The housing crisis and landlords

[MadgeMarple]

Hello, I am curious about the housing crisis and rents and not a little anxious as have young adults this will impact.

I was listening to R4 at lunch (you and yours maybe?) and the discussion was about the awful state of the rental market in England (I think Scotland has different, new laws and I'm not sure about Wales).

There was a landlord lamenting the rise in interest rates and the awfulness of mortgage tax relief being cut in 2015. If interest rates get to 6% lots of landlords will sell.
He lists a room in a shared occupancy house and 30 seconds later his phone is ringing with people enquiring about it. Within 24 hours 150 people have contacted him.
Someone, maybe from the Opposition, talked about how there just aren't enough homes now, due in part I think to successive changes/cuts in social housing.
And a bloke from some landlord association also talking about how everyone hates landlords etc.

Cut to a young man in London who is moving to a new house with his mates, rent has risen from £750 to £950. I don't even think it's a nice house (he said they had to drop their expectations). They had to audition for the place and the landlord had his pick of tenants (and can charge what he wants I assume). He will spend 40% of his income on rent.

What I don't understand is why there is a lack of rental stock? I understand landlords are selling up but I don't really get why. If places go so quickly, are not that great, and make a fortune why is this still a bar to being a landlord? Or are they just really greedy and want even more money and tax relief etc?

I read on the front of the Times today (too tight for a subscription) something about Truss considering scrapping the affordable housing quota imposed on developers which seems crazy given the lack of such homes. This is an idea from the levelling up minister to promote growth. Seems pointless doing everything to promote growth if people can't afford to live, or have anywhere to live.

Professional landlords are scumbags IMO. So many disgusting HMOs made out of suburban houses that could have been a lovely family home.

a lot of landlords are also based outside of the UK, they will never come here or live here, they’re just investing money in properties that are left to rot while being rented for huge sums.

I genuinely wish the Govt passed a law that you can’t own a house you don’t live in full-time.

We desperately need large scale social housing but it's not fitting in Tory ideology.
Whoever puts that in their manifesto gets my vote.

It’s been easy for a landlord to rent a place out and do very little to improve the property/keep it up to standards. Now that some restrictions are being placed Landlords aren’t happy.
at the same time there are loads of empty properties purchased as an investment from people overseas. That’s housing that could go to someone who needs it.

It’s harder to get on the property ladder nowadays so more people rent.

I listened to that too! Couple of landlords complaining about how they 'as private individuals' were expected to do loads to help out in the cost of living crisis.

They don't even realise they are running a business! No wonder they are so flaky, and resent having to meet safety standards

I’m not a professional landlord, I rent out my former home (from when I was single) which is in a prime location for young professionals.

The mortgage interest increase will likely make it unprofitable for me to keep, also BTL affordability is calculated based on a multiple of the rental income.
I have a lovely tenant, the house is kept in very good condition, but as I am taxed at 40% on the income and have few deductions now it just won’t be affordable as the lender won’t lend unless I increase the rent to an outrageous amount.

About 40% of property in the area was rented but landlords are gradually selling up. Unfortunately you’d need a salary in the region of £70k to buy there, so my tenant and similar younger single people will be priced out. So no-one really wins here.
I’m not sure what the answer is - I was hoping DD would inherit mine but instead what equity I have will go in to reducing my residential mortgage.

I hate the vilification of landlords, there are some very dodgy people and properties, but also nice people who worked hard for what they have that look after their tenants and properties (and allow pets). I only rented mine because I relocated out of the area and didn’t need to sell it to buy another but wanted to hedge my bets in case it didn’t work out. I’m not the spawn of satan.

I own a 2nd property which is mortgaged and I rent out. Since the mortgage interest is no longer tax deductible, rates increasing have a massive impact on whether it's viable for me to keep the property. Once the tax bill is paid I hardly break even. My choices are increase the rent, sell up or take a hit. I don't want to sell or increase the rent as the tenants are lovely but I might be left with no choice.

The thing is that landlords often don't make a fortune. The change to mortgage rate relief essentially means paying income tax on the revenue and not the profit. Then take off insurance, repair and maintenance costs, ground rent, letting agent fees, annual servicing, accountancy fees, legal advice etc etc.
then factor in banks are charging a fortune on interest rates for anyone exposed to the market in any real way (say 3 or more properties), it's very difficult to deal with tenants who don't pay or who trash the property so a huge risk and being less able to sell if needed with the changes to tenancy laws.

Same here. I work with my tenants and keep everything well maintained. We are not all slum landlords.

SOME landlords @Dinhop! And if no one could own a home they don't live in, just where would the 4 million households in private rentals go? Where would all those who enjoy self catering holidays go? Where would over half of all students who rent privately live? Where would people on short term contracts live?
Face it, a huge amount of people rely on private landlords. What should happen is landlords should be licenced and all rentals inspected for minimum standards.

What I don't understand is why there is a lack of rental stock?

There is a lack of any stock, and it's an engineered one. Build a couple of million houses like what we did in the 1920s and 1950s and the problem goes away.

Piss around with fonts, tax relief and lego, and don't be surprised when the problem doesn't go away.

I grew up in an HMO. Instead of a home for one family it provided a home for 7 households, at a price they could afford. Yes, space was limited compared to being in a whole house/flat, but we had a safe, comfortable home.

As well as that, the tenants, being close neighbours, supported each other when the need arose, providing babysitting or minor repairs or taking messages etc, according to what they could do.

This always irritates landlords on mumsnet but it's not talking about someone who rents out a small home and is a decent person.

for context my comments are a reflection of living in London.

