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Media articles NORTHERN IRELAND Hpc Related

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Not everyone wants to live in the 'Belfast bubble'... Average rental across N.I for a three bedroom house is approximately £450-£550 p/m..... The level of 'profit' from an average BTL won't put your 'average' BTL landlord into the higher tax bracket but gives a better return than most other investments at the minute...

It all depends on the level of borrowing involved, as shown above.

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Not everyone wants to live in the 'Belfast bubble'... Average rental across N.I for a three bedroom house is approximately £450-£550 p/m..... The level of 'profit' from an average BTL won't put your 'average' BTL landlord into the higher tax bracket but gives a better return than most other investments at the minute...

It's the fact the 6k is all treated as income come 2020. A paper profit will turn into a monthly cash loss for so many.

Terrific stuff really.

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Not everyone wants to live in the 'Belfast bubble'... Average rental across N.I for a three bedroom house is approximately £450-£550 p/m..... The level of 'profit' from an average BTL won't put your 'average' BTL landlord into the higher tax bracket but gives a better return than most other investments at the minute...

.

If your landlord is not in the higher tax bracket, he's rather brave in getting into the btl racket. I don't think I'd recommend the game to anyone on ordinary income. Only gamble with what you can afford to lose and all that.

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Has anyone any figures on what an average landlord is? Clearly not the famous Declan, but are there people on 30,000 a year with more than one house?

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Not everyone wants to live in the 'Belfast bubble'... Average rental across N.I for a three bedroom house is approximately £450-£550 p/m..... The level of 'profit' from an average BTL won't put your 'average' BTL landlord into the higher tax bracket but gives a better return than most other investments at the minute...

So that's around £5000 a year, allowing for the rates, a bit of maintenance and the odd void month between tenants. What's the house worth? Even if you paid for it outright with savings, anything over £100,000 and it starts to look dodgy. Any borrowings and you're in bother.

It's been said before, but this whole game is based on capital appreciation, and a hope (or expectation) of future rent rises.

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I wonder have things changed much since 2009? A fair bit, I'd say.



- Almost 25% of respondents' mortgages then were interest-only, that's likely to have reduced along with the LTV figures below.

- There's little awareness of recent tax changes, but that could impact reasons cited for becoming a landlord and buying intentions.

- The intentions to buy/increase portfolio size may have increased as the market had improved slightly last year.


I don't see any economic or demographic reasons to suggest big changes apart from that, just based on a quick read. Btw, some of the charts are wrongly labelled if I read correctly, worth not relying on the graphics if something interests you. Interesting report though, good post.


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<p>

- Almost 25% of respondents' mortgages then were interest-only, that's likely to have reduced along with the LTV figures below.

- There's little awareness of recent tax changes, but that could impact reasons cited for becoming a landlord and buying intentions.

- The intentions to buy/increase portfolio size may have increased as the market had improved slightly last year.

I don't see any economic or demographic reasons to suggest big changes apart from that, just based on a quick read. Btw, some of the charts are wrongly labelled if I read correctly, worth not relying on the graphics if something interests you. Interesting report though, good post.

I think the LTV might have actually got worse. Majority on BTL or interest only mortgage. Prices dripped again after 2009.

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<p>

- Almost 25% of respondents' mortgages then were interest-only, that's likely to have reduced along with the LTV figures below.

- There's little awareness of recent tax changes, but that could impact reasons cited for becoming a landlord and buying intentions.

- The intentions to buy/increase portfolio size may have increased as the market had improved slightly last year.

I don't see any economic or demographic reasons to suggest big changes apart from that, just based on a quick read. Btw, some of the charts are wrongly labelled if I read correctly, worth not relying on the graphics if something interests you. Interesting report though, good post.

I'd suggest a turn for the worse. There can't have been many people trying to get into the business compared to the boom years referred to there. Surely the pressure has been in the other direction through bankruptcy and repossession, and despite all the talk to suggest otherwise, there hasn't been any significant appreciation in the value of rental type houses in what is now a 7 year period.

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I'd suggest a turn for the worse. There can't have been many people trying to get into the business compared to the boom years referred to there. Surely the pressure has been in the other direction through bankruptcy and repossession, and despite all the talk to suggest otherwise, there hasn't been any significant appreciation in the value of rental type houses in what is now a 7 year period.
I'd estimated the slight uptick may have offset the previous stagnation / slight decline but that may well be in the other direction. Repossessions are low at the moment but it's true they were higher for a good part of 2009 to now. By the same token I wouldn't expect too pronounced a shift in the other direction either.
I think the LTV might have actually got worse.

It's a pretty dire base but I wouldn't underestimate the BTL landlord.

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Rents set to increase as landlords exit the market

https://www.propertyinvestortoday.co.uk/breaking-news/2016/4/rents-set-to-increase-as-landlords-exit-the-market

Not specific to NI but I having been reading the same sort of story about Dublin. Basically if you force the BTL landlord out there will be less properties available for rent which causes upward pressure on rent prices if there is the same demand for fewer properties. The flip side of that is you should increase the supply of properties for people to buy thereby placing downward pressure on house/apartment prices. But for me, particularly in NI it is a case of undesired policy outcomes.

