Friday, January 28, 2011

Here we go again

Struggling property market creating 'accidental' landlords

Getting Déjà vu. The surest sign of a drop in prices is on the way - hooray! Are we going to get a yo-yo of Home-owners putting properties on the market or renting them depending on conditions - they could always drop the price...

Posted by the number cruncher @ 08:29 AM (4649 views)
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20 thoughts on “Here we go again

  • There is a shortage of 2/3 bed semi/detached with garden/garage for rental in the sub £900/pcm in Kent, so it would make sense at the moment to rent out such a property if you can’t sell it.

    Hopefully they will cut housing benefit hard soon, this will take down rent a peg or two.

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  • The January 2012 Housing benefit reform:
    * £250 Maximum for a one bedroom property
    * £290 Maximum for a two bedroom property
    * £340 Maximum for a three bedroom property
    * £400 Maximum for a four bedroom property

    A second change, to reduce housing benefit rates from average local rents to the value of the lowest third of rents.

    I guess the above maximums will apply to inner city areas, so smaller outlying towns where rent is less than half should be around half of the benefit paid as a maximum:

    So for smaller towns and villages I reckon around:

    * £125/week £542pcm Maximum for a one bedroom property
    * £145/week £628pcm Maximum for a two bedroom property
    * £170/week £737pcm Maximum for a three bedroom property
    * £200/week £867pcm Maximum for a four bedroom property

    The above are maximums, I am not sure how changing housing benefit rates from average local rents to the value of the lowest third of rents will affect the above calculations..

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  • Perhaps knock another 20% off for the lowest third of rents gives:

    * £100/week £433pcm Maximum for a one bedroom property
    * £116/week £502pcm Maximum for a two bedroom property
    * £136/week £589pcm Maximum for a three bedroom property
    * £160/week £693pcm Maximum for a four bedroom property

    Thinking about it this will be a really good move for the claimant because when they get back to work they will not have to spend so much of there wages on rent meaning they will find the move from benefits to work more beneficial. Its a win win unless you are a boomer relying on this for your pension.

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  • I knew it…

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  • sibley's b'stard child says:

    “This has been very successful and has created a win-win situation for the vendor who is earning a rental income and also for the agent who is satisfying the vendor’s needs in the circumstances.”

    Of course, that is predicated on rental income meeting mortgage repayments. Otherwise they’ll be – presumably – renting out another home while letting theirs out; and having to meet the shortfall between rental income and mortgage obligations. Still, can’t go wrong with bricks ‘n’ mortar.

    “But becoming a landlord, almost overnight, is quite a daunting task and that’s why we urge people to seek out initial free and impartial, independent advice from an expert letting specialist such as ourselves, before attempting to ‘go it alone’.”

    Indeed, and of course it doesn’t need mentioning that these unplannedlords will notify their lender of changes in circumstances and seek necessary approval. Of course.

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  • To add to that:

    Increased mortgage interest rate (Northern rock etc put up the rate because it is higher risk)
    Rent lost when house is vacant
    Repairs
    Fluctuations in interest rate
    Agency fees
    Tenants not paying rent
    Landlord insurance
    +The stress and hassle of it all

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  • Our local property pages are now full of lettings….and the sales listing that are still printed are heavy with mostly circa 250K properties.

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  • Thanks for the link, khards. It’s interesting to see that in some areas the difference between room-only and 1-bed is very wide, whereas in other areas they’re almost the same. I wonder why.

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  • Surely Fergus and Judith Wilson could take up some of the slack having purchased half of Kent a while back – they’ve gone from being very high to low profile.

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  • They could turn all of there ‘rental properties’ into houses of multiple occupancy / slums I am sure they could fill there pockets doing that.

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  • sibley's b'stard child says:

    Jack (or anyone else for that matter), do we know whether the Wilsons managed to flog-off their entire portfolio (to rich foreign investors, natch) in the end?

    Last I heard of them was early 2010, IIRC.

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  • Sib’s – last I read was back in March of last year – “Buy-to-let king and queen dismantle property portfolio” (see http://www.guardian.co.uk/money/2010/mar/06/buy-to-let-fergus-judith-wilson)

    As I indicated in my previous post the silence is sadly now deafening

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  • sibley's b'stard child says:

    Jack, I can only conclude then that this mysterious Russian buyer failed to materialise…Let’s face it; had they managed to off-load, their ugly, sanctimonious mugs would’ve been triumphantly plastered all over the papers.

    I do hope that the LHA reforms and double-dip won’t effect them too adversely.

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  • Double dip = another 10% off ?
    LHA reform= another 10% off ?

    So another 20% down, LAH don’t kick in to next January so 10% down 2011, 10% down 2012?

    At least after the LHA reform there won’t be much of an interest in BTL as yields will be much smaller and there will be little prospect of future capital gains.

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  • Sibs – you are quite right if they had offloaded half a dozen properties it would have been in the news – interestingly enough the Wilson’s have become an orphan article on wikipedia so I think their profile is perhaps dropping at a much quicker rate than their outstanding liabilities.

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  • sibley's b'stard child says:

    Khards, not to mention remortgaging…

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  • sibley's b'stard child says:

    BTW Jack, I can’t believe there’s still no news re: Shapps’ MMR/FSA meeting.

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  • the number cruncher says:

    A bit of local knowledge on the Wilsons

    The Wilsons where putting one property per week on the market at a fixed price through Connells but they did not sell many so gave up putting new ones on the market. you can play spot the Wilson’s property on there website, they have about no more than 5 on the market at any one time – no prizes

    http://www.connells.co.uk/buy/search-results?index=1&searchType=buy&geographyName=Ashford,+Kent&radius=5.0&maxPrice=200000&minPrice=150000&includeSSTC=0

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  • @ Sibs – agreed it is all too quiet on the Shapps/FSA/MMR front – guess we need to be patient

    @ the number cruncher – thanks for the info, most interesting.

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