Understanding Landlords

[Bland Unsight]

I stumbled across this June 2013 study for this first time recently, Understanding Landlords, which says it is a "study of private landlords in the UK using the Wealth and Assets Survey"

It is quite a substantial report. Two of the authors (Lloyd and Barnes) have had roles in government as policy advisers.

As you might expect PRS landlords tend to be better off, however the thing that tickled me is the following which is mapped out in Chapter 6 of the report. All comparisons I give here are relative to non-landlord homeowners:

PRS landlords are:

• Less likely to own their own home outright and more likely to have a mortgage
• Far more likely to have a larger, more expensive home
• Far more likely to have a large (£200k+) mortgage outstanding against their home
• Far more likely to have in interest-only mortgage
• More likely to have a mortgage at higher LTV (60%+)
• Far more likely to have significant equity in their own home (£175k+)

There are other interesting bits and bobs in the report.

Considering the leveraged landlords in the sample, from my particular perspective, being whether or not these guys might make good foam on the runway during a correction, what really caught my eye is that they've really bet the lot on UK residential property as, the rental properties aside, it's the bubble equity in their own homes which looks to be the core of their balance sheets. They'll make reasonable foam, but they are unlikely to have a pot to piss in after a correction unless they deleverage aggressively before the housing market turns. You have to admire their faith in property.

Edited December 29, 2015 by Bland Unsight

[Killer Bunny]

Yes, I admire them. Er...

[winkie]

There are plenty out there with two or more homes and their net worth is pretty abysmal.......far worse than others that have one small one and a safety net......never judge a book by its cover.

[Exiled Canadian]

I stumbled across this June 2013 study for this first time recently, Understanding Landlords, which says it is a "study of private landlords in the UK using the Wealth and Assets Survey"

It is quite a substantial report. Two of the authors (Lloyd and Barnes) have had roles in government as policy advisers.

As you might expect PRS landlords tend to be better off, however the thing that tickled me is the following which is mapped out in Chapter 6 of the report. All comparisons I give here are relative to non-landlord homeowners:

PRS landlords are:

• Less likely to own their own home outright and more likely to have a mortgage
• Far more likely to have a larger, more expensive home
• Far more likely to have a large (£200k+) mortgage outstanding against their home
• Far more likely to have in interest-only mortgage
• More likely to have a mortgage at higher LTV (60%+)
• Far more likely to have significant equity in their own home (£175k+)

There are other interesting bits and bobs in the report.

Considering the leveraged landlords in the sample, from my particular perspective, being whether or not these guys might make good foam on the runway during a correction, what really caught my eye is that they've really bet the lot on UK residential property as, the rental properties aside, it's the bubble equity in their own homes which looks to be the core of their balance sheets. They'll make reasonable foam, but they are unlikely to have a pot to piss in after a correction unless they deleverage aggressively before the housing market turns. You have to admire their faith in property.

So in summary they're debt junkies riding an asset price bubble on the back of historically low interest rates. These chaps have quite literally "bet the house" and probably don't even know it.

Bully for them......that's a strategy with a long track record of success (see South Sea Bubble/Amsterdam Tulip mania/1929 stock market crash etc etc.).

[Bland Unsight]

So in summary they're debt junkies riding an asset price bubble on the back of historically low interest rates. These chaps have quite literally "bet the house" and probably don't even know it.

Bully for them......that's a strategy with a long track record of success (see South Sea Bubble/Amsterdam Tulip mania/1929 stock market crash etc etc.).

That's how I am reading it.

[Bland Unsight]

I know one 'accidental' BTL LL who thinks it is great because they can't lose as the government will pay any HB rent and house prices only ever go up.

I think the brutal truth is that during the most recent reforms of LHA this was actually a wired in reality.

The structure of LHA actually drove rents up, and rising rents drove what a BTLer could pay (in the hope of capturing further gains) and those purchases drove prices.

Between April 2008 and April 2010 Brown actually built and operated a bubble machine which involved the bailed out banks, the government as provider of LHA to cover the interest (and as the one funding the bailed out banks) and BTLers. The canny BTLers who understand it, if there are any, seem not to bang on about it on public fora, the ones who are less canny seem to honestly think that their investment decisions had no effect on the odd pockets of the housing market they were turning into LHA-funded BTL ghettos, (h/t last laugh for cluing me into this). It is arguably still running in certain pockets, though continuing reform of the LHA framework has largely neutered its potential.

