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Rent Increases Due To Btl Tax Changes - R4 You And Yours

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At about 32:35

Bit about clause 24 having a negative effect on tenants rather than having the desired effect of encouraging LLs to sell.

Interview with a tenant who claims she has no choice but to pay the increased rent because of the disruption of moving and all rents are rising.

Useful commentary from Betsy Dilner from Generation Rent but Carolyn Uphill from NLA confidently wheeled out the usual "Poor landlords providing a roof over someone's head with all of those overheads to pay are left with a choice between reducing maintenance or increasing rents" tripe.

http://www.bbc.co.uk/programmes/b0742kw2

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Bit about clause 24 having a negative effect on tenants rather than having the desired effect of encouraging LLs to sell.

Interview with a tenant who claims she has no choice but to pay the increased rent because of the disruption of moving and all rents are rising.

I'm going to call bull.s.hit here. The landlord can only pass on the tax cost if the renter market can absorb it.

I would take a guess that most landlords are already charging 100% of what they can reasonably expect to get in rent. Therefore, on the balance, the tax cost will remain in the hands of the landlord.

Edited by Drummer

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cheers for posting.

There's always a glaring inconsistency with these discussions. if rents reflect landlord's cost bases, why are rents rising now? Clause 24 has not yet started to be implemented. And if rents reflect the cost base, why choose maintenance or rent rises. You can have it all.

Of course, it might be that some landlords ask for and get a rise, maybe from a currently low base compared to the local market. Maybe rents are rising in line with nominal wage rises in an area, maybe some tenants will make the judgement that paying more is the least hassle, even if it means paying top end for the area.

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If people are contributing to higher house prices when moving away from London, why would the same thing not happen with rent prices?

Could there not be the same effect?

Edited by Noallegiance

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Landlords get easy money from banks.....tenants generally can't get easy money from their customers or employers that is why they rent.....it is no longer easy to get easy money out of the welfare system....

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Sorry, but seems that we have more net people requiring a roof over their head as each year passes and not enough building going on - if all else stays the same then landlords can do want they want provided they don't hit the affordability end stop, which is difficult to identify being an individual thing.

What is really needed, less 'government help' with financing ponzi loans, more building coupled with a regulated rental market/secure tenancy. Until those things change or we get a crash proper then most people will continue to be stuck in an unfair system with no way out.

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The mkt sets rents not landlords

Actually it isn't really a market and landlords really do set rents.

In fact that's the whole point - if landlords can raise rents then they will, regardless of any tax changes. The only thing stopping them is tenants ability to pay, so prices are set according to the logic of the Laffer curve.

Landlords aren't a charity, they are the opposite of a charity.

Ultimately rents may rise they may fall, they will do this roughly in line with incomes as they always have.

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Landlords get easy money from banks.....tenants generally can't get easy money from their customers or employers that is why they rent.....it is no longer easy to get easy money out of the welfare system....

Exactly, what a mad way to run things.

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The mkt sets rents not landlords

You'll be telling me markets set house prices next.

They've been allowed to police themselves and shock horror they've taken way more than their fill. If HPI is here to stay then continental style rent controls and tenant rights are inevitable.

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Actually it isn't really a market and landlords really do set rents.

In fact that's the whole point - if landlords can raise rents then they will, regardless of any tax changes. The only thing stopping them is tenants ability to pay, so prices are set according to the logic of the Laffer curve.

Landlords aren't a charity, they are the opposite of a charity.

Ultimately rents may rise they may fall, they will do this roughly in line with incomes as they always have.

In a free market, rents and house prices are linked. They compete with each other, of course, at the moment the market is heavily skewed towards btl which puts up both. OO don't get a look in, the market is loaded as most on here already know.

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Actually it isn't really a market and landlords really do set rents.

In fact that's the whole point - if landlords can raise rents then they will, regardless of any tax changes. The only thing stopping them is tenants ability to pay, so prices are set according to the logic of the Laffer curve.

Landlords aren't a charity, they are the opposite of a charity.

