Housing benefit cuts deter landlords from letting

chewmylegoff

Generali wrote: »

Maximum LTV was 85% for most products I think. It would take a particularly dumb businessman to work out that you're better off with a 2 month void than a tenant paying 10% less than they'd prefer.

Maybe the survey sample was collated from an old Inside Track client list. ;-)

TBH I can't see how vast numbers of BTL LLs would be failing to make a profit. Even on the wee poor yields that my old LL in the UK used to get, with current interest rates and a small mortgage they'd be making a little bit.

it would also take a pretty dumb businessman to invest in something which generated no (net) income for them and just hope for capital appreciation. plenty did it though.

Generali

chewmylegoff wrote: »

it would also take a pretty dumb businessman to invest in something which generated no (net) income for them and just hope for capital appreciation. plenty did it though.

True but then a lot of those that invested for capital gain got it in spades.

I'd only look at a BTL if it was strongly cashflow positive personally. There is more than one way to skin the BTL cat however.

chewmylegoff

Generali wrote: »

True but then a lot of those that invested for capital gain got it in spades.

I'd only look at a BTL if it was strongly cashflow positive personally. There is more than one way to skin the BTL cat however.

a lot of people who bought gold have made money too. gambling isn't running a business, even if you can make a lot of money from it.

bengalknights

If landlords cant afford the mortgages then great property gets repossesed and then first time buyers can buy the property at a more realistic price which in turn brings down house prices which means those who are already homeowners can then have a more affordable upgrade in home if required.

Brallaqueen

Wee_Willy_Harris wrote: »

But there is no such thing as an "LHA house", so when the rental rates fall for LHA, they fall for all as it's an open market.

Very true but all tenants are not created equal - associated costs for LHA tenants tend to be higher to reflect the risk factor and therefore renting to LHA tenants is more specialised.
LHA being seen as a riskier proposition will be intensified if the rates for LHA are cut, especially as rent is not guaranteed to be paid to the LL which offset some of the risk. If the risk of renting to LHA ends up greater than the perceived benefits, then LL will choose to rent to other markets if they can before taking a hit on the rent, and especiialy if it brings associated costs down.

Wee_Willy_Harris

Brallaqueen wrote: »

Very true but all tenants are not created equal - associated costs for LHA tenants tend to be higher to reflect the risk factor and therefore renting to LHA tenants is more specialised.
LHA being seen as a riskier proposition will be intensified if the rates for LHA are cut, especially as rent is not guaranteed to be paid to the LL which offset some of the risk. If the risk of renting to LHA ends up greater than the perceived benefits, then LL will choose to rent to other markets if they can before taking a hit on the rent, and especiialy if it brings associated costs down.

There isn't a separate advertisong stream for LHA tenants only. The ads all go in the same places. So the advertised price for, say, a 2 bed house will be £xxx. Both LHA and non LHA tenants will look at the ad and decide if they can afford £xxx, knowing how much they are able to contribute towards their housing costs. Although "No DSS" is often a stipulation with some LLs, it is very rare to see "DSS only". So, if the LL chooses the "No DSS" route, he will still be competing in the same market as those who accept "DSS" and will, as a result, have to ammend his rental charge in line with LHA to compete.

Brallaqueen

Wee_Willy_Harris wrote: »

Although "No DSS" is often a stipulation with some LLs, it is very rare to see "DSS only". So, if the LL chooses the "No DSS" route, he will still be competing in the same market as those who accept "DSS" and will, as a result, have to ammend his rental charge in line with LHA to compete.

Agencies bring with them a further set of costs and hoops for tenants to jump through and would prefer to find a fully employed and financially solvent tenant who will pay their fees so whilst it may not be overt, there is usually a No DSS policy.

LL who rent to LHA will advertise to their target market directly, through the local council or in private adverts rather than in direct competition with non LHA properties.

Wee_Willy_Harris

Brallaqueen wrote: »

Agencies bring with them a further set of costs and hoops for tenants to jump through and would prefer to find a fully employed and financially solvent tenant who will pay their fees so whilst it may not be overt, there is usually a No DSS policy.

So, if they choose to go the "No DSS" route, with more landlords chasing fewer tenants, which way will rents go?

Brallaqueen wrote: »

LL who rent to LHA will advertise to their target market directly, through the local council or in private adverts rather than in direct competition with non LHA properties.

There is no "LHA Today" style paper available only to LHA tenants and the council office is open to all. At the cheaper end of the market, it's both competative and open. It's also noticeable how quickly LLs pegged their rents at LHA levels when it was introduced. My guess is that many will have to do the same again.

Brallaqueen

Well, we'll see! Though if I were a LL (and I'm not, yet) I would investigate any other options before taking a drop in income. To me, that's sound business sense.

Graham_Devon

Brallaqueen wrote: »

Agencies bring with them a further set of costs and hoops for tenants to jump through and would prefer to find a fully employed and financially solvent tenant who will pay their fees so whilst it may not be overt, there is usually a No DSS policy.

LL who rent to LHA will advertise to their target market directly, through the local council or in private adverts rather than in direct competition with non LHA properties.

LHA tenants are free to find any property they wish to rent.

They will then get a payment based on their circumstances. If that payment meets the rent, all good. If the payment doesn't meet the rent, then the tenant has to pay more. If the payment exceeds the rent, the LHA recipient gets to keep some of it.

There is no LHA rent "agency" as it were.