Lots of Landlords are selling up!!

[PassingStranger]

Where is everyone going to live who can't afford to buy?

Alot of landlords are selling. Can't be bothered with all the hassle now.
People aren't paying rent and also trashing houses when they do and costing the owners lots of money to put things right.
On TikTok people are being told to trash houses. [Society gone downhill]

I know there are good tenants, but there are alot of bad ones. Family member works for estate agent and says there are more bad tenants than landlords.

You can trash a house and walk away. Nobody ever gets done for criminal damage on private rents.
There is no register of bad tenants legally allowed either. It's all left to the landlord to sort out at their expense.

Where is all the housing going to come from?
The government donthave enough.
People who are trashing houses and not paying rent are actually spoiling it for everyone..
Alot of lls are selling up now.

I have no idea. But they are unlikely to make individual decisions about rent based on individual circumstances. Corporations want to maximise profits and are unlikely to consider charging less than market rents for some tenants because they are good tenants and the hassle factor makes them worth keeping. Corporate landlords will surely have fixed rents per property type and fixed regular increases. Common sense.

They just don't have the same incentive to keep good tenants that small landlords have. The risk is spread across many properties, so they get a better return overall by charging the max for all their flats and accepting that some flats will make a loss.

Whereas for a small landlord, a loss in one flat would be financially devastating. So they are inventivised to accept lower returns to reduce that risk.

Section 24 was announced TEN years ago. Loads of time for established landlords to incorporate, and no excuse for new leveraged landlords not to have started out properly. Anyone who hasn’t incorporated by now has accepted the tax situation and so shouldn’t be bleating about it.

As I understand it individuals can't incorporate? There needs to be at least two of you?

It's not that there are too many people: although that does make housing more expensive, when house building doesn't keep up with population increases.

It's people behaving appallingly, and a complete lack of accountability or personal responsibility. They continue to get more housing, more support, no matter what they do.

How has the UK got to this, and so quickly? Social security was introduced in the UK in 1948. In just 75 years - 3 generations - we've got to the point where it's spiralled out of control with no accountability and just endless entitlement.

We've gone pretty badly wrong somewhere, and I think it's a result of this constant drive to remove personal responsibility by the Left.

I think we need to move closer to the Nordic model.

www2.deloitte.com/content/dam/insights/us/articles/43149-the-nordic-social-welfare-model/DI_The-Nordic-social-welfare-model.pdf

"The welfare model is not just about solidarity and must function in terms of both financing and delivery: a fairly shared tax burden, minimal misuse of provided benefits and efficient delivery"

I agree with every word.

The government should arrange for benefit rent to be paid directly to the landlord instead of the tenant who may not pay it on. There could also be a system where if the landlord needs to do repairs then the rent is withheld until done. I know this means more admin for the government but it could be a better way of protecting both parties and promote confidence in the rental market.

I understand your theory but what is the evidence that tennants of large landlords are paying more than those of smaller ones?

There is not really any other reason for covering walls with shit or pouring concrete down toilets apart from the tenants absolutely hating their LLs.

And in tourist areas where there are so many Air BNBs and holiday lets that there are few homes for locals, pushing up prices and reducing supply.

By incorporate, I mean starting a limited company and transferring the house into the companies ownership. Then the mortgage costs become tax deductible. Obviously a number of issues come up, like the mortgage needs to be changed/renewed, stamp duty paid, etc etc.
There is a ton of information online about it and companies that specialize in this.

What's the evidence they're not? How would one go about finding such evidence? Let us know if you find out.

What I've explained is why that's likely to be the case. Small landlords will do their best to keep good tenants, including by not increasing rent along with market rates. Corporate landlords won't be making such individual decisions.

It's not that long ago that the government DID pay rent directly to landlords. It was maybe 10-20 years ago that the govt decided to pay tenants instead. I think at the time it was said that it was to make tenants more responsible!!

Don’t you know small landlords always charge less than the going rate? You can see it in nearly all the landlord comments.
They pride themselves on their benevolence.

Well it hasn’t worked according to some of the LLs on this thread so maybe it’s time to reverse that decision.

Nope. A single person can form a limited company. It used to be the case that you needed 2 people to run it, i.e. two directors or a director and company secretary, but the company laws changed roughly 20 years ago and now "one person" companies are very common and popular.

Yes, and from reading the articles in my Landlord magazine only two people or more can do this. It was an article written by someone I expect was qualified, and published in the NRLA magazine. Was that incorrect?

Lots of things that have changed over the past 20-30 years have been proved to be mistakes. Personally, I'd love to just turn back the clock to the mid 90s and start again.

So would I!
Not everything though. Thinking about those Fray Bentos pies in tins.

Interesting. I read an article just last year in the NRLA magazine advising landlords on this issue, and it very definitely said only two people or more can do this. However a Google tells me that's not the case. Well how strange is that?!

Me too!!

Yes, it's wrong. It was changed in the 2006 Companies Act. So whoever wrote that article is 19 years out of date!

It may be that some banks and other lenders have their own criteria and would only lend to a limited company with more than one director/shareholder, but it's not a legal restriction.

This is from a 2024 piece written about the Irish market but you may find it interesting.

“The setting and stretching of market rent is particularly important here, because corporate landlords operate on a scale that gives them the de facto ability to decide what market rent is or ought to be. Although rent controls limit the amount and frequency of rent increases, ‘comparable dwellings’ are used when carrying out rent reviews. For a rent increase to be valid, the landlord must show that the rent increase is proportional to market rent for 3 comparable dwellings – because corporate landlords tend to acquire or own apartment buildings or complexes, this gives them significant control over what market rent will be in a given area.
For newly-built developments, market rent is essentially performed as what the corporate landlord decides that the rent should be, which is typically higher than rents being paid in existing tenancies in the area. Cumulatively, this means that the market rent for an area can be dragged up by corporate landlord investment,”

(From https://www.rundale.org/2024/03/28/size-matters-the-case-for-regulating-corporate-landlords/)

This, which refers to Irish and US markets, is also notable. It appears eviction applications by institutional landlords are much higher.
https://theweekinhousing.substack.com/p/the-week-in-housing-250621

I don't have any evidence, only a mechanism.

If you really wanted to, you could try to look at how various factors which have affected rentals have changed in the last 10 years. Eg population and demographic changes, mix of individual vs corporate landlords, government social housing and benefits take-up etc. You could then compare how rental prices have changed as a proportion of sales prices, bearing in mind that there will be a time lag on impacts.

Perhaps the government should do an economic impact assessment before introducing a new policy billed as "the most significant reform the private rented sector (PRS) has seen since the Housing Act 1988"?

Of course they won't.

So we'll just have to watch what happens over the next 10 or so years. I have no skin in the game, so I'll just get out the popcorn and make observations.

Your analysis please of the returns generated by BTL versus equities versus fixed income versus cash - say, during the past five years.

Thought not…