[goldbug9999]

"Understanding landlords" - oxymoron surely.

[SirGaz]

I had one almost screaming at me Sunday night.

All I did was ask him if he had a good accountant.

Then I asked him what his yield was, he didn't know what a yield was let alone how much it was.

I asked how the changes in regulations in Wales affected him, he didn't know.

All I managed to ascertain was he made about £600 a month from two houses he rents out in the welsh valleys both on high LTV (80%+) interest only mortgages`.

I asked him how basel III might affect him, he'd never heard of it.

Then I got the abuse for living at home into my thirties, being a loser that has a 'posh' car (12 year old Merc) and no house.

The bit that pushed him over the edge was me telling him I could buy now, for cash, but I didn't see it as a sensible thing to do at this time.

[Bland Unsight]

The bit that pushed him over the edge was me telling him I could buy now, for cash, but I didn't see it as a sensible thing to do at this time.

They are all hat and no cattle. Anyone still at the table is taking a very big risk on turning out to be, with the benefit of hindsight, and in the fullness of time, the final greater fool.

[winkie]

[Neverwhere]

Most (72%) PRS Landlords have just one rental property, although over one in ten (12%) have 3 or more. The majority (80%) have a buy-to-let property, whereas a quarter (24%) has a second home.

[. . .]

Private Rental Sector Landlords – defined as those who are receiving rent from either second homes or buy-to-let properties in the UK (or both). This does not include those who receive rent from lodgers in their own home.

[. . .]

PRS Landlords rent out properties other than the one that they live in, and the types of property can either be a ‘buy-to-let’ property or a ‘second home’. A buy-to-let property is one that the landlord bought specifically to let, whereas a second home can be one that is either owned with a non buy-to-let mortgage or owned outright. Therefore, second homes may include inherited houses that have been retained for the purpose of letting.

When second homes and buy-to-let properties are considered together, just less than three quarters (72%) of all PRS Landlords own a single property apart from the home that they live in. Sixteen percent of PRS Landlords own two rental properties, with 6% owning three, and a further 6% own four or more properties. This suggests that the majority of PRS Landlords do not have a large portfolio of houses that they rent out, but instead let a single property. Most PRS Landlords have a buy-to-let property (80%) and a quarter (24%) have a second home.

Landlords as Landlords - Summary

• Most (72%) PRS Landlords have just one rental property, although over one in ten (12%) have 3 or more properties
• Four out of five (80%) PRS Landlords have a buy-to-let property, whereas a quarter (24%) have a second home
• The average (median) rental income a PRS Landlord receives is £500 per month
• One quarter of PRS Landlords receive rental income of £900 or more per month
• Most (60%) PRS Landlords receive more from earnings than rental income

Interesting definition of 'second home'.

Edited December 29, 2015 by Neverwhere

[BorrowToLeech]

Who dreams of being the bad guy? Who reads Charles Dickens and decides to become Scrooge?

Who looks at this (Evicted - Erik Henningsen -1892), or the others like it, and wants to be a landlord?

Aside from a few true psychopaths I suspect they are mostly just ignorant of history or economics, and too arrogant to accept the facts when confronted with them.

Edited December 30, 2015 by BuyToLeech

[SirGaz]

Did you ask him whether he declares his income to the taxman? He does know he has to pay tax right...right?

I thought it best not to broach the subject because if he isn't and he does get collared guess who's fault that would be.

I did point out that as an emergency services union rep that hates the tories with a passion, rentierism was an awfully tory like thing to get involved in.

He was totally convinced that what he was doing was for the good for the poor sods that have to rent off him.

I hope he has the chance to learn the error of his ways.

[Pop321]

Who dreams of being the bad guy? Who reads Charles Dickens and decides to become Scrooge?

Who looks at this (Evicted - Erik Henningsen -1892), or the others like it, and wants to be a landlord?

Aside from a few true psychopaths I suspect they are mostly just ignorant of history or economics, and too arrogant to accept the facts when confronted with them.

I believe my profile photo probably mirrors the sentiment here....er Scrooge. I would love to offer further insight....but I think this thread is on the right track.

