Tighter lending rules mean 10-year wait for first-time buyers

Exocet

chucky wrote: »

why would interest rates go up = inflation

what happens when inflation goes up = rents will go up.

does anyone actually think if inflation goes up rents will stay the same...
interest rates go up, people will pay more for their rent. end of.

where's the issue?

Rents aren't geared, mortgages are. A 1% rise in mortgage rates is a lot more than 1% on rent.

Harry_Powell

Exocet wrote: »

Rents aren't geared, mortgages are. A 1% rise in mortgage rates is a lot more than 1% on rent.

With the population increasing and more people living alone, the demand for houses increasing yet the number of people able to buy property is falling. This means there will be a greater demand for rental proprties and therefore the landlords can increase prices to cover their mortgages.

Or do you believe that the landlords will subsidize the tenants out of the goodness of their hearts?

Rents are always going to be far higher than mortgages, except for the fools who jumped onto the BTL bandwagon far too late.

chucky

Exocet wrote: »

Rents aren't geared, mortgages are. A 1% rise in mortgage rates is a lot more than 1% on rent.

that's a fair point but it all depends on LTV's, fixed rates etc bla bla bla, we could go on for pages and pages as different people have different circumstances but the real point is that rates will only really go up if we have high inflation.

you can't have high inflation without it increasing rents - they're not exclusive to each other.

also don't forget that if it is as it's alleged on here that more and more people are bing priced out they are going to have no choice but to rent - what do you think will happen to rental demand and rents if more people are having to rent?

Emy1501

Harry_Powell wrote: »

I read your link and this statement doesn't make any sense at all:

"Matt Hutchinson, director, flat and house share website Spareroom.co.uk, said: “Britain’s landlords are in a Catch 22. On the one hand, the rise in capital gains tax for higher rate taxpayers means that many landlords either won’t be able to sell their buy-to-let properties full stop or will sell at a far greater loss. At the same time, holding onto their properties means they are at the mercy of the Bank of England and facing higher mortgage payments."

Capital gains are payable on gains only and there is also a £10k threshold. This means that the BTL landlord can make a £10k gain before s/he even starts paying the tax. S/he then pays a percentage (I forget what the new rate is, let's say 40%?) of tax on the remaining profit, meaning that they retain 60% of the gain. The gains are also calculated AFTER costs such as estate agents fees, etc.

How a BTL landlord make a loss due to capial gains? It seems this guy really hasn't got a clue what he's talking about.

It not the point thats relevant here. The point it that a reasonable number of landlords would struggle to get the rent to cover the mortgage if rates rose 1% let alone 2% and whilst inflation would see a rise in rents this would only occur if the demand was there and if lots of people are going to buy BTL properties the demand will fall. ALso highly unlikely an increase in rents would be anywhere near the rate rise

The reality is that most FTB's etc are more like to stay longer at the parents whilst they save up rather than rent and save.

BTL in the near future is only going to appeal to those with lots of cash. The days of teaser rates with only a 10% deposit etc seem to long gone for the want to be BTL'r.

Raggs_2

Harry_Powell wrote: »

Rents are always going to be far higher than mortgages, except for the fools who jumped onto the BTL bandwagon far too late.

But rents aren't far higher than mortgages. If anything they will be lower than most normal mortgages (90% ltv etc). Plus rent includes a lot of extra benefits that mortgage payments don't.

Exocet

BTL. The most emotive part of the House Price argument. To me, it's a dirty investment, dealing with tenants and maintenance. It's bad enough maintaining your own property. There were large gains to be made, I suspect they have gone for some time now. The risk of large losses is another reason I stayed clear.

I agree that if more people rent, they will need more rental property, and of course someone has to own that, now we have less social housing. Maybe those landlords will be making a tidy turn. Certainly if they bought before HPI they should be OK.

But the sums, for me, still don't add up - not when calculating risk / effort / reward.

Harry_Powell

Raggs wrote: »

But rents aren't far higher than mortgages. If anything they will be lower than most normal mortgages (90% ltv etc). Plus rent includes a lot of extra benefits that mortgage payments don't.

Yes. Rents are lower than most normal mortgage. lol.

Exocet

Harry_Powell wrote: »

Yes. Rents are lower than most normal mortgage. lol.

I think the statement is probably true, if you look at the price tag on a property and compare the likely mortgage cost to rental value. That's where the current BTL equation does not, imo, make sense.

Harry_Powell

Exocet wrote: »

I think the statement is probably true, if you look at the price tag on a property and compare the likely mortgage cost to rental value. That's where the current BTL equation does not, imo, make sense.

The statement didn't put any sort of timeframe around when the BTL properties were bought. It makes me smile to see all the narrow views on this board. The only viewpoints expressed or considered are those pertinent to the people expressing them. They do not look outside their own circumstances.

"It will cost ME more to service a mortgage on a house purchase than it would cost for ME to pay rent, therefore all mortgages are more expensive than rent".

It's an argument I'd expect from children.

System

Even if it was true, I never understood the argument anyway, surely renting anything should be cheaper than buying it , given that whole issue of ownership at the end.