Rents Frozen In Scotland From Today

k12479

AJRBADGER said:

k12479 said:

AJRBADGER said:

My main issue, I'm wanting to sell my flat, and that this government decision may effectively force me to continue being a landlord until the eviction ban is lifted... 

Stick it into an auction. Let properties with existing tenants are commonplace.

In doing that you are excluding so much of the market. It's a perfect flat for a single first time buyer.

The flat is worth about £55k, and well..... I probably want about £55k for it. £55k is a good bit below the inflation adjusted number I paid for it (£44k in 2007, then £4k changing from storage to central heating + £4k modernising and insulating it + £2k flooring the attic/cladding and plastering the beams to make it a usable - albeit inhabitable - space).

Putting it up for auction, I might be voluntarily giving away £10-20k as I'd only expect it to make £35-45k being sold tenanted (you almost never see tenanted properties being sold in my area, and advised not to sell it tenanted by estate agent quoting those valuations). I don't think it is realistic to ask somebody to potentially take that hit.

I don't think it's an attractive proposition as the tenant pays £275 a month, so would undoubtedly sell low at auction.

So as usual, not "can't" but rather "won't".

Investments have risks. The risks for landlords - political risk in particular - have been increasing significantly over time and a lot of people have either ignored this or been oblivious. The "accidental landlord" and "can't sell" arguments are tedious excuses for failing to appreciate risk and then failing to manage it when things change.

Grumpy_chap

Retireby40 said:

If they want/are going to freeze rent increases for landlords, then it's time to freeze price rises in every commodity where people make money.

Price freezes at Tescos, price freezes on gas/electric/petrol/school products/transport/hotel prices you name it.

martindow said:

Looks like  start has been made on your list!

Not really the same with the gas and electric.
Gas and electric is a freeze (cap) on the unit prices paid by consumers but the charge from the supplier still goes up, with the gap between the two back-filled by some process that the Government have set out.  The supplier does not simply get told to absorb whatever the difference is.

The Scottish rent freeze is that the consumer (tenant) pays the same as today and the supplier (landlord) has to absorb any increase - there is no back-filling the gap through Government funds or complex pay-back process.

AJRBADGER

k12479 said:

AJRBADGER said:

k12479 said:

AJRBADGER said:

My main issue, I'm wanting to sell my flat, and that this government decision may effectively force me to continue being a landlord until the eviction ban is lifted... 

Stick it into an auction. Let properties with existing tenants are commonplace.

In doing that you are excluding so much of the market. It's a perfect flat for a single first time buyer.

The flat is worth about £55k, and well..... I probably want about £55k for it. £55k is a good bit below the inflation adjusted number I paid for it (£44k in 2007, then £4k changing from storage to central heating + £4k modernising and insulating it + £2k flooring the attic/cladding and plastering the beams to make it a usable - albeit inhabitable - space).

Putting it up for auction, I might be voluntarily giving away £10-20k as I'd only expect it to make £35-45k being sold tenanted (you almost never see tenanted properties being sold in my area, and advised not to sell it tenanted by estate agent quoting those valuations). I don't think it is realistic to ask somebody to potentially take that hit.

I don't think it's an attractive proposition as the tenant pays £275 a month, so would undoubtedly sell low at auction.

So as usual, not "can't" but rather "won't".

Investments have risks. The risks for landlords - political risk in particular - have been increasing significantly over time and a lot of people have either ignored this or been oblivious. The "accidental landlord" and "can't sell" arguments are tedious excuses for failing to appreciate risk and then failing to manage it when things change.

Lots of things that I won't do as opposed to can't do 

Nobody - that isn't having their hand forced, or honouring some agreement - is going to sell a property to a stranger for 25-30% below what it would fetch on the open market. So whilst I could do this, it is tantamount to willful self sabotage. I don't think it's a realistic solution and I wouldn't even consider it unless necessary.

What exactly can you do to manage a risk here? I have a contract, a legal document, written, read and signed stating the eviction notice period and conditions. The tenant agreed to this on moving in. I've followed all my obligations, and did things correctly.

The Scottish Government are the ones who, without any warning, have changed this. The change has happened whilst - in my case -the eviction process had started, and seems to usurp my contractual agreement, so if my tenant won't move out, it isn't realistic to sell the flat..... and there is little I can do about it - even if they stop paying.

How do you even plan for that risk?

theartfullodger

AJRBADGER said:

The Scottish Government are the ones who, without any warning, have changed this. The change has happened whilst - in my case -the eviction process had started, and seems to usurp my contractual agreement, so if my tenant won't move out, it isn't realistic to sell the flat..... and there is little I can do about it - even if they stop paying.

How do you even plan for that risk?

Without warning unfair in my opinion, the complexion of government has been moving that way for some time, just recall what several politicians have been saying.  Government exercising their powers (it's what they are employed to do).  Sturgeon doing something positive for the vulnerable etc unlike Thick Lizzy who only seems to care about wealthy companies and wealthy members of the Tory party.

 Well, eviction regulations had changed during Covid & recently.  Think the grounds were still discretionary anyway.

(NB Currently trying to flog off a property, Highlands: Had served notice to leave (discretionary due to the various cost-of-leaving crises etc , surprised tenants actually left when the didn't need to.  Selling due to age - 74, ill health & travel - 10hr-ish trip each way to property: Nothing to do with tax or legislation changes. )

How do you plan? Well, ensure you've a bit of financial "fat" for rainy days etc, expect things to go wrong from time2time, read the signs as to what is likely and don't believe the rabid red-tops who keep telling us that property prices always go up.  And the rest... etc etc etc/...


