Rents Set To Go Through The Roof

[London-loser]

We're doomed, tenants and landlords.

Never thought I'd say it.......

Aaaaaaaaahh,

Then it will be time to buy a home... with the money saved and invested while assorted idjit boys bet their pension on 22 Acacia Avenue (because the government wouldn't let them lose money etc).

No, I really will feel sorry for them.

[IP Newcomer]

And as for the Scottish example who've had licensing in place for a while now. How do we know that rents haven't soared there as a result?

Is there any evidence that they have? Surely that's where the burden of proof lies.

And as I said, the advertising campaign clearly shows properties removed from the market altogether. ie rent them and face criminal prosecution. So the tenants will need to move out straight away, not when they save enough money to become FTB's.

And they will need to be sold very quickly. Not when the number of buyers has recovered. Low prices.

[IP Newcomer]

I spoke to an empty housing officer about this who told me that they are aware of a major problem with property developers paying estate agents a retainer to tip them off when an empty property comes on the market - it doesn't get marketed, gets sold for a pittance to the developer who keeps it empty to reduce supply and increase demand. Apparently it can be worth their while doing that.

Has the empty housing officer actually come across this, or is this some sort of urban legend to increase their powers.

1) This will not be effective unless the builder has a massive chunk of the local market. Most of the people who will benefit from this will be other sellers.

2) The Estate Agent, if he hasn't marketed the house, will be committing fraud. Even EAs understand that this can mean prison.

3) This exacarbates the risk for the developer. Not only do they have their own stock that is coming on to the market, they also have presumably unrelated stock that increases their exposure to a downturn. You'd have to be enormously confident of an upturn to buy a load of stock on the open market at the same time as building a whole load of new properties.

I have certainly seen a number of houses that have been bought in part exchange by developers and some of those have been held as empty waiting for a "reasonable" offer. (Others are being rented out and many more are being offered below the market price to get a quick sale.)

Developers can also buy old properties as part of their landbank.

This is not the same as buying properties in some bankruptcy inducing stunt to corner the local market.

[mercsl]

Not sure if this will affect things that greatly.

As far as I am aware under the new scheme an HMO will be any property shared by MORE than two unrelated tenants. Guess all depends on their definition of 'related' , a couple unmarried and a friend for instance will NOT come under the HMO provisions.

Really think this is after the pack them in like sardines landlords rather than your typical BTLr.

I can imagine some landlords getting tenants to sign up to the fact they are in a relationship(even if they are not) to get around this legislation where more than two tenants are sharing Expect to see landlord ads saying no DSS and only couple and friend accepted.

Edited December 5, 2005 by mercsl

[Time to raise the rents.]

Not sure if this will affect things that greatly.

As far as I am aware under the new scheme an HMO will be any property shared by MORE than two unrelated tenants. Guess all depends on their definition of 'related' , a couple unmarried and a friend for instance will NOT come under the HMO provisions.

Really think this is after the pack them in like sardines landlords rather than your typical BTLr.

I can imagine some landlords getting tenants to sign up to the fact they are in a relationship(even if they are not) to get around this legislation where more than two tenants are sharing Expect to see landlord ads saying no DSS and only couple and friend accepted.

A couple and a friend would qualify as 2 families. Therefore an HMO.

Imagine that you buy a 2 bed flat in a Victorian conversion. Under the new rules, to let the flat as an HMO of just 3 people as in your example, you will be required to have an integrated alarm system fitted to every flat in the building so that a fire in one flat, results in an alarm going off in every flat.

Now your neighbours in the building may object to the work as OO's don't have to do this. And they will certainly object to the expense. This may drag on for months in many cases. And these are the places that know what they need to do. The easy solution, just let the flat to the couple. An instant reduction in rental capacity.

And what if you're letting your place innocently to a couple, but another landlord in your building is letting a 2 bed flat to tons of sharers? How will you be affected by that?

As I said, many will just carry on oblivious, but they will be doing so with the eventual criminal convition hanging over them.

[CrashIsUnderWay]

Hilarious thread.

Excellent place to see desperate overgeared parasites panicking over the goalposts being moved.

This, of course, is just the start. Un-duckable taxation on this 'unearned income' is, of course probably already in the pipeline.

The idea that making it tougher for landlords will somehow cause rents to increase is so funny it probably ain't even worth the obvious response. However, seeing as the swedeboner is so obviously mentally challenged, I'll explain the flaw in his child-like argument.

