Starter homes being bought by BTL LLs

paul1964_2

IveSeenTheLight wrote: »

Your not getting the point.

If the costs increase, what's the effect going to be on the tenants.

Think of Utility companies. What happens when the cost of wholesale gas increases? That's right, the cost of your gas increases.

I do get your point, perhaps you may be missing mine.

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.

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 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.

BTL doesn't deny FTBers.
I once offered on a 2 bed property and was 4th in the bid with FTBers outbidding me.

I didn't bid any higher as it would have impacted the RY achievable for that property.

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.

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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.

Thrugelmir

paul1964 wrote: »

I assume all BTL LLs have some kind of business plan before embarking on their venture

Unlikely. Few have any understanding of their legal responsibilities.

shortchanged_2

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. QUOTE]

Many LL's on here believe this is the case and that tenants have a bottomless pit of money to be able to dip into.

How many do you hear say 'I will just pass the costs onto the tenant', like it's that simple.

There is evidence around now that more and more tenants are struggling to meet payments with more using pay day loans and credit cards to pay the rent.

If things keep going the way they are it will all eventually blow up in LL's faces as their greed eventually gets the better of them. But this is the flaw of many LL's they believe that tenants can be squeezed indefinitely.

grizzly1911

IveSeenTheLight wrote: »

My BTL's cover the interest, repayment costs, maintenance, factor fees etc and a bit more.

The market sets the rates in which rents can be achieved.

Well done you are ideal. Many are but there are a fair few chancers doing the rounds.

You also pointed out, elsewhere, that you turned a purchase a side because it didn't wash it's face and know what you are doing.

grizzly1911

IveSeenTheLight wrote: »

Are they? or are you hoping this will be the outcome?

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.

ukcarper

Where I am LHA 3bed is just under £900 a month while the cheapest house on rightmove is £975 and that is let agreed so I'm not sure what will happen.

wotsthat

shortchanged wrote: »

How many do you hear say 'I will just pass the costs onto the tenant', like it's that simple.

There is evidence around now that more and more tenants are struggling to meet payments with more using pay day loans and credit cards to pay the rent.

I think I've only really seen Nollag say that. The more sensible BTL's seem to say that increasing costs create an upwards pressure on rents. However, the market determines whether that pressure is actually translated to an increased rent.

If not the landlord takes a hit on margin. If the market will allow it but the tenant is already struggling then housing occupancy will increase so that the rent is shared among more occupants.

Thrugelmir

wotsthat wrote: »

then housing occupancy will increase so that the rent is shared among more occupants.

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.

wotsthat

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

Percy1983

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.