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.

Final demographic factor is,
(4) WAITING - people are waiting longer to commit to stable relationships with financial pooling. This makes it harder for them to raise deposits of the size needed to satisfy the bank.

Houses are expensive so you need high rents to cover mortgage. I understand why landlords are selling up it's such a hostile environment to make money these days.

I rented for years in Edinburgh and it was fine, I paid rent, had a series of relatively nice flats had a couple of s21s a couple of times I moved. Settled down bought a house blah de blah. Private landlords have a place I couldn't afford/ wouldnt of wanted to be tied down to a place in my twenties.

There should absolutely be more social housing and security of tenure for families etc. Bungalows/ single story living for the elderly. It's desperately needed. I don't think a lack of private rentals is going to benefit anyone tbh.

www.telegraph.co.uk/personal-banking/mortgages/renting-affordable-buying-mortgage-repayments-soar/

Renting cheaper than buying.

@Nolongerteaching @Kabalagala we are accidental landlords because we bought our forever home and then due to illness and disability we then couldn't live in it anymore. There was a massive redemption penalty so it didn't make sense to sell and take that financial hit when our future was uncertain so we rented it out planning to sell at the end of the term. We were very open from the outset and made it clear that was our plan to our tenant. When that mortgage term ended and we could have sold our tenant was happy and settled and we knew she would struggle to rent elsewhere (affordability and history of bad credit) so we kept going at her request because it was ticking over okay.

The money we were making is actually far less than we could have got just by investing the equity elsewhere. Particularly once you factor in that in the four or so years we've been renting we've actually had a big financial outlay on the house in 3 of the 4 years.

Mortgage is interest only so the rent is only covering the interest not the repayments.

I agree in an ideal world there would be lots of social housing and no landlords like us, but in reality most the family homes in our area that are rented out are rented by individuals like us. And when we sell or put our rent up where is the social housing for our tenants to move to?

The government needed to fix the supply issue and provide good social housing before clobbering landlords. Because causing landlords to sell with no credible alternative for the tenants just benefits people wanting to snap up cheap property and screws over the renters who have no hope of buying.

I’m in Scotland. We have to nice but to lets we let out to happy tenants. The properties are well maintained. Our tenants are happy. When we last had to find new tenants we had 40 applicants in two days

we cannot claim mortgage interest relief. Rent controls are being brought in. We cannot evict non paying tenants.

we, like other small landlords, are selling.

It's terrible when it happens - and far more difficult now I would imagine.
That dreadul a calculaion that you have paid as much in rent as the property costs (been there) and have literally nothing - or less - to show for it, or to help you on your way, is absolutely soul-destroying. The whole way of life is forced to change, on a whim not of your making. What a relief that you have a much better arrangement now!

For all the landlords - "accidental" or otherwise - on here.... oh, cry me a river. (Plays tiny violin.)

None of the landlords on here are asking for sympathy, just explaining the rationale for the decisions they have made. They are 'business' decisions and the main part of those decisions are financial. When your business stops making money you don't throw more money at it unless you're a fool, you leave the business. That is what is happening here. People leaving the business.

Because people are leaving the business, there is little supply so rents increase,
and that, along with increased finance costs, increases in maintenance costs, and uncertain trading conditions, is what you have. A reliance by government on the PRS, and then failing to have the common sense to invest in social housing before they fucked them over. That's a technical term 🙄

I live in social housing in a housing Association newbuild and I am being charged £300 a week for two bedroom. I was nominated by the council and I couldn’t refuse as you only get one offer the rent is Very high compared to most of the social housing rent. This rent now is is called affordable housing rather than social housing it is 80% of the market rate

even in social housing these days rents are high let alone Private landlords.
However those in existent social housing generally have it quite good most of my friends don’t pay more than £500 a month for a three bed council or housing association property it’s just my housing association which is very expensive compared to other social rents . There should be rent caps For private landlords however I have heard of people paying £1000 just for a bedroom in a shared house. My friend was paying 899 for a small bedroom in a flat which was in an estate , it’s crazy

That is a crazy amount for social housing. i guess at least it's more secure than private though.

You sound charmingly naive.

Cladding crisis, houses literally unsellable despite having no cladding, due to the backlog in issuing fire certificates. What are people supposed to do if they need to move? Give them away?

Yes they choose to play real life Monopoly with people’s lives 🙄 other people pay their mortgage but be told they’re unable to pay their own by banks? It’s cruel

And you sound incredibly patronising. Sort out your attitude. I've never owned a house, so I genuinely wouldn't know that.

Sometimes I hear of landlords not putting up rent to keep good tenants happy. Only to find that the tenants will not move is rent is put up higher as not longer sustainable. They can’t afford anywhere else. I really never want to be a landlord. At least one that only own a couple of properties.

I haven't read the full thread but if you're a landlord that maintains the house to the standard that you'd want to live in it yourself, you're not "making a fortune". The money it makes after tax doesn't really justify the amount of admin it involves, and that's if I have decent tenants. The government keeps moving the needle in favour of tenants which is fine, but it pushes the reasonable landlords out of the market leaving just the sharks with huge portfolios.

“Hello this flat might burn down like Grenfell, it’s £3,000 pcm to rent. I’m moving somewhere safe, bye”

🙄🙄

Some landlords are selling up because the obscene profit levels they used to make are gone now they have to do pesky things like safety certs.

Some are selling up because they can’t afford the increase to their own mortgages. There are a lot of LL’s, particularly of the accidental kind, who actually can’t afford to be LL’s.

Round here lots have sold up because there’s been a glut of housing association new builds and it’s had a massive impact on the rental market.

More people have left the private rental market because of the social housing. That in turn has given people looking more options, and has also meant that LL’s have had to keep rents competitive and places good.