Many landlords are highly geared. They have no option but to rent out the flats because they sure as hell can't sell em (yet :-). They can't carry the mortgage costs for long before going bust, either. They can't unilaterally raise the rents, because there is plenty of competion who won't be trying to raise - in these troubled times most parasites (sorry - landlords) will just be glad to have a tenant at all. This is why London rents (as I recall before I left) hadn't moved in about 7 years - competition. So what REALLY happens? The ones who spend a fortune complying can either stay competitive and rent their flats out, or they can try and pass the increased cost of being a landlord to the tenant, in which case they will have empty properties. And soon, repossessed properties. Fabulous result for the unhomed, BIIIIGGGG problem for parasitic immigrant tax dodgers from Oz.

It's also probably also worth saying is that there is probably a sizeable minority of 'landlords' already breaking the law by not declaring the income, so assuming that yet another new law will cause that lot of jokers to run is ludicrous. They'll ignore it and hope not to get caught.

Because they are sitting targets, and the process of catching them is essentially nothing more than a database problem, they WILL get caught eventually. Just not this year.

Typical antipodean half-thought out bunch of buggerybollox, this thread.

[IP Newcomer]

The easy solution, just let the flat to the couple. An instant reduction in rental capacity.

Well that's going to mean, (1) more flats on the market, (2) more expensive for singles renting multi-occupancy and (3) cheaper for couples and families.

It looks like it could be a two tier market with couples at an (arguably unfair) advantage.

Edited December 5, 2005 by IP Newcomer

[Van]

TTRTR still has his head stuck in the clouds as usual. The majority of lets now are not comprised of legit BTL landlords, but from upsizers who can't flog their old places, divorcees who can't flog their old places, emmigrant who can't flog their old places.. all being rented out at a sub-5% yield? A HUGE amount of letted property is "off the radar". A change in the law isn't going to make one iota of difference to these landlords.

And what's this - GB's about to cut his growth forecast from 3.5% to 2%. Doesn't exactly look like the economy is booming, does it? Guess more and more people will be renting out their spare rooms in the near future.

[Time to raise the rents.]

Well that's going to mean, (1) more flats on the market, (2) more expensive for singles renting multi-occupancy and (3) cheaper for couples and families.

It looks like it could be a two tier market with couples at an (arguably unfair) advantage.

Shouldn't that read - more tenants in the market?

ie landlords no longer willing to let to groups, therefore groups have to become smaller & pay more to live alone.

Where will the supply of all these places come from? It won't come from anywhere. Because people will ignore them. This is where the risk of the law going too far and encouraging banks to call in loans is.

If those loans are called in, expect to pay a lot more rent to landlords without mortgages.

[London-loser]

Shouldn't that read - more tenants in the market?

ie landlords no longer willing to let to groups, therefore groups have to become smaller & pay more to live alone.

Where will the supply of all these places come from? It won't come from anywhere. Because people will ignore them. This is where the risk of the law going too far and encouraging banks to call in loans is.

If those loans are called in, expect to pay a lot more rent to landlords without mortgages.

Sorry, if BTL loans get called in on any major scale I'll be looking to buy from a desperate landlord... at the going rate not what he'd like to get or what he needs to ensure his pension isn't trashed.

I can't help feeling you are getting over-excited about this but if you are not you really ought to be turning bear about now.

[Time to raise the rents.]

Sorry, if BTL loans get called in on any major scale I'll be looking to buy from a desperate landlord... at the going rate not what he'd like to get or what he needs to ensure his pension isn't trashed.

I can't help feeling you are getting over-excited about this but if you are not you really ought to be turning bear about now.

I honestly can't work out what to make of it. I personally should be fine because I rent my places to a reasonable number of sharers and am in the process of applying for govt grants to do the work required. So I will comply with the rules myself.

But for example the ODPM says it's the govts policy to encourage the private rental sector. But the NFRL (National Federation of Residential Landlords) objects to this in their most current magazine by saying that there is nothing whatsoever in these new rules that will encourage the private rental sector.

At best I see a slow decline as less buying by landlords takes place, but as landlords sell which some naturally do, tenants will have to pay more for the remaining rentals available. This will benefit people like me in higher rents, but it may mean low or no CG. Which IMO will result in tenants not wanting to buy because of a feeling that there's nothing to be made from buying.