Ultimately rents may rise they may fall, they will do this roughly in line with incomes as they always have.

Same letting agent here has many city centre flats. Most are vacant. Yet despite the glut all prices are fixed the same and stay high.

Markets in action

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Same letting agent here has many city centre flats. Most are vacant. Yet despite the glut all prices are fixed the same and stay high.

Markets in action

There is no housing market.

There is a market for monetising houses, which depends on ability to pay. OO, BTL and renters themselves.

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The first thing landlords will try to do is increase capacity... Squeeze more bodies into less space...put up a plaster wall to make one bed into two or three bedrooms..use the garage, use the loft etc.

It is therefore down to the authorities to set workable regulations to see bad, unhabitable, slumb like living conditions does not come back else, this will clearly show this country is going backwards not forwards......the poor getting poorer......Noway out of the pit.

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Question for people here,

I'd love to see a HPC and an end to leveraged BTL, but if GO really wanted to put an end to leveraged BTL landlords, why does he not stop the sale of new BTL mortgages? Particularly IO types? I may be missing something here, but wouldn't that be the easiest solution to stopping the expansion of leveraged BTL?

At present it just looks to me like landlords will try to pass on tax hikes to tennents, and sorry but, speaking as a private tennent, I don't want to be homeless so will do whatever it takes to make the increased payments. The least GO could do is to introduce some kind of rent controls. Say, limiting rates of rent rises to inflation etc.

I live in London BTW, so understand things are a little different here. Just so depressing! I'd love to buy, I have a 6 figure deposit and a good income, but paying £450k for a shoe box above a kebab shop really doesn't appeal!!

Thoughts?

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In a free market, rents and house prices are linked. They compete with each other, of course, at the moment the market is heavily skewed towards btl which puts up both. OO don't get a look in, the market is loaded as most on here already know.

It isn't a free market; it derives from a restriction on people's freedom.

Furthermore, the only way to enter the market and buy back this lost freedom is to pay an existing land owner.

Rents rise and fall with people's ability to pay. We know this from historical evidence, and theory explains why.

We can discuss the theory, but the facts speak for themselves.

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The mkt sets rents not landlords

The mkt being the government with their massive generous pot of HB.

If you take away HB, rents will collapse.

There's a reason the UK was top of the European rent price charts already !!!

Do the BTLers honestly think people can/will pay more.

F**king idiots.

HB is a disgraceful giveaway to the rich, tarted up as a gift to the poor.

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Question for people here,

I'd love to see a HPC and an end to leveraged BTL, but if GO really wanted to put an end to leveraged BTL landlords, why does he not stop the sale of new BTL mortgages? Particularly IO types? I may be missing something here, but wouldn't that be the easiest solution to stopping the expansion of leveraged BTL?

At present it just looks to me like landlords will try to pass on tax hikes to tennents, and sorry but, speaking as a private tennent, I don't want to be homeless so will do whatever it takes to make the increased payments. The least GO could do is to introduce some kind of rent controls. Say, limiting rates of rent rises to inflation etc.

I live in London BTW, so understand things are a little different here. Just so depressing! I'd love to buy, I have a 6 figure deposit and a good income, but paying £450k for a shoe box above a kebab shop really doesn't appeal!!

Thoughts?

You allow greed to devour itself.

Those who were lusting for BTL mortgages, who haven't yet gone all in, will be running the opposite way soon enough.

Leaving many a BTLer on the hook for their own financial investment decisions to buy up properties (at prices many would-be OO can't/won't pay) - have some C24.

And the banks can come after the BTLers own homes.

Double-sweet.

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Question for people here...

...At present it just looks to me like landlords will try to pass on tax hikes to tennents, and sorry but, speaking as a private tennent, I don't want to be homeless so will do whatever it takes to make the increased payments. The least GO could do is to introduce some kind of rent controls. Say, limiting rates of rent rises to inflation etc.

...

Thoughts?

There is nothing to stop your landlord increasing your rent. And when he realises that, he will.