I do know some individuals who run homeless activities and are also prominent members of housing charities (and other types of charities) and they are also LLs. However, these are exceptional people in every sense and I think many of the 118'ers use these types as their 'examples' and are hanging on their shirt tails to justify their own activity which is less than charitable,

"Understanding landlords" - oxymoron surely.

Worryingly accurate.

[long time lurking]

All I managed to ascertain was he made about £600 a month from two houses he rents out in the welsh valleys both on high LTV (80%+) interest only mortgages`.

That would be the turnover ,definitely not profit ,£3-400pcm typical in the valleys

[Neverwhere]

New press release and pdf download from the CML on 'The Profile of UK private landlords'.

I've only glanced at it but Table 13 is pretty interesting.

[Gribble]

• Less likely to own their own home outright and more likely to have a mortgage

This is because if they remortgage their house to provide equity for a BTL, the interest with respect to this on their main residence is tax deductable .And in this way it means  they can get lower interest rates for they BTL than a BTL mortgage

[DoINeedOne]

Most people i know who are landlords own 2-3 properties on interest only are debt junkies who don't really have a pot to piss in and have a lot credit card debt too, always seem stressed and struggling with something that said I'm sure there are plenty landlords out there with there shit in order its just most don't, Most people who do it think its easy money you can't lose



 

 

 

[iamnumerate]

I work with a landlord and he has no real understanding of the tax changes.  He sadly will lose if prices fall and if they don't as he has adult children living at home*

*Assuming he cares which a lot of boomers don't.

[EnglishinWales]

Every landlord I've ever encountered appears to be suffering from Narcisstic Personality Disorder.

[Wayward]

On ‎30‎/‎12‎/‎2015 at 3:53 PM, BuyToLeech said:

Who dreams of being the bad guy? Who reads Charles Dickens and decides to become Scrooge?

Who looks at this (Evicted - Erik Henningsen -1892), or the others like it, and wants to be a landlord?

Aside from a few true psychopaths I suspect they are mostly just ignorant of history or economics, and too arrogant to accept the facts when confronted with them.

if society appears to give licence to be greedy, selfish and exploitative then it seems many people will take advantage of this...in the long term they will be judged in a cold light.  Friends of my parents (elderly) have recently bought a BTL (because you get nothing at the bank etc), my response was "well that's another young families' dream of owning their home squashed"....aghast looks all round.

[EnglishinWales]

1 hour ago, Wayward said:

if society appears to give licence to be greedy, selfish and exploitative then it seems many people will take advantage of this...in the long term they will be judged in a cold light.  Friends of my parents (elderly) have recently bought a BTL (because you get nothing at the bank etc), my response was "well that's another young families' dream of owning their home squashed"....aghast looks all round.

Did you get told off for 'spoiling it'?

[hi5lo5]

6 minutes ago, hotairmail said:

 

This makes the Property118ers seem particularly knowledgable. They know enough to know they are going to shafted and try to fight it.

However, by raising awareness for the 'fight' they could affect the price they get for exit.

It's awkward for me to make a comment @14hrs on a Wednesday. 118ers are normally a bunch of f€¥£tards who don't have a day job. I agree that they are knowledgable but questions their intelligence. These guys clearly know that it's end of thier dreams. But still in denial and fight back to see if they can hold on to their shinny SUVs . One question often props up in mind is why are they not selling to reduce thier losses? I know content in 118 is censored a lot but noone ever have come up and said that I have sold these many properties?

[cashinmattress]

Understanding landlords....

What's difficult about that?

Earning through title.. a title either birthed or bought.

As opposed to earning through work.

In one sense, it could be argued that everybody's favourite couple... the Wilsons.. have as much 'title' or even more 'title' than many of the peers in the upper house of parliament.

Hence the attraction.

[SarahBell]

2 hours ago, fru-gal said:

I wonder what effect LHA going to EU migrants has had on all this since 2004? As I understand although not 100% certain, EU migrants can no longer claim LHA (or housing benefit) since 2015 (perhaps Durhamborn or someone knowledgeable on this can confirm).

https://www.gov.uk/government/news/new-rules-to-stop-migrants-claiming-housing-benefit

New migrant jobseekers from the European Economic Area (EEA) will no longer be able to get Housing Benefit (HB) from April, Work and Pensions Secretary Iain Duncan Smith announced today (20 January 2014).

Does that mean the ones here before then can continue to?