Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Trendo " at "16/02/2016 - 01:28":

Here's a copy of the Orwellian outcome I predict (taken from an original post I put up on PropertyTribes:

I foresee some huge changes in the housing/rental market over the next 10-15 years and Osborne’s changes have merely acted as a catalyst to get the process going.

‘Build to Rent’ is already starting to happen (indeed being actively promoted by the same government claiming all their action against private landlords is aimed at increasing home ownership…?), where flats – and indeed houses – are built (under favourable conditions from the government) but then not sold by the corporate but rented out.

The deal looks very tempting, you get a brand new house – possibly even fully furnished, with gyms and public spaces and concierge service – for ‘not much more’ per month than it would cost you to rent a run-down Victorian property.

In all your excitement you conveniently forget that paying a little extra is actually stopping you from getting a deposit together for your own house; you also forget that the corporate isn’t furnishing the house for free or as a philanthropic gesture either (so guess who’s really paying?).

But then it starts to get worse…

The corporate that built the house owns the freehold/leasehold and, more focused on choosing your new glossy kitchen, you probably skimmed over the bit of the contract that mentioned your responsibility to pay a percentage of the annual service charge (unilaterally set by the corporate, of course).

The maintenance that is done (by a subsidiary of the corporate) will ensure that the buildings stay in top condition but the cost will be shared by you and your neighbours with little say in how it is controlled or kept in check. One of the companies believed to be eying up this golden future is Legal & General so you may also find that there are strong ‘incentives’ for you to take out their insurance cover too.

One entrepreneurial corporate will then start a customer incentive scheme which means that, provided you remain in one of their properties, you will gain extra points for nice little things like a new kitchen after 4 years instead of the normal 5 (which you’re paying for anyway but they fail to mention that…). If they’re really smart they will allow you to start accumulating points from university, provided you use their Halls of Residence accommodation, of course.

Another corporate will start a Gold, Silver, Bronze tenant structure whereby you can pay a little more each month to be ‘upgraded’ to one of their flagship developments or ones closer to the city centre (this actually just helps the corporate to fill their new developments but it makes you feel special). Unfortunately, a less well-publicised feature of the programme is that tenants who have stepped out of line (for whatever minor reason) will automatically be dropped into the Bronze category.

Here you will find the number (and quality) of properties open to you for rental is reduced quite dramatically (and, ironically, you might now be paying more rent and insurance because you are now categorised as a ‘risky tenant’). Unfortunately, because you are now in the Bronze category of Company A the chances of you being able to switch to Company B are also limited because Company B will know all about your drop from grace. You’re going to have to work (pay) hard to regain your Silver status and any ability to switch providers equitably.

As you’re now approaching your sixties (and are still saving up for a deposit on your own home), provided you have stayed loyal to the same corporate there is a chance you may be ‘specially selected’ to join their retirement home scheme which gives a ‘huge discount’ to loyal customers and, in your relief at being chosen, you sign up (forgetting that no-one ever pays the full price anyway). The price you pay will, of course, be means tested which takes care of that little nest egg (sorry, initial home deposit) you had built up over the preceding 40 years.

By this point in time, some old and bold tenants will be reminiscing about the good old days when they had a private landlord…

Reply to the comment left by "money manager" at "17/02/2016 - 12:55":

Greedy, selfish scumbag LL/flippers with cashpots will buy them up, with "Vendor pays SDLT" (expect to see alot if that !) ...same as vendor pays deposit.

FTB are unlikley to touch them as they are already struggling with raising deposits, let alone a full refurb and mortgage retention costs on top.

Not only are tenants getting more expense , a lot of OO moving up the ladder will have to drop 3% off their prices (& give it to govmt) ....well done george

Reply to the comment left by "Paul Temple" at "17/02/2016 - 13:06":

.....dont forget the bit about lease term , right now AST 6 months ....at the other end of the scale is 999 year leases.

As commercialisation seeps in I'm guessing that 1, 3 ,5 10, 20 etc leases will be available to give you the peace and mind that you can start and raise a family without being moved on, i wonder what premiums will be charged for the secure lease terms ? and as well as monthly rent payments wether the lease purchase payments could be spread over the term (bit like a mortgage on a property that you never ever get to own or pass down ) ......in the relief and excitment of getting away from those overleveraged fools, and the safety of a professional "BIG" company looking after your home, you overlook that you are now paying far more than you ever did, or would, with a private LL, and have not a chance of ever raising any deposit of any kind.

Reply to the comment left by "Trendo " at "17/02/2016 - 13:43":

It must be worth divorcing and having the partner buy the serial flipping properties........

If LLs (parasites, scumbags etc) don't buy them up and refurbish, are they supposed to lie empty, ready for vandals and arsonists, there are thousands going up for auction.

Surprises me that a person can buy a £1.5m house, none of the hogswarts on HPC say a word, but if they had a £1/2m house and provided 10 homes (whether on debt or with equity), that no one else wanted to refurbish, they become scumbags. Funny old world.

One word for the experts ? On HPC begins worth J ends with Y

Grainger plc under the leadership of its new CEO, is increasing its focus on the PRS, with plans to spend £850m in this area by 2020, of which £250m is aimed at buying existing tenanted property

It is aiming for 40-45% gearing at 4% finance costs.

There are some slides in the most recent presentation that you may find interesting, including some of refurb in Liverpool

http://www.graingerplc.co.uk/~/media/Files/G/Grainger-Plc/pdf/downloads/strategy-update-presentation-28-jan-2016.pdf

And also, from its trading update on 11 Feb 2016, I noticed this

"Rents - Strong demand and continued growth

Continued high demand for our wholly owned and managed UK private rented sector homes (PRS) and positive growth in regulated tenancy rents.

Rental increases in the year for owned and managed PRS averaging 7.8% on new lets (excluding refurbishments) and 3.6% on renewals (2015: 6.3% and 2.6%). Including refurbishments, new lets increased on average by 10.0% (2015: 14.3%). Increases for regulated tenancy assets, where biennial rent reviews have been completed in the period, averaged 6.3% (2015: 9.6%). "

http://otp.investis.com/clients/uk/graingerplc/rns/regulatory-story.aspx?cid=505&newsid=667914

Has anyone seen the article in this link re L&G offering Landlords Lifetime Mortgages?
http://www.mortgagesolutions.co.uk/news/2016/02/17/legal-and-general-preparing-to-launch-landlord-lifetime-mortgage/?utm_source=Adestra&utm_medium=email&utm_term=&utm_content=&utm_campaign=Daily%20HouseAdvert&utm_campaignid=250&utm_cmdid=14806

Reply to the comment left by "Jon Pipllman" at "17/02/2016 - 15:12":

Hi John

Grainger’s strategy presentation starts and ends with “Grow rents”, and repeats it in the middle. They say their target is Generation Rent. If Osborne’s taxes force us out of the business, Generation Rent may come to regret supporting him, and wish they had opposed him

They are the stereotypes of us brought to life.