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Time to raise the rents.

This Is What You Should Be Debating

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http://news.ft.com/cms/s/7fa786d0-c0a3-11d...00779e2340.html

Your rents are going up to pay for this. I hope you enjoy your basin, it'll cost you. :D

"Landlords of properties that house five or more tenants and are at least three storeys high will from April 6 have to apply for a mandatory licence from their local authority and meet a raft of new criteria. Some have estimated the costs of complying with the regulations at up to £20,000 per property."

BTL just ain't what it used to be :(

The government entices people to BTL and jack up house prices and then, as if by magic (another Gordo miracle?) they pull the rug and tax like wild banshees. Just wait--this is just the beginning as OldLabour shows through with its anti-Landlord policies.

TimeToSellBTLs :D

Go to cash.

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http://news.ft.com/cms/s/7fa786d0-c0a3-11d...00779e2340.html

Your rents are going up to pay for this. I hope you enjoy your basin, it'll cost you. :D

I have never seen TTRTR post a reasoned argument claiming that rents will actually rise to cover increased landlord costs. As many people have asked him/her (TTRTR, what is your gender, your avatar is a bit ambiguous), what makes you think that rents are set by landlords and their expenses, not the market? If landlords could raise rents at will, then why haven't they raised them just to increase profit. Since HPI means that landlords' costs have rise dramatically over the last few years, in terms of the purchase and mortgage costs of property, why haven't these increases been passed on to tenants?

Billy Shears

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Don't you mean - Time to get rid of the tenants & take in less of them?

This'll squeeze people in cheaper accomodation out into the real world into more expensive accomodation in 1, 2 & 3 bed flats. Increasing the demand for more expensive rentals will have an upward impact on prices as your new-build type new BTL's start to fill their voids.

I have never seen TTRTR post a reasoned argument claiming that rents will actually rise to cover increased landlord costs. As many people have asked him/her (TTRTR, what is your gender, your avatar is a bit ambiguous), what makes you think that rents are set by landlords and their expenses, not the market? If landlords could raise rents at will, then why haven't they raised them just to increase profit. Since HPI means that landlords' costs have rise dramatically over the last few years, in terms of the purchase and mortgage costs of property, why haven't these increases been passed on to tenants?

Billy Shears

Don't you mean: "I am willing to ignore all reasoned arguments that go against my beliefs"?

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Rents are based on what people can / are willing to pay - if rents went up to cover costs then they would be double what they are now - I have posted several examples recently of property that is for sale for £200k+ but which is for rent at £700/month - if it were that easy to get higher rents then the owners of these properties would just bump the rent up to cover the real cost of ownership - except they can't because there are plenty of lower priced properties competing with them

time to realise that BTL at current prices is not a good idea - down come property prices

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Don't you mean: "I am willing to ignore all reasoned arguments that go against my beliefs"?

Can you disambiguate the use of the pronoun 'you' in this sentence?

Billy Shears

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Don't you mean - Time to get rid of the tenants & take in less of them?

This'll squeeze people in cheaper accomodation out into the real world into more expensive accomodation in 1, 2 & 3 bed flats. Increasing the demand for more expensive rentals will have an upward impact on prices as your new-build type new BTL's start to fill their voids.

Don't you mean: "I am willing to ignore all reasoned arguments that go against my beliefs"?

Do you actually know the percentage of rental properies that are HMOs?

I may be wrong but I'm gussing that this isn't going to effect the total rental market significantly.

I do agree with the basic argument that higher costs for landlords will eventually push up rents, but they will also make BTL less attractive, push down speculation and therefore property prices. So - swings and roundabouts really.

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Don't you mean - Time to get rid of the tenants & take in less of them?

what so the house vanishes and nobody lives in it?

This'll squeeze people in cheaper accomodation out into the real world into more expensive accomodation in 1, 2 & 3 bed flats.

hmm, moving into larger households if rents are increased to save costs, isn't that demand destruction? I thought you could just increase your rents to cover additional costs.

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I do agree with the basic argument that higher costs for landlords will eventually push up rents, but they will also make BTL less attractive, push down speculation and therefore property prices. So - swings and roundabouts really.

Then why haven't higher purchase and mortgage prices pushed up rents?

I personally believe that some landlords will push through small rent increases due to the hassle of moving house. But that these increases will not be permanent as eventually the landlord will need to find new tenants, and will then have to compete for tenants based on rental prices. A few months of void along the way will help.

Billy Shears

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Rents are based on what people can / are willing to pay - if rents went up to cover costs then they would be double what they are now - I have posted several examples recently of property that is for sale for £200k+ but which is for rent at £700/month - if it were that easy to get higher rents then the owners of these properties would just bump the rent up to cover the real cost of ownership - except they can't because there are plenty of lower priced properties competing with them

time to realise that BTL at current prices is not a good idea - down come property prices

If I have learnt one thing in my 9/10 years as a landlord, it is that people don't like to spend large amounts of money on rent. I get to see the wages of every one of my tenants, you'd be very suprised how much most of them could afford, compared to what they pay me. But they obviously are smarter than that and would like to save a larger portion of their wages for future consumption, rather than for immediate gratification now.

