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richc

Landlords Now Own More Property Than Mortgage Holders

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Article in FT on new research from Savills showing that the total value of properties held by landlords now exceeds the total value of property held with a mortgage.

https://www.google.co.uk/webhp?sourceid=chrome-instant&rlz=1C1CHWA_enGB614GB614&ion=1&espv=2&ie=UTF-8#q=Landlord+housing+wealth+eclipses+owner-occupiers+with+mortgages

(Title should have said "own" more property.)

Edited by richc

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Feudalism, noun: The dominant social system in medieval Europe, in which the nobility held lands from the Crown in exchange for military service, and vassals were in turn tenants of the nobles, while the peasants (villeins or serfs) were obliged to live on their lord’s land and give him homage, labour, and a share of the produce... Defined broadly, it was a way of structuring society around relationships derived from the holding of land in exchange for service or labour.

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Article in FT on new research from Savills showing that the total value of properties held by landlords now exceeds the total value of property held with a mortgage.

https://www.google.co.uk/webhp?sourceid=chrome-instant&rlz=1C1CHWA_enGB614GB614&ion=1&espv=2&ie=UTF-8#q=Landlord+housing+wealth+eclipses+owner-occupiers+with+mortgages

(Title should have said "own" more property.)

Excellent news. Makes the future direction that policy changes have to go in even more obvious.

How many votes does a landlord with ten properties get?

Exactly.

Edited by Frugal Git

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From a government/banking point of view, job done.

All that housing debt shifted nicely into the hands of a client base which enjoys no regulatory protection nor public sympathy. Wonder what will happen next?

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Some shocking stats in there ,it`s plain to see why BOE see it as a financial stability risk ,but yet again they are dealing with the symptoms when they should have been preventing the cause ...one step behind the horse again if you ask me .better late than never is all you can hope for

This just screams ponzi scheme

Total value of privately rented homes has risen 55% in the last five years but the rise in London was 90% over the same period

If i have got the following right most of the equity has come from HPI not hard earnt cash? ( IO mortgages do not increase equity ) on the flip side to a lesser extent the same could be said for the OO (lesser because they are building equity via repayment mortgages )

Edited by long time lurking

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Does anyone know if there are similar figures that break down the PRS figure into owned and mortgaged property?

While the ratio of mortgaged to owned OO properties is decreasing, I suspect there will have been a huge increase in the ratio of mortgaged to owned PRS properties, with very few of the new PRS purchases owned outright, but I haven't seen the proof, or any estimated of the overall equity in the PRS

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Does anyone know if there are similar figures that break down the PRS figure into owned and mortgaged property?

While the ratio of mortgaged to owned OO properties is decreasing, I suspect there will have been a huge increase in the ratio of mortgaged to owned PRS properties, with very few of the new PRS purchases owned outright, but I haven't seen the proof, or any estimated of the overall equity in the PRS

Theres figures on here somewhere ...from what i can remember they were higher than i would have guessed at 40% rings a bell?( 40% could well be wrong)

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Same Tories who announced Clause 24 and Stamp Duty hike 3% BTL/second owners.....?

The greedy BTLers have gleefully danced into the trap, at painfully high prices, taking up all the supply (ask 8YI how many houses on RM we've tracked that have fallen to BTLers at ultra-high prices, and gone back on rental market in NW Regional over the last few years)..... MEW, unregulated BTL mortgage, and delight at people farming the young forever, because they're the special core-voters who are protected by BTL MPs - not.

'Gents, we are not in disarray! We are falling back. And all the time, their supply lines get longer. The home-owners, buyers and investors must be taken to the point where they start to think about pulling back, then present them with the possibility - the seeming possibility - of a knock-out blow. But it won't knock us out - it knocks them out.'

Most of the renters looked at all the territory they had lost, and the fraction they had left, and thought it was all over for them. The HPC senior members looked at their relatively unscathed divisions, fresh units, crack squads, all positioned just where they should be, knives laid against and inside the body of an over-extended, worn-out enemy, just ready to cut...

[Tweaked from Use of Weapons.]

The game was over; couldn't anybody see that? He looked despairingly around the faces of the officials, the spectators, the observers and Adjudicators. What was wrong with them all? He looked back at the board, hoping desperately that he might have missed something. The Emperor(s) had fallen for it, taken the bait, entered the run and followed it to be torn apart near the high stand, storms of splinters before the fire.

