Jump to content
House Price Crash Forum
interestrateripoff

More Tenants 'struggling To Pay Rent', Says Arla

Recommended Posts

http://www.bbc.co.uk/news/business-12165697

A rising number of tenants are struggling to pay rent to their landlords, according to industry data.

Some 40% of landlords reported a rise in tenants having difficulty paying during the previous six months, the Association of Residential Lettings Agents (Arla) poll found.

Three months earlier, only 35.9% of landlords reported problems. This is the first such rise in 18 months.

Landlords also said more tenants were haggling over rent levels.

However, Arla said tenants in London were less likely to have difficulties paying, even though other industry surveys had suggested that rents were rising faster in London than the rest of the UK.

LSL Property Services recently reported that rents had risen for 10 months in a row - driven most recently by rises in the capital - and that arrears had also risen, with 9.7% of all rents unpaid.

Arla said that job losses and pay cuts were the key reasons for tenants struggling to make their monthly payments.

So not over priced rents then, it's all down to job losses and pay cuts.

Over the past couple of weeks all I've heard from landlords on the TV/Radio/Papers is how great renting is at the minute it was boom time, loads of people chasing lets and the landlord could charge what they wanted. Now you can charge what you like but that doesn't mean you are going to collect the rent.

Still I'm sure this is just a blip more people are seeking to rent so it all must be good.

Share this post


Link to post
Share on other sites

Rents are mad here so I'm glad to see a story like this. There is alos a big difference between 2 flats next to each other, Land loards are asking for £850-900 for most places but there is a good flow of flats comming on at £650 next to the £900 ones and thesse are the only ones that are moving.

I can see rents comming down myself

Share this post


Link to post
Share on other sites

A rental contract can be seen as a form of debt, in that it creates a future obligation for the tenant to pay, and the LL advances the benefit (the property) up front.

Like any form of debt, the lender (LL), carries an element of risk that the debtor will not pay.

So these higher rents, which the LL sees as a future income stream, need to be discounted for risk.

Share this post


Link to post
Share on other sites

with a possible default rate of 10% on your rental...a 3% yield is looking a bit thin.

indeed, if you have a portfolio, you are probably barely breaking even even without any maintenance issues.

Share this post


Link to post
Share on other sites

Directly bailing out overpaying gambling landlords was a vey bad idea.

More job and industry losses to come. Comepete or die - we have been forced to take the die route.

Share this post


Link to post
Share on other sites

A rental contract can be seen as a form of debt, in that it creates a future obligation for the tenant to pay, and the LL advances the benefit (the property) up front.

Like any form of debt, the lender (LL), carries an element of risk that the debtor will not pay.

So these higher rents, which the LL sees as a future income stream, need to be discounted for risk.

Without wanting to be too facetious (queue Mr Burns laugh, lots of schadenfreude and much rubbing of hands), it would be good to see some moral hazard reintroduced to BTLing. It's been a one-way bet for far too long. The "justification" has been that it's a business and not over-leveraged speculation, and the social/political justification is supposed to be providing goods or services at fair, competitive prices - as well as employment - that overall increase standards of living. That's long been the justification for legal protection for joint stock/limited liability companies. BTL fails every test one can think of for a fair, decent society.

But then again, I'd be happy to see most BTLers rotting in the outer circles of hell for eternity along with their catamites, the letting and referencing agents.

Share this post


Link to post
Share on other sites

My advise to anyone who has BTLs--get out NOW.

Austerity means lower incomes and job losses means no incomes. Rents either fall or they will not be paid.

True, but don't forget since house sales are at an all time low, many are turning to renting because despite having a good income they can't get a mortgage. So yes, voids are increasing, but so are the number of people who can pay.

Landlords can get income insurance.

Edited by exiges

Share this post


Link to post
Share on other sites

True, but don't forget since house sales are at an all time low, many are turning to renting because despite having a good income they can't get a mortgage. So yes, voids are increasing, but so are the number of people who can pay.

Landlords can get income insurance.

I've experienced this "insurance" first hand. Exactly how this works doesn't seem to be widely realised.

