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Better Offload That Btl Property By Spring

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Hi,

Well, we knew it was coming in last year, I was interested to see some of today's and tomorrow's papers running the large page adverts from the Deputy Prime Minister's Office regarding the looming property licence act coming in this April. Infact, if you go over to the ODPM and take a look, you need to declare how long you have been renting property as a landlord and that information is shared with the inland revenue. Nice one Mr John Prescott, I always thought he was a sterling chap.

http://www.telegraph.co.uk/property/main.j...04/ixpmain.html

It's spring again, it's spring again, tulips from Amsterdam, oompah, oompah, ommpah.

The 2004 Housing Act will be implemented for the fi rst time on April 6 this year and will change much about how the private rental sector currently operates. Part-time landlords, who view their properties more as an investment or pension, rather than as a business, are likely to be most affected.

For those landlords who choose to do nothing, the next time they hear about the Act may come in the shape of an enforcement notice through the letterbox, with a demand to apply for a licence within 28 days - or cease operating.

Boomer

Edited by boom_and_bust

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Prescott went up in my estimations when he gobbed that chap :lol:

Out of the Nulab camp he is probobly one of most down to earth. Isn't it strange I liked Ken Clarke when he drove that XR3i to LOL.

Mr Joe.

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.... the looming property licence act coming in this April. .....

It's for HMO's.

So if a landlord has to kick, say, 8 people out of an HMO prop, won't these guys need to look for somewhere else to live?

Since there will be fewer HMO props available, where will they go? 1 & 2 bedroom flats etc?

What will that do to demand, and hence rents?

More unintended consequences courtesy of the feckwit twins of Downing Street....

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The sooner you lot are on the street looking for 1k a month 1 bed flats, the better.

Don't forget rent prices are included in the CPI figure. Be careful what you wish for TTRTR :lol:

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Another Labour party council job creation scheme

Although prices for these licences are not yet known, in Glasgow, when the Scottish parliament introduced similar legislation, the cost was £2,750.

Nothing to worry about for landlords, tax deductable and passed onto the tenants as a overhead cost.

Well done New Labour, you are now attacking the most vulnerable in society, those who are driven to the depths of renting as they cannot afford to buy.

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Nothing to worry about for landlords, tax deductable and passed onto the tenants as a overhead cost.

Look what's happening to retail, overheads are increasing but sale price inflation is flat. Who says it's going to be any different in the rental market. Either landlords take a hit on profits or it will lead to inflation, which will filter through to interest rates rises - again hitting landlords' pockets :ph34r:

Only people like TTRTR, who does all the maintenance himself and cleans his tenants' kitchens and bathrooms, will make any money.

Edited by karhu

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It's for HMO's.

So if a landlord has to kick, say, 8 people out of an HMO prop, won't these guys need to look for somewhere else to live?

Since there will be fewer HMO props available, where will they go? 1 & 2 bedroom flats etc?

What will that do to demand, and hence rents?

More unintended consequences courtesy of the feckwit twins of Downing Street....

Hi,

It's a fair point, who knows? I can't help thinking if that people are sharing HMO in the first place, buying or renting a sole place is very unlikely wrt cost. I can see a lot of younger people going back to parents or sharing a room with a mates house on a casual basis, particulalry in the big cities. The HMO wording is very ambigous anyway, it does not strictly mean 5 students or weekday city workers taking a bedrrom each. It can apply to virtually any situation where more than a coiple of people are under one roof and exchange of money is occuring. It could boost the spring rise, it could flood and depress it maybe, there is always a spring rise though so the next couple of months is interesting to see if amateur BTL really have any sway in the market.

Edited by boom_and_bust

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Don't forget rent prices are included in the CPI figure. Be careful what you wish for TTRTR :lol:

Seriously, why would I care? You're suggesting higher rents will lead to higher IR's. Who cares if the result is that higher rents pay for higher IR's?

The impact of that scenario is up for argument. I argue that higher rents will mean that people like your will accept higher repayments and buy (therefore increasing prices) and that higher rents will encourage other landlords, therefore increasing prices.

The only loser here is the tenant, who has a choice of higher rents, or higher repayments if they buy.