If he can get an extra £100 a month from you, he will.

That was true before the new tax rules and after, it will happen regardless of his increased or decreased costs.

Of course, there are some practical problems with this.

Firstly he doesn't know how much you (or someone he gets to replace you) can pay, everyone has a maximum.

And he must avoid voids. He is taking a risk by squeezing too hard.

New tenants might not be complicit meeklings. They might start demanding repairs or heating, or the removal of the closed circuit cameras from the toilet. He will pay a small price to keep nice compliant tenants. Better the devil you know.

The resulting process of price discovery takes a little while, is haphazard and random, and none of the players really understand why they are doing what they are doing.

The ultimate outcome of all this is that rents will rise in line with people's ability to pay and landlord's costs do not factor into this in any way.

Edited by BuyToLeech

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Somehow new money must find its way into the system, helps the world go around.....BTL was an easy and low risk way of doing that..... for the lenders an excellent form of security,lower loan to value, also a growing demand for housing in certain popular areas, areas where there have been growing numbers of new people, where the jobs are and high torisum.......good for banks, safer than lending to business for sure.....good for growth, good for GDP, good for taxes, stamp duty, capital gains, inheritance etc......good for those that got in early.....Problem now the number of losers in all this is growing faster than the winners.;)

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I think landlords who charge less than the max they can get for the area are extremely rare. If they use a letting agent, the slugs will always quote the max they can get for the property. One friend had their landlord move to a letting agent and they immediately put the rent up by £500 a month.

Renting a property is not a public service, it's an exercise in exploiting human capital. They always have their eye on whether they can get more money regardless of their costs. When something like these tax changes or regulation, HB cuts, deposit protection or anything that might cost them money happens they show their true colours and start threatening to evict people or charge them more. They don't care about tenants - if they could rent to a block of wood tied to a cash machine they'd be more than happy.

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Question for people here,

I'd love to see a HPC and an end to leveraged BTL, but if GO really wanted to put an end to leveraged BTL landlords, why does he not stop the sale of new BTL mortgages? Particularly IO types? I may be missing something here, but wouldn't that be the easiest solution to stopping the expansion of leveraged BTL?

At present it just looks to me like landlords will try to pass on tax hikes to tennents, and sorry but, speaking as a private tennent, I don't want to be homeless so will do whatever it takes to make the increased payments. The least GO could do is to introduce some kind of rent controls. Say, limiting rates of rent rises to inflation etc.

I live in London BTW, so understand things are a little different here. Just so depressing! I'd love to buy, I have a 6 figure deposit and a good income, but paying £450k for a shoe box above a kebab shop really doesn't appeal!!

Thoughts?

Speaking from personal experience, our Landlord has asked for a 5% increase to our rent, in SE. We've negotiated down to 3.5%. Seems harsh when inflation is basically zero, but he wants to cover the clause 24 increase and we need the roof over our heads.

Personally I don't buy the argument that there is a ceiling on what landlord's can charge. They'll keep pushing and people will find a way to pay, go without etc, until it gets extreme and causes real social unrest. However to get that far it has to get much worse.

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I'm in Bristol which saw a 20% increase in rents last year. Two things I noticed in the last 2 years are firstly a huge influx of immigrants. If I walked down my high street every other person I hear speaking isn't speaking English, compared to before where is was quite rare to hear a foreign language. Seems a lot of immigrants are now bypassing London completely and going direct to 2nd tier cities.

Around my area every house is being brought up by BTLs and people crammed in. The going rate of £400-£500 a month (2 years ago you were talking £300) to share a room in a shared house probably doesn't seem so bad if there's two or more of you sharing. My own tiny 1 bed flat before I moved in had 3 Poles crammed in. It's not much bigger than a studio.

Secondly, the amount of people fleeing London coming here is currently off the scale. For a 1 bed slave box flat you're now talking £750-£800 p/m whereas they used to be £400-£500 2 years ago. For someone coming from London £800p/m probably seems like bargain and is happy to pay it.

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