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.

You can't blame LL for doing what the gov encouraged and in fact were doing themselves in many cases.
It should never have been touted as an investment vehicle.
It harms society and we can see the damage now and luckily know of a solution.

Yup! THAT’S the sort of HMO landlord I am referring to, a greedy one - the kind you see on channel 5, cramming 13 people in to a 3-bed.

if less people hoarded homes then there would be more for people to buy, and they would be more affordable as the prices would drop etc.

as long as people see other people’s homes as “passive income” there will be unscrupulous leeches profiting from loopholes and desperation.

Hahahaha no they won't! A nice 2 bed house in my area costs 280k, I earn 30k a year, on what planet am I going to be able to get a mortgage for that? Dear god 🤦‍♂️

I only had one flat for rental. But are selling up.

Way too much hassle.

Management fees are through the roof.
Finding the clients, vetting them. Fixing any damage to the property.
New furniture.

Evry month something or other needs fixing( maybe it's the management company conning us??)

But it's not worth the hassle.

I'm just going to put the money into a s &s ISA instead.
It really is not worth the hassle.

Landlords often sell to other landlords. Especially with tenants in situ ie already there.
We have a few rentals. One of ours in a state atm because the tenants aren't looking after the place. We have offered to decorate, take their rubbish to the tip, get a gardener in etc but they are being extremely awkward. They don't want a nice home (hoarders) which is what it was before they moved in. It's like steptoes at the moment with all the junk. Because they pay their rent we're letting them stay but not renewing the contract so will be getting notice to leave soon and it will have a full refurb and hopefully nice tenants next time. But anyone not understanding the situation would think we're the scum allowing them to live like that. We provide decent homes and expect decent tenants.

I'd be interested to know what the government's plans are for when millions of people who've been priced out of owner occupancy and have had to rent all their working lives reach retirement and don't have enough pension to pay their rent because they've spent their working lives contributing to their landlord's pension pot

I'd rather my young adult kids stay home for as long as they want rather than line the pockets of these greedy landlords. I'll even carry on working longer or downsize to help them buy rather than let them pay extortionate rent.

I would have thought the evidence of the past few decades shows that no government has ever really had any plans for dealing with the difficult issues.

People who can't pay their rent in retirement get it paid for by housing benefit. Unless the rent is so high that it exceeds there local housing allowance, they will get it all covered if their state pension is low enough for them to claim Pension credit. If they can't claim pension credit then depending on the amount of their state pension they are still likely to get a significant chunk of rent paid.

It's not fair.

a lot of these landlords are not asking for 6months-1 years rent up front now

People who can't pay their rent in retirement get it paid for by housing benefit
Where will the money come from?

Unless the rent is so high that it exceeds there local housing allowance

But the housing allowance typically doesn't reflect reality. I was on UC for a few months in 2020. The housing element (large city, not London) was capped at 350, but my rent for a room in a flatshare was 500. I moved into that room in 2019 and when I was looking for a place to live, there was basically nothing below 450/room.

It will trickle down remember. Keep up 😉

I heard that programme, it was shocking but not surprising. I also have young adult offspring and one of them has been in that position of trying to find a place to rent. He had the money for rent and deposit but absolutely everything went before he could even view. He came back to live at home but it wasn't ideal for his work.
I had no idea that "bidding" higher rent was a thing.

I turned a 200 year old Georgian office into a house last year. I refurbed sympathetically and to standards I would if I wanted to live in it.

The value if I sell it is far better than the value it's worth renting. The rental capital value is essentially assessed on the basis of a multiple of rent rather than what's it's worth selling. If I sell I could get 550k, renting is worth closer to 470k. If I let it as a HMO that rental capital value is closer to the potential sale value. Financially all the bells and whistles I have added to the house to upgrade it don't make sense from a rental perspective - a typical landlord will not add much/upgrade a property much as financially it doesn't make sense.

On top of this in 3 years time to rent it out the government are insisting on quite hefty upgrades to reduce energy consumption which on my Georgian house don't make sense.

What I am saying in a very round about way is that landlords are essentially compelled by the market and to offer less well maintained property at the moment to get a reasonable return. In future many will sell up because they can't upgrade their properties to meet government requirements for energy consumption.

If you can't afford to purchase a house landlords stepping out of the market is probably not great news.

I will see what I will do with the house when the current tenants leave. I had offers to pay the rent up front for a year from people - if I was thinking purely financially I would sell it or would have turned it into flats.

It's not easy being a landlord and we aren't scum of the earth. I'm literally making no money on this property at present even with an interest only mortgage because of the way the tax system works.

You're part of the problem though. It doesn't matter how good you think you are or why you are a landlord. The fact is you are using a home to your advantage and then turfing your tenant out as soon as it's not profitable.
Housing should be stable and affordable. Not subject to the whims of individuals.

So kabalagala, it's unacceptable to use a home for an advantage? What about a farm - should food not be produced for advantage? Or what about ambulances - should ambulances not be sold by manufacturers for an advantage? Should a builder build the house on a not for profit basis?

Not the same at all though is it?

Why isn't it the same? Food and healthcare as important as housing surely.

Me too

I don't see how any of those are comparable to landlords. Ambulances aren't allowed to just stop providing emergency care because it gets hard. Farms are subsidised where necessary. And I have plenty of issues house builders and their profiteering too. No other industry is allowed to behave the same as housing.

Locally landlords seem to be selling up.

Both residential and commercial.

My sister rents from someone who loves abroad. It was his mums house so no mortgage.

Landlords who have mortgaged properties will be selling I'd assume.

There is ever increasing demand because there are more single households than ever before. Divorced couples require two houses, increasing student numbers, refugees etc.

Supply hasn't kept up with demand. More houses need to be built. Under occupation is also a huge issue. As was right to buy.

You might like to read this article in The Guardian. Maybe be careful what you wish for. www.google.co.uk/amp/s/amp.theguardian.com/business/2022/sep/29/blackstone-rebellion-how-one-country-worlds-biggest-commercial-landlord-denmark