Buying to let

[THR1]

Hey, just putting it out there, but if people can afford to acquire a second property and are using the rent from it to pay a mortgage on their own home or increase profits/create a nest-egg, it seems unreasonable to pass on mortgage inflation to tenants, who only have one temporary home. It's not their fault mortgages are going up - at least split the difference with them!

A second property, whichever way you look at it, is a middle-class "luxury" and should demand fair rent prices and promote less greed. Buy-to-let is a risky business, but the landlord takes the risk and should not expect to put up rental prices on a whim or to charge extortionate prices for no service improvement (as per most business models).

I speak as a second property owner, who charges their tenant only 2/3 the geographic expectation because the tenant is on benefits. She looks after the house beautifully for a 1/3 reduction and her (local government-generated) rent is reliable. Any income at all is a lot more than most people have right now, and if you can't sustain a second mortgage comfortably without burgeoning your tenants with your costs, surrender it and put your money into something else.

In my opinion there is a very real housing crisis. I think the only ways to make real improvements are:

Huge investments in social housing including pop up modular housing (think prefabs after the war -this is a crisis!).

No tenant would rent a damp poorly maintained hone for £1000 a month from a private landlord if they had a choice of a warm modern social home for £500 so the sector would largely self regulate. (Still need safety certificates of course). The choice of a decent social home is not one most tenants have.

Prioe out empty second homes through taxation. This has already started through doubling/tripling of council tax in Wales/Whitby etc. This is a good thing and needs expanding. We do not have enough homes to leave swathes empty in some high demand areas.

Require planning permission for change of use for holiday rentals. The expectation should be that this will not be granted for an ordinary residential property on a residential street. There would need to be some phasing in such as properties rented over a certain % in the last 2 years granted holiday let but on sale revert to residential. Not allow more than a designated % of properties in an area to be holiday lets. The figure could be decided on a local level. The right of a holiday maker to stay in a cottage (rather than a B&B, hotel, caravan or purpose built lodge) should not trump the right of people to live in their local communities.

I was listening to a radio podcast the other day about the problems that Cornwall's hospital has recruiting when staff can't find anywhere to live so turn down jobs. The market needs regulating so that local people and people who want to live and work in the area can rent or buy.

@hannahcolobus interesting that you stop responding when my fact based responses peove your narrative wrong. Also that you don't respond with any fact based resources for your statements.

Also why should landlords sell their property just because people like you don't like it. Imagine if someone else had the power to tell you how to live your life. Sounds like communism to me.

@hannahcolobus I am not a LL currently but have in the past let a property (my own home) when I moved abroad for work. I just wondered who you think should own all the rented property. In the past, most rented property was owned by the big landowners - there are not many left but still a few Dukes etc who let numerous properties in London and across the country. These would all be owned outright by the LL with no borrowing so would not in theory be impacted by rising rates. It is mainly the newcomers, borrowing from banks on BTL mortgages that are suffering due to rising costs. I guess the banks are therefore to blame for offering so many low equity mortgages on BTL property.

Looking at it from a different perspective, rates of return are all calculated based on bank rates. No landlord, with or without borrowing, is going to invest in new property if the returns are less than those obtainable on deposits or the stock market. That takes us back to all landlords being ultra wealthy, such as the Dukes, who have held their property portfolios for centuries and continue to do so as they are very traditional and look to the much longer term (many generations). Do we really want to return to this limitation of choice in the property rental market - is it really a good thing?

@hannahcolobus I can see your point. At least now the BTL market is less attractive, only the serious investors will hang on, the rest will gradually sell up presumably.

Unfortunately the holiday home market has been more buoyant mainly due to the advantageous tax breaks, but around here I think even that is starting to crumble as people realise the market is saturated and they can't get the cleaners and other services they need to keep it going as all the locals have been forced out.

Agree with all of this, although I would add that capital gains on property need to be taxed at the same rate as earned income. At the moment, the highest rate of CGT is 28% on residential property, which is utterly wrong when the higher rates of income tax are 40% / 45% (plus NI).

Councils should definitely have the power (through the planning application for change of use) to manage the proportion of properties used for holiday rentals in their area.

It is mainly the newcomers, borrowing from banks on BTL mortgages that are suffering due to rising costs.

Except it is mainly the tenants of the newcomers, borrowing from banks on BTL mortgages that are suffering due to rising costs, isn't it? In the current rental market, with a huge shortage of properties, the landlord has the power to pass the sufferingn down the chain.

Supply, meet demand.
Demand, meet supply.
Surely you must have met each other before?

@hannahcolobus I've responded to over 4 people on this thread. But it's OK. You throw your toys out of the pram because I've proven you wrong on every single statement.

Also, your preference to return to the days when land owning dukes were the only ones who are property owners is hilarious and shows just how out of touch you are with the relationship between renting and owning.

The proportion of people who own thrirnown home the UK has never been higher. Before the 1960s almost half of people rented. Take a look at the figures if you don't believe me.

