Another naive call for 5-year tenancies

Conrad

RICS reported last month a sharp rise in rental prices, just as we said would be the case with the introduction of higher costs (impending tax increases - you cant just put up the rent cost in one big jump).


Less rental property is coming to market due to stamp duty and income tax rises, thus rents are increasing.


This 5 yr tenancy, very much loaded in favour of tenants, would significantly deter buy to let, and thus further constrain supply.


I've seen this world from both sides when a Letting Agent worked out of here. Overwhelmingly the stress and problems came from tenants. Most Landlords just want a quiet life and a settled Tenant and so most attend to repairs and issues in good time.

A very ordinary example was this tenant that demanded a radiator be fixed, which was pulled off the wall as she used to chain her dog to it. When the very nice LL came to ask her to leave, she tried to pretend he assaulted her (no way, he's like Ronnie Barker). The Tenant also had loads of Rabbits and their food attracted rats, but of course she expected the Landlord to sort this.

Conrad

One of the most common issues I saw was Tenants creating condensation, that was not present prior to their occupancy. The Letting Agent was always educating them not to keep all the windows closed, to air kitchens and bathrooms, not cook using uncovered pots etc etc

westernpromise

ruggedtoast wrote: »

OK. I thought

Can I stop you there?

I've seen no evidence of your thinking.

Perhaps you need to add tenants to the long, long list of people you hate?

westernpromise

Conrad wrote: »

Less rental property is coming to market due to stamp duty and income tax rises, thus rents are increasing.

Despite which the SNP wants landlords locked in to 5-year tenancies even though nobody has any idea what's going to happen to the tax treatment of letting or to mortgage lending policies over that horizon.

This is a huge regulatory risk to letting property. The likelihood is that a number of landlords will exit, whether they have mortgages or not. They risk their costs being driven up by discriminatory tax treatment at the same time as other laws prevent from remortgaging, raising rents or selling, so they can neither keep nor sell their property. Who would sign up for that? Many will exit before they are legislated into insolvency. The group worst affected will be their consequently-evicted tenants, who can't afford to buy but can't find another landlord either.

Unless the property the landlord then sells is both attractive and affordable to an owner-occupier - and I've seen no analysis that says people rent exactly what they'd buy - then the property will in many cases get sold to another landlord. Between the local concentration of ownership, and the reduced supply of rentable property, this can only mean one thing for rents.

S24's most pernicious effects will be its indirect ones. The tiny minority of affected landlords lack the market power to just jack up rents, but if they exit a tight market, then those left certainly will.

ruggedtoast

westernpromise wrote: »

Can I stop you there?

I've seen no evidence of your thinking.

Perhaps you need to add tenants to the long, long list of people you hate?

No, you've failed to stop anything.

You have shown that you can't engage with any of the issues I raised and are jolly cross though.

What a shame.

Now where's my buy to let landlord violin...

beecher2

westernpromise wrote: »

Despite which the SNP wants landlords locked in to 5-year tenancies even though nobody has any idea what's going to happen to the tax treatment of letting or to mortgage lending policies over that horizon.
.

What's the SNP got to do with a Shelter campaign?

GreatApe

Landlords are probably more inclined to extend a property to add another bedroom to increase income and there has been a boom in HMOs again adding bedrooms to the supply. Although this does not add to the number of properties it does add to 'housing'

If a HMO of 6 persons gets sold to a couple, say 2 of the people living in the HMO form a couple and buy off the landlord. They don't then want to continue living 6 to a house like students so they evict 4 of their old housemates who have to go bid up rents in the market.

The idea that landlords will just sell to their tenants or it will be a 1 for 1 over many transactions so there is no gain or loss of supply/demand is simply wrong. Landlords and their tenants utilise housing more efficiently. If the rental sector contracts relative to what it was going to be this adds both to demand and subtracts from supply.

Of course this does not necessarily mean landlords will be able to recover all of the additional taxes or regulatory burden but some of it will be paid by the tenants. Of course its also possible that more than the taxes could be paid by the tenants and the landlords as a whole could benefit. The additional burdens are in the ballpark of £3 billion a year spread over 6 million rentals that is ~£40/pm so if rents go up by more than £40/pm which is possible then on average all the taxes will be passed onto the tenants.

Many landlords do not put up rents they probably feel guilty if they did. I have one long term tenant who is on £300-400pm less than the current market and normally I would not even have considered increasing rents on them they could have stayed on the same rent for a decade I wouldn't have minded. From next year when the taxes go up I might ask for the then current market price and explain its due to higher taxes. Thus although the market rent might not change or show up in some index the real rent paid by existing tenant will go up sometimes substantially 'thanks' to the additional taxes.

The counter from some people is that the tenants will just refuse and walk out leaving a huge void but here it seldom takes more than 2 weeks to re let and about half the time there is less than one week void. Its not uncommon to have tenants move out today and new ones in the next day (you advertise a few weeks before the current tenants leave)

Graham_Devon

westernpromise wrote: »

They wouldn't be able to buy it if the tenants have the right to occupy it for five years. The sector would vanish overnight.

WHY wouldn't they be able to buy it?

Because of CURRENT lending rules?

Why do you assume the lending sector would prefer to lose all of their BTL lending revenues instead of changing their products to keep up with legislation?

beecher2

http://www.scottishhousingnews.com/9470/blog-private-housing-tenancies-scotland-act-all-change-for-landlords-and-tenants/

Here's a blog post about unlimited tenancy periods in Scotland - doesn't seem to mention the issues westernpromise mentions

Graham_Devon

beecher2 wrote: »

http://www.scottishhousingnews.com/9470/blog-private-housing-tenancies-scotland-act-all-change-for-landlords-and-tenants/

Here's a blog post about unlimited tenancy periods in Scotland - doesn't seem to mention the issues westernpromise mentions

I really can't see it being an issue. It's done all over the world.

Every time someone mentions any change to current BTL lending practices in the UK we have the very same posters stating "can't be done".

Of course it can be done - whether it's palletable to a certain sector of landlords (shady, at best is what I'd describe them as) is a completely different matter. And this thread is basically stating "I don't like it" and assuming that lenders running a business simply cannot, or will not change their products to keep up with the pace of legislation - which is clearly absolute rot.