So we possibly get into this unexpected (by the govt) decline which results in recession & at least an adjustment of real prices. I hear you all cheer, but IMO because you'll pay more in rents, you'll have trouble saving for a deposit as usual.

Eventually 10yrs+ a govt will repeal the laws to encourage BTL again and tenants will be paying 10-15% yields. BTL will take off again and all of those that didn't see the chance to buy, will lose out again.

One of my first posts to this forum pointed out that Political Risk, the risk of laws being changed, is the biggest risk the property market faces. IMO these new laws are the perfect example of that risk.

[2005]

But for example the ODPM says it's the govts policy to encourage the private rental sector. But the NFRL (National Federation of Residential Landlords) objects to this in their most current magazine by saying that there is nothing whatsoever in these new rules that will encourage the private rental sector.

You didn't really believe the ODPM did you?

I also think you are under estimating tenants.

I am not disputing that there isn't a group of tenants who will always rent and are on very low wages but leaving these aside....

...not all tenants are financially stretched by renting and unable to save a deposit. I would suspect that most tenants rent because 1) they don't want to buy yet because they are not settled in a career/relationship etc or 2) they think house prices will come down and don't want to buy just yet.

It's a bit like waiting for the January sales...I could easily afford to buy that lap top now if I wanted but I won;t..because it will be 20% cheaper next month.

[London-loser]

An interesting post TTRTR.

I would agree the "political" risk is a serious factor - I seem to remember suggesting to BBB a long while ago that renting to DSS tenants is not the risk-free bet many see it as precisely because it could become a political hot potato (the amount of council tax money handed over to private landlords for housing DSS tenants) that COULD (not necessarily would) be hit quite quickly (the council decides it will pay a maximum of £x and the landlords can like it or lump it).

This risk is obviously included in the rental premium you require when you decide to buy/hold property.

In my opinion landlords NOT buying (let alone selling) in numbers will see the market fall significantly (precisely because BTLs have priced the other potential buyers - FTBs - out). BTLs are the key support for the market these days, if they re-trench the market WILL re-trench, potentially quite seriously.

In such a scenario (which may or may not happen) I think prices will fall, rents might rise (perhaps only temporarily though as the balance moves back towards buying being attractive rather than renting) and longer term yields will rise again.

You're describing a bear market in housing, driven by a lack of BTL buying on the back of these regulations. Like I said, I'm not sure they are quite that serious but I think such a scenario could play out (I believe it is likely) for a variety of reasons with this set of regulations not helping.

The irony is people will all look back and say "obviously X killed the market (these regulations?), without that things would have been fine" but actually the market got killed by over-excited "investors" who didn't care about yields, didn't mind that they had no risk premium, were happy subsidising their tenants in the short-term etc."

[Mags]

Has the empty housing officer actually come across this, or is this some sort of urban legend to increase their powers.

He didn't say they were necessarily builders although I guess they could have been. He certainly said that he knew it was happening but he didn't indicate that this increased their powers - much the opposite. He said they desperately want all property in the area to be used but it's a losing battle with these kinds of tactics.

I've had several agents openly tell me that certain properties don't get marketed but get offered straight to developers/investment buyers. I didn't know it was actually illegal for them to do that. Bit stupid of them to talk about it really if it is!

[IP Newcomer]

He didn't say they were necessarily builders although I guess they could have been. He certainly said that he knew it was happening but he didn't indicate that this increased their powers - much the opposite. He said they desperately want all property in the area to be used but it's a losing battle with these kinds of tactics.

Well that's what I meant. Create (or more likely believe) a convenient theory about some dastardly market manipulation that will just happen to justify giving them more power, staff, etc. The problem is that the sort of manipulation I assume he was talking about - buying up properties on the open market with the sole intent of keeping them empty - would ruin any one who tried it. The rental market is simply too fragmented.

I've had several agents openly tell me that certain properties don't get marketed but get offered straight to developers/investment buyers. I didn't know it was actually illegal for them to do that. Bit stupid of them to talk about it really if it is!

Well it depends. If they say that they will try to get the full price for it and then don't market it then they are guilty of fraud. If they say that they can get a quick guaranteed sale, but you won't get the full price, then they are acting perfectly legitimately - and been going on for ages.

However what you seemed to be describing before was the first practice, now it seems to be the latter.

