can you increase rent if interest rates go up?

hornetgirl

realwildone wrote:

I would just like to say to all you greedy BTL's. Judgment days arriving.

This is just one IR rise. I expect it to be one of many over the next 2 years.

What about all the BTL landlords with the smug gene who have fixed rate mortgages? Or who own their BTL properties outright? Somehow I don't think they'll be too worried about all these interest rate rises.

Iso

Originally Posted by BobProperty
Would you like to think of a business where you hand over a £x00,000 asset to someone else, and can't re-gain possession of it without a court order (i.e. ignore the borrowing money bit)?

BobProperty wrote:

Really, can you point me to the law that says a HP company has to wait until the end of the initial hire period before they can have their property back?

Bob, you seem to have forgotten the first part of the question (above). An HP company would have to take someone to court to regain possession of the car if that person defaulted on the payments - in the same way as a landlord has to - ie [they] "can't re-gain possession of it without a court order".

morgaine_2

Now this is an interesting thread! I have been both a home-owner and a tenant.....I know which I prefer to be.
Unfortunately, due to the break-up of my first marriage and subsequent sale of the property - I have been unable to ever get back onto the property ladder. There was neither enough left after the sale nor were we, my "now" husband and I, earning enough to take on another mortgage and provide for our four then dependent children. And before anyone jumps in with why we had so many children, the two older ones were from my husband's first marriage - their mum was an alcoholic (like my first husband) and was unable to care for them for a longish period of time.

We have lived in rented accommodation - with the same LL - for approximately 8yrs. That's about £60,000 plus in rent that the LL has had from us. The house we are in was bought as a repossession for a lot less than the actual market value [we know this for a fact, by the way] about 15 yrs ago. Recently, our LL put the rent up to cover the rise in interest rates. I could fully understand this IF the mortgage payments for this property had increased. However, there was no morgage outstanding on this house.....BUT shortly before that, the property had been re-mortgaged to help fund the purchase of more properties on a BTL basis. H'mmm.

By the way, the valuer told us that if we had been looking for a mortgage on the property ourselves, there would have been no chance of getting one because of the poor maintenance of the building......
However, we love the old shed; our neighbours are super and as for the LL, well at least we're left alone to get on with our lives. In all fairness, the rent has only increased a couple of times since we have been here. The other side of the coin is only absolutely necessary repairs are done and then they are usually done as "foreigners" by LL's acquaintances etc.

It wouldn't matter how hard we worked, or what long hours we put in, we will never be in a position to purchase property again. We will never be able to feel "secure" in our home.
I often find myself thinking what would happen to us and to all our LL';s other tenants if our LL suddenly dropped dead? Our LL has no close family - has partner but not spouse; no children etc.
Sorry I've waffled on but I can see both sides. Personally, I wouldn't do a BTL even if I could - in the area where I live FTB's are being priced out of the market totally partially because LL's like ours - who owns in excess of 14 properties - are in better positions to "snap up" any bargains. This is also an area where there is NO emergency housing and very, very little HA or council housing.

H'mm
Morgaine

Gorgeous_George

If all renters were kicked out tomorrow and the houses put on the market, there would be as many new buyers as houses and the effect on the market would balance out.

Renting is better than buying for millions of people. It's not a class thing but one of choice.If someone wishes to buy a house they can. Equally, if they want to rent that's their choice.

BTL is not a problem it's a necessity. It's only people who buy 2nd homes for the weekend etc., that put upward pressure on the market by removing a house from those available.

House price inflation is a product of continued low interest rates, low house-building and populatioon increases. BTL does not come into it.

Som people need to get the chips off their shoulders.

GG

F_T_Buyer

Gorgeous_George wrote:

If all renters were kicked out tomorrow and the houses put on the market, there would be as many new buyers as houses and the effect on the market would balance out.

How many of those buyers couldn't afford it, and I mean could not borrow enough money to buy the property. The value would adjust until it ballances out, and with virtual all pricing models indicating housing being over priced, I would expect prices to fall.

Supply always matches demand, it's just the price level that moves that matches the two!

morgaine_2

I don't think I've got a chip on my shoulder about BTL in general. Indeed, it is fulfilling a need in society. If not for this amenity then heaven knows where the likes of us would be living, what with the drop in council housing availability - and I was as "guilty" as anyone in buying up council stock.

Then again, it may be argued that if supply equals demand then if there were fewer BTL's the government would have to get back to their Socialist roots and provide affordable, rentable housing stock. Or would we just have to put up with ghetto type slum housing again? Who remembers the pre-fabs of the post war eras? I thought they were okay - better than the private rented houses of the area I grew up in. Maybe we could see a resurgence of this type of housing stock?

Regardless of how it effects me, I have encouraged all our offspring to buy rather than rent. However, there are those within our society for whom that will never be an option. Also, in fairness, tenants do have more rights now.

I just worry about what may happen if the private LL's decided to cash-in on their stock ....and about what would happen to us if my LL popped their clogs suddenly......:rolleyes:

Morgaine

Gorgeous_George

morgaine wrote:

. That's about £60,000 plus in rent that the LL has had from us. Morgaine

How much would you have paid in mortgage payments stamp duty, solicitor's fees, maintenance and all the other things your LL has dealt with?

Your LL would not have known house prices would rise so dramatically. They could have fallen and he/she took that risk.

My BTL rent is less than what I could earn from selling up and paying off my own residential mortgage (at the moment). However, I will not be increasing the rent until at least April next year (18 months since the last rise). My tenants will get 3 months notice of any rise.



GG

Gorgeous_George

morgaine wrote:

I just worry about what may happen if the private LL's decided to cash-in on their stock ....and about what would happen to us if my LL popped their clogs suddenly......:rolleyes:

Morgaine

It's not likely to happen. Cashing in results in a huge tax bill for the LL. Of course, if he dies you'll be able to save the rent until his/her affairs are sorted.



GG

BobProperty

Iso wrote:

....Bob, you seem to have forgotten the first part of the question (above). An HP company would have to take someone to court to regain possession of the car if that person defaulted on the payments - in the same way as a landlord has to - ie [they] "can't re-gain possession of it without a court order".

No they wouldn't, you are wrong. It's as simple as that, I know of it happening. And if you want to say that the leasing company's action were "iffy" then OK, but unlike a landlord they aren't going to end up in court facing criminal charges.

jamesd

Gorgeous George, there is merit in the argument that BTL buyers are forcing prices up. The issue is the tax break that BTLs get and OO don't: BTL pay the interest out of pre-tax income, OO pay it out of taxed income. For the same property that results in a significantly higher effective price for the OO. It's also a reason why rents should be lower than purchase: the tax break is subsidising the BTL landlord compared to the OO.

Tax breaks for those who add to the housing stock (newbuild, rework costing half the property value, say) seem clearly helpful. Those who are exploiting a tax break for existing properties are not quite so positive.

Personally, if there's tax money to be allocated, I'd rather see it go to OO for first time buyers than BTLs.

Not that this will stop me from using the tax rules as they exist myelf, but I will be recognising that I am getting a tax benefit the OO isn't getting.