BTL to be reviewed

lynzpower

We should not underestimate the impact of "btl" investors on properties that need significant work and or that are unmortgageable in the traditional sense.

When I was an EA, there was a number of properties that were sold "to investors only" be them in high rise or that they are of concrete construction. Ie, high st lenders will not touch witohut a 25% cash deposit MINIMUM, and there are only a small handful ( less than 5 IIRC) that will lend on these sort of properties at all.

One of the investors I worked closely with had cash ( and mew of course) to purchase these properties and bring them back into use. One in a concrete estate he paid cash for- a 4 bed flat he lets now directly to the council for HB clients. the place was an utter bin, he refurbed its now functional usable housing for a family. No FTB unless they happened to have 190 grand in the bank would have been able to make that property a home.( plus all the costs for refurbing and man that place was BAAAAAD)

the only alternative for these props are leaving them empty waiting for squatters and crack users to turn it into a den. Additionally, the owner who had bought on RTB and was now elderly needing to be rehomed, could not get shot of the flat.

So thank god for the BTL investor who has a rescued the prop from dereliction, provided a way out for the elderly owner, provided a massive flat for a family in need.

I think the problem is that the labour government is totally constrained on housing policy due to the massive sell off on RTB.

RTB has taken all those "cheap renteds" out of the market, an area where rents couold effectively be capped, responding to the economy and its performance. Recession ahead? Lets cap rents in the public sector so that HB doesnt take a hit. Bouyant? We can push it up by inflation per annum ( my SO rental share went up by 6.00 a month to repsond to inflation)

If you are homeless/ low income/ benefits recipient/ single parent family/ disabled and not working/ elderly etc etc, and you are homeless, when you present yourself as homeless to a local authority ( well in london anyway) you will get the utter 3rd degree about every home youve moved out of with a view to working out if they can bat you back. if so, off to the private rental sector for you. If not, and you are genuinely in need of housing, and you have PRIORITY need then whopooeee, the council will recommend you hit the private rented sector. So armed with your copy of the loot youll find NO ONE accepts HB, because the processing time takes an age and the LL is out of pocket for such a long time. there are guaranteed rent schemes set up to respond to this though, adn bring some Private into the Public sector. However, in london its simply not enough. Which is why we have families living in hostels next to those released from prison/drug users/people with enduring mental health problems all chucked in some hostel. The problem is again here that the HMO regs have taken many of these out of operation too, and back to the private rented provision.

The LL and the HB will have to find a middle ground where what they will be willing to take for the property is acceptable to what HB is willing to pay. When costs to LLs go up, then inevitably, notices are served and the LL will try and flog the property or rent it to profs so that they can get what they need to service the property, meet the mortgage demands. Yes, many of them rely on capital gains, but with MEWing not being so readily available now, the LL could be in a position where they are having to flog off thier props, because as GG rightly says, 110 or whatever it is is sod all in terms of wear & tear on ANY property. We all know in our OWNED homes, 110 could be spent in one go on a lock, tin of paint and brushes, 2 pairs of curtains, and not a great deal else.

I dont believe additional taxation is right for the rental market
a) it pushes up the ongoing price of the rent, and thus in many cases to housing benefit, and woah! the rest of the taxpayers have to fund that.
2) extra levels of admin which cost more than they gain in terms of personnel/ policy making- again all comes back to the taxpayer to fund.
3) nowhere to put these homeless families and individuals that have found themselves priced out by taxation
4) not a great deal of new LLS coming on stream given that the priices of properties is just too high ( certainly in london) to make breaking even on HB clients a reality.

I agree there should be a board, similar to the TDS that would maintain repairs and backcharge the LL through the courts service. I think this is something that simply has to be done, and as they are meant to be bringing in HIPS for the letting market I expect this could be put together using the same model as TDS.

If the government wanted to be really radical ( which, of course they dont!!) they should look at the viability of IO mortgages across the board. then
a) we are not working with capital gain being the only prize
b) prices of housing and values would drop heavily
c) people in general would only borrow what they can afford to pay off

Either that or the gov should HALVE all this SO business, and use all the properties to go for market rent properties for the middle people, the low earners who cannot afford/ do not want a mortgage.

pickles110564

Gorgeous_George wrote: »

My BTL was so bad that I didn't bother with a survey. Seven months of hard work later and it's a little palace - until the tenants trashed it!