[CrashConnoisseur]

I would agree the "political" risk is a serious factor - I seem to remember suggesting to BBB a long while ago that renting to DSS tenants is not the risk-free bet many see it as precisely because it could become a political hot potato (the amount of council tax money handed over to private landlords for housing DSS tenants) that COULD (not necessarily would) be hit quite quickly (the council decides it will pay a maximum of £x and the landlords can like it or lump it). [London-loser]

1. A correct term would be 'tenants in receipt of Housing Benefit'. The DSS was replaced by the DWP back in 2001.

2. Housing Benefit is funded by the DWP, not from Council Tax. Local councils are paid an allowance for administering claims and receive bonuses for detecting errors and fraud (more efficient councils may make a 'profit').

3. The maximum Housing Benefit payable for particular properties in each area is determined by the District Valuer who is employed by the Valuation Office Agency which is an executive agency of HM Revenue and Customs.

4. Any claim for Housing Benefit is between the tenant and the council. If a tenant is entitled to full Housing Benefit, but this is less than the full rent, the tenant will either have to pay the difference from other resources or look for somewhere cheaper to rent. There is no obligation on the landlord to "like it or lump it".

[IP Newcomer]

TTRTR - so do you think that this will put house prices up or down?

[Time to raise the rents.]

TTRTR - so do you think that this will put house prices up or down?

Well if they keep going up, it won't be as a result of these new rules.

But who knows anyway, if rents do go up because of it, the incentive for tenants to buy returns with renting becoming more expensive. Also, higher rents mean more support for higher valuations.

So maybe the real question is whether this will in fact increase rents. I can't see any reason why not.

Edited December 5, 2005 by Time to raise the rents.

[FunkyGibbon]

I have just checked the ODPM's website regarding HMO's and it's not good news for landlords with properties occupied by any more than two single sharers.

Full details are at HMO Legislation on ODPM's website .

I would imagine the immediate effect is a decrease in the number of available flat shares and a large increase in rent for those landlords that need to comply with the new legislation.

What the effect on house prices will be is uncertain.

Edited December 5, 2005 by FunkyGibbon

[since the beginning]

Has the empty housing officer actually come across this, or is this some sort of urban legend to increase their powers.

I saw the job spec and salary for "Empty Housing Officer" in one of dogs threads.

You will have a eye for detail and be almost psychic in spotting empty houses. Salary £250,000

[Time to raise the rents.]

I saw the job spec and salary for "Empty Housing Officer" in one of dogs threads.

You will have a eye for detail and be almost psychic in spotting empty houses. Salary £250,000

If that salary is real, it must include danger money (danger of being attacked by legitimate owners).

Reading the NFRL magazine I see that the govt even proposes to take over houses of people who've left them empty whilst on an overseas assignment. The time frame was either 1 year or 2 years.

[Spring Bounce?????]

Utterly ludicrous!!

Back to the drawing board TTRTR.

[A Fool & His Borrowed Money]

In other news reported today by TTRTR, A vast woodland of Money- Trees which grow masses of 20-pound Notes was discovered in Wandsworth.............

[New Darker Law]

I don't think this will have much effect at all.

Scotland has had HMO laws for a number of years now. When introduced, houses with 4 non blood relations had to have an alternative fire escape. The following year this reduced to 3 non blood relations and the following year it dropped to 2 non blood relations (unless they were in a relationship). This is all from memory so may not be 100% accurate, but you get the jist.

Scotland has still "enjoyed" an HPI boom. Rents have not risen significantly as a result of the HMO laws.

Apologies if this has already been mentioned. It's a long thread!

NDL

[Sledgehead]

I can't believe that you lot actually think you determine the cost of rent by what you are willing to pay!

Why. You seem to think you can determine the cost of housing by what you are prepared to ask.

FU@KING

Give up TTRTR. You talk about LLs - that's YOU - having to fork out 100K for improvements to comply with regulations, and guess what : it's actually good for LLs!! What a spinmeister!

Mate, there is glass half full and there is hallucinogenically blind optimism. May I suggest you do some serious thinking about what you did with the other half glass of acid, cos dude, I have to tell you, you have tripped so far up Alph, your head is wedged solid in Kubla Kahn's @rse, and you are breathing nothing but the heady vapours of his colon.

Reading the NFRL magazine I see that the govt even proposes to take over houses of people who've left them empty whilst on an overseas assignment. The time frame was either 1 year or 2 years.

I warned you of that ages ago too. Hark: Is that the sound of Xmas turkey, or just the clucking of chickens returning for a spot of roosting?

Edited December 5, 2005 by Sledgehead