Starter homes being bought by BTL LLs

Thrugelmir

wotsthat wrote: »

I bet he was gutted - could probably charged much more in rent if he'd known the occupancy rate was that high.

Would have made it an HMO!

IveSeenTheLight

paul1964 wrote: »

I don't think you can to assume that a LL or any other business is automatically able to pass on all increases to customers - there must come a point where customers are unwilling/unable to pay the increase.

As per my previous post. If you look at the average monthly outgoings, there is a significant ammount of areas where lower priority expenditure could be reallocated to higher priorities.

paul1964 wrote: »

Even in your utilities example, there comes a point where people are unable to pay the increase and cut their consumption - i.e. demand is reduced.

I agree, if there is a reduced demand, then there may be a balance between supply and demand and the cost of rental may stay the same instead of increasing.

If there is a significant reduction in supply, then rents may even decrease.

However there are other potential scenarios such as : -

1. more people could choose to share and spread the burdon accross more household income.
2. There could be an increase in HMO
3. People could reprioritise as I mentioned before
4. People could choose to try and increase their income through additional working/ promotion / training etc

paul1964 wrote: »

I assume all BTL LLs have some kind of business plan before embarking on their venture and know the likely market rate for their product and the likely business costs. I would expect that as the likely profits get smaller, fewer new LLs would enter the market.

In the last 6 years since the peak of the housing market, personally I have seen profits increase as my mortgage rates have reduced.

I have not passed on this to my tenants, however for one tenant who has remained in the property, I have neither increased their rents, despite the market rents increasing.

As costs rise, I will evaluate whether the rents can be raised similarly.

paul1964 wrote: »

If the increased demand introduced by the Boom in BTL over the past 10-15 years has had absolutely no impact on property prices, then you are correct.

If, on the other hand, this increased demand has raised prices, it is absolutely clear that some FTBs will have been priced out of the market.

The impact has been calculated as 7% IIRC.
FTBers were not prices out at peak, when prices were higher.
How can you say that BTL is the cause of FTBers being priced out?
Credit availability is probably the better root cause of reduction in FTBers (which is increasing IIRC)

paul1964 wrote: »

By the way, I am not trying to say that BTL is a bad thing or that LLs are bad people. I just think that it would be positive for society in general if the trend of falling levels of home ownership could be reversed.

Again, Ownership levels were higher at peak of 2007 / 2008.
Credit availability is the reason ownership levels have reduced in recent years.

IveSeenTheLight

Thrugelmir wrote: »

Unlikely. Few have any understanding of their legal responsibilities.

Is this another soundbite without any foundation?
Where is your data on this?
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I thought not.

IveSeenTheLight

grizzly1911 wrote: »

Yep I think they will in certain areas, such as the SE and other honeyspots, others less so, hence the reason I said "soft".

Do have any VI? No it makes no odds to me personally.

If you have capacity you have choice as you are fond of pointing out.

Some people do not have that capacity and that basket will already be skewed by necessity.

It will depend on the marketplace.
If they can't afford the market rate of a property, they will need to look at properties / areas where they can afford.

IveSeenTheLight

Thrugelmir wrote: »

A distant relation was surprised to find 19 Chinese people consisting of 3 families in his 3 bed Brighton BTL. The property of course had taken a a considerable amount of wear and tear due to the occupancy level. Once the tenants were finally evicted.

I once had an Iranian view one of my properties with a view to renting.
He had a translator (cousin) as he could not speak English.
He awas apparently coming to the UK for Oil & Gas training and they asked if more beds could be added so his family could be joining (2 bed flat and they were asking for another 5 or 6 beds)

My spider senses were tingliing wondering why someone who could not speak English would be coming to the UK for an English speaking course and want to take his "family" with him

I thought they essentially wanted to sublet so decided not to lease to them.

In your example above, you state they were evicted, which infers that the LL was not aware of the subletting.

The LL is not at fault here

IveSeenTheLight

Percy1983 wrote: »

The problem is, if you up the rent and tenants can't afford it but they also can't afford to move what can they do?

The other thing of if they can't afford it somebody else can its all very well just getting somebody else in, but then all the landlords put the rent up and where are those who can't afford it meant to live, ok they move to a cheaper area, but then there is mass emigration to the cheaper areas, landlords take advantage, prices go up, repeat process, how long until we have legions of homeless and said landlords are complaining the homeless are blocking the way of Mondays 4x4 garage so they have to use Tuesdays 4x4 on a Monday.

Your being a bit extreme and unrealistic in my opinion.

You won't have "mass emmigration to cheaper areas". Yuo'll get some movers who move at the end of their tenancy.

You won't have "legions of homeless blocking peoples driveways".

The market sets the rates. If there is sufficient demand, the properties will be let. If not, the achievable rental price will reduce.

If your unfortunate not to be able to afford ANY property in ANY area, then you will look to family / friends for support.

Sure this may happen on occasion but it will not be the "legions" you percieve.

Incidently, is it inconceivable the HB could increase if the government can't provide social housing and "legions" were homeless?

dryhat

The majority of BTLs are not businesses.

They are subletting a property while speculating on capital gains.
It's a bit like a leveraged futures option on the stockmarket.


In other words - a gamble.

Percy1983

IveSeenTheLight wrote: »

Your being a bit extreme and unrealistic in my opinion.

You won't have "mass emmigration to cheaper areas". Yuo'll get some movers who move at the end of their tenancy.

You won't have "legions of homeless blocking peoples driveways".

The market sets the rates. If there is sufficient demand, the properties will be let. If not, the achievable rental price will reduce.

If your unfortunate not to be able to afford ANY property in ANY area, then you will look to family / friends for support.

Sure this may happen on occasion but it will not be the "legions" you percieve.

Incidently, is it inconceivable the HB could increase if the government can't provide social housing and "legions" were homeless?

But you keep saying 'just move to a cheaper area' but it really isn't that simple as if everybody starts moving to the cheaper area prices will start to rise.

Yes my example was a bit extreme, but the point stands, you can't keep shuffling people around forever with no problems, people will be left behind and will be homeless.

Mr._Pricklepants

IveSeenTheLight wrote: »

The market sets the rates. If there is sufficient demand, the properties will be let. If not, the achievable rental price will reduce.

And that's all there is to it.
The 'Percy fairness-o-meter' and the 'shortchanged affordability index' are irrelevant.

IveSeenTheLight

Percy1983 wrote: »

But you keep saying 'just move to a cheaper area' but it really isn't that simple as if everybody starts moving to the cheaper area prices will start to rise.

Yes my example was a bit extreme, but the point stands, you can't keep shuffling people around forever with no problems, people will be left behind and will be homeless.

I am renting at the moment whilst my house is being built.
I have rented in the past.

When looking for rental property, I have a budget of what I can afford.

I don't go looking at property outwith my budget.

Your point is that if there is extra demand in the cheaper area, then the prices will rise in that area, but conversly this would mean reduced demand in the more expensive areas and landlord would need to market accordingly.

The market sets the rates to which the achieveable rent can be made for the level of demand that is looking for that type of property.

People adjust, governement adjusts.
Policies get made and then adapted.

Life is fluid and you need to adjust to the flow of life instead of deliverately bashing yourself against the extremes of the flowpath.