You apply for your rental. The letting agent sends your details off to the credit referencing agency. If you score highly enough then the insurance is granted. In other words, the insurance depends on the financial security of the tenant. If the tenant is felt to be a poor risk then the insurance is not available to the landlord. Because I'm a freelancer and the referencing agency were absolutely phuqing moronic (that's another story) in order to pass the checks I had to get the people I work for to stand guarantee for my rent. The letting agent made it clear that unless I arranged this I couldn't have the flat - and he admitted that without this the landlord income insurance would be void. So the insurance "risk" was carried by the people I work with, and not the landlord.

Many people would fail the referencing for this. And even if they pass initially, they can fall through the system later if their financial circumstances change. I don't know what the small print for the landlord insurance policy is but I'd bet that changes in tenant financial circumstances invalidate the insurance policy.

The point is that it's like many insurance policies - you can only get insured if you are already such a low risk that it isn't worth getting insured. That's how they profit. And of course your credit referencing fee is effectively their administration fee for setting up the policy. In other words, it's a scam that doesn't stand up to scrutiny.

Share this post


Link to post
Share on other sites

I hadn't noticed that. 9.7% of all rents unpaid.:o

Not clear if that's countrywide or just for London. Former, I suppose.

Tracker mortgages are another factor in the equation - many BTLs will be paying as little as £200 pm.

Share this post


Link to post
Share on other sites

True, but don't forget since house sales are at an all time low, many are turning to renting because despite having a good income they can't get a mortgage. So yes, voids are increasing, but so are the number of people who can pay.

Landlords can get income insurance.

Really? All these well paid professionals 'turning to renting', where, exactly, were they living before they 'turned to renting'?

Share this post


Link to post
Share on other sites

http://www.telegraph.co.uk/finance/personalfinance/investing/8253602/Buy-to-let-is-now-a-good-time-to-invest.html

Is the buy-to-let bandwagon on the run again, and if so, should you jump on? Many will be surprised to hear the health of the buy-to-let industry described as anything but sickly. After all, this is the industry that sank Bradford & Bingley, and left thousands of ''Mum and Pop'' landlords nursing losses and unsaleable newbuild flats.

But for those investors who kept their portfolios, the picture is looking rosier than it has been for some time, even though the Office for Budget Responsibility is predicting that property values will be worth nearly 3pc less at the end of April 2012.

Landlords are the major beneficiaries of the current stagnant mortgage market, since those who cannot buy a home need to live somewhere.

Figures from the Royal Institution of Chartered Surveyors showed that demand for rented property is increasing at its fastest rate since the fourth quarter of 2008; a third more of the Institution's members reported a rise in demand than a fall, with rents also expected to pick up.

Research from Rightmove showed that the return on investment for buy-to-let homes is now more than 6pc, while the amount of rental stock available has fallen 23pc since last year, meaning rents are likely to rise further. Meanwhile, LSL Property Services, a letting specialist, says that landlords are getting healthy returns of 5pc, and for those renting to students the rate could be far higher – estate agents Knight Frank said that they are getting returns of more than 13pc.

Meanwhile in another alternative universe it's all good news for potential landlords.

Clearly it's time to buy.

Share this post


Link to post
Share on other sites

That depends why people are in it. I have friends and family who own a BTL and will always keep them on the simple basis they do not trust stock markets, financial advisers, the bank etc. It's the classic 'for a pension' perspective and with the financial position to cover voids I doubt they'll ever sell until they have to fund retirement. They don't care what the price is when it's a generational investment. I appreciate the contradiction vs other distrusted investments, but to them the yield is irrelevant.

asset allocation theory says they will lose their wealth even if they keep the houses

Share this post


Link to post
Share on other sites

Well I have my owns views on asset allocation theory, but common sense says they could lose money. However, what is wealth - for many people there is still a point where financially enough is enough and they're not chasing higher returns, only perceived stability to give their children an equivalent opportunity to their own. They could be right.

gobbledegook. sorry but if the said houses are worth relatively little and that's all they leave their kids then their kids will be hard done by.

Share this post


Link to post
Share on other sites

Rent levels have to be affordability based and people quite clearly are going to be able afford less and less in the immediate future. Mortgage repayments weren't affordable in the first place to most, and they're only going up from here. Hence a mismatch. So obvious and so predictable, this whole unwinding is like watching a car crash in slow motion. How can so many people be so stupid.

