There should be an upper limit on rental prices

[HereLiveIAmNotACat]

Am I the only one that thinks the property investment industry is horrendous and shows how awful, greedy and selfish mankind can be? Surely there should be laws around this? Or caps on the maximum profit a homeowner can make per month relative to any mortgage on the property?
How can it be right that rental prices are ludicrously above mortgage prices purely for the homeowners to benefit from someone else paying off their mortgage and make a pretty penny on top.. then moving on to their third, fourth houses etc..meanwhile renters are stuck forking up more than they can afford with little chance of ever making it onto the property ladder due to the impossibility of saving up whilst paying rent.
Unless you were fortunate enough to have a property in the 80s before inflation/money from family you’re screwed really.
Just means less and less rental properties being available. The rich getting richer the poor getting poorer. And it’s always ‘oh it’s brilliant we’ve paid that mortgage off and are making such and such per month renting out..we’re now moving to a much larger house in a much nicer area’ as if that’s something to be proud of?!

(Yes- bitter renter here)

A tenant pays £800 per month for 35 years renting (a total of £336000) at the end of the 40 years they receive NOTHING.

A homeowner pays £800 mortgage for 35 years (a total of £336000) at the end of 35 years they have a house they can sell for (likely) more than the £336000 so they have money or own the house outright. Ideal.

Leaving aside what benefit the tenant gets from the rental during the rental time, this also ignores mortgage costs.

Let's say you take out a 25 year mortgage for £200k with a 10% deposit for a house costing £220k. Let's say the average interest rate over the course of the mortgage is 4% (risky to assume what interest rates will be like over 25 years). Your monthly payment will be just over £1k and by the end of 25 years you will have paid the bank roughly £317k. It's very likely your house will have risen in value by this time and will need to be over £337k for you to have broken even. This is ignoring maintenance costs (excluding improvements) over 25 years which is estimated at roughly £850 a year, adding an extra £21k over the 25 years. Total cost of buying now = £358k. Maintenance and costs (including mortgage interest) on a rental will be much higher than this.

It's not as simple as you claim.

Some tenants are on benefits for their rent, rates etc. So they're not paying into a property the tax payer is. I worked for the council in this department so do have knowledge experience of this.

If you want to blame someone then there's two culprits. One the deregulation of building societies. Two the right to buy of council property.

The tenant we had for the longest time was far richer than we were. He ran part of his business out of our house. Some years he gave us a Christmas bonus! He had started out renting our smaller basement when he was young and poor--he'd had a rough upbringing and a bad credit rating, and we took a chance on him. Later, he came back because he'd always just loved the house and felt comfortable with us, and rented the whole thing for years and years. It was a part of the money we have saved over the years. But honestly, we could have made more money with much less effort in the stock market. And I'm sure many tenants do, too.

One of my tenants in now in arrears. I still have to pay the mortgage on the property though. Plus maintenance. And tax. And ground rent. And the managing agent. And the estate agent. The list goes on. I can't evict them without a lengthy and expensive process. And I am not the only landlord in this situation. I'd love to hear your thoughts on the above, OP. But chances are you will read this but not comment. Prove me wrong. Go ahead.

My thoughts are that you should be paying for the asset you own.

If there is anyone left on the thread that is interested in inequality and social justice, these are interesting, if depressing, reads.
www.opendemocracy.net/en/oureconomy/i-made-a-fortune-from-predicting-the-last-crisis-i-fear-for-whats-about-to-unfold/

www.theguardian.com/commentisfree/2020/may/07/i-made-millions-last-debt-crisis-rich-win-coronavirus-fair-tax

Forcing working people to buy assets for landlords is a political choice. It does not have to be like this, but Britain chooses this path of screwing its people again and again.

@ParsleySageRosemary A primary residence (that you live in) isn't a true asset though. It might count as an asset on a balance sheet, but there is a reason why banks only count assets that can be liquidated when determing who is a ultra high net worth individual. Mainly because you can't easily sell your house without needing another to move to. So by that token, only BTL properties can be considered assets, owner occupied homes are not really assets as no income is earned from them (unless you have a lodger), its just paper wealth. An asset is something that is used to generate cash flow so by definition, a BTL needs to have someone else paying for it, that is what differentiates it from a non asset like your home.

What can be done is to encourage rich people to invest in other asset classes with high taxes/stamp duty on BTL and banning companies in offshore tax havens from purchasing properties. Wealth taxes.

@Danikm151

The cost of renting can be extortionate. My old flat I rented for £500pcm (1 bed room with garage) My landlady didn't raise the rent and I was there for 4 years. On moving in £500 seemed a bit high but location and garage were excellent, it was within my budget. A flat in the same block on the 2nd floor(no lift)without a garage was being advertised for £650pcm! My current 2 bed house with a garden with a housing association is £391pcm. The house 2 doors down is being advertised for £750pcm on right move. Almost double the cost. Lower rent charges will usually result in tenant loyalty and therefore the long-term costs are a lot better rather than having to find new tenants every year as they have realised they can't afford the £800 pcm you want even though their housing benefit is £650.

There because I am paying for the other half through my taxes, yet I believe you have an iPhone in one hand, long nails in the other and a huge tv.

Priorities of the disadvantaged.