[Tweaked from The Player of Games.]
-Iain M Banks

Banks got the security they need on these BTLs, including landlords' own homes.

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Theres figures on here somewhere ...from what i can remember they were higher than i would have guessed at 40% rings a bell?( 40% could well be wrong)

You can work it out from the DCLG live tables on tenure, which give you the number of dwellings in the PRS. The last data point in the series is a provisional figure for 2013 of about 5.2m. If you assume the post 2002 growth trend has held in the interim, that's probably closer to 5.5m today.

For the number of BTL mortgages, you can use the data the CML make public occasionally, for example 1.7m loans in September 2015 given here, (you could also use the Bank of England MLAR statistics to give you the BTL count, but there are other types of mortgages in the same category - h/t FreeTrader, still the baddest man alive in my book).

That'll put you at about 30% of the PRS encumbered by mortgages.

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Meh, there are just as many unmortgaged owner-occupiers as mortgagees so a bit of a non-story really in terms of how much landlords hold. Still too many landlord owned properties of course.

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Same Tories who announced Clause 24 and Stamp Duty hike 3% BTL/second owners.....?

The greedy BTLers have gleefully danced into the trap, at painfully high prices, taking up all the supply (ask 8YI how many houses on RM we've tracked that have fallen to BTLers at ultra-high prices, and gone back on rental market in NW Regional over the last few years)..... MEW, unregulated BTL mortgage, and delight at people farming the young forever, because they're the special core-voters who are protected by BTL MPs - not.

Banks got the security they need on these BTLs, including landlords' own homes.

The Tories are schizophrenic. On the one hand, yes they have brought in some new taxes for BTLers but they are determined to make the PRS as insecure and as inhumane as possible (they just vetoed a bill to make rented houses fit for human habitation). I don't really know what the Tories endgame is but it certainly isn't giving more rights to serfs renters. I imagine the tax changes are more to do with helping the big funds get a piece of the BTL market than anything else but then again, I am very cynical about anything changing for the better for tenants in the near future.

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Fru-gal. It's an easy question to answer. Tory manifesto was to increase home ownership. Obviously there is some reluctance because of sky high prices.

Carrot and stick: Carrot being HtB and RtB. Stick being carry on renting and suffer!

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Hmm well I have not followed that, but things have notched up slightly on regulation side for BTLers with slight improvements for tenants.

There's a chart explaining it somewhere - quite interesting - but if tenant files notice or repair it has to be dealt with in certain amount of time, else landlord can't serve S21. Also, ny understanding, tenant can escalate it to some council body... time for them to come and inspect and check... and all the while landlord can't serve S21.,

At a guess, from what you've outlined, I suggest that Tories may be thinking of something of a market - allowing tenants and landlords to operate in it with some choice in their decisions. Also just how far do you take regulation, and the costs of enforcing it. There is licensing coming in - with added landlord costs. If these houses are unfit for human habitation the market should be able to work it out... but yes I do have concerns for those who have no other choice but to accept somewhere well dodgy.

For instance?

If you are suggesting it should be easy to gain possession against a tenant, these were always known risks (and costs).

And it was a always a risk on the BTLer side that costs would rise and tenants may receive improved rights. That legislation would change so BTLers can't serve S21 early into tenancy (or at outset). As I understand things, it's changing so a landlord can't serve S21 until 4 months into a tenancy. These are simply small measures to improve tenant rights, from my perspective.

1. The Home office have announced that Right to Rent checks will now be the responsibility of all Private Landlords from the 1st February 2016. This is part of a wider government scheme to make it harder for illegal immigrants to live in the UK. Landlords not making the checks could be fined up to £3,000 per tenant if found guilty of renting out a property to someone who is illegally living in the UK.

2. More authorities are bringing in licensing for landlords (+ fee). Even requiring them to attend courses.

3. Court fees have risen, and risen again, if landlord/BTLer requires court action.
http://blog.painsmit...ees-rise-again/

4. New legislation comes into effect - 1st October 2015.

A valid EPC
A current landlord’s Gas Safety Certificate
The Government How to Rent Guide

Timing: A Section 21 Notice cannot validly be served in the first four months of a tenancy

Expiry: If proceedings are not issued within 6 months of the service of a Section 21 Notice, then the notice will be invalid.

Although see up-to-date official sources for it is my understanding rules got a further tweak/tightening the very following day. re item 4.