Share this post


Link to post
Share on other sites

That depends why people are in it. I have friends and family who own a BTL and will always keep them on the simple basis they do not trust stock markets, financial advisers, the bank etc. It's the classic 'for a pension' perspective and with the financial position to cover voids I doubt they'll ever sell until they have to fund retirement. They don't care what the price is when it's a generational investment. I appreciate the contradiction vs other distrusted investments, but to them the yield is irrelevant.

this makes sense...providing the BTL is not purchased with leverage...ie, a loan.

the BTL is then open to 2 risks, the property itself and the service of the loan.

An outright purchaser has nothing to lose except the cash used to buy the place...and he doesnt have that anymore anyway.

Share this post


Link to post
Share on other sites

Gobbledegook? They will be leaving their kids a house. Isn't that enough?

no

you are blinded by the bubble view of houses equals masses of wealth.

In current currency terms, is it better for kids to own a physically depreciating small 'investment' house worth (after the bubble has popped) 2-3x their salary, or shares in, say, a rothschild investment trust (for example, I do tracekrs myself) worth double that, less hasle, more profit

but no a house is magic like a giant beanstalk, so you seem to think

wealth is wealth, and stupid people will always chase rainbows

Share this post


Link to post
Share on other sites

I saw an interview on BBC the other day about this. Basically the whole thing was about how landlords can protect themselves - nothing whatsoever about helping out those who rent!

Share this post


Link to post
Share on other sites

no-one is forcing anyone to rent, i lived in a campervan for over a year, it was great and cost no more than the usual vehicle cost to have.

this in my opinion is what everyone should do, let them pay there own loans on their investments.

the trouble is most people aint got the balls to do it.

in the usa they have here they are scared to be labelled a gypsy, only once this country gets over that snobbery will house costs truly crash

i will add the only reason i still dont is i got married and the wife had a very cheap council house. i would never ever pay someone to harrass me for a bed to lie in at night.

Edited by homeless

Share this post


Link to post
Share on other sites

Let this be a warning to anyone thinking of going into BTL. Don't let the VI's con you into thinking it's easy money because you might not get paid.

BTL will be dead within 5 years.

House prices will drop and people can get more for their money, if rents stay high people will buy. Rents will drop with house prices leaving the typical BTL mortage with a shortfall of which the average BTLer won't be able to afford.

Couldn't come soon enough.

Share this post


Link to post
Share on other sites

no

you are blinded by the bubble view of houses equals masses of wealth.

In current currency terms, is it better for kids to own a physically depreciating small 'investment' house worth (after the bubble has popped) 2-3x their salary, or shares in, say, a rothschild investment trust (for example, I do tracekrs myself) worth double that, less hasle, more profit

but no a house is magic like a giant beanstalk, so you seem to think

wealth is wealth, and stupid people will always chase rainbows

It depends whether the value of the rothschild investment trust goes through the floor or whether the house does.

In reality both are investments and their relative value depends on a combination of

1) How much you paid into them.

2) The income they generate.

3) How much money you get when you sell off.

4) How liquid they are

Houses aren't giant beanstalk but there is a certain wisdom in owning a house and renting it out. Of course buying a house with a mortgage and renting it out is a different story as you then have the risk that the investment may end up a liability. That's the magic moneytree silliness.

Share this post


Link to post
Share on other sites

no

you are blinded by the bubble view of houses equals masses of wealth.

In current currency terms, is it better for kids to own a physically depreciating small 'investment' house worth (after the bubble has popped) 2-3x their salary, or shares in, say, a rothschild investment trust (for example, I do tracekrs myself) worth double that, less hasle, more profit

but no a house is magic like a giant beanstalk, so you seem to think

wealth is wealth, and stupid people will always chase rainbows

http://www.youtube.com/watch?v=Eg8cDmi7-U8

Share this post


Link to post
Share on other sites

My advise to anyone who has BTLs--get out NOW.

Austerity means lower incomes and job losses means no incomes. Rents either fall or they will not be paid.

Have you heard of housing benefit

You and I will pay via income tax increases

Now be a good peasant will you and pay your tax

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 309 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.