Housing benefit cuts deter landlords from letting

HAMISH_MCTAVISH

Thrugelmir wrote: »

Unlikely as the boom of BTL occurred in the past 10 years.

No, I don't think that's quite right. Or at least, it's true that the BTL boom is a recent thing, but there were already a significant number of rented properties previously.

AFAIK there are around 3 million privately rented houses today, there were 2 million 15-20 years ago, and 1 million 50 years ago. But some have remortgaged, some will have sold form one to another, some are reluctant landlords, etc.

I may be wrong.... all from memory of online discussions and news articles, and it's not a subject thats come up recently.

Curious enough now to google it, I'll post whatever I find.

Wee_Willy_Harris

Graham_Devon wrote: »

http://www.bbc.co.uk/news/uk-12937116

Interesting article, as it highlights the minimal room to manouvre for BTL landlords.


Shame.

But more noticibly:

86% cannot afford to cut rents!? 86?!

What's going on if 86% simply can't afford to cut rents?! What on earth is going to happen when interest rates rise if people, at these interest rate levels on mortgages cannot afford to cut rents!?

Bluster to try and scremonger an reverse the policy? Or reality when it comes to BTL?

It really doesn't matter if 86% cannot afford to cut rents. What matters is if 86% of renters can afford to pay the advertised rent.

Thrugelmir

HAMISH_MCTAVISH wrote: »

No, I don't think that's quite right. Or at least, it's true that the BTL boom is a recent thing, but there were already a significant number of rented properties previously.

There's always been rented property. BTL however didn't exist as a product until 1996 when the now demised Bradford and Bingley sold the first BTL product on the market, and subsequently boomed in the 2000's.

A while back you kindly published a report showing that the impact on the property market of BTL mortgages. In the report was some interesting data. Which showed the growth of BTL lending.

Gross lending in billions.

1999 3.1
2000 3.9
2001 5.9
2002 12.2
2003 19.2
2004 22.7
2005 29.5
2006 38.2

So your assertion that a significant amount of capital debt has been repaid is extremely unlikely.

Just as side point. This is what B&B published in 2006. Shows how quickly markets and businesess can change.

Myths about the Buy-to-Let market

Executive summary

The phenomenal growth of the Buy-to-Let market has been well
documented. The first Buy-to-Let mortgage was offered in 1996,
and now, only a decade later, there are more than three quarters
of a million Buy-to-Let mortgages in the UK, worth over £90bn.
This revolution has brought with it vast benefits for the
housing market and for the economy. There has been a
huge improvement in the quality and availability of rented
accommodation. And the ownership of this property, previously
the province of companies, institutions and specialist investors,
has spread to a huge range of people from all walks of life.
At a time when people are being urged to save more, hundreds
of thousands of people are investing for their futures through
Buy-to-Let.
This should be celebrated as a resounding success story. And yet
the public perception of Buy-to-Let is not always positive. The
Buy-to-Let market and its wider impact are widely misunderstood.
At Bradford and Bingley we have unparalleled experience of
the Buy-to-Let market. Through Mortgage Express, our specialist
lending arm, we were pioneers of Buy-to-Let in 1996. And we
remain the leading Buy-to-Let lender in the UK. This report seeks
to address and rebuff, with evidence, a number of commonly held
misperceptions about Buy-to-Let

Thrugelmir

Wee_Willy_Harris wrote: »

It really doesn't matter if 86% cannot afford to cut rents. What matters is if 86% of renters can afford to pay the advertised rent.

Then 14% of landlords may have to consider cutting theirs to attract tenants. Over supply of any service brings downward price pressure until such point as the market stabilises at a new base level.

Wee_Willy_Harris

Thrugelmir wrote: »

Then 14% of landlords may have to consider cutting theirs to attract tenants. Over supply of any service brings downward price pressure until such point as the market stabilises at a new base level.

The 14% indicated they could reduce rents. But if the 86% price themselves out of the market by refusing to reduce rents to a level the market can sustain.............

LydiaJ

Talking of whether letting properties is worth it for LLs... anybody care to hazard a guess as to what my former landlord may be doing and why?

