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Si1

Where are the general stories of landlords in distress? I don't see any?

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1.  S24 hasn't fully kicked in;

2.  The economy is in full employment, still plenty of demand;

3.  The collapse of the pound has massively lowered the value of UK property for foreign investors, but hasn't knocked UK investors;

4.  Disposable income of renters has been squeezed, but still full employment therefore demand.  Certainly not near recession levels;

5.  Small localised house price falls represent a very small dent compared to years of massive rises (in the South at least);

5.  Interest rates still un-naturally low.

Landlords my be down slightly, but they certainly aren't out.  Government should note that there's a lot more they could do to squeeze them further.

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The U.K. Isn't in full employment, if you believe that you'll believe anything...

I don't think you'll see many really distressed landlords yet.  A landlord I know very well in the North East (4 or 5 houses) seems on the surface to have it all stitched up but a bit of lateral thinking shows what appears to be the case probably isn't...

He definitely earns in the top 5% but doesn't live the lifestyle of a well off individual.  Old cars, no holidays, no going out - basically no treats at all.  So the next question is to ask where is the money going?  Im pretty certain they are throwing every spare penny at the mortgages they have.  The same individuals advice has always being get the biggest IO mortgage you can and let inflation work its magic...

In the North East prices have effectively gone backwards over the last 10 years so that strategy means they have to use their wages to do what inflation isn't and hasn't been doing.

They are in a race now to get the mortgages paid before they lose their jobs or before legislation, which I don't think they know about, guts them...  They work in a currently very volatile sector and if they lost they're job they'd be looking at a 50% pay cut.

How they sleep at night is a mystery.  However if they come out of this with their trousers on they'll be the biggest geniuses ever, rather than someone who should have been pulled under the steamroller back in 2009.

 

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I know a landlord, a colleague with a student let in edinburgh. Ive asked him.a couple of times about section 24 and he assures me i dont know what im talking about and his accountant advises him the new rules are only for landlords with more than 5 properties. He's quite an authoratitive individual and the few exchanges weve had have left the rest of my team thinking im a muppet as they assume hes right! 

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16 minutes ago, Bunfight said:

The U.K. Isn't in full employment, if you believe that you'll believe anything...

I don't think you'll see many really distressed landlords yet.  A landlord I know very well in the North East (4 or 5 houses) seems on the surface to have it all stitched up but a bit of lateral thinking shows what appears to be the case probably isn't...

He definitely earns in the top 5% but doesn't live the lifestyle of a well off individual.  Old cars, no holidays, no going out - basically no treats at all.  So the next question is to ask where is the money going?  Im pretty certain they are throwing every spare penny at the mortgages they have.  The same individuals advice has always being get the biggest IO mortgage you can and let inflation work its magic...

In the North East prices have effectively gone backwards over the last 10 years so that strategy means they have to use their wages to do what inflation isn't and hasn't been doing.

They are in a race now to get the mortgages paid before they lose their jobs or before legislation, which I don't think they know about, guts them...  They work in a currently very volatile sector and if they lost they're job they'd be looking at a 50% pay cut.

How they sleep at night is a mystery.  However if they come out of this with their trousers on they'll be the biggest geniuses ever, rather than someone who should have been pulled under the steamroller back in 2009.

 

That's the thing. If he gets out with his trousers still on he'll quit possibly own 6 houses out of it.

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4 minutes ago, Si1 said:

That's the thing. If he gets out with his trousers still on he'll quit possibly own 6 houses out of it.

That's the most galling thing for me. They've taken hold of multiple family homes and being allowed to by banks and government.  They think they're very savvy individuals but they're avaricious, egotistical bastards.

They've been allowed to become 'quasi slave masters' laying claim to people's wages. They would hoard the planets oxygen supply if they could.

I have an underlying dread that they may get away with it.

However, and this is the big thing for me, I think in years to come this whole landlord thing will be viewed very differently and they'll have to justify it to the next generation.

It'll be the modern equivalent of admitting you were in the NF in the 70's.  Everyone will view you with suspicion...

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I tend to figure anyone with any connections or influence got out of the game a long time ago when yields went below 10%. All that's left are the greedy and the stupid who are being thrown onto the pyre by TPTB.

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4 minutes ago, Calcutta said:

I tend to figure anyone with any connections or influence got out of the game a long time ago when yields went below 10%. All that's left are the greedy and the stupid who are being thrown onto the pyre by TPTB.

Except they don't seem to be suffering too much.

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4 minutes ago, Bunfight said:

That's the most galling thing for me. They've taken hold of multiple family homes and being allowed to by banks and government.  They think they're very savvy individuals but they're avaricious, egotistical bastards.

They've been allowed to become 'quasi slave masters' laying claim to people's wages. They would hoard the planets oxygen supply if they could.

I have an underlying dread that they may get away with it.

