Jump to content
House Price Crash Forum
Sign in to follow this  
Realistbear

The Independent: Govt Drives Another Nail In Btl Coffin

Recommended Posts

http://money.independent.co.uk/property/ho...icle1174462.ece

New rules mean expensive legal headache for landlords

Owners of larger properties will need a licence and meet a new set of safety criteria. James Daley reports

Published: 15 July 2006

Buy-to-let landlords facing falling rental yields were landed with another headache this week, with new rules that could cost the owners of some rental properties several thousand pounds in fees.
The new laws relate to House in Multiple Occupation (HMOs), which are defined as properties with three or more storeys or five or more unrelated people living inside them.
Since 6 July, all HMO owners have been obliged to apply for a licence from their local authority, which could cost landlords up to £1,100 depending on which council they deal with.
Licences will be handed out only to landlords whose properties meet a range of rigorous safety measures - such as having fire doors, alarms and emergency lights fitted in the house.
Although many landlords have taken the trouble to comply with safety standards in their properties, those who have not could find themselves forced to pay out several hundred pounds on improvements to each of their HMOs, as well as coughing up the fees for their licences.
Ray Boulger, the senior technical manager at mortgage advisers John Charcol, warns that local authorities have the right to class smaller properties as HMOs if they see fit - potentially snagging thousands more landlords for the new levy
.
For those that do not comply, there are fines of up to £20,000. However, Boulger believes councils may be lenient in their use of penalties for the first few months. "In the early stages, I think the local authorities will have to be quite flexible, because the Government has not promoted these new rules at all," he says. "A lot of amateur landlords with one or two properties are just not aware of them."
Although the laws have been drawn up to improve standards in the rental sector, Boulger says there is a chance that they may have a detrimental effect on the prices of larger properties. "If you're buying an HMO, you're going to have to take into account the cost of the licence as well as the cost of any necessary upgrades to the property - and that's going to affect how much people are willing to pay for the property," he continues. "I'd expect HMOs to underperform the market in the short term, but in the long term it will iron itself out."
...../
Although the cost of HMO licences will vary depending on the local authority, Terrington believes the fees will slowly move towards a median. "If the local authority is charging £1,000 in one town, and the town next door is charging £150, then landlords will simply go to the cheaper one if they can get the same rental yields," he adds
.
However, Moneyfacts, the personal finance analyst, warns that buy-to-let regulation is increasing. Moneyfacts' Lee Tillcock says: "The next year will see the Housing Health and Safety Ratings System (HHSRS), Residency Property Tribunals, Empty Dwelling Management Orders, Tenancy Deposit Schemes and Local Housing Allowance all come into effect."
Buy-to-let landlords facing falling rental yields were landed with another headache this week, with new rules that could cost the owners of some rental properties several thousand pounds in fees.
Buy-to-let landlords facing falling rental yields were landed with another headache this week, with new rules that could cost the owners of some rental properties several thousand pounds in fees.

With NuLabour LL are a soft target for ever increasing taxation and regulation. The key is the power of local authorities to extend the net to smaller properties. The question is, will local authorities eager to keep council taxes down give up the opportunity to tax the unpopular landlord class? Highy unlikeley.

The end of BTL is in sight. My local paper has ever increasing numbers of "no upward chain" sales. I wonder why? :)

___________________________

http://www.in2perspective.com/nr/2006/07/r...ur-year-low.jsp

Rental yields hit four year low
By Laurie Osborne, Editor
Published 14th Jul 2006, (a Friday) at 10:00AM
See also... landlord, mortgages, uk, rental-yields, buy-to-let, housing-market
Rental yields in Q2 2006 have fallen to a four-year low (5.69%) in England and London (5.70%), according to the latest figures from Landlord Mortgages.
Edited by Realistbear

Share this post


Link to post
Share on other sites

Hmm, yet more costs to pass on to renters.

The other shoe NuLabour are about to drop is the dreaded rent controls. Especially as unemployment and debt begin to send more and more into bankruptcy and on the council house list. The market will bear less and less which is undoubtedly why yields have been falling. Immigrants haven't helped that much as they tend to earn even less.