We have six rental properties all if which we now own outright and we have great tenants in all of them. Yes we make monthly income from them but we invested more for the eventual capital growth on the properties. We treat our tenants well and make sure that any maintenance is done promptly and to a good standard and always tell our tenants if they want anything doing to the property to ask us and we will help as much as possible. In the last six years we have put new kitchens and bathrooms in all the properties and upgraded the boilers in the ones that needed them. Our tenants are very stable and they know we have no intention of selling up so they can feel secure and regard the property as a long term home.

I know from speaking to a couple of our tenants that they are finding things hard and so we have decided to waive the rent for the month of December to help them all out with heating bills and have also promised that there will be no rent increases for at least the next year.

@hannahcolobus, for your information I have 4 houses on interest only and 4 on repayment. 2 almost paid for. The rent payments easily cover the mortgages and I choose to upgrade the houses each year. Over last 5 years 3 have had new kitchens, 2 new bathrooms, 2 new boilers, 1 new radiators, 3 new fences around gardens, 2 washing machines, 1 integrated fridge freezer, 3 houses new laminate, 3 houses repainted, 1 new decking in garden and several other bits and pieces. I have just remortgaged 3 from tracker mortgages to 5 year fixed. I did this 1-2 weeks before mortgages sky rocketed so managed to get 4 percent 5 year fix so no tenant will have more than 3.5 percentage rent increase this year.

Not btl LL fault that councils have sold off most of their social housing. Social housing has a rent increase each year. The house let to the poor family of child killed by mould not let by private LL but by social housing. None of my houses are damp or mouldy. I never understand why any LL would let their property get mouldy or damp when they can right off maintenance repairs to fix issue off of their tax bills. It pays me to keep houses in excellent repair as I can charge competitive rents and take my pick of tenants with well kept property. Seriously if all private LL sold up where would tenants who don't earn enough money in multipliers or don't have deposits live? Private rentals make up almost half of all rentals. Just be careful what you wish for. I know 5 LL all selling one house before April for CG purposes. 2 are also planning to sell a further house the following year. That will be 7 more families looking for a rental. That is what is forcing rentals up, lack of good quality rentals to rent at reasonable price. All caused by government policy.

@hannahcolobus, you say private rentals are in a terrible state. That is a sweeping statement and clearly you believe all privately rented properties are in this terrible state. You are just wrong. I have not seen all privately rented properties and I suspect some are in a poor state but equally you have not seen all privately rented properties either. The rentals I rent out and several other btl LL I know of and I have seen these properties are in excellent condition. Just look on Rightmove for rental properties. There seem to be many in a good condition to me. I have actually heard of many social rentals with mould. The 2 year old child who died is not the only renter living in a mouldy social rental. I understand you think social housing has no faults in your black and white world. At the end of the day no one is forced to rent a property. People go into private rental if they want to. If they chose not to no one is for ong them. They can always wait for your lauded social housing.

I always thought that when buying a second property the property itself and the (very likely) long term increase in value WAS the investment, so renting it out was to cover mortgage / maintenance / insurances.

SO many BTL landlords where we are are raking in 1000s a month over and above what they're spending on the mortgage etc. Rather than simply having a nice nest egg to sell when they retire and have made a good chunk on, they are significantly boosting their income monthly while no renters can afford to get on the ladder at all.

When I sold my 1 bedroom flat I refused to even show it to investors. I wanted the perfect first ladder step to go to some getting on the ladder.

We became accidental landlords when I met my Dp and we both had our own houses. His was mortgage free so we rent it out and it pays for our mortgage on the home we live in now but didn't straight away because we had to spend money on it and then wanted to build up enough savings should anything go wrong repair wise.

Our tenant will likely be renting all her life as she has debt and ccj's so absolutely no chance of getting a mortgage so I can't see where I'm stopping her from owning her own property by renting to her. If all landlords sold up my tenant would be out on the road with nowhere to live due to lack of social housing but it's easier to see landlords as the bad guys.

@hannahcolobus, how is social housing regulated to a high standard if a child can die of living with mould in a social housing property? What high standards are they meeting that private LL don't meet? I am interested because I do all I have to do with booklets on how to rent, electric certificate every five years, gas certificate every year, 2 smoke alarms, 1 on each level, carbon monoxide alarm near boiler and cooker. I also have boilers and gas appliances serviced each year, provide fire blanket, extinguisher and first aid kit in each kitchens. I also provide white goods, fridge freezer, washing machine, tumble dryer, dishwasher and replace if they brake. I don't want a medal at all. I get paid rent. All I ask is tenants pay their rent on time, let me know immediately if something needs repair or if they go on holiday for more than 3 weeks at a time, for insurance purposes.

@You can't have it both ways. On the one hand all LL are people who you don't want to rent privately but on other hand if all private LL sold up you accept there are not enough social housing. So would you rather all private LL sold up and left their tenants to councils to home? You know very well they would end up in temporary accommodation maybe for years. It is not as if all tenants can conjure up earning multipliers and deposits. Some as previous poster stated have ccj's. Do you think they will get a mortgage?