Housing benefit cuts deter landlords from letting

Callie22

HAMISH_MCTAVISH wrote: »

No.

12%.

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

Ahh, sorry - I got muddled with this - 40% of LLs reported a rise in tenants having difficulty paying rent.

http://www.bbc.co.uk/news/business-12165697

chucky

HAMISH_MCTAVISH wrote: »

And it seems not only were my numbers out of date, but the rate of change is accelerating.

people can't buy and won't because it's expensive so it must mean they have to rent which increases demand.

people on here can't have it both ways.

Wee_Willy_Harris

chucky wrote: »

people can't buy and won't because it's expensive so it must mean they have to rent which increases demand.

people on here can't have it both ways.

And because people aren't buying (particularly FTB) that increases supply to LLs.

chucky

Wee_Willy_Harris wrote: »

And because people aren't buying (particularly FTB) that increases supply to LLs.

a landlord buys investment property because there is demand in the rental market.

Wee_Willy_Harris

chucky wrote: »

a landlord buys investment property because there is demand in the rental market.

And that demand comes from those who are unable to buy because of lending restrictions/high prices. If every house cost £5, there would be no rental market at all.

LydiaJ

Thrugelmir wrote: »

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.

Fascinating. Thanks Thrugelmir.

So what happened in the mid-90s to trigger this change? Was it the erosion of tenants' rights making BTL less risky? Or the problems with pensions making people look for an alternative? I'm guessing here. Please could somebody who knows some economic history enlighten me?

Because whatever it was, I think it's been a disaster for social mobility and I wish we could change it again to make BTL much much less attractive. It's all very well Hamish and others saying that the young aren't priced out because eventually they'll inherit, but I grew up in a Britain where you didn't need to inherit wealth in order to have a comfortable standard of living. So many of my peer group were the first in their family to go to university, and mostly the second generation of their family to own their own home. When I was young, we thought that an emphasis on inheritance was so outdated and irrelevant - belonging to a pre-war era and gone for ever.

Thrugelmir

HAMISH_MCTAVISH wrote: »

And it seems not only were my numbers out of date, but the rate of change is accelerating.

Extract from CML Table CM1

Number of BTL mortgages and % of total mortgages

1999 44,400 3.5%
2000 48,400 4.3%
2001 72,200 5.5%
2002 130,000 9.3%
2003 187,600 15%
2004 217,700 17.5%
2005 223,800 22%
2006 330,300 28.9%

Unsurprising that people have been forced to rent in certain areas of the country. As average family homes were purchased for rental purposes.

DervProf

HAMISH_MCTAVISH wrote: »

More a "screw you I'm not lowering the rents because little Fiona's riding lessons are expensive" issue.

- Hamish finds this funny ?

How sad.

Thrugelmir

LydiaJ wrote: »

So what happened in the mid-90s to trigger this change? Was it the erosion of tenants' rights making BTL less risky? Or the problems with pensions making people look for an alternative? I'm guessing here. Please could somebody who knows some economic history enlighten me?

Some would say the Building Society Act 1986. Which was in response to building societies concerns of being unable to compete with banks. Although it was some years later before the major societies became PLC banks ( Abbey 1989 and the remainder 94/99). In order to compete with the established banks they expanded lending aggressively. Around 57% of Bradford and Bingleys total mortgage book was BTL at the point it collapsed. Reflected now in its worse than average mortgage arrears figures and slow reduction in capital debt owed.

Spartacus_Mills

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?

Yes it is scaremongering. I listened to this on World at One, the guy from Sheffield took the view that the cuts to benefits coupled with interest rate increases coming down the line would mean he would not be able to pay the mortgage so he was going to put all 35 properties into the private sector.

I am curious as to how landlords expect the Private sector to grow so quickly. Given that, according to HMG, benefits are paid to 40% of the renting community on average then that is one hell of a gap to make up.

I got the distinct impression the guy from Sheffield felt the government should be paying his mortgage.

I think if alot of Landlords take that view then they will end up not getting any money to pay the mortgage.