However, and this is the big thing for me, I think in years to come this whole landlord thing will be viewed very differently and they'll have to justify it to the next generation.

It'll be the modern equivalent of admitting you were in the NF in the 70's.  Everyone will view you with suspicion...

I think a Corbyn govt is being baked in more and more each passing day.

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3 minutes ago, Si1 said:

I think a Corbyn govt is being baked in more and more each passing day.

Absolutely.  It's the Trump affect.  Most don't think it will happen and then it does.

Theres lots of angry and disillusioned people about..

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9 minutes ago, Si1 said:

I think a Corbyn govt is being baked in more and more each passing day.

Labour went into the last election desparate to save their jobs. So they sucked it up and hid the infighting over Europe. Of an elections called before Brexit is sorted then Labour will be ripped to shreds. 

Corbyn's overall agenda has mass appeal, but his union pleasing hobby horses like rail and the post office need shelved.

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The tax bills won't arrive for 6 months, and the final date to pay them is January 2019.

so most of the people who don't realise they are effected won't of had the brown envalope wake up call yet. 

I think we will see a lot of BTL selling up on mass towards the end of 2018, and the mass bankruptcys early 2019.

way too early to see distress right now. leveraged BTL is not a clever mans game in the last few years, these are not soshisticated investors. reality will kick in when the huge tax demands come.

the wall of forced BTL sellers will be selling into a very thin market, volumes for sale could easily jump 50%, prices should take a big hit, as those forced to sell have to more or less get a buyer straight away for the sale to go through in time to pay the bills.

and there is CGT to think about. 

even those who are not forced to sell through S24, many are going to find it impossible to remortgage their portfolio, easily wiping out and razor thin yield they had as they revert back to non-teaser rates.

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1 hour ago, jiltedjen said:

The tax bills won't arrive for 6 months, and the final date to pay them is January 2019.

Won't there be a lot of people who don't realise until they do their online self assessment on the 31st of January 2019? I can see there being a lot of desperate sellers in February 2019.

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2 hours ago, Si1 said:

I think a Corbyn govt is being baked in more and more each passing day.

Not in gilt prices.

Really Corbyn and his bunch of loons are pretty close to getting in. Uk gilts should be screaming up.

But the BoE which knows everything have collapsed the gilt market as they know and can predict everything. No price signal needed.

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3 minutes ago, This time said:

Won't there be a lot of people who don't realise until they do their online self assessment on the 31st of January 2019? I can see there being a lot of desperate sellers in February 2019.

Pretty much.

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There is some squealing happening:

https://www.theguardian.com/society/2017/sep/16/universal-credit-rent-arrears-soar

But being the Guardian the article is tenant centric and asks why these poor tenants should have to be put in the position of having to suffer being in arrears.

This not the question I'd ask.

I'd ask why should taxpayers money be used to keep rents high, instead of letting the market find a level these tenants can afford.

If you want to protect tenants, make rent arrears over 12 months old unrecoverable or something, don't keep prices high with landlord subsidies.

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1 hour ago, jiltedjen said:

The tax bills won't arrive for 6 months, and the final date to pay them is January 2019.

so most of the people who don't realise they are effected won't of had the brown envalope wake up call yet. 

I think we will see a lot of BTL selling up on mass towards the end of 2018, and the mass bankruptcys early 2019.

way too early to see distress right now. leveraged BTL is not a clever mans game in the last few years, these are not soshisticated investors. reality will kick in when the huge tax demands come.

the wall of forced BTL sellers will be selling into a very thin market, volumes for sale could easily jump 50%, prices should take a big hit, as those forced to sell have to more or less get a buyer straight away for the sale to go through in time to pay the bills.

and there is CGT to think about. 

even those who are not forced to sell through S24, many are going to find it impossible to remortgage their portfolio, easily wiping out and razor thin yield they had as they revert back to non-teaser rates.

Wise words from jiltedjen there, you're by far the most observant member regarding the BTL sell off to come, many thanks for all your valuable contributions thus far. 

We have the double whammy of shock tax increase realisation and all the 2 year fixes taken out in panic pre March 2016 to beat stamp duty hikes expiring, so patience is key until April 2018. Just a couple of articles from past 2 days...

Choke buy-to-let to help deliver home ownership for young voters

The Tory dream of a property-owning democracy must be restored

https://www.ft.com/content/296227f0-9966-11e7-8c5c-c8d8fa6961bb

(YES, you're not seeing things, that's the FT saying this!)

Buy-to-let lending squeeze: 'some banks won't lend at all'

Buy-to-let investors with four or more properties will find it harder to raise finance from the end of this month when tough lending regulations are introduced by the Prudential Regulation Authority, part of the Bank of England.

