged court system. But vowing to do something about those “unscrupulous landlords” is a vote winner for the clueless, the same clueless that will complain about the unintended consequences without having the gumption to realise it.
Oh well…
markh1973 said:
It's a good job professional tax advisors and accountants do exams then and not simply use Google
When I say "quick google search" I mean guidance produced by the above such as this from Baker Tillyhttps://www.mha.co.uk/insights/can-property-incorp...
Not my area of speciality and if you have anything to share would be interested to read.
nickfrog said:
^ indeed. Quite weird. Why would someone be anti Landlord in the first place?
Jealousy, bitterness at not having done better in life, need for a scapegoat for all their problems...............nickfrog said:
Renting is an essential part of society for mobility or while saving to buy a property. Other countries don't seem to have that issue with renting.
Maybe they have fewer resentful losers & more people content with where they are in life.Edited by Biggy Stardust on Wednesday 24th April 14:08
Countdown said:
Ian Geary said:
So what happens to the house / flat when the landlord sells it?
It doesn't just disappear - someone will buy it. Maybe another landlord? Or maybe someone leaving the private rented sector. Change in housing stock = 0.
I think this bit is quite often ignored. Landlords leaving the market don't reduce the overall availability of housing. The reason rents are so high is the same reason that house prices are so high - supply isn't enough to meet demand.It doesn't just disappear - someone will buy it. Maybe another landlord? Or maybe someone leaving the private rented sector. Change in housing stock = 0.
FWIW Landlords leaving the market has (IME) increased profits for those still in the market. It's relatively easy to get net profits of about 5% per annum not including capital growth.
Ian Geary said:
I have limited experience, but my personal anecdote comes from one door away.
The bungalow next to me is rented - elderly couple died, their son in his 50s inherited, and now rents to a young teacher with a child.
Owner occupier deceased so -1, someone looking to rent now has a place to rent so also -1. In going from owner occupier to tenanted, the rental demand reduces.The bungalow next to me is rented - elderly couple died, their son in his 50s inherited, and now rents to a young teacher with a child.
If there’s a chain, you likely remove 1 renter at the bottom, at the other end of the chain, who knows. Could be death, could be retirement home, could be retiring somewhere sunny & sandy, could be selling to a landlord. Hard to say the effect on demand.
If you transfer the tenancy in the opposite direction, rental demand increases.
No matter how good a tenant is, there will be some refreshing and refurbishing likely needing done to a property in order to market it. The landlord will give notice, once vacant, work can be done and then the property marketed and sold, completion of missives, exchange etc. Best case scenario, 3 months feels quite good in the current climate.
So the rental market has one additional person looking for a property, but there's a 3 month lag before someone renting can become an owner occupier.
If that kind of decision is made en masse, that's a big demand spike in the rental market and it’s unlikely to be good for renters.
Saying there is no change in the overall stock completely ignores the reality of how property transactions function.
There’s altogether too much focus on endlessly squeezing landlords out of the market and nowhere near enough on getting more housing stock and better housing stock available.
Killboy said:
What "business model" doesn't change over time? Why should BTL landlords be protected from the ups and downs of interest rates etc? If people are paying off interest only on a BTL scheme, and the property value goes down - who should fit that bill? The tenants?
This is my problem with "landlords". They expect absolutely everything, and try pat themselves on the back as "entrepreneurs" for doing renters a favor and if it weren't for their kind generosity their tenants would be out on the streets. I also wonder what percentage of private landlords are only in that situation due to inheritance.
Corporations owning property for the purpose of renting out are worse, but that does not excuse a large portion of private landlords.
Perhaps a certain poster from the "Has your insurance gone up" thread can come explain how he weeds out those on benefits - while somehow also thinking you are allowed to discriminate against them.
I dont think anyone is suggesting that Landlords should be protected from anything other than perhaps more well meant but idiotic legislation. This is my problem with "landlords". They expect absolutely everything, and try pat themselves on the back as "entrepreneurs" for doing renters a favor and if it weren't for their kind generosity their tenants would be out on the streets. I also wonder what percentage of private landlords are only in that situation due to inheritance.
Corporations owning property for the purpose of renting out are worse, but that does not excuse a large portion of private landlords.
Perhaps a certain poster from the "Has your insurance gone up" thread can come explain how he weeds out those on benefits - while somehow also thinking you are allowed to discriminate against them.
The problem Elise98 was illustrating was that when one can earn 5% risk and hassle free why would anyone in their right mind choose to make 5.5% from an investment that is fraught with risk and attracts the hatred of so many, its the only place the justice system penalizes those who are stolen from.
The main reason I removed my BTLS from AST rental is the risk associated with this, interest rates on borrowing have nothing to do with it. When cash was earning 0.1% in the bank making 5 or 6% was worth the risk, now it is not.
Realistically you need to be making 2 or 3x the rates made from savings to make this rental risk even remotely worth considering. Lets be franks even 2 or 3x the savings rates is not that sensible.
The disappearing property thing is really simple I think I read on average a property on an AST returns to the market about every 30 months, owner occupied is something like every 15 years. The liquidity is incomparable between owner occupied and rented.
What is happening is all the nice rentals, the ones owned by fairly ordinary people as a retirement income are being sold to owner occupier, leaving the property that owner occupiers would never consider as the only things on the rental market. Its really sad.
Otispunkmeyer said:
Astonishingly, the Green MP suggestion of a minimum EPC "C" rating, actually sounds quite sensible.
Not letting them ask for guarantors is daft though. As is the student housing thing. Yes you aren't there for most of the summer, but equally a LL can't exactly do much with 3 months going spare. All that will happen though is "weekly" rents going up to equalise.
I think it's one of those ideas that sounds sensible but actually really isn't. Not letting them ask for guarantors is daft though. As is the student housing thing. Yes you aren't there for most of the summer, but equally a LL can't exactly do much with 3 months going spare. All that will happen though is "weekly" rents going up to equalise.
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