My tenants pay the same as the HA tenants in similar properties (I’ve actually tried to sell my property to the council three times now as they always have someone they want in it due to adaptions, but they always end up saying “in the next budget year”) so it’s had no effect on me. The guy in the same block who used to charge £00000 for a mouldy damp shithole - well he had to sell up.

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

No. This is not the case. Full housing benefit is only payable to those who claimed prior to 2008 or those who have a regulated tenancy. Everyone else is subject to LHA rules.

My DM has lived in her privately rented house for 40 years. She became eligible for pension credit and housing benefit in 2009. Her rent at the time was 410. She was entitled to 353 for her rent. Several years passed and the rent increased again and again to 550. She is still only entitled to 1 bed rate under LHA. It took 1 YEAR for me to successfully get to a position that I could register her for a regulated tenancy (only where you've lives in your home prior to 1985) and then argue with the council , go through the complaints and appeals process, threaten to complain to the ombudsman, spell out the housing benefit regulations to the team who should know them and reassure my poor mum that it would all be ok.

It was in the end. She got a refund of £10k in housing benefit that she should've been entitled to 10 years previously. Now the rent is covered in full. However if she ever left that home, she wouldn't be entitled to have her rent covered.

TLDR: if you rent and haven't lived there before 1985 don't expect your rent to be covered in retirement.

Yes you have paid enough rent to cover the cost of the property but have you paid the interest on the mortgage, did you save for a deposit, did you pay for the upkeep of the property, service charges, insurance etc. it’s not as simple as looking at
the price of a house and saying I’ve paid that in rent.

Also one of the effects of private LL selling up is that rents will go up - the idea that everyone can or wants to buy is unrealistic - there is still a demand for rentals, short term, longer term. How is that helpful to the housing crisis?

Lastly there are many reasons for a shortage of housing stock, and I think private LL are the least of them, as watchthesunrise mentioned above -
elderly people in big houses, households splitting etc - what shall we do about those issues?

In my street a HA house 3 bed 3 storey huge garden drive has just come up for rent on Home choice
it had over 600 bids
£112 a week so £444 every 4 weeks

a similar house would rent for around £1500 a month

There is actually some property companies in New York that are only charging rent based on what people can afford or a certain % of their wage, I think this is something that can/should be implemented over here

By and large, I do not think that landlords are truly considering what people can afford. Using the excuse of the cost of living crisis, rentas are being increased across the board by the local (100 properties) landlord, who I have the dubious privelege of knowing. All rents have gone up £50 per month, so £5000 esy money into the bank.
The majority of these houses are owned outright by him, due to their original low value. No work is done, until change of tenancy - the basic requirements for Landlord Registration (Gas Check, smoke alarms etc) are met, and that's it. He has left people without heating through the winter, refusing to fix a non-finctioning boiler, and does not make the hosues draught-proof or even fully secure (some are nearly 80 years old). When work is absolutely necessary, he basically tries to do whatever is needed himeself, rather than get in a professional.

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

All legislation that was passed to protect tenants has backfired spectacularly.

Whilst everyone was looking at how they can protect tenants they forgot to think about what was in it for the landlords if the profit margins were reduced so much it wasn’t worth their while and taking away no fault evictions has just meant less and less properties in the rental sector which means higher and higher rents

Punitive legislation that has been passed to make it harder and harder for a decent landlord to make a profit doesn’t affect those landlords who The landlords who completely disregard their tenants are still there. There numbers haven’t been affected. Legislation doesn’t bother someone who ignores it any way
But a lot of those who wanted a professional business model and to supply good housing have been driven from the market

I saw a piece on the news when the legislation was passed that landlords could no longer put mortgage interest payments against tax and it showed several renters
almost rubbing their hands together in glee that landlords would have less money in their pockets and how the tide was turning against landlords and my reaction was are these people morons. All it will mean is rents will go up and tenants will be made homeless because either the landlord will sell or it will be turned into an Airbnb.
Airbnb/holiday let/short term accommodation where you can get your mortgage interest payments against tax, you don’t have to deal with tenants not paying as you get your money up front and you don’t have to worry about tenants refusing to leave as you call the police to remove them from your business premises looks so much more profitable than dealing with tenants
Getting rid of no fault evictions and you have even less properties coming to the market.
Less properties = higher rents
.

How would that work? If you have a mortgage on the property

Getting a mortgage you have to prove you can rent the place for 25% over what the mortgage payments are. I think you would be in breach of your mortgage terms if you didn’t.

Only those who own outright could contemplate it. You also have to take account that a landlord is not a charity.
They have their own household to look after

This is such depressing reading.
I think the situation will only get worse and is so shortsighted by the gov - who will be able to live in areas and work in the shops/schools/drive the buses etc?
It's such a fundamental human right to have somewhere clean and safe to live. Surely it's so much better for the country and economy to have everyone's human needs met.

I don't know how to quote just bits of replies but the PP who said renters are lucky is incredibly naive. What's lucky about such precarious living/paying over the odds/competing with hundreds of others for a home?

I get LL don't want to lose money but not making as much as before shouldn't mean you sell, especially if you pride yourself on being one of the "good" ones. Unless there's a catastrophic housing market collapse you will always be making thousands of pounds annually - even if that slows/stalls for a year or two.

How anyone votes Tory under the age of 35 is a mystery to me. Young people can't afford to buy and now can't afford to rent assuming they could actually find a place. What a mess.

We are selling because the Scottish government is putting in place plans that mean we cannot evict tenants who don’t pay rent and rent controls meaning we can rarely raise rent. We have the properties mortgages and rising rates and the inability to claim costs against the money in means we are losing money and it’s a high risk investment

thousands of Scottish landlords are in the same boat but the Scottish government doesn’t listen. I do worry about our tenants ability to find a new home but we cannot afford to lose money each month