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SarahBell

Who will check what rents LL get?

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Discussing the changes to PRA with him indoors.   Sent him this link from the other thread
http://www.propertytribes.com/understanding-the-impact-of-pra-on-landlords-t-127627442.html

What checks will banks do to ensure LL are telling them the truth about what rent they can get on a property? 
Will they look at places like rightmove? LHA? (as being a centile of local rents?) 



 

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23 minutes ago, SarahBell said:

Discussing the changes to PRA with him indoors.   Sent him this link from the other thread
http://www.propertytribes.com/understanding-the-impact-of-pra-on-landlords-t-127627442.html

What checks will banks do to ensure LL are telling them the truth about what rent they can get on a property? 
Will they look at places like rightmove? LHA? (as being a centile of local rents?) 

The only time to cheat is when you first purchase the property and even then it will be 2 surveyors confirming plausible market rent.

 For a re mortgage the question will be give us the paperwork.

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1 hour ago, SarahBell said:

Discussing the changes to PRA with him indoors.   Sent him this link from the other thread
http://www.propertytribes.com/understanding-the-impact-of-pra-on-landlords-t-127627442.html

What checks will banks do to ensure LL are telling them the truth about what rent they can get on a property? 
Will they look at places like rightmove? LHA? (as being a centile of local rents?) 

There's an explicit statement in the PRA's Supervisory Statement.

Quote

 When assessing their minimum ICR threshold, firms should take into account rental demand and typical rent levels within the property’s locale. Expected rental income should be verified by a suitably qualified valuer who is independent of the borrower, automated valuation models or evidence of an existing rental agreement, subject to appropriate policies, controls and risk management.

Checking that the lenders' controls on this are adequate will be easy grunt work for junior PRA employees supervising a given lender, I would've thought.

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1 hour ago, eek said:

The only time to cheat is when you first purchase the property and even then it will be 2 surveyors confirming plausible market rent.

 For a re mortgage the question will be give us the paperwork.

This i would think ,it`s easy to say you do the proving or there`s no deal 

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How dare you!!!

LL rent verifier is one of the noblest professions going.

Its up there with Unicorn manure collector, teetotal scotsman and Middlesbrough virgin.

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3 minutes ago, Bland Unsight said:

You'd want some kind of national statistics service to set up some kind of index of private housing rental prices so that you could get a quick reasonableness check on claims being made.

Index of private housing rental prices (IPHRP) in Great Britain

 

Is that by the same people who bought you 'Low inflation figures' by including LED flat screens into the mix?

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6 minutes ago, Bland Unsight said:

You'd want some kind of national statistics service to set up some kind of index of private housing rental prices so that you could get a quick reasonableness check on claims being made.

Index of private housing rental prices (IPHRP) in Great Britain

 

So if lots of landlords put the rents up then the rents go up...? 

or will rents stay the same but rooms get smaller? :-D

 

Edited by SarahBell

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1 hour ago, SarahBell said:

Is that by the same people who bought you 'Low inflation figures' by including LED flat screens into the mix?

 

1 hour ago, SarahBell said:

So if lots of landlords put the rents up then the rents go up...? 

or will rents stay the same but rooms get smaller? :-D

No, if a overwhelming majority of landlords could coordinate an increase in rents then they might be able to put the rents up a little.

"Lots of landlords" is a bit ambiguous, but I'd argue that unless "lots" is an overwhelming majority then what you'll get if "lots" of landlords put the rents up is "lots" of additional churn as renters move in response to rent hikes, "lots" of voids and "lots" of arrears where renters accept rent hikes they can't actually cover.

Rents aren't paid out in rainbows and moonbeams. Households can't magically pay extra rent.

As to televisions. Lots of households used to rent televisions and it was a non-trivial expense. Are you seriously suggesting that TVs didn't get cheaper or that the cost of a TV should be excluded from the assessment of CPI? The government doesn't need to manipulate inflation statistics. They just choose which one to employ, hence replacing RPI with RPIX and then replacing that with CPI. 

I think this scepticism regarding government statistics can go too far, and it's a two-edge sword. We'll soon be back to news reports of old people lined up on trolleys in hospital corridors at which point a politics predicated on fantasy not facts will be very convenient for anyone who wants to ensure that they don't have to share anything with those who have nothing.

Edited by Bland Unsight

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6 minutes ago, Bland Unsight said:

As to televisions. Lots of households used to rent televisions and it was a non-trivial expense. Are you seriously suggesting that TVs didn't get cheaper or that the cost of a TV should be excluded from the assessment of CPI? The government doesn't need to manipulate inflation statistics. They just choose which one to employ, hence replacing RPI with RPIX and then replacing that with CPI. 


I believe the basket for inflation measure should include things that people buy on a regular basis. I don't believe anyone buys a tv often enough for it to be relevant.

Bread, milk, petrol would all be acceptable things to put in the basket. Although maybe the milk and petrol might get mixed up and leak.

Excuse my cynicism about inflation and government statistics.

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6 minutes ago, SarahBell said:


I believe the basket for inflation measure should include things that people buy on a regular basis. I don't believe anyone buys a tv often enough for it to be relevant.

Bread, milk, petrol would all be acceptable things to put in the basket. Although maybe the milk and petrol might get mixed up and leak.

Excuse my cynicism about inflation and government statistics.

Agree.

I buy a telly every ~10 years.

I've spent ~£500 twice in 20 years.

In he mid 96, my £500 got me a 24inch Sony Triniton. Fcking huge it was.

In 2006, my £500 (about 400 in 96 money) got me a flat 32inch Sony LCD which runs Unix and has an enet + wifi connection.

Sadly, a £500/month UK rental has not improved that much.

 

 

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26 minutes ago, SarahBell said:

I believe the basket for inflation measure should include things that people buy on a regular basis. I don't believe anyone buys a tv often enough for it to be relevant.

Not sure this is a very promising or engaging line of discussion, but isn't this about aggregation? An individual household might buy a new television once every five years and a new car once every eight years (pulling bogus numbers straight out of the air) but twenty million households are buying hundreds of thousands of TVs and cars every year, hence it is possible to speak meaningfully of how these things are inflating and as the overwhelming majority of households are consuming both these goods it's also reasonable to argue that households are exposed to the movement of their prices.

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49 minutes ago, Bland Unsight said:

Not sure this is a very promising or engaging line of discussion, but isn't this about aggregation? An individual household might buy a new television once every five years and a new car once every eight years (pulling bogus numbers straight out of the air) but twenty million households are buying hundreds of thousands of TVs and cars every year, hence it is possible to speak meaningfully of how these things are inflating and as the overwhelming majority of households are consuming both these goods it's also reasonable to argue that households are exposed to the movement of their prices.

I understood it to be a weighted average - therefore the change in price of a TV will have a much lesser impact in the index than that if something you buy daily. On that basis is seems reasonable. The only real interest in the index is to look back over the years and use it as a social barometer for what people were buying in the 70s and 80s

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16 minutes ago, CunningPlan said:

I understood it to be a weighted average - therefore the change in price of a TV will have a much lesser impact in the index than that if something you buy daily. On that basis is seems reasonable. The only real interest in the index is to look back over the years and use it as a social barometer for what people were buying in the 70s and 80s

Good point too. A TV sits in the Recreation and Culture basking which is about 15% of the index. I think that it is a point of discussion that different people face different rates of inflation. For example, owner-occupiers housing costs face inflation through the cost of maintaining property, but renters face inflation through the inflation of rents (and obviously people who want to buy houses face inflation through house price inflation - which is something we ought to talk about more than we do on the forum).

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