National Rent Rise Day 5 April 2017

Reply to the comment left by "Jon Pipllman" at "13/10/2016 - 20:14":

With regards to my thoughts on rents please see my comment at 3pm today, extract below ...

"The reason I have only sold enough property to restore my personal liquidity position, rather than selling the lot, is that I foresee a demand driven 50% increase on rental values over the next two to five years as a result of failures in Government policy making on both housing and population growth."

If s24 is reversed I would revise this growth projection to half that figure. A lot of damage has been done already by s24 and changed the mindset of many landlords including myself. Where many landlords have not increased rents annually I think they will now do so. I also forsee rents lagging behind market values due to long periods of no increases being put right, i.e. In line with market values for recently let property. That will be hidden inflation, just as it was hidden generosity not previously recognised.
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The rent figures that are often used by the Government are based on information provided by the Valuation Office Agency (VOA) and is often out of date, so I would urge all private landlords to submit rent details to the VOA so that the Government are aware of true current rent levels (not assumed or out of date rent levels).
This is the link for submitting such information:
https://www.gov.uk/government/publications/local-housing-allowance-and-statistics-on-private-rent-levels
If you put your rents up, please submit the new rent details to the VOA.

I have also in the past never increased rents on existing tenants, however I think leaving this until next year and issuing increases all at the same time is risky for a landlord. I started pushing for market rate increases a year ago to attempt to get into a satisfactory position before next April. Now its all about making sure every claimable expense is claimed for, and looking out for any other ways to help maintain the business I started in the 90's

I have just been sent a link
http://www.propertywire.com/news/europe/new-rents-fall-0-8-across-uk-latest-index-revealing-slowdown-trend/

The article states: "Martin Totty, HomeLet’s chief executive officer, believes that landlords are being very careful to ensure rents remain affordable for tenants. ‘Despite factors such as higher Stamp Duty on purchases for buy to let investors and the tax changes coming in from April 2017, it would appear so far landlords have absorbed any actual or expected decreases in their yields, rather than pass this on through higher rents,’ he explained."

I am not sure what is going on here?

Whiteskifreak, simply-put I expect that the majority of landlords are either unaffected by S24 or are not bothered enough to potentially lose a good tenant. Either that or perhaps tenants have less money? I think everyone is struggling financially at the moment.

To do what you suggest ie make it a set date and a known tax could like one of the readers has suggested make the government act in regulating rents. My suggestion would be just increase rents where you see you need to as each case is different and the government will soon realise the error of their ways. I am a landlord of a large portfolio and am also very angry with what's happening, I just don't want the government to have any good reason to try and regulate rents and make it even more unfair for us.

Reply to the comment left by "