Sunday, May 24, 2009
The BTL trade is down the drain!
Times: Landlords lose deposits as letting agents go bust
Finally, sure more regulation is around the corner. Bankruptcies will force liquidations. Great news!
Posted by confused76 @ 09:47 AM (1627 views) Add Comment
25 Comments
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1. paul said...
“I have taken responsibility for it personally because I don’t want to get a reputation as a difficult landlord,”
There's no danger of that - you'll be bankrupted by the 3x deposit penalty imposed by the TDS for not paying up.
Perhaps landlords should look at asking letting agents for credit references (at the letting agents expense of course).
2. Henryweston said...
Ha Ha great news.
3. Solo said...
Should the agent not me holding the deposit in a trust account??
Would that not protect the deposits from the letting agents creditors?
4. uncle tom said...
One of the myriad of expenses that erodes the headline 'yield'.
I have discovered a little game that is being played, where flats are offered as investment buys with a sitting tenant, who appears to be paying a rent that works out as an 8-10% yield, or even more.
The tenant is actually a friend or relative of the vendor or the EA involved, and promptly quits as soon as the sale is completed; moving to another flat that someone wants to sell.
All the rental paperwork is correct, except that no-one mentions that the tenant is getting the free use of a nice new car, or some other benefit in kind..
5. little professor said...
ut - that's a great scam! I hadn't heard of that one before.
I've got little sympathy with the landlords in this article. If they had used the free Deposit Protection Scheme, rather than the two insurance-based schemes, then the money would have been lodged with a third party and would have been safe. But then they would not have been able to collect interest on the tenant's deposit.
6. drewster said...
Uncle Tom,
Nice little scam! However any half-brained BTL investor could verify local rents with a quick look at Rightmove or Gumtree. If they don't even make that simple check, then they deserve to lose.
Little Prof,
I was wondering about that - I thought all deposits were held by a trusted third party, like the DPS. I wasn't aware that there were insurers offering an alternative scheme in the first place.
7. nubbers said...
Uncle Tom, that scam has got me really curious. Do you have any online sources for us to look at?
8. crunchy said...
http://query.nytimes.com/gst/abstract.html?res=950DE1D7113BEE33A2575AC2A9619C946197D6CF
This is not exclusive to the UK nubbers.
9. crunchy said...
Looks like the assured shothold tenantcy agreement scam has loopholes.
10. paranoia blue said...
Nor exclusive to this century.....as far as cons are concerned, "there is nothing new under the sun"
11. nubbers said...
Thanks crunchy. The article is dated 1900, so I guess that must make the sitting tennant scam one of the oldest tricks in the book. I am just a bit surprised, because I have never heard of it in this or any other HPC blog.
Another go Google and it would seem that this might be more widely practiced than it is published. Probably it is not the sort of thing that gets discovered that often, unless the tennant refuses to leave (had to get this one from Google Cache): http://209.85.229.132/search?q=cache:u-Im-Yc0G3cJ:https://www.tribune.ie/archive/article/2007/oct/28/property-sunstroke/+fake+sitting+tennant+scam+-david&cd=1&hl=en&ct=clnk&gl=uk
12. uncle tom said...
Crunchy,
Nice bit of research!
Nubbers,
Information is good from sources operating in NE London, Harlow, Southend and Basildon. I get the impression that it is almost impossible to either sell or let tired old flats in rough areas, but if the place has a charming tenant who seems quite happy to pay top dollar for his rent, there are still some mugs with more money than sense..
13. crunchy said...
10. uncle tom...
Thanks for the lead.
It makes one wonder how long this little gem has been running. Sweet, but sour. All part of the property game I guess!
14. mander said...
Miles Cary, an accountant, owns three properties in Shoreham-on-Sea, West Sussex, From an accountant I would expect a better judgment.
It looks to me like a lot of people own 3 or more properties so there will be no housing shortage when everything is going South for them.
15. little professor said...
Never thought I would find myself saying this but... great post Crunchy! Exactly the scam UT was describing, but in 1900 New York.
16. crunchy said...
15. little professor
The big apple crunch. Early days professor! If you think about it this scam has more than one use. It is indeed a very profitable idea and has other possibilities to make profit from property. Selling a business is so yesterday!
17. crunchy said...
This is stretching the idea a bit perhaps, but hasn't our government been doing the same thing with immigration. They have supplied a temporary flux of tenants to landlords thus making BTL a much more attractive prospect. That coupled with the advent of the Secured Shorthold Tenantcy act over time has made banks lick there lips on property investment loans. Remember the days where it was near impossible to get a second mortgage. Do I even need to expand on this possibility.
Sorry conspiraloon stuff. Nothing to see, ignore! lol
18. crunchy said...
http://www.heritage.org/research/immigration/bg1913.cfm
Here I go again!
19. crunchy said...
From the article...
The argument that immigrants harm the American economy should be dismissed out of hand. The population today includes a far higher percentage (12 percent) of foreign-born Americans than in recent decades, yet the economy is strong, with higher total gross domestic product (GDP), higher GDP per person, higher productivity per worker, and more Americans working than ever before. Immigration may not have caused this economic boom, but it is folly to blame immigrants for hurting the economy at a time when the economy is simply not hurting. As Stephen Moore pointed out in a recent article in........ The Wall Street Journal:
There's something to sleep on!
20. crunchy said...
http://www.youtube.com/watch?v=kNqQx7sjoS8
More taxpayers money. Can you see what it is yet?
21. crunchy said...
http://www.youtube.com/watch?v=UJHonmi-d8w&NR=1
Hey, Bush before you run off and retire in luxury, I think you have something to say the American people.
Wow, that was a short Goodbye speach!
22. nomad said...
Crunchy, one little compliment from LP and you're back off the rails. Get a grip, man!
23. crunchy said...
If you missed the point you should look again. You are being as blind as the "poor" Americans. The video featuring Bush is a classic.
Look at he's eyes and body language and what he is actually saying, then tell me why I posted it! The last thing I would want to do is please LP.
Two different animals nomad. If nobody put some time and effort into this thread or site it would be a pointless exercise. We have enough lame papers already. Perhaps you would prefer to read those.
24. crunchy said...
Oh well I can't say I didn't try, but it is frustrating when bloggers are not interested in the why's of bubble creation. Questions like who sat down with the clueless Bush and dreamt all of this up and why seems of little importance.
This thread is very on topic and as hot as a potato. I shall have to leave it aside to let it cool off as it goes down the page blog of HPC, but hell it's on here and may be of help to someone later.
25. crunchy said...
http://www.youtube.com/watch?v=bT29fq0slGc&feature=PlayList&p=870D50D23CC81578&playnext=1&playnext_from=PL&index=10
Last one..... Funny, very funny Bush. I guess the scam worked then. Off you go now!