Landlords who seek finance after October 1 will have their entire property portfolio assessed for viability, as opposed to just the individual property concerned, as is currently the case.

http://www.telegraph.co.uk/investing/buy-to-let/buy-to-let-lending-squeeze-banks-wont-lend/

And let's not get too blinkered, we're heading for a global recession early 2018 too, if Durhamborn is right then a full on (once in a generation) deflationary shock, not inconceivable by any means, quite possible given recent economic indicators.

Edited by Barnsey

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2 hours ago, Si1 said:

That's the thing. If he gets out with his trousers still on he'll quit possibly own 6 houses out of it.

The percentage of portfolio buy-to-let landlords on repayments terms must be absolutely trivial.

In order to grow a portfolio you need leverage. You need the existing investment to make gains and then you need to extract those gains by refinancing at high LTV and using those gains as deposits.

Being on repayment terms instead of interest-only terms restricts your leverage because the same rent will only service a smaller mortgage.

Thoughts about people who are going to end up with six houses owned outright are akin to thoughts about hitting a unicorn when driving down the M6 in heavy fog; entertaining maybe, but irrelevant to the general run of things.

Let's assume that these people in Bunfight's post are real. Are they scrimping and saving to pay down the mortgages - or are they scrimping and saving to cover the interest on the mortgages? If there are no capital gains, BTL is money pit.

Edited by Bland Unsight

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14 hours ago, Si1 said:

As per title.

I reckon there are about 400,000 buy-to-let landlords with four or more properties. We have no idea how many of them are aware of the section 24 or PRA SS13/16 but various lending industry talking heads (e.g. David Whittaker at Mortgages for Business) are suggesting that ignorance is widespread.

We're aware, via the work of the good people on forum at Property118 (who comprise a key element of the TenantTax campaign) that those portfolio buy-to-let landlords who do understand what is coming have raised tens of thousands of pounds and hired a PR firm.

Those who don't know what's coming aren't bothered. Those who do are losing their shit.

Edited by Bland Unsight

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2 hours ago, Si1 said:

That's the thing. If he gets out with his trousers still on he'll quit possibly own 6 houses out of it.

Even if so....owning 6 houses (with expenses of Maintenance, Council Tax & Insurance) they can't sell for more than they bought for. Not making much of a profit in what's left of their lifetime. How long until (falling) rents finally break even on their purchase price of mortgage + interest for a house that is probably going to go down in value? + changing demographics, politics and progressively needing to compete with the rest of the world economy (cheaper housing is an advantage). + what Bland Unsight is saying.

Sound like a big feckless waste of time.

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36 minutes ago, Mikhail Liebenstein said:

There is some squealing happening:

This from the RLA

Quote

Research by the Residential Landlords Association (RLA) last year found that 25 per cent of landlords with tenants in receipt of Universal Credit said that they had tenants in rent arrears. This supports the recent admission by Lord Freud, the former Welfare Reform Minister, to the Work and Pensions Select Committee when he said that “there is an arrears issue.”

Source: Alan Ward: Private landlords need a better deal from Universal Credit, Conservative Home, March 2017

Part of what is going on is that landlords complaining about not making money is more dog bites man than man bites dog. Also the general promotion of BTL 'good news', e.g. prices inflating madly and leveraged landlords minting it, are promoted by financial interests with deep pockets, e.g. lenders pay for some muppet at some industry body or consultancy to write a 'report', some PR person somewhere is paid to send the report to journos and follow up with an offer of an interview with a chief exec or the report's author etc.

Some muppet having to go without a holiday because their three BTLs can't wash their face is not newsworthy (also the muppet is far more likely to put a brave face on things with their family and friends than publicise the fact that they are not, after all, a pwoperdee genius and that buy-to-let is all magic beans without the magic).

Quote

Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.

Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay, 1841

 

Edited by Bland Unsight

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Smart money has already got out (including my landlord, former solicitor), by next April it'll be far too late, next summer into autumn will be very interesting indeed.

It's worth stating the obvious, the BTL hoarded properties are exactly what excluded first time buyers are after, so it's a major win for the Tories to push through these changes and not change course, falling prices and all.

Edited by Barnsey

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6 minutes ago, Barnsey said:

Smart money has already got out (including my landlord, former solicitor), by next April it'll be far too late, next summer into autumn will be very interesting indeed.

It's worth stating the obvious, the BTL hoarded properties are exactly what excluded first time buyers are after, so it's a major win for the Tories to push through these changes and not change course, falling prices and all.

Its been too late since MMR was brought in.

 

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Anecdotally, I know of a landlord with a 4 bed house in a big city.

Presumably as the rent was high , the tenants got a 5th tenant in, told the landlord, who turned a blind eye.

Turns out that a 5 bed needs an HMo licence.

I wonder how many 4 bed rented houses are in this position &  if councils target them for landlords avoiding Hmo registration & expensive upgrades  to comply ? 

Edited by Saving For a Space Ship

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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