Slàinte mhath!

k12479

AJRBADGER said:

k12479 said:

AJRBADGER said:

k12479 said:

AJRBADGER said:

My main issue, I'm wanting to sell my flat, and that this government decision may effectively force me to continue being a landlord until the eviction ban is lifted... 

Stick it into an auction. Let properties with existing tenants are commonplace.

In doing that you are excluding so much of the market. It's a perfect flat for a single first time buyer.

The flat is worth about £55k, and well..... I probably want about £55k for it. £55k is a good bit below the inflation adjusted number I paid for it (£44k in 2007, then £4k changing from storage to central heating + £4k modernising and insulating it + £2k flooring the attic/cladding and plastering the beams to make it a usable - albeit inhabitable - space).

Putting it up for auction, I might be voluntarily giving away £10-20k as I'd only expect it to make £35-45k being sold tenanted (you almost never see tenanted properties being sold in my area, and advised not to sell it tenanted by estate agent quoting those valuations). I don't think it is realistic to ask somebody to potentially take that hit.

I don't think it's an attractive proposition as the tenant pays £275 a month, so would undoubtedly sell low at auction.

So as usual, not "can't" but rather "won't".

Investments have risks. The risks for landlords - political risk in particular - have been increasing significantly over time and a lot of people have either ignored this or been oblivious. The "accidental landlord" and "can't sell" arguments are tedious excuses for failing to appreciate risk and then failing to manage it when things change.

Lots of things that I won't do as opposed to can't do 

Nobody - that isn't having their hand forced, or honouring some agreement - is going to sell a property to a stranger for 25-30% below what it would fetch on the open market. So whilst I could do this, it is tantamount to willful self sabotage. I don't think it's a realistic solution and I wouldn't even consider it unless necessary.

What exactly can you do to manage a risk here? I have a contract, a legal document, written, read and signed stating the eviction notice period and conditions. The tenant agreed to this on moving in. I've followed all my obligations, and did things correctly.

The Scottish Government are the ones who, without any warning, have changed this. The change has happened whilst - in my case -the eviction process had started, and seems to usurp my contractual agreement, so if my tenant won't move out, it isn't realistic to sell the flat..... and there is little I can do about it - even if they stop paying.

How do you even plan for that risk?

Risks need to be considered way before signing any agreements and continually monitored, especially with so many factors outside the agreement having an influence. The Scottish government's actions, whilst stupid in my opinion, are hardly without any warning - the specifics may have been unknown, but the pandemic response of both England and Scotland showed willingness to interfere in the market which, given that the housing crisis is as bad as ever and it's a soft target, is hardly surprising. As I mentioned, political risk has increased a lot.

As for 'willful self sabotage', cutting your losses if it'll prevent a larger loss is not sabotage, it's self-preservation. Trying to get out sooner, taking the financial hit and moving on may be preferable to waiting for a better outcome that may not materialise. Renters are clearly being prioritised over landlords and, in the short term and until the sht hits the fan at least, I'm not sure that's going to change.

TripleH

The risk landlords should face is :  

1. The property falls in value so they get less when they sell

2. Interest rates increase soctheir cist of borrowing increases

3. Demand for rental properties falls so rental income plummets

4. They get a bad tenant who refuses to pay rent / vandalises the property and it takes time to remove them

If you want to reduce your risk then you can sell, but now, you can't sell easily because only landlords would buy a tenanted house, but it would have to be at a very low price to justify the return on capital. So its not even as if this will benefit those trying to buy a house unless it's renters buying the house they live in. Unless the goal is to nationalise rental  ownership on the cheap?

I'm not a landlord, but this is a questionable plan.

theartfullodger

V true about interest rates.  In November 1979 Bank of England base rates hit 17%. (Seventeen percent).  Good old Thatcher's time.  (Is there an irony emoji?)

I had a for then large mortgage.  Lucky because my building society only wanted 15%.

I'm expecting interest rates to keep increasing, especially with the cost-of-leaving crisis.

Good luck folks......

Eldi_Dos

theartfullodger said:

V true about interest rates.  In November 1979 Bank of England base rates hit 17%. (Seventeen percent).  Good old Thatcher's time.  (Is there an irony emoji?)

I had a for then large mortgage.  Lucky because my building society only wanted 15%.

I'm expecting interest rates to keep increasing, especially with the cost-of-leaving crisis.

Good luck folks......

What you do not mention was that as pay rises tried to keep up with inflation the percentage of mortgage to earnings swung in your favour, if you could ride out the initial storm.

Sarah1Mitty2

ProDave said:

It is not the rent freeze that has me spitting feathers, but the ban on evictions "during the winter"  I fully intend to serve notice on my tenant on 1st January, they have had 12 months informal notice of this intention.  I need to find her definition of "winter" for this.

"Winter" finishes in March next year I think.

theartfullodger

Eldi_Dos said:

theartfullodger said:

V true about interest rates.  In November 1979 Bank of England base rates hit 17%. (Seventeen percent).  Good old Thatcher's time.  (Is there an irony emoji?)

I had a for then large mortgage.  Lucky because my building society only wanted 15%.

I'm expecting interest rates to keep increasing, especially with the cost-of-leaving crisis.

Good luck folks......

What you do not mention was that as pay rises tried to keep up with inflation the percentage of mortgage to earnings swung in your favour, if you could ride out the initial storm.

Let me assure you that such wage increases I got then in absolutely no way covered the actual interest rate extra payments my mortgage cost (from 10% to 15% so another 5%)

Wage rises were not keeping pace (this was Thatcher's charming regime...)