For me I always thought it was preferable for the private investor to fund the supply for the rented properties required. I would rather that than ask the tax payer to build them. In NI I think we have around 80k-90k NIHE units and 35k HA units, aprox 120k units supplied by the public/HA sector and the same again by the private sector. If the BTL brigade begin to exit the market by anything more than 1,000 pa we have a major problem as the HE side only build that a year.

The total units in rent is around 240k.this is an increase of 80k or so over the last 10 years. I believe there are is a need for 10k new households per year. The industry has supplied less than half of that for the last 8 or so years.

So my long winded question is- do you think the number of properties in the rental properties will increase or decrease.

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Rents set to increase as landlords exit the market

https://www.propertyinvestortoday.co.uk/breaking-news/2016/4/rents-set-to-increase-as-landlords-exit-the-market

Not specific to NI but I having been reading the same sort of story about Dublin. Basically if you force the BTL landlord out there will be less properties available for rent which causes upward pressure on rent prices if there is the same demand for fewer properties. The flip side of that is you should increase the supply of properties for people to buy thereby placing downward pressure on house/apartment prices. But for me, particularly in NI it is a case of undesired policy outcomes.

For me I always thought it was preferable for the private investor to fund the supply for the rented properties required. I would rather that than ask the tax payer to build them. In NI I think we have around 80k-90k NIHE units and 35k HA units, aprox 120k units supplied by the public/HA sector and the same again by the private sector. If the BTL brigade begin to exit the market by anything more than 1,000 pa we have a major problem as the HE side only build that a year.

The total units in rent is around 240k.this is an increase of 80k or so over the last 10 years. I believe there are is a need for 10k new households per year. The industry has supplied less than half of that for the last 8 or so years.

So my long winded question is- do you think the number of properties in the rental properties will increase or decrease.

We've talked about the 10k figure on a number of occasions, I've seen several revised and re-revised figures thrown about but let's say (post brexit) it's 10k, I've never actually seen it worked out. I think last year we had over 6k new builds last year and 1.5k social housing.

We have a local housing benefit bill of 700 million. And a few hundred million in landlord tax relief (at a guess) let's say £1 billion spent on "social" housing and subsidies. We have a waiting list (again I question the accuracy of this) of say 40k.

Take that £1 billion in tax perks, build some 80k a unit houses and in a few years the list is gone.

Not every landlord has a mortgages. Not all are borrow to let. Not all will exit.

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We've talked about the 10k figure on a number of occasions, I've seen several revised and re-revised figures thrown about but let's say (post brexit) it's 10k, I've never actually seen it worked out. I think last year we had over 6k new builds last year and 1.5k social housing.

We have a local housing benefit bill of 700 million. And a few hundred million in landlord tax relief (at a guess) let's say £1 billion spent on "social" housing and subsidies. We have a waiting list (again I question the accuracy of this) of say 40k.

Take that £1 billion in tax perks, build some 80k a unit houses and in a few years the list is gone.

Not every landlord has a mortgages. Not all are borrow to let. Not all will exit.

I wont agree with the Landlord tax perk. They are reducing the full tax relief on interest from 40% (if you are paying that) to 20%. You are not allowed interest tax releif on your own house but you always were in a business and still will be if you place the BTL's into a company. But there is no point arguing over that. The government has made the changes and they will be implemented. In my opinion, and I guess most here will agree with them, is these changes will make BTL more unattractive to investors and they will therefore go elsewhere reducing the number of Private let houses. The government, who makes some saving will then have to spend lots replacing at lease some of those properties

The £700m housing benefit (if that is the figure) is paid mostly to the NIHE (90,000 houses) and the HA's (35,000 houses) in rent. The remainder goes to the private landlords who rent to DHSS tennents. You cant suddenly stop paying that and use that money to build new houses. Although one of our recent Ministers appeared to think something similar.

My rough calculation assuming

125,000 BTL houses,70% with mortgages of £60,000, paying 4% interest =£210m in interest. Assuming 50% are 40% tax payers who will have their offset reduced to 20% = improvement to HMRC of £21m. This £21m goes to Whitehall and is not available to Stormont in any case.

Any mistake in any of the above assumptions could put that figure up the left.

The 10k new house figure obviously interests me. You have to ask yourself how long will a house last. Not the ones we are building today but the ones that were built 40, 50 or more years ago as they are the ones that need replaced. Scotland uses a figure of 60 years. I personally think about 100 years. Newer houses will last 150 years but the next generation can use that figure.

We have 750,000 dwellings at the moment and if I assume they last an average of 100 years then we would need to be refurbishing/replacing with 7,500 houses each year just to keep that number. I can tell you that the NI experts who develop the new HGI (Housing Growth Indicator) figures use the figure of 1,000 replacement dwellings per year. This is a wonderful vote of confidence in the industry as it, by definition assumes a lifespan of 750 years for our houses. This of course can easily be demonstrated as feasible by the number of 750 year old houses we have in existence today. in their defence we don't always replace a house in one go. it gets new windows at 30 years a new roof at 60 years dpc, insulation etc but eventually, between 100 and 150 years they are totally replaced. Indeed many houses, built mainly in the city far out live their lifespan and are demolished at 70 years old.