Hi,

It's a fair point, who knows? I can't help thinking if that people are sharing HMO in the first place, buying or renting a sole place is very unlikely wrt cost. I can see a lot of younger people going back to parents or sharing a room with a mates house on a casual basis, particulalry in the big cities. The HMO wording is very ambigous anyway, it does not strictly mean 5 students or weekday city workers taking a bedrrom each. It can apply to virtually any situation where more than a coiple of people are under one roof and exchange of money is occuring. It could boost the spring rise, it could flood and depress it maybe, there is always a spring rise though so the next couple of months is interesting to see if amateur BTL really have any sway in the market.

You hit on a very important point (and don't even realise it). These regs apply to ALL HMO's. It's only the larger ones that need licensing. So even a 2 bedroom flat is subject to the same rules, but won't initially be policed.

I for one am very suprised that lenders haven't realised the threat to their money that a council taking over the management of a badly run property poses. Council's are about as wasteful an institution we human beings can produce. Once they get their rip off contractors round to sort out these minor problems, very little money will be left for the lenders.

There is a genuine risk of things going pear shaped for tenants, landlords and banks.

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The sooner you lot are on the street looking for 1k a month 1 bed flats, the better.

Are you expecting wage inflation?

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There is a genuine risk of things going pear shaped for tenants, landlords and banks.

And if things go pear shaped for tenants, landlords and banks is that not likely to involve falling house prices (other things being equal)?

More repossessions, more landlords selling up? Can only lead to one thing, ceteris paribus of course.

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And if things go pear shaped for tenants, landlords and banks is that not likely to involve falling house prices (other things being equal)?

More repossessions, more landlords selling up? Can only lead to one thing, ceteris paribus of course.

No. I speak of over-regulation forcing tenants out of cheaper properties, over-regulation forcing landlords to do unnecesary work, over-regulation moving mortgage providers from first on the list of who has rights over a property to second behind the govt.

As I have stated before, the impact IMO will be higher rents and higher HP's.

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No. I speak of over-regulation forcing tenants out of cheaper properties, over-regulation forcing landlords to do unnecesary work, over-regulation moving mortgage providers from first on the list of who has rights over a property to second behind the govt.

As I have stated before, the impact IMO will be higher rents and higher HP's.

Surely forcing "over-regulation" on landlords can only lead to a percentage of landlords facing "over-regulation" selling up?

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Surely forcing "over-regulation" on landlords can only lead to a percentage of landlords facing "over-regulation" selling up?

You don't seem to understand the new regulations Fred. Here is a summary for you:

Landlord applies for license:

a. Landlord gets licence & is then compelled to make improvements that most tenants wouldn't want anyway. Higher costs, higher rents.

b. Landlord doesn't get license. These regs then stipulate that this landlord has no right to ask their tenants to leave. But an enforcement notice says they have to cease renting their place out. Catch 22, no right to evict tenants, yet the same govt is saying there is no right to collect rent. An impossible situation that leads to the council having to take over the property. The lender gets involved, does up the property, gets the license, kicks out the tenants & sells the property.

So yes, I guess there'll be some selling, but not in the smooth manner you hope for. In both cases, to maintain the same level of accomodation being available to tenants, higher rents are required. Higher rents support higher HP's. Simple.

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You don't seem to understand the new regulations Fred. Here is a summary for you:

Landlord applies for license:

a. Landlord gets licence & is then compelled to make improvements that most tenants wouldn't want anyway. Higher costs, higher rents.

b. Landlord doesn't get license. These regs then stipulate that this landlord has no right to ask their tenants to leave. But an enforcement notice says they have to cease renting their place out. Catch 22, no right to evict tenants, yet the same govt is saying there is no right to collect rent. An impossible situation that leads to the council having to take over the property. The lender gets involved, does up the property, gets the license, kicks out the tenants & sells the property.

So yes, I guess there'll be some selling, but not in the smooth manner you hope for. In both cases, to maintain the same level of accomodation being available to tenants, higher rents are required. Higher rents support higher HP's. Simple.

No far more simple than that. Increased regs, is increased cost, is increased selling. VERY SIMPLE. Unless you are arguing that landlords will ignore increased costs without selling? Course many will, but pretty much by definition it'll happen... a few will sell. May lead to falling prices and others selling for that knock on reason.

(I am a landlord by the way, just

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Seriously, why would I care? You're suggesting higher rents will lead to higher IR's. Who cares if the result is that higher rents pay for higher IR's?

