The rental market

macaque_2

Whilst the private rented sector has a valuable role to play, it has attracted too many people with little or no commercial skill and dubious business ethics (my apologies to the good landlords). Many of the people who rent these properties do so reluctantly. For them, the equity leverage and artificially high rents that BTLs enjoy makes for a very uneven playing field.

In other words, too many rental properties are owned by unsuitable landlords and occupied by unwilling tenants. A shakeout is long overdue. Recent changes to the housing benefit system is a step in the right direction. By reducing housing benefit, rents will fall, accross the board. This will force the weaker landlords out of business and drive down house prices. Everyone wins....almost.



http://www.lovemoney.com/news/make-good-property-decisions/buy-to-let-investments/bad-news-for-landlords-5392.aspx

nearlynew

There was a time when owning a house and becoming a landlord was something you could only do if you had a bit of money behind you. And I mean cash not "equity" in an existing property.

During this latest boom many people became seduced by the propsect of ever increasing prices and with the bank's encouragement borrowed heavily against the inflated values of existing property to "buy" more. It's classic bubble mentality and has happened many times throughout history in all sorts of markets.

Many enter the market but few are successful.

The banks ends up winning either way and the losers come to realise that debt is not wealth.

Pimperne1

nearlynew wrote: »

There was a time when owning a house and becoming a landlord was something you could only do if you had a bit of money behind you. And I mean cash not "equity" in an existing property.

During this latest boom many people became seduced by the propsect of ever increasing prices and with the bank's encouragement borrowed heavily against the inflated values of existing property to "buy" more. It's classic bubble mentality and has happened many times throughout history in all sorts of markets.

Many enter the market but few are successful.

The banks ends up winning either way and the losers come to realise that debt is not wealth.

Oh, actually you've sold that to me. How I hanker for the time when only rich people could be landlords. As for your "many enter the market but few are successful" that is just absolute nonsense. The sign of a failed landlord is a repossession, how many BtL properties have been repossessed? I doubt that there are many even in negative equity or mortgage arrears but if I could be ar5ed I could go and find out.

olly300

Pimperne1 wrote: »

Oh, actually you've sold that to me. How I hanker for the time when only rich people could be landlords.

Like Rachman?

The main problem with BTL is that the majority of landlords don't realise they have a business and that their tenants are customers.

Pimperne1

olly300 wrote: »

Like Rachman?

The main problem with BTL is that the majority of landlords don't realise they have a business and that their tenants are customers.

And you base your "majority of landlords" I suppose on the majority of landlords you have encountered. How many?

diable

olly300 wrote: »

Like Rachman?

a name from the past, funny as my Dad knew him in the 50's

PasturesNew

Rents are too expensive. £500 for a 1-bed flat where I live, with average wages at £13,500 it doesn't take rocket science to work out that a single working person just can't pay that much.

Lots of "cash in hand" going on round here. I had a mate who was asked to leave their rented room when they got laid off because the LL wasn't declaring any of the rooms in his HMO. Lots of that going on - and people renting sheds and garages. I'm not really keen on renting a shed or garage round the back of somebody's house...

I'm on a "round robin" mailing list - one of the inbound emails today was a list of four 1-bedders, £565-650/month they were... pfft. Keep 'em!

rockitup

PasturesNew wrote: »

Rents are too expensive. £500 for a 1-bed flat where I live, with average wages at £13,500 it doesn't take rocket science to work out that a single working person just can't pay that much.

Lots of "cash in hand" going on round here. I had a mate who was asked to leave their rented room when they got laid off because the LL wasn't declaring any of the rooms in his HMO. Lots of that going on - and people renting sheds and garages. I'm not really keen on renting a shed or garage round the back of somebody's house...

I'm on a "round robin" mailing list - one of the inbound emails today was a list of four 1-bedders, £565-650/month they were... pfft. Keep 'em!

You don't happen to live in Slough area do you PN? Plenty of sheds with beds there....

On the subject of rent levels though, the Landlords who have bought their properties say 10 or more years ago could probably let theirs go for a slightly cheaper rent and still make a comfortable living. Different story for Accidental Landlords and those who bought way-overpriced New-Build apartments. They obviously want to try and cover their mortgage interest payments and voids etc.

I can't see much chance of rents coming down too much while FTB's need such large deposits, granted landlords who creamed it with HB/DSS tenants will be seeing a shortfall in rents with upcoming LHA cuts. If HB rents end up similar to private rents I wonder will there be less LL's renting to HB claimants?

PasturesNew

rockitup wrote: »

You don't happen to live in Slough area do you PN? Plenty of sheds with beds there....

No, far far far South West... almost as far as you can go

Graham_Devon

PasturesNew wrote: »

Lots of "cash in hand" going on round here. I had a mate who was asked to leave their rented room when they got laid off because the LL wasn't declaring any of the rooms in his HMO. Lots of that going on - and people renting sheds and garages. I'm not really keen on renting a shed or garage round the back of somebody's house...

I've known people to rent garages to live in, but never a shed! I guess it's one of those things you never really know happens unless you know someone that does it.

Do remember seeing the story of a london broom cupboard that sold for 50k or something though. Was posted up on here.

Was looking for the cupboard article, and found this:

Flat, £99,800
Where: Hampstead, NW3.
Specification: 110 sq ft. Cupboard-sized studio flat in a grand Victorian block, with an open-plan sitting room-bedroom-kitchen, cloakroom, separate toilet and shower cubicle.
Chain details: the owner needs to free
up finances for university-bound children.

110sq feet!!

Cleaver

PasturesNew wrote: »

Rents are too expensive. £500 for a 1-bed flat where I live, with average wages at £13,500 it doesn't take rocket science to work out that a single working person just can't pay that much.

Where do you live Pastures? I had in my head it was the South West for some reason. The average median salaries for the South West areas are below, and there are none as low as £13,500. (source)

SOUTH WEST AREA MEDIAN AVERAGE SALARY Cheltenham £24,552 Stroud £22,715 North Somerset UA £22,602 Swindon UA £22,248 South Hams £22,134 Tewkesbury £22,003 Bath and North East Somerset UA £21,718 Gloucestershire £21,706 Bristol, City of UA £21,580 North Wiltshire £21,377 South Gloucestershire UA £21,314 Salisbury £21,301 Taunton Deane £21,150 East Dorset £21,108 Purbeck £21,093 Wiltshire UA £21,070 West Wiltshire £20,998 Poole UA £20,470 Gloucester £20,436 Kennet £20,331 Bournemouth UA £20,223 Plymouth UA £19,906 West Dorset £19,862 North Dorset £19,798 South Somerset £19,783 Caradon £19,731 Somerset £19,687 Dorset £19,473 Sedgemoor £19,349 Forest of Dean £19,162 Weymouth and Portland £19,111 East Devon £19,029 Mendip £18,893 Cotswold £18,775 Carrick £18,593 Mid Devon £18,579 Exeter £18,513 Kerrier £18,119 Cornwall UA £18,029 Devon £17,974 Teignbridge £17,577 North Cornwall £17,448 Restormel £16,836 Torbay UA £16,708 Christchurch £16,594 Torridge £16,250 North Devon £15,454 Isles of Scilly £12,803