Share this post


Link to post
Share on other sites

The other shoe NuLabour are about to drop is the dreaded rent controls. Especially as unemployment and debt begin to send more and more into bankruptcy and on the council house list. The market will bear less and less which is undoubtedly why yields have been falling. Immigrants haven't helped that much as they tend to earn even less.

Some of these immigrants sleep 10 to a room that is why they can afford some rents in London.

Share this post


Link to post
Share on other sites

Some of these immigrants sleep 10 to a room that is why they can afford some rents in London.

That seems to be the case. However, as jobs dry up accross the country the immigranmts will start to migrate home where the UK has been busy outsourcing manufacturing.

The BTL market is under threat from not just affordability but the high cost of doing business in the face of government fees. With capital gains a past factor its just rents now and an economy headed into a recessionary cycle is going to see lower and lower rents.

With a dead BTL market and total elimination of FTBs the whole edifice will crumble. A little help from IR later on and a stock market meltdown will just add some more grease to the poll.

Share this post


Link to post
Share on other sites
Hmm, yet more costs to pass on to renters.

If BTLs raise rents to try to cover their costs, that just means the landlords who don't have huge mortgages and don't try to stuff ten people into a tiny house will get the good tenants.

Share this post


Link to post
Share on other sites

That seems to be the case. However, as jobs dry up accross the country the immigranmts will start to migrate home where the UK has been busy outsourcing manufacturing.

I am an Indian and am in IT. While 7 or 8 years ago the US and the UK were dream destinations for indian IT profs, now nearly everyone I know is going back home. I am also off by the end of the year. I think soon it will happen to other sectors as well.

Share this post


Link to post
Share on other sites

Further comment from mate:

If the gap is widening that’s why you should get back on the ladder now. Then you’ll be riding the gap upwards. IF it carries on rising and you don’t you won’t have benefited from waiting. IF it does drop then great you’ll get a slightly bigger (or cheaper) gaff but in the long run (I’m talking ten years) it’s wouldn’t have made any difference.

Share this post


Link to post
Share on other sites

I am an Indian and am in IT. While 7 or 8 years ago the US and the UK were dream destinations for indian IT profs, now nearly everyone I know is going back home. I am also off by the end of the year. I think soon it will happen to other sectors as well.

As wealth shifts to Asia it seem inevitable that people will want to go back. With the UK almost at the end of NS Oil and losing its competitive edge it will need more than HPI-MEW to keep people here! It was miraculous while it lasted I suppose but now the chickens are home to roost in the form of debt (1.2 trillion pounds of it and grwoing exponentially), worsening deficits, unemployment, out of control HPI, dissappearing manufacturing and services sector and an already dying retail sector. At least the weather has improved a bit!

Share this post


Link to post
Share on other sites

Further comment from mate:

Couldn't agree more myself...

..I am a doctor from India and have been amazed to see the revolution in medical care (and everything else) in India in the 6 years I have been in the UK. The quality of life here in the UK is going down all the time due to several factors (high costs of living and thus less disposable income), and I have seen several doctors leaving the UK for India in the last year or so. And mind you, this is in one sector where the pay rises in the UK over the past few years have been the most impressive...

...There used to be a time when the Indian doctors settled in the UK used to be looked up to in India, they are now derided and ridiculed.

Share this post


Link to post
Share on other sites

This has been on the cards for a while now. It does only apply to certain properties under certain conditions so it is by no means the end of BTL.

BTL investors normally invest in smaller properties and rent to professional couples. Of course it will be different for LL's that buy a house and rent it out to students and maybe to families that rent out their houses and buy another but your average BTL will not be bothered. I'm not anyway.

Share this post


Link to post
Share on other sites

This has been on the cards for a while now. It does only apply to certain properties under certain conditions so it is by no means the end of BTL.

BTL investors normally invest in smaller properties and rent to professional couples. Of course it will be different for LL's that buy a house and rent it out to students and maybe to families that rent out their houses and buy another but your average BTL will not be bothered. I'm not anyway.

Some would wish that were the case but the government is eyeing smaller properties as well:

Ray Boulger, the senior technical manager at mortgage advisers John Charcol, warns that local authorities have the right to class smaller properties as HMOs if they see fit - potentially snagging thousands more landlords for the new levy
.