Some of the landlord/BTLer reactions to all of this. Overly hysterical from my point of view.
http://www.propertytribes.com/new-legislation-comes-into-effect-today-smoke-alarms-t-127622059.html

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[...]There's a chart explaining it somewhere - quite interesting - but if tenant files notice or repair it has to be dealt with in certain amount of time, else landlord can't serve S21. Also, ny understanding, tenant can escalate it to some council body... time for them to come and inspect and check... and all the while landlord can't serve S21.

PDF on this page sets it out, although it wasn't the chart I was thinking of originally.

http://www.fixflo.com/Section-21

(Infographic at bottom of the page)

No wonder the BTLers who know about it are troubled, with their view that tenant can sit back and not pay rent. That BTLers have to snap-quickly respond to repair requests. I think it's quite a switch of power to tenant.

Haha

On 26th March 2015, a new Deregulation Act received royal assent which has now made “retaliatory evictions” illegal and the new law will come into effect on 1st October 2015.

What this means is that you will not be able to evict a tenant just because they have made a legitimate complaint about the condition of the property. If the local authority confirms that repairs need to be carried out for health and safety reasons and proceed to issue a notice to the same effect, you will have a 6 month ban from serving notice on your tenant.

[..]The law has been passed in an attempt to protect tenants who are faced with landlords that are not fulfilling their obligations; and who use the eviction as a way to get out of dealing with any complaints. However, even though it will help a minority of tenants that are faced with this kind of landlord, in our opinion, the law is not fair to the landlords who are genuine and fulfil their obligations.

http://www.evictionaid.co.uk/important-changes-to-section-21/

Edited by Venger

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Fru-gal. It's an easy question to answer. Tory manifesto was to increase home ownership. Obviously there is some reluctance because of sky high prices.

It isn't working. Saps like me are paying a significant chunk in rent and thus are only able to save little, if any at all, each month.

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Feudalism, noun: The dominant social system in medieval Europe, in which the nobility held lands from the Crown in exchange for military service, and vassals were in turn tenants of the nobles, while the peasants (villeins or serfs) were obliged to live on their lord’s land and give him homage, labour, and a share of the produce... Defined broadly, it was a way of structuring society around relationships derived from the holding of land in exchange for service or labour.

Are you /B?

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How many votes does a landlord with ten properties get?

Nope.

Its about how much risk a BTLer and their bank can take.

And the losses that they can absorb - which is, frankly, not 10 house worth.

The risk of house prices falling -a and they will - is concentrated in a very narrow demographic - 40-60s.

If these pople owned outright then there would not be much risk.

Unfortunately, these people are mortgaged to the hilt. And then some.

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It isn't working. Saps like me are paying a significant chunk in rent and thus are only able to save little, if any at all, each month.

Patience... so many of them are hard in, and their wealth subject to change. Narrow exits, and very few get out at peak price. It's mathematically impossible... only a few get out of a bubble with anything like great gains. Majority hold and lose.

Everyone here says the young are being ******ed over, which they are. But even if there is HPC of -50%, few young people will be able to buy on a zero hours contract - if they even have a job at all.

Then we'll have to have a 90% correction.

I think that what is going on here is that for a long time two very different groups (portfolio BTLers and hpcers) have looked at the same underlying market and constructed entirely different explanatory frameworks and reached entirely different conclusions. The highly geared property investors of Poverty11Later have got a lot riding on their framework being right on a continuing basis.

I am happy to pay a BTLer to take that balance sheet risk on my behalf.

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Is this saying that people with BTL mortgages "own" the property as opposed to mortgage holders? At least the banking system isn't on the hook for all this wealth....

It`s comparing the amount of equity held in mortgaged BTL vs mortgaged OO ,at what i presume are mark to market prices

Edited by long time lurking

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Interesting graph in the article. 'Owner occupier no mortgage' ... same for past X years at 40% of the total housing stock, 'OO with mortgage' fell from 40 to 30% and BTL LL rose from 10 to 20% of the total ... essentially of the total 10% were / would be OO are now renting from BTL LL.

So much for BTL scum saying they are not in competition with FTBs and no wonder the government need a change to get OO on track as there are millions of disgruntled 'want to buy but having to rent' votes that will be lost if they don't help people to become OO.

Absolutely. Great graph and it totally shows the lie to that argument.

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