Landlords Naively Counting On "illusions Of Gain"...

[OnionTerror]

http://www.telegraph.co.uk/finance/personalfinance/houseprices/10163025/Starry-eyed-landlords-are-ignoring-the-costs.html

Landlords have unrealistic expectations of property returns and are failing to consider the effects of a range of costs, a new report has shown. And the proportion of landlords viewing their properties as short-term investments is "at levels last seen before the financial crash".

The data, from YouGov's Landlords and Mortgages 2013 report, contradicts the view held by lenders that the buy-to-let market has improved since the financial crisis. Lenders claim that post-crisis investors are focused on long-term returns, rather than the quick capital gains that characterised the 2006/07 boom. Instead, the YouGov data suggested that landlords were naively counting on "illusions" of gains.

It said landlords' total returns were in long-term decline, despite reported evidence of rising rents. In the 2002-06 period, landlords' rental returns averaged between 4pc and 6pc, it said, whereas rental returns are now between 1pc and 4pc.

One reason for weaker returns was landlords' propensity to overlook costs. "While 93pc consider mortgage interest payments, only 68pc take account of agency fees and 46pc budget for other management expenses."

Buy-to-let continues to grow, with the number of landlords increasing. There are now 1.5 million landlord mortgages in force, accounting for 13pc of all lending.

However, the growth of the sector in an otherwise weak housing market is contentious. A report entitled "Understanding Landlords", published last week by the Strategic Society Centre, a think tank, sought to analyse the profile of the average landlord, and concluded that the private rented sector was driving up prices and making it harder for younger owner-occupiers to buy. "Private rented sector landlords have, on average, a more advantaged background," the report concluded, finding that three quarters of landlords are aged 45-64, 40pc have a degree or higher qualification, and 34pc live in London or the South East.

The report was accompanied by calls to limit landlord activity. Suggested measures included a "newbuild buy-to-let moratorium" that would prohibit newly built properties being bought with buy-to-let loans.

The report chimes with other critics of the private rented sector. Pricedout.org.uk, for example, a lobby group representing younger, aspirant home owners, has called for landlords to be stripped of their right to offset mortgage interest against tax as a business expense.

But landlords are fighting back. Richard Lambert of the National Landlords Association poured scorn on the Strategic Society Centre's report, saying it should be entitled "Misunderstanding Landlords". He said: "The authors just want to prove their preconception that the growth of the sector is the cause of problems in the market rather than a consequence of them."

Any idea that landlords are exploiting a market failure is a red herring, Mr Lambert argued. "Will anyone be surprised to learn that those who invest in property are wealthier than those who have not been able to buy? It's the nature of a competitive market economy. Claiming that the private rented sector represents a transfer of wealth from tenants to landlords is like saying that pubs represent a transfer of wealth from drinkers to publicans."

The controversy around buy-to-let means lenders are reluctant to publish figures showing how much lending they do to landlords. The biggest lenders in the market are believed to be Lloyds Banking Group and Nationwide Building Society, although other lenders, such as Coventry Building Society, are also growing aggressively.

[The Knimbies who say No]

http://www.telegraph.co.uk/finance/personalfinance/houseprices/10163025/Starry-eyed-landlords-are-ignoring-the-costs.html

Some mistake surely, I've read in the Telegraph comments section that landlords will just up the rent if their returns are poor or costs rise.....

The illusions some of these people have regarding their pricing power is staggering.

[long time lurking]

So,the report concluded, finding that three quarters of landlords are aged 45-64, 40pc have a degree or higher qualification, and 34pc live in London or the South East.

Hmmm could be a bit of a problem if they have invested locally,but they are far better educated than myself so do they know something I don`t

[interestrateripoff]

I thought it was all guaranteed???

[dances with sheeple]

[dances with sheeple]

I thought it was all guaranteed???

So did they

[@contradevian]

Who would have thought it? Making money from doing feck all isn't that easy. If this carries on people might have to try being productive again. I don't know where that will get us.

Edited July 8, 2013 by Secure Tenant

[ingermany]

Any idea that landlords are exploiting a market failure is a red herring, Mr Lambert argued. "Will anyone be surprised to learn that those who invest in property are wealthier than those who have not been able to buy? It's the nature of a competitive market economy"

If anyone sees a competitive market economy can they let me know? Currently UK property investment is more subsidised than European agriculture was at the time of the legendry wine lakes and butter mountains. Free market has absolutely no part in this.

[JustAnotherProle]

If anyone sees a competitive market economy can they let me know? Currently UK property investment is more subsidised than European agriculture was at the time of the legendry wine lakes and butter mountains. Free market has absolutely no part in this.

Indeed, there is no free market in UK housing, if it was the supply and demand argument would actually hold water. If the price is high and there is still a demand, we should be seeing massive building projects for housing everywhere they can in order to cash in shouldn't we, are we seeing that?

The Govt is basically forcing you to subsidise your slavery to landowning classes with your money...

[Bloo Loo]

Indeed, there is no free market in UK housing, if it was the supply and demand argument would actually hold water. If the price is high and there is still a demand, we should be seeing massive building projects for housing everywhere they can in order to cash in shouldn't we, are we seeing that?

The Govt is basically forcing you to subsidise your slavery to landowning classes with your money...

This is because the housing market is no such thing...its a Mortgage Market.

[The Spaniard]

This is because the housing market is no such thing...its a Mortgage Market.

And domestic mortgages are the main spigot of our debt-based money supply - our essential medium of exchange expensively and unnecessarily rented to us by the banking cartel.

Can we have our money supply back, please?

Can we disengage its source from buying a place to live?

[Sancho Panza]

There's a thread on this on my new favourtie site.Enjoy.

http://www.propertytribes.com/the-true-cost-of-being-a-landlord-t-6605.html

Edited July 9, 2013 by Sancho Panza

[The Knimbies who say No]

There's a thread on this on my new favourtie site.Enjoy.

http://www.propertytribes.com/the-true-cost-of-being-a-landlord-t-6605.html

40% of rent received as a baseline net profit figure looks pretty modest overall, I'm sure some do better if long-term tenants are in place. Even at 60% it makes your average BTL proposition look like an artistic statement by the K Foundation.