Impact of Negative Equity

Crashy_Time

AdrianC wrote: »

Two months is the legal requirement.

And a decent landlord won't have a great issue with any of those, providing basic assurances and standards are met on the tenant's behalf. Things they'd have no issue at all with if they actually owned the place...

Exactly.......:)

ReadingTim

AdrianC wrote: »

Two months is the legal requirement.

And a decent landlord won't have a great issue with any of those, providing basic assurances and standards are met on the tenant's behalf. Things they'd have no issue at all with if they actually owned the place...

Problem is, not all landlords are decent. Or feel they need to be bound by the requirements of the law.

So rather than play landlord lottery, some people prefer to buy.

Crashy_Time

ReadingTim wrote: »

Problem is, not all landlords are decent. Or feel they need to be bound by the requirements of the law.

So rather than play landlord lottery, some people prefer to buy.

Much harder to play fast and loose with tenants rights than it used to be, so for me your argument doesn`t really hold up. Most people IMO just thought they needed to get on the "Ladder" or miss out on HPI gains or not be able to buy in future, as this sentiment shifts there will be much less clamour to "Get out of renting". IMO.

ReadingTim

Crashy_Time wrote: »

Much harder to play fast and loose with tenants rights than it used to be, so for me your argument doesn`t really hold up. Most people IMO just thought they needed to get on the "Ladder" or miss out on HPI gains or not be able to buy in future, as this sentiment shifts there will be much less clamour to "Get out of renting". IMO.

Well, yes, things have improved since the days of Peter Rachman, but the renting-related posts on this very board suggest things are still far from a (rented) garden of eden. Or if they are, there's a letting agent with an apple...

IMO, the clamour to "get out of renting" will continue for as long as it's principally provided by the private sector, and subject to the worst excesses of that free market. And for as long as the choice is fundamentally between buying something for yourself and buying something for someone else, most people choose to be masters of their own destiny, rather than being at the mercy of someone else.

Crashy_Time

ReadingTim wrote: »

Well, yes, things have improved since the days of Peter Rachman, but the renting-related posts on this very board suggest things are still far from a (rented) garden of eden. Or if they are, there's a letting agent with an apple...

IMO, the clamour to "get out of renting" will continue for as long as it's principally provided by the private sector, and subject to the worst excesses of that free market. And for as long as the choice is fundamentally between buying something for yourself and buying something for someone else, most people choose to be masters of their own destiny, rather than being at the mercy of someone else.

When negative equity pops up though, many won`t think that way, they will in fact regret borrowing money against property. IMO. You can`t just walk away from a mortgage, you can from a landlord/over-priced let.

AdrianC

ReadingTim wrote: »

IMO, the clamour to "get out of renting" will continue for as long as it's principally provided by the private sector, and subject to the worst excesses of that free market. And for as long as the choice is fundamentally between buying something for yourself and buying something for someone else, most people choose to be masters of their own destiny, rather than being at the mercy of someone else.

Surely an increase in the supply of private-sector letting will lead to an improvement in quality?

The market is price inelastic. You cannot adjust demand by increasing prices - because, very quickly, the demand falls very sharply.

So the best differentiator for landlords is in quality. Quality both in terms of the property itself, and in terms of the service and relationship.

Poor quality properties will not rent, unless and until there is an imbalance in supply and demand - more demand (tenants) than supply (properties). Restrict the supply, and you worsen that problem, not improve it.

ReadingTim

Crashy_Time wrote: »

When negative equity pops up though, many won`t think that way, they will in fact regret borrowing money against property. IMO. You can`t just walk away from a mortgage, you can from a landlord/over-priced let.

But as noted above, negative equity is only a problem when you come to sell, or remortgage if you've done your sums wrong. And while you can walk away from a landlord/over-priced let, you still need somewhere to live.

Typhoon2000

In other news... house prices are going up http://www.financialreporter.co.uk/mortgages/buyer-demand-sees-house-prices-hit-new-record-high-rightmove.html

LdnFtB

The Rightmove index tracks asking prices, not sale prices. In the area I'm looking the Land Registry has indicated annual falls in sales prices of 5% and the surrounding boroughs are now also starting to showing year on year falls. So negative equity is a very tangible and very real probability for me despite the optimism of vendors in other parts of the country.

So if we could keep the thread on track with what the implications of that will be when it happens I'd be much obliged.

Crashy_Time

ReadingTim wrote: »

But as noted above, negative equity is only a problem when you come to sell, or remortgage if you've done your sums wrong. And while you can walk away from a landlord/over-priced let, you still need somewhere to live.

If negative equity comes because or rising interest rates and you can no longer afford to maintain your house loan you will still need to find somewhere else to live?