It is my choice to supply this end of the market with what I believe is a very good standard for the price (no voids, so I must be right). But it seems the govt feels that this end of the market should reach a higher standard than that.

Pie & chips in paper wrapping £2.70 take-away. Gourmet burger & home cooked fries £11 in a sit down environment. Simple.

You can't fight it, you can only vote against it, but it looks like most of you voted for it.

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I do agree with the basic argument that higher costs for landlords will eventually push up rents, but they will also make BTL less attractive, push down speculation and therefore property prices. So - swings and roundabouts really.

Rents will not generally increase as there will be no wage push inflation to support them in a globalised world. Higher costs for landlords will eventually result in sales as capital gains fail to offset cashflow loss and their ability to sustain them, the resulting lower prices from net selling then mean lower costs for landlords to offset additional regulation. Given that rental yields are already less than the cost of capital, we should be beyond this point already, however, as we have seen in ireland calling the peak of a speculative bubble is not an exact science and they almost always run further than most predict (see greenspans call of 'irrational exuberance' well before dot com popped). Chasing a bubble in an asset class with long selling times and high transaction costs is just asking for pain.

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I agree with Billy Shears.

If the landlords could have jacked up prices they would have done it already for profit. They aren't charities and many seem to want to screw every penny out of their 'investments', some at the expense of providing a decent service.

I don't think this will have a huge impact on the market as the HMOs are probably one of the only profitable and viable BTL investments at current prices. IMHO all that will happen is that HMOs will become about as good an investment as a 2 bed newbuild city apartment.... thats why TTRTR is all in a flutter as his HMOs profitability (which I believe they currently would be if mainly HMOs) will dive.

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If I have learnt one thing in my 9/10 years as a landlord, it is that people don't like to spend large amounts of money on rent. I get to see the wages of every one of my tenants, you'd be very suprised how much most of them could afford, compared to what they pay me. But they obviously are smarter than that and would like to save a larger portion of their wages for future consumption, rather than for immediate gratification now.

It is my choice to supply this end of the market with what I believe is a very good standard for the price (no voids, so I must be right). But it seems the govt feels that this end of the market should reach a higher standard than that.

I could, with difficulty, pay twice what I am now for rent. Hell, I was paying twice what I am now six months ago though London weighting took care of a proportion of that. But if my landlord tried to put my rent up significantly I'd go look for a better house for the money. And I'm pretty sure that I'd find one.

Billy Shears

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I agree with Billy Shears.

If the landlords could have jacked up prices they would have done it already for profit. They aren't charities and many seem to want to screw every penny out of their 'investments', some at the expense of providing a decent service.

I don't think this will have a huge impact on the market as the HMOs are probably one of the only profitable and viable BTL investments at current prices. IMHO all that will happen is that HMOs will become about as good an investment as a 2 bed newbuild city apartment.... thats why TTRTR is all in a flutter as his HMOs profitability (which I believe they currently would be if mainly HMOs) will dive.

All you bears seem to operate in a very nice world. I wish I could live there too.

What we've experienced over the last decade is the free market which has meant competition & value for tenants. The free market is about to get trampled over by your govt, which can only reduce competition & remove supply.

Why do you think councils jack up council tax each year with complete disregard for their people? Because they don't operate in a free market and therefore they can do that.

You are dillussional if you think the free market can be removed without consequences to pricing.

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Me and a friend recently left a 'luxury' flat in Nottingham. The rent was £1000 a month, which the landlord wanted to put up to £1200 at the end of our first 6 months, to 'cover the service charge' on the block.

So we moved out. To a nicer area of Nottingham. For less money.

He now has had 2 months void. He would need to fill it for nearly a year at the increased rental rate, just for the extra £200 to cover this void his greediness has created.

The flat is now marketed at £995 per month.

TimeToRealiseTenantsAreHighlyMobileCustomers

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All you bears seem to operate in a very nice world. I wish I could live there too.

What we've experienced over the last decade is the free market which has meant competition & value for tenants. The free market is about to get trampled over by your govt, which can only reduce competition & remove supply.

Why do you think councils jack up council tax each year with complete disregard for their people? Because they don't operate in a free market and therefore they can do that.

You are dillussional if you think the free market can be removed without consequences to pricing.

Value for tenants? PMSL!!

As for your idea that you win every way, since I'm hacked off with the HMO I'm living in at the moment I will, when it suits me, be giving my notice in a couple of months and moving out. Where I live in Cambridge there's a very good website (not going to mention it here but you'll know it if you're a Cambridge person) which lists accommodation of all sorts. It's particularly good for rooms. One of the few nice things about being a tenant, I can move any time I like. And if my slumlord protests I'll take them through small claims for the deposit.

Recently the accommodation list has been pretty long but I'm also noticing a new trend - ads that are obviously homeowners trying to get lodgers. Of course there's always been an element of this but it's becoming more noticeable. So your idea that supply will dry up if HMO owners have to make their houses civilised for tenants doesn't wash if the supply removed is compensated for by desperate OOs trying to prop up their mortgages by taking in lodgers. Not to mention the rash of "To Let" signs round where I live and the guy I saw yesterday putting up a new "For Sale" board on a house round the corner, for a different agent to replace the one there before.