I recently bought a house, so I left the rented place I'd been living in for the last 5+ years. It's a reasonably nice family home in a pleasant town - not in London. I wasn't getting HB, and the cap wouldn't have any effect anyway - the rent was £900pcm. After I gave notice, they put the house straight onto RM at £925pcm. When the woman from the LA came round to take pictures, I asked her if she really wanted to do viewings before the leak in the hall ceiling was fixed - the first thing you saw when opening the front door was the bucket to catch the drips, which drew the eye up to the huge discoloured patches on the ceiling. She agreed it would put prospective tenants off, and no viewings were done before I left.

My tenancy ended 4 weeks ago. The "to let" sign is still up, but the house has disappeared from RM and the LA tells me the LL has decided not to market it at the moment. I said "Oh, are they doing the repairs first?" but she said "No. I don't know what they're doing." I drove past the place when I was over that side of town yesterday, so I peered in through the front door, to see that repairs have been begun but not completed.

Why would they keep an asset like that just sitting about doing nothing? I wonder if perhaps they can't afford the repairs and don't know what to do next. I admit I feel very curious about it - partly just because I'm nosey, but also because my lovely former neighbours are hoping to get nice people living there, and I hope that happens.

Callie22

Wee_Willy_Harris wrote: »

It really doesn't matter if 86% cannot afford to cut rents. What matters is if 86% of renters can afford to pay the advertised rent.

Aren't 40-odd percent of tenants in arrears? I'm sure I read that statistic somewhere recently. I took yesterday afternoon off and spent a few hours trogging up and down the street in town where all of the letting agencies are based. I must have gone into at least twelve offices and in all of them, without exception, there was at least one agent having a heated phonecall trying to get rent out of tenants. Also saw a LOT of letters from tenants lying about on desks saying that there would be no rent forthcoming this month ...

I have no idea if this is typical (I try to avoid LAs unless absolutely necessary) but I've been renting for a good few years (the number in my username isn't my age lol) and I don't remember it ever being this obvious that there are problems.

Wee_Willy_Harris

Well, one of the reasons some LL tend to specialise in LHA tenants is that the rent is all but guaranteed. In much the same way that LHA originally had a upward pressure on rents, these revisions will have a downward pressure. Regardless of a landlords choice NOT to accept LHA claimants, they cannot escape those market pressures if/when the LHA rate again becomes the benchmark.

LHA, in principle, has been a good thing. For the vast majority of both LLs and T who use it, it has worked well. There were a few issues which needed addressing and the level of rent was one of them. Personally, I feel the 30th percentile to be an over-correction. But it will reduce the rents LLs can charge, which is a good thing for everyone apart from LLs.

HAMISH_MCTAVISH

Callie22 wrote: »

Aren't 40-odd percent of tenants in arrears? I'm sure I read that statistic somewhere recently..

No.

12%.

The average yield on buy to let property increased to 5% in February as rents increased at a faster pace than rental property values, according to the LSL Property Services buy-to-let index. Rents increased fastest in Wales, where they rose 1.9%, and the north-west and the east Midlands, where they rose by a respective 1.1% and 0.8%.

But decreases were experienced in the north-east, where rents fell 1.4%, Yorkshire and the Humber and the south-west, where they fell 1.2% and 1% respectively.

LSL said fierce competition among renters in many areas of the country coupled with a lack of affordable mortgages available to home buyers bolstered demand for rental properties, cutting short the "traditional lull" it sees between December and February.

Landlords suffered setbacks in the shape of increased tenant arrears, with 12.6% of all UK rent unpaid or late by the end of February – an increase from 11% the previous month.

http://www.guardian.co.uk/money/2011/mar/18/cost-of-renting-rises

HAMISH_MCTAVISH

Thrugelmir wrote: »

Just as side point. This is what B&B published in 2006. Shows how quickly markets and businesess can change.

And it seems not only were my numbers out of date, but the rate of change is accelerating.

The English Housing Survey from Communities and Local Government shows that the number of households renting privately has gone up by one million in the last five years.

In 2005-06, there were 2.4 million private rental households, which rose to 3.4 million in 2009-10.

The private rented sector now accounts for 15.6% of all households in England, up from 14.2% in 2008-09 and 11.7% in 2005-06.