It's the landlords who maybe have a £700/800 mortgage and then make the flat/house into a HMO and charge £900/1k per room. That needs stopping.

There's places to live on spare room £1.5k for a room?! Not a flat a room. It's atrocious. People could spend more in the economy if most of there wage didn't go to rent.

My friend has a 48 year old in her flatshare he's a dad where once he could have gone a one bed flat now he has to flat share.

Whilst I agree all rental properties should meet the minimum decent homes standard, inspections of every rental property will cost the local authority a lot of money, and to raise the money there will be licensing with landlords paying the fee, and in turn rents will rise to meet the extra cost to landlords of licensing and improvements at a time when materials and labour is also high.

There is a huge supply and demand issue at the moment, and unfortunately there isn't a simple solution.

Tbh I am glad these conversations are happening as I had no idea that landlords are also not really in a great position, unless they have many properties. Yes there are asshole ones but that's often what you need to be to be successful in a capitalist society. You have to take emotions out of the equation and that's impossible to do when it's a basic need like housing. Which brings the point that a basic need like housing should never have been placed into a capitalist equation.
It does seem more and more clear that the current government will, above all, support extraordinary profit by the few, instead of supporting the majority.

I know in my city HMO landlordz are trying to shift the stock at high prices. During the pandemic with no students they had to pay council tax and were upset about it. I was pleased. I moved from a street full of hmos with the extra rubbish, noise and cars.

Landlords just want a quick buck and I think even landlords with family homes will want to sell as everything becomes unpredictable. But this is what happens when the government sells social housing and doesnt build more.

The peole being priced out are the people with one or two properties that they rent out. Of which there seems to be many. Who do people think are going to buy up all their houses when they sellt hem and make their tenants homeless? It won't be the tenants or housing associations or councils, it will be the foreign investment buyers.

These campaigners have a lot to answer for imo. Be careful what you wish for and all that. There are going to be a lot more homeless and no benefit to the little people.

I listened to this too. I thought the Scottish lady had a good point. Landlords expect to do nothing and make their living from other people hard earned wages. Some landlords certainly do this. Unfortunately it seems that many won’t maintain their properties. I was completely staggered when I visited a relative in a HMO in Bristol, absolutely extortionate rent. It’s was disgusting. Apparently that was a nice property by todays standards! I have very limited sympathy with landlords saying they can’t make enough money. Release the housing stock then and let prices fall to what people can afford. I do understand lots of people become accidental landlords and lots are benevolent landlords. But there’s no doubt buy to let really helped to screw up the market in lots of places, along with lack of stock of course.

I have 6 properties, all one bed flats typically rented by young professionals or mature students. I was able to only need 50% mortgage loans on purchase which I have fixed for the next 5 years. So recent events don’t impact my situation.

There really is not much profit to be made in this type of business (it is a business, I’m not an “accidental” landlord). Even without thinking about mortgage costs, my outgoings include 14% management fees (my choice, I prefer to be hands off), all costs that used to be charged to the tenant eg inventory and referencing, all maintenance, insurance, regulatory costs (gas certificate etc), voids which then incur utility and council tax bills.

where landlords are highly leveraged then an increase in mortgage payments really could mean they are effectively subsidising their tenants. In these circumstances it’s not surprising they are selling up.

one side effect however is that market rents are rising, certainly where I am.

My LL works ft and owns 2 houses, the one he lives in and the one I live in. He's also bloody lovely. And hasn't increased rent this year because he knows how expensive it is to live right now.

One of my best friends lives in an HMO. She pays 750 for a room. Her LL is increasing rent to 850pcm from next month. For a ROOM.
The LL has 4 other HMO in that town, all with between 5-7 rooms. LL lives abroad. Does nothing in terms of upkeep. Just sits back and gets richer and richer off the hard graft of her tenants.

Our local town is absolutely full of HMO like this, but what other option is there when a 1 bed flat here is nearly 1k a month and homelessness in the borough has increased by over 75% in the last year.
And in most areas near here the monthly rent on a private rental is double the local housing allowance. Forcing those on benefits or low incomes to need social housing. Of which there is a massive shortage. Something's gotta give.

If Landlords sell up prices will fall. Many renters will then move into their own homes freeing up rental properties. Non-professional landlords have not created housing, they have just cornered a lot of the exiting stock. There should be incentives for building new homes for rent, but no incentive for buying an existing property just to let it out

If Landlords sell up prices will fall.

No, because the demand won't fall. Some more fortunate renters will become owners of such distress sales, but the overall supply:demand ratio will remain unchanged. And even if that were to somehow change such that demand is reduced, the incoming tide of cheap labour Liz Truss is dreaming of inviting in will ensure it's not for long.

Maybe no one can own more than one home. Government buy back the tons of converted previous council homes and simply build more housing. Government could also offer to buy people out who are defaulting and tent back to them as council tenants so they don't ever become homeless

Where are all these ex-renters going to find the huge deposits required to qualify for a mortgage when by the very fact of renting they haven’t been able to save for that deposit? It’s far too simplistic to say people can just buy up the property put back on the market

The whole concept of paying someone else''s mortgage, with the shadow of being asked to leave (and more than a house sometimes - it can be a whole area or village....) looming, whilst they do f-all and await an incease on their investment - makes me sick!

Lots of renters won't buy up the lower end of the market as they will be priced out by higher deposit requirements and higher mortgage interest rates! There is also the risk of negative equity with flats/esp with cladding scandal, which are where there are a lot of rentals. The very thing that is driving out landlords will prevent FTB and others getting on the ladder apart from a few exceptions. I agree larger conglomerate landlords and foreign investors will step in. Nothing good in this for renters whatsoever.