The impact of that scenario is up for argument. I argue that higher rents will mean that people like your will accept higher repayments and buy (therefore increasing prices) and that higher rents will encourage other landlords, therefore increasing prices.

The only loser here is the tenant, who has a choice of higher rents, or higher repayments if they buy.

You hit on a very important point (and don't even realise it). These regs apply to ALL HMO's. It's only the larger ones that need licensing. So even a 2 bedroom flat is subject to the same rules, but won't initially be policed.

I for one am very suprised that lenders haven't realised the threat to their money that a council taking over the management of a badly run property poses. Council's are about as wasteful an institution we human beings can produce. Once they get their rip off contractors round to sort out these minor problems, very little money will be left for the lenders.

There is a genuine risk of things going pear shaped for tenants, landlords and banks.

TTRTR, higher IRs in response to inflationary pressures would hit the majority of mortgage holders who're on variable rates........eg IRs up from 5% to 7.5% means payments on an interest only mortgage go up by 50%!............rents would only rise more-or-less in line with incomes say 10%........so you'd be hit in the short term if you're highly geared...............

but once the high IRs subsided you'd be receiving higher rents but be back on the old lower IRs.

High inflation greatly shortens the length of the boom/bust cycle in property.....

BTW, TTRTR I think you're mad sticking with variable rate (BOE+ 0.74%, isn't it?) mortgages on your 8 houses in Wandsworth.....

The financial markets have written off inflation completely ...not just for the next 5 years but for the next 25 years!...........because they're offering 5.5% APR on 30 year fixed rates..........and my gut feeling is they've jumped the gun ....the rates they're offering on fixes are determined by bond yields which reflect their expectations of future IRs...........

I feel that inflation will eventually re-establish itself and you should bite their hands off right now if they're offering 5.5% APR fixed for 15, 20 or 25 years..............

Edited by Michael

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Additional regulation by this Government has led to cost increases.......period.

NHS

Jobcentres

Tube

Buses

Trains

Sellers Pack

Its a grand job creation scheme, councils rub their hands with glee whenever they get a new directive backed up by legislation. Adverts in the paper will abound. "Wanted HMO police 80K per annum, relatives only need apply".

Edited by laurejon

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hey, Laurejon, why don't the government employ all of us on £80k a year?....no need for any of the hassle of the private sector

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You don't seem to understand the new regulations Fred. Here is a summary for you:

Landlord applies for license:

a. Landlord gets licence & is then compelled to make improvements that most tenants wouldn't want anyway. Higher costs, higher rents.

b. Landlord doesn't get license. These regs then stipulate that this landlord has no right to ask their tenants to leave. But an enforcement notice says they have to cease renting their place out. Catch 22, no right to evict tenants, yet the same govt is saying there is no right to collect rent. An impossible situation that leads to the council having to take over the property. The lender gets involved, does up the property, gets the license, kicks out the tenants & sells the property.

So yes, I guess there'll be some selling, but not in the smooth manner you hope for. In both cases, to maintain the same level of accomodation being available to tenants, higher rents are required. Higher rents support higher HP's. Simple.

I always thought the property rental market was a market - with rents set by demand/supply and ability to afford etc. You seem to think that the landlord, having been forced to do some work, will simply buck the market and charge more. I suppose it depends where you are. House up the road from me has had a To Let sign outside for the last 6 months. Seems to have been let in the last few weeks. House we looked at last September was still available after Christmas. New build flats near me are standing empty - never been sold according to LR - developers long gone - no curtains or lights in window.

Take the bloke whose son goes to uni. Thinks he'll be smart and buy a house that his son can live in and let the other rooms to other students. 3 years later sell up and take profit. Once this new legislation kicks in and matey realises he has to go to the other end of the country and get the house fit for human habitation etc - he'll sell up. Amateur landlords won't want the hassle. Lot of property coming on the market at once - sounds like a price fall to me.

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I always thought the property rental market was a market - with rents set by demand/supply and ability to afford etc. You seem to think that the landlord, having been forced to do some work, will simply buck the market and charge more. I suppose it depends where you are. House up the road from me has had a To Let sign outside for the last 6 months. Seems to have been let in the last few weeks. House we looked at last September was still available after Christmas. New build flats near me are standing empty - never been sold according to LR - developers long gone - no curtains or lights in window.