The LL classes were always the most hounded by the taxman in the decades of yore and they are a soft target once again. At least BTLers have been given advance warning of what is to come which will allow the smart ones to move on to better investments.

Share this post


Link to post
Share on other sites

I am an Indian and am in IT. While 7 or 8 years ago the US and the UK were dream destinations for indian IT profs, now nearly everyone I know is going back home. I am also off by the end of the year. I think soon it will happen to other sectors as well.

Firangi, if you don't mind me asking...what are the reasons why you and your friends are thinking of going back home? Is it because of the IT jobs market in UK? Or the rising cost of living? Or do you see career prospects back home in India which weren't there previously? Or perhaps family reasons? I'm curious because I work in IT also.

Share this post


Link to post
Share on other sites

Couldn't agree more myself...

..I am a doctor from India and have been amazed to see the revolution in medical care (and everything else) in India in the 6 years I have been in the UK. The quality of life here in the UK is going down all the time due to several factors (high costs of living and thus less disposable income), and I have seen several doctors leaving the UK for India in the last year or so. And mind you, this is in one sector where the pay rises in the UK over the past few years have been the most impressive...

...There used to be a time when the Indian doctors settled in the UK used to be looked up to in India, they are now derided and ridiculed.

very interesting anecdote, thank you.

could i ask why indian doctors working in the UK are now derided in india?

i know that the 'foreign student boom' is certainly over. for example the number of chinese students in the UK has fallen by 25% in the course of one year. i understand that this is due to students realising that there is better value elsewhere together with their own home-based institutions improving in quality...

Share this post


Link to post
Share on other sites

very interesting anecdote, thank you.

could i ask why indian doctors working in the UK are now derided in india?

i know that the 'foreign student boom' is certainly over. for example the number of chinese students in the UK has fallen by 25% in the course of one year. i understand that this is due to students realising that there is better value elsewhere together with their own home-based institutions improving in quality...

Foreign students are balking at the ratholes we call BTLs in this country! Not long now.............. :)

Share this post


Link to post
Share on other sites

Firangi, if you don't mind me asking...what are the reasons why you and your friends are thinking of going back home? Is it because of the IT jobs market in UK? Or the rising cost of living? Or do you see career prospects back home in India which weren't there previously? Or perhaps family reasons? I'm curious because I work in IT also.

I think it's all of the above. I personally think that I can maintain a better standard of living in India than over here due to the rising cost of living here and salaries not catching up in that ratio. While in india salaries are going up very fast. Career prospects there are also much better now. And if you are given good career prospects and handsome salaries why wouldn't you want to live close to home and family

Share this post


Link to post
Share on other sites

I think it's all of the above. I personally think that I can maintain a better standard of living in India than over here due to the rising cost of living here and salaries not catching up in that ratio. While in india salaries are going up very fast. Career prospects there are also much better now. And if you are given good career prospects and handsome salaries why wouldn't you want to live close to home and family

Makes total sense.

Share this post


Link to post
Share on other sites

Makes total sense.

Makes you wonder doesn't it? What has Gordon delivered with his Miracle Economy?

1. Higher taxes.

2. Lower employment.

3. Inflated House prices and a destroyed FTB market.

4. Council taxes out of control.

5. A debt mountain the likes of which has never been known before.

6. Twin deficits (trade balance and government debt).

7. Inflation well above European levels and targets.

8. An angry electorate that is turning right wing in reaction to housing shortgages.

9. Pensioners forced to sell their houses top pay for medical care.

10. A collapsing NHS.

11. A collapsing manufacturing base.

12. An outsourciung rush for service sector jobs.

13. Devastated retail sector.

And now he wants to ascend to No. 10?

Share this post


Link to post
Share on other sites

I think it's all of the above. I personally think that I can maintain a better standard of living in India than over here due to the rising cost of living here and salaries not catching up in that ratio. While in india salaries are going up very fast. Career prospects there are also much better now. And if you are given good career prospects and handsome salaries why wouldn't you want to live close to home and family

I understand. Same reason I moved out of London back home to the north of England, although getting a job here was more difficult and I had to take a pay cut.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.