GG

I made that mistake with the first flat we bought to rent out.
I refurb it to the standard that I need to live in, what a shock i had after the first six month inspection.
Two iron marks on the lounge carpet, blood stains over the bed matress, drink stains and the toilet looked like it had never been cleaned.
I wanted to cry then got angry, luckily my wife was present during the check, otherwise i might have got a jail term.
In some ways that was probably the best thing to happen to us, as i soon realised that just because you are decent people dont believe renters are, on the whole they are lazy lying cheating scum and that is how you should treat them.

lynzpower

pickles110564 wrote: »

I made that mistake with the first flat we bought to rent out.
I refurb it to the standard that I need to live in, what a shock i had after the first six month inspection.
Two iron marks on the lounge carpet, blood stains over the bed matress, drink stains and the toilet looked like it had never been cleaned.
I wanted to cry then got angry, luckily my wife was present during the check, otherwise i might have got a jail term.
In some ways that was probably the best thing to happen to us, as i soon realised that just because you are decent people dont believe renters are, on the whole they are lazy lying cheating scum and that is how you should treat them.

Sounds like you are a bit too emotionally involved with what is, a business at the end of the day. Shouldnt matter to you whether a loo has ever been cleaned or not, after all, if the property was NOT returned to you in the way it was let, ( obv minus that fair W&T). if not then clealry youd be taking thier deposit in any case???

Gorgeous_George

Sapphire wrote: »

People in this country being encouraged to look on property as investments rather than places to live have been largely responsible for the massive and unsustainable hikes in property prices, which have priced out would-be first-time buyers.

This is totally off topic but I'll respond regardless.

It is a myth that BTL has had a massive impact on HPI. BTL was popular, in part, because prices were rising. Rents are reasonable when compared to mortgage payments and many people prefer to rent for a variety of reasons. The things that a tenant does not have to pay add up to a significant sum.

If you really want to blame HPI on something, look no further than easy credit and sustained low interest rates. Houses cost whatever people can afford. What people can afford is driven by the cost of credit (interest rates) and the availability of credit (lending multiples).

BTL may have had a minor impact on what are, traditionally, FTB homes. In my view, this does tenants a favour by saving them from the high costs of buying a house that is, in all likelihood, going to be a nothing more than a temporary home. Many people soon outgrow their FTB 2-bed houses/flats. Within a year or two they need somewhere larger. Somewhere more long term. Ina stagnant/falling market their savings will be even greater.

And remember, BTL LLs did not know that property would rise so hideously and, in general, it does not benefit them anyway. My BTL is 'worth' considerably more than I paid but, I'm not selling so that makes no difference to me.

GG

CYBERCIDERSAVER

Gorgeous_George wrote: »

BTL may have had a minor impact on what are, traditionally, FTB homes. In my view, this does tenants a favour by saving them from the high costs of buying a house that is, in all likelihood, going to be a nothing more than a temporary home. Many people soon outgrow their FTB 2-bed houses/flats. Within a year or two they need somewhere larger. Somewhere more long term. Ina stagnant/falling market their savings will be even greater.
GG

I have heard it all now.

So I guess you're saying I should thank you and all the other BTLers out there for helping price me out of the market. Yeah right!

My example would be a friend who bought for £40k (1 bed BTB) sold for 80 000. Sure she never saw this profit as cash in her hand but it gave her a nice big juicy deposit on her next house (£120K 2 bed semi) Had she rented instead of buying no 1, there is no way she would now be the owner occupier of a house 3 times that of her initial purchase!

Gorgeous_George wrote: »

And remember, BTL LLs did not know that property would rise so hideously and, in general, it does not benefit them anyway. My BTL is 'worth' considerably more than I paid but, I'm not selling so that makes no difference to me.

HPI is a very real factor in the decision of all BTlers to embark on such an investment.
Otherwise BTLs would still be an attractive proposition even now in a falling market.

CYBERCIDERSAVER

lynzpower wrote: »

I dont believe additional taxation is right for the rental market
a) it pushes up the ongoing price of the rent, and thus in many cases to housing benefit, and woah! the rest of the taxpayers have to fund that.
2) extra levels of admin which cost more than they gain in terms of personnel/ policy making- again all comes back to the taxpayer to fund.
3) nowhere to put these homeless families and individuals that have found themselves priced out by taxation
4) not a great deal of new LLS coming on stream given that the priices of properties is just too high ( certainly in london) to make breaking even on HB clients a reality.