Marina, you've hit the nail on the head there. What our feckless dim-wit TTRTR forgets (and God knows he has been told many times by a number of people) is that landlords cannot simply raise rents at will to cover their overheads.

If overheads increase, the landlord cannot simply pass them on to the tenants. They do not have an unlimited capacity to pay rent. In desperate scenarios they will move back in with parents, share with more people to reduce their outgoings etc. Meanwhile the landlord is losing money. Some will be forced to sell. The property will be less attractive to other potential landlords, who will price the increased overheads into their business model, and subsequently offer less to buy the property so that they achieve a yield which covers overheads at a rent which the market will bear.

The result is that landlords who paid too much for properties at the peak are forced out of business by new landlords who can make the proposition viable by buying the property at a lower price, hence achieving a yield which is profitable.

Why does TTRTR not grasp this concept? Is he a victim of the era of cheap money, believing that a ready supply of cash is available to meet every eventuality and solve every problem?

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I had a few properties classified as HMO the legislation is not severe to say the least.

I dont expect that it will cost too much to put right, if a property is classified as HMO.

However the real cost will be to local taxpayers in their council tax as the council seize the opportunity to expand their operations with new staff.

Property is a business, therefore be under no illusion costs are passed on.

I doubt that the selling up of BTL on a wholesale basis will take place, and certainly would have no impact on the market.

If they did sell up, they would be bought up by those in the know, immediately.

Student Accomodation is very lucritive, thanks to New Labour.

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Property is a business, therefore be under no illusion costs are passed on.

I doubt that the selling up of BTL on a wholesale basis will take place, and certainly would have no impact on the market.

Basic economics says that if the cost to the consumer increases, the demand will decrease. If demand decreases, some landlords will be without tenants and forced to sell. Those who remain can charge higher rents to the remaining renters who are prepared to pay it. New landlords can buy at a lower price, and rent property at a price that renters are happy to pay. I.e. they will meet the unmet demand by charging a market rent.

Its all in your basic supply/demand graph:

image001.gif

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Basic economics says that if the cost to the consumer increases, the demand will decrease. If demand decreases, some landlords will be without tenants and forced to sell. Those who remain can charge higher rents to the remaining renters who are prepared to pay it. New landlords can buy at a lower price, and rent property at a price that renters are happy to pay. I.e. they will meet the unmet demand by charging a market rent.

Very true if applied to a consumer product.

However housing is a basic neccessity and you have no choice. In this model you have to pay what the asking price is or go without, and given that you cannot go without a roof over your head you are therefore subject to pay the price.

Now apply that to say beer, then for sure an increase in price will reduce demand to a degree as people vote with their feet and either do without or go elsewhere.

Utilities are another example, Gas goes up in price what do you do turn off the heating ?.

Water goes up in price, do you go without?.

Petrol prices increase, is there any drop in usage, No its a product that people cannot do without.

Rents in my opinion will rise significantly as people are priced out of the market and search for rental properties. Given the lack of suitable properties in this particular market then properties up for rent in good locations and of good decorative order will see rises in rent as people compete to secure the deal.

This topic is very relevent to me today as my Daughter has just left Uni (10k of debt each year for 5hrs tuition per week was deemed not worth it). She is searching for a property in a city on the south coast, 2 bed to share with a couple. 750pcm is her budget and everything she finds has offers going in above the rental asking price. Now I myself would smell a fish and think the agents are blagging it, but no. She meets the same people looking at the houses as they come onto the market each time she views and they all say the same. There is very little good quality accomodation in the rental market, demand is high and the rents are going up!!!.

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However housing is a basic neccessity and you have no choice. In this model you have to pay what the asking price is or go without, and given that you cannot go without a roof over your head you are therefore subject to pay the price.

You make it sounds like there is only one product, "property" which is clearly rubbish. While people have to sleep somewhere they can sleep in a tent in a field if they so choose. If the price for what they are currently paying for rises they can choose to downsize, move in with others, move to parents, move to cheaper area, leave the country or perhaps even move into the little BTL flat they bought as an investment.

So the graph is correct. Housing is not price inelastic, the requirement for a roof over one's head is - but when you aggregate all the different sub-markets that make up the housing market it seems clear it acts just like any consumer good.

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  • 301 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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