@InTheNameOfAllThatIsHonest I think this is a very separate issue isn’t it? There’s a contract in place that the tenant is not complying with so of course that is unfair on you and leaves you in a situation you did not account for financially, which is very wrong. I’m not saying tenants shouldn’t comply with contracts they’ve signed and agreed.
My argument is I don’t think contracts/tenancy agreements should be allowed in the way that they are- with all the benefit to the homeowner and none to the tenant. The whole housing system needs an overhaul. I suspect if rental prices were decreased, or there was greater incentive for renters, they’d be a lot less landlords (obv not all!) finding themselves in a situation where the tenant falls into arrears- which is not of benefit to anyone.

If there are fewer landlords, where will renters live?

Thank you, OP. However my point is that landlords must account for such eventualities i.e. non-payment of rent, in the amount they charge tenants per month. Because the money to pay the mortgage and all other costs when nothing is coming in, must come from somewhere. We cannot apply for benefits like some tenants can when they have no income. So rent levels don't indeed just reflect mortgage payments but other costs too, plus of course there must be a profit for the LL or they would not be in the letting business (same as any for-profit business).

If you looked (if you haven't already) at the profit or mark up of many businesses, you would realise it is much MUCH higher than that made/applied by landlords. And yet, most people don't have an issue with that. Most landlords invest in order to make a profit, like any other business person. And yet they get vilified for that. If landlords were forced to lower rents, most would sell up and then there would be a housing shortage. So I'd like people to stop putting the blame for high rents squarely and exclusively at landlords' feet, but do some research, and then express their opinions.

YABU.

if the government cares about affordable housing they wouldn't have sold off all the council houses.

And there aren't any caps because they know the population wouldn't vote for it.

Its up to the government to introduce any of this- and they won't because they know it's not a vote winner.

People aren't necessarily in arrears because they lack money. Tenants can stop paying for any reason and it can take months to get them out, because laws are so favorable to tenants.

@Porfre

YABU.

if the government cares about affordable housing they wouldn't have sold off all the council houses.

And there aren't any caps because they know the population wouldn't vote for it.

Its up to the government to introduce any of this- and they won't because they know it's not a vote winner.

The Welsh government are beginning to address this. They intend to create a construction company who will build for them. Because up till now contractors have paid offset money to councils for social housing that money just disappears. It's bloody annoying to be honest contractors are following the rules councils are letting us down

My argument is I don’t think contracts/tenancy agreements should be allowed in the way that they are- with all the benefit to the homeowner and none to the tenant.

You can change them any way you like, but I guarantee you that any benefit you create for tenants in one place will be offset by an equal and opposite disadvantage elsewhere. The whole point of market forces it that they balance competing interests, if you disadvantage landlords in one part of the deal you will have to give them an equal amount more elsewhere, or there won't be a deal.

You can't magic better terms for tenants into existence without saying where the benefit is going to come from. The net benefit can't come from landlords, because the original level of benefit is necessary to keep them in the game. (One way out of this could be to land the bill on the taxpayer, make them subsidise rented housing somehow.)

(When I say equal and opposite disadvantage elsewhere, I mean for tenants as a class, not necessarily individual tenants. For example, the introduction of rent controls would genuinely make life better for people who were tenants at the time, the disadvantage would be felt by people who wanted to be tenants afterwards and couldn't get properties to rent, or had to pay higher-rents in the non-rent-controlled sector.)

Investing in property is very risky. It is easy to look at the market the way it is now and think that the value of homes always goes up. But the markets could crash tomorrow. When I bought my first home, the value dropped by forty percent the next year, but the mortgage rate was very high--in the double digits at the time. We still had to pay it. We were "under water," as they say. It was tempting to walk away from the house. It took years to regain its value. Furthermore, there are all kinds of bad physical things that can happen to property. Squirrels in the attic. Floods. Where I live, hurricanes. Fires. Etc.

Either way, there's no getting round that tenants are exploited in today's market. I moved a few years ago from one property to the one next door and had the same landlord. I was charged £60 for references (inc from my current landlord), despite the fact that I had the same landlord.

My cleaner is currently homeless and I have had to invite her to stay with me. She has been dealt with in a really shitty way by an agency she is about to rent from. Some people might be able to protect themselves and live a fairly buoyant life because they are financially cushioned but there are others who are really subject to sharp practices by landlords and agencies.

It strikes me that there are mostly middle class people on this forum who are socio economically advantaged, but there is a whole slice of society out there who are much more vulnerable and the current housing market really kicks about 50% of the population in the teeth.

I don't live in the UK, so I don't know the answer to this question--are there any kind of rent controls or rent stabilization laws in place at all? For example, can a landlord raise the rent by any amount he or she chooses year by year, or are there regulations about that? And are there regulations about how much the landlord can charge the next tenant who would move in? Or is it a free-for-all?

Mrs. Hookey--That is ridiculous. I know there are some bad landlords and that kind of nonsense is shameful.

Yes every year we would have a tenancy agreement renewal at the cost of £75. They were printed out and frequently had the wrong person's details and wrong address and year. Felt like a rip off!

Landlords are charged for tenancy renewals too. And a lot more than £75! It's usually a few hundred pounds on a sub £1,000/month rent AST. Plus all the certificates, etc. that we need to get regularly. Gosh this is actually quite depressing...

But aren't all these costs & charges tax deductible for landlords?

Is it next year that private LLs have to make sure new rentals meet a minimum C rated EPC? I have read speculation that it will make many think again and sell up.

Not really. It's complicated and has changed a lot in recent years. The current regime certainly favours professional landlords with multiple properties over landlords with one (most of them).

No, 2025 for a C rating.