I think the principle idea of BTL is quite clever.
Rather than councils supplying endless rows of affordable social housing, get the private investor to do it. They get tax breaks and can turn a profit, the "homeless" get housed.

Unfortunately GREED always destroys any idea that has a social benefit. The need to turn a profit outways any consideration for the people renting.
Also the whim of the LLs uproots families at short notice, all in the pursuit of a few more benjamins.

Bring Germany's rental rules in here. How you can't chuck anyone out on the street unless you need tha property to live in etc...

Sure it costs money to buy a house. But don't underestimate the cost of renting a house. £500 deposit that unless you have a decent landlord (which I'm afraid is rare) you won't see much of. Add Letting agent fees. Plus removal costs. Then there is costs to make the house your home. (curtains etc) Now do that lot once every six months and watch the costs rise.

No system is going to be perfect. I realise that. But I am also sure the current system doesn't work. Certainly not for tenants and also not for the "casual" one property investor or the big pension funds in the current climate.

Sapphire

CYBERCIDERSAVER wrote: »

I have heard it all now.

So I guess you're saying I should thank you and all the other BTLers out there for helping price me out of the market. Yeah right!

HPI is a very real factor in the decision of all BTlers to embark on such an investment.
Otherwise BTLs would still be an attractive proposition even now in a falling market.

You obviously won't be able to persuade anyone with a vested interest in HPI – like the poster who responded to you – to agree with you.

This includes members of the 'government', BTW, most of whom are into BTL themselves and will therefore do practically anything not to see HP fall, even though the gross over-valuation of property in the UK is detrimental to the economy and much of the population of this country. :cool:

HugoSP

Gorgeous_George wrote: »

My BTL was so bad that I didn't bother with a survey. Seven months of hard work later and it's a little palace - until the tenants trashed it!

GG

Ouch! I feel for you - I really do.

I know someone else this happened to. The tenant was a colleague of his that he thought he could trust. It turns out she was a complete loser at work as well as with her personal life. He had spent a fortune on the house before letting it to her.

I narrowly missed renting the flat to a nice young girl who turned out not to be what we thought she was.

Fortunately the first couple of loser tenants I had in my flat just messed around with the rent.

The second left it in a mess but £20 to a cleaner and it was all sorted.

Some time ago we had a narrow escape with one prospective tenant. Nice young couple who had to sell their house to pay off debts. They had virtually no money but wanted to furnish the place themselves on finance - some people never learn . The words 'alarm' and 'bells' come to mind sometimes......

eco-friendly_2

CYBERCIDERSAVER wrote: »

I think the principle idea of BTL is quite clever.
Rather than councils supplying endless rows of affordable social housing, get the private investor to do it. They get tax breaks and can turn a profit, the "homeless" get housed.

Unfortunately GREED always destroys any idea that has a social benefit. The need to turn a profit outways any consideration for the people renting.
Also the whim of the LLs uproots families at short notice, all in the pursuit of a few more benjamins.

Bring Germany's rental rules in here. How you can't chuck anyone out on the street unless you need tha property to live in etc...

Sure it costs money to buy a house. But don't underestimate the cost of renting a house. £500 deposit that unless you have a decent landlord (which I'm afraid is rare) you won't see much of. Add Letting agent fees. Plus removal costs. Then there is costs to make the house your home. (curtains etc) Now do that lot once every six months and watch the costs rise.

No system is going to be perfect. I realise that. But I am also sure the current system doesn't work. Certainly not for tenants and also not for the "casual" one property investor or the big pension funds in the current climate.

Not as rare as you believe! you won't see posts on this site like =


I phoned my LL today (sunday)because my roof was leaking , the LL appeared in an hour.


My WM broke down, when I phoned my LL on his mobile he was in Spain, he called a guy who was by co-incidence round the corner, fixed in 30 mins.


My heating broke down xmas eve, my kids and I were freezing, LL said there was NOTHING that could be done because of the holiday period but, supplied temporary elec heaters.


Tenants on this site, post only the NEGATIVES. Think about it! ...........I'm the above LL.

wolvoman

Sapphire wrote: »

You obviously won't be able to persuade anyone with a vested interest in HPI – like the poster who responded to you – to agree with you.

This includes members of the 'government', BTW, most of whom are into BTL themselves and will therefore do practically anything not to see HP fall, even though the gross over-valuation of property in the UK is detrimental to the economy and much of the population of this country. :cool:

In what way is HP (and I assume you mean house prices not hire purchase) detrimental to the economy?