After that you look at population. Rule of thumb, there are 25,000 people born every year and 15,000 people die. This is an additional 10,000 people every year. it's every year so for household formation its an extra 10,000 people turning say 30 each year. they will form households at a ratio of around 2.4 people per house therefore requiring 4,200 additional households (mortgaged and rented) each year.

On top of that you have to take into consideration the fact that we have under provided, to the tune of 5,000 per year for the last 8 years (40,000) and you can see that 10,000 per year is justifiable.

The trends in demographics is people are living longer although they claim we will max that in the next 20 years!. The increasing in the life span effects the house size ratio in two ways.

Firstly the obvious one as people occupy the house longer (very inconsiderate of them).

But worse than that, as ladies live longer (proof they get it easier) there is therefore a higher number of houses now in single occupation. Over our lifetime the number of houses occupied by a single person has and will increase from 20% of houses to over 35%. That statistic alone increases the housing need by 156,000 houses alone on a static population. You also add in the increasing divorce rate etc and you can easily see the housing crises that I believe is here now.

Continuous under supply is a massive ticking time bomb. Undersupply is caused by slow zoning (remember BMAP), Slow planning - takes average of 18 months in NI 15 weeks in GB. we also have a lack of assistance with the underfunded infrastructure we this is all passed onto, predominately the FTBer. at today's prices that makes developing many sites unfeasible.

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As the 10k figure is based on the assumption that "there will be less properties available for rent which causes upward pressure on rent prices if there is the same demand for fewer properties", I'd revise that downward.

If a BTL property is sold it can go to either another BTL buyer or an occupier-owner. Ignoring the possibility of multiple purchases for redevelopment, the significant figure in terms of demand is the difference between average occupancy rates in owner-occupier properties and BTL properties.

I've got figures here for England & Wales suggesting a 30% difference, but gained almost exclusively where there's more than one free room:

http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/census/2011-census-analysis/overcrowding-and-under-occupation-in-england-and-wales/sty-household-occupancy-and-overcrowding.html

Going on your figure of 120k private sector properties and this NIHE report for breakdown of property type we get:

http://www.nihe.gov.uk/private_rental_market_july_december_2015.pdf

Number of Bedrooms H2 2015

1: 10%

2: 47%

3: 29%

4+: 16%

That means the potential increase in rents has to be offset by the ability of owner occupiers with 3 bedrooms to absorb the extra demand in the small 4+ category.

Overall that suggests the impact looks fairly limited, with the added possibility of increased managed build-to-let (seemingly the current model for pre-crisis developments) on the horizon.

Also, these figures don't dictate demand in a narrow sense of demand = supply = market price. There you have quite stagnant wages, all-time high personal credit and continued public-sector dependency restricting room for rises. And then there's the possibility of severe recession and/or prolonged stagnation.

The points on planning are well made, but given the extent of reforms that have just taken place within that bureaucracy and the absence of central direction I don't see much change there in the near future, unfortunately.

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I wont agree with the Landlord tax perk. They are reducing the full tax relief on interest from 40% (if you are paying that) to 20%. You are not allowed interest tax releif on your own house but you always were in a business and still will be if you place the BTL's into a company. But there is no point arguing over that. The government has made the changes and they will be implemented. In my opinion, and I guess most here will agree with them, is these changes will make BTL more unattractive to investors and they will therefore go elsewhere reducing the number of Private let houses. The government, who makes some saving will then have to spend lots replacing at lease some of those properties

They'll return to OO. The houses won't disappear. Less renting = more buying.

The £700m housing benefit (if that is the figure) is paid mostly to the NIHE (90,000 houses) and the HA's (35,000 houses) in rent. The remainder goes to the private landlords who rent to DHSS tennents. You cant suddenly stop paying that and use that money to build new houses. Although one of our recent Ministers appeared to think something similar.

I agree, you can't suddenly stop paying it, but it can be reduced and the saving used to build new stock. No reason why the percentiles can't be changed again. We know that with 70% of all private renters (think that's still right) claiming LHA that LHA sets the rental price floor. Reduce LHA, reduce the price floor, reduce average rents. Rinse and repeat.

My rough calculation assuming

125,000 BTL houses,70% with mortgages of £60,000, paying 4% interest =£210m in interest. Assuming 50% are 40% tax payers who will have their offset reduced to 20% = improvement to HMRC of £21m. This £21m goes to Whitehall and is not available to Stormont in any case.

Any mistake in any of the above assumptions could put that figure up the left.

Obviously we don't know the exact figures, all we know is that 700-750 million is paid in HB in NI. 120k private units, £550 average rent = is about £600 per unit wear and tear cost. there's another 7.2 million.

I think your tax relief figures are way way out.

Edited by 2buyornot2buy

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