Wednesday, January 5, 2011

Just wait until interest rates go up (some time in 2015)

Londoners take in lodgers to pay mortgages

Record numbers of Londoners are renting out spare rooms to earn extra cash. Nearly 200,000 British households took in lodgers last year — up 21 per cent on 2009 — earning about £860million, according to new research. The biggest rise was in London, where demand for rented rooms is the highest in the country. September saw the largest number of homeowners advertising for lodgers, and the trend is expected to continue as people struggle to keep up mortgage repayments amid 20 per cent VAT and an anticipated rise in interest rates.

Posted by mark wadsworth @ 04:14 PM (2212 views)
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18 thoughts on “Just wait until interest rates go up (some time in 2015)

  • sibley's b'stard child says:

    I’m getting deja vu here; I vaguely recall 2008 seeing a spate of ‘unplannedlords’ (ho ho, titter ye not) and look what happened then…

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  • Yes, this will help keep people in their houses and prices at an all time high……

    I want to know whether tax is being paid on the money earned for letting out rooms……….

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  • hpwatcher – I’ll let our resident Tax expert come in with the precise details but off the top of my head you can charge roughly uoto £5k PA and pay no extra income tax when renting out a room.

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  • sibley's b'stard child says:

    On the plus side HPW, we can all revert to Victorian squalor and won’t need any more houses built. Bish, bosh; job done.

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  • Note to self: I must make sure that my self-build house I’m planning has sufficient rooms to let to lodgers….there’s a nice piece of vacant land by the old railway bridge arches…..should do the trick.

    Sorry I do not know how to embed a picture http://mckaygardens.org/Dore_London.jpg

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  • mark wadsworth says:

    HPW, Jack C explains it. Or if you get more than £5,000 a year from a lodger, you can do a proper income and expenditure account and claim a proportion of your mortgage interest etc and knock 10% of the gross rents just for starters. Or do like most people and don’t declare it, conveniently forgetting to de-register for Council Tax single person’s discount, of course.

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  • Lodgers – no thanks, dirty plates in the sink, mess in the bathroom, rows over bills, uninvited boyfriends and girlfriends- , maybe even the danger of extra marital affairs – complete loss of privacy for just £50 – £90 per week – no thanks.

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  • sovietuk – all very valid points but I know of several people who have resorted to this because they need the £200 per month to keep the roof over their heads – desperate times call for desperate measures.

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  • I live in such a set up, no idea if the landlord pays tax on the money I give him but it’s def more than £5k per annum and I’m not the only lodger. I admit outside of London this set up is seen as weird but it’s actually quite common amongst a lot of people I know.

    The advantage for me is it’s a lot cheaper than renting my own place and much higher quality accommodation and provided you get on with your housemates is actually quite good company. However as sovietuk @6. says, the landlord is essentially just house-sharing as well, which given the dream of home-ownership is to “have your own place” he doesn’t really have his own place while he has lodgers.

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  • “@6. says, the landlord is essentially just house-sharing as well, which given the dream of home-ownership is to “have your own place” he doesn’t really have his own place while he has lodgers.”

    The more one thinks about home ownership in these over inflated times the more crazy it all is.

    Dumb animals are smarter than us.

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  • HPW, Jack C explains it. Or if you get more than £5,000 a year from a lodger, you can do a proper income and expenditure account and claim a proportion of your mortgage interest etc and knock 10% of the gross rents just for starters. Or do like most people and don’t declare it, conveniently forgetting to de-register for Council Tax single person’s discount, of course.

    Yes, I agree it’s a win/win – my point is that it makes the possibility of a HPC even smaller.

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  • @9

    I think that lodgers are bad news for BTL people: each lodger is a reduction in customers for a BTL arrangement;

    I also think that if a lodger is a last resort, and interest rates have not gone up yet, then what further resort does a struggling mortgagee have?

    Either way, I suspect that it is a powerful metric: more lodgers means a higher likelihood of a forced sale by the BTL lot or by the home owner lot.

    Mike

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  • I agree with mdmick – the housing market is clutching at straws/running out of options – the very last option being a big price correction.

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  • more lodgers means a higher likelihood of a forced sale by the BTL lot or by the home owner lot.

    Not necessarily. A few years ago, when I was looking at rooms, many of the houses were let to groups of people who didn’t necessarily know each other before renting a place – but they were just getting together to rent a house. And when individuals move out, new replacements are found to take the room.

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  • hpwatcher – were you looking at renting a spare room within someones main residence or a multiple occupation property (which wasnt the landlords main residence) ?

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  • tenyearstogetmymoneyback says:

    It just goes to show that nothing is new.

    Back in 1985 I spent a year living in a house where the “owner” was a pub musician.

    As such a person couldn’t get a normal mortgage (no self cert back then)
    he was buying the house on a ten year bank loan with payments of £430 a month.
    With four lodgers each paying £100 a month this worked out quite nicely for him.

    I agree with sovietuks comments though. When the other three lodgers had girlfriends
    staying we sometimes had eight people in a house with one bathroom. I moved in thinking
    I might buy a house and do something similar. After a year I bought a cheap 2 bed so I didn’t
    need any lodgers.

    In around 1989 a colleague (who was into any money making wheeze he could think of)
    was living in his dining room because he had let out all his bedrooms.

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  • Another point missed so far:

    According to easyroommate.co.uk, the average room rent in London is now £659 a month, up from £551 six months ago. There are six potential tenants chasing every room in the capital.

    That’s nearly 20% rent inflation in just six months. What on earth is going on?!

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  • fallingbuzzard says:

    @15, Easyroommate has hired a PR agency, Evening Standard = advertising, traditional and article placement. Never mind the content, feel the spin!

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