Meanwhile keep working on that smugness. It's just soooo attractive.

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Me and a friend recently left a 'luxury' flat in Nottingham. The rent was £1000 a month, which the landlord wanted to put up to £1200 at the end of our first 6 months, to 'cover the service charge' on the block.

So we moved out. To a nicer area of Nottingham. For less money.

He now has had 2 months void. He would need to fill it for nearly a year at the increased rental rate, just for the extra £200 to cover this void his greediness has created.

The flat is now marketed at £995 per month.

TimeToRealiseTenantsAreHighlyMobileCustomers

And your point in relation to this issue is?

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Me and a friend recently left a 'luxury' flat in Nottingham. The rent was £1000 a month, which the landlord wanted to put up to £1200 at the end of our first 6 months, to 'cover the service charge' on the block.

So we moved out. To a nicer area of Nottingham. For less money.

He now has had 2 months void. He would need to fill it for nearly a year at the increased rental rate, just for the extra £200 to cover this void his greediness has created.

The flat is now marketed at £995 per month.

TimeToRealiseTenantsAreHighlyMobileCustomers

This reminds me of something someone posted when I first arrived in this forum. Someone advertising an "investment opportunity" with a certain rent. The rent was to rise within one month or so. And "vacant possession" in two months. What point is the increased rent? I presume that this meant that the landlord had increased the rent but that the tenant was moving out.

Billy Shears

And your point in relation to this issue is?

Surely that landlords cannot just jack up rents to cover increased costs. Isn't this central to the issue?

Billy Shears

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And your point in relation to this issue is?

that rental prices are not as inelastic as you like to think

I thought the point was quite clear

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If I have learnt one thing in my 9/10 years as a landlord, it is that people don't like to spend large amounts of money on rent.

Exactly. So why do you think you'll be able to hike up rents and still get tenants?

In fact, why don't you just increase your rents right now and make more money? After all, they have no choice other than to rent from you, right?

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You lot really do live on planet Tenant don't you!

You seriously think that a measure that affects all of the cheaper end of the market can have no impact at all, that people will just move (to where I ask - the whole market is affected) rather than accept the inevitable consequences.

I don't argue that it'll happen overnight, I just argue that it'll happen.

To back up your argument, you can now start with stories of how higher IR's (also impacting the whole market) has no consequences either.

Exactly. So why do you think you'll be able to hike up rents and still get tenants?

In fact, why don't you just increase your rents right now and make more money? After all, they have no choice other than to rent from you, right?

Do you think people wanting to pay less ring their next place & demand to pay less? Or do you think they simply select the best value advertised & ring there.

Watch the best value advertised rise & decide for yourself how long a person will live on the street waiting for something cheaper to come up.

You can view these people's ads on the gumtree, they're the ones in the wanted section with unrealistically low price expectations. Email them & watch them bite your hand off.

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You lot really do live on planet Tenant don't you!

As you on planet landlord... ;)

Seriously, this change only directly affects HMO's - which are largely occupied by the poorer end of the market - Students, Doleites, Migrant labour - who don't have much flexibility in their budget. Any demands for rent increases are likely to be met with a cry of sod off, or more likely resignation and then more problems for the L/lord with missed payment.

Additionally, based on a 20k cost for a 5 person HMO, that's 4k per person, and if the L/Lord wanted that all back in a year that'd be an £80 hike in rent per week. Not likely to wash. Even annualised over 4 years it's still a fair whack @ £20/week.

Most likely this legislation will simply be ignored by Landlords wanting to avoid losing tenants through unaffordable rises. I doubt it'll change anything.

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You seriously think that a measure that affects all of the cheaper end of the market can have no impact at all

Of course it will have an impact: it will make renting out a house to six grimy students a whole lot less profitable for landlords.

To back up your argument, you can now start with stories of how higher IR's (also impacting the whole market) has no consequences either.

Again, it will drive inept landlords with big debts into bankruptcy.

You seem to be under the impression that there's some lack of rented accomodation. That might be true where you live, but it sure isn't true around here: in particular, with mortgage rates rising, more and more 'owners' seem desperate to rent out a room at any price to subsidise their payments for their overpriced house.

Watch the best value advertised rise & decide for yourself how long a person will live on the street waiting for something cheaper to come up.

They don't have to 'live on the street'. They continue paying your rent until they find something cheaper, then you're left with an empty house for months unless and until you find a mug willing to pay what you're asking... or you go bust.

You see, there are lots of landlords who don't have huge mortgages and whose costs will barely change due to this law, and there are lots of people who'd be happy to rent out part of their house if it would bring in a few hundred a month to go towards their costs. That leaves the over-indebted BTLs as the only part of the market desperate to increase rents to cover their increased costs before they go bust.

Plus, more and more of the kind of people who'd previously have lived in shared houses (e.g. new graduates) seem to be moving back in with their parents... where they probably don't have to pay any rent at all.

Face it: being a landlord in today's market is a mug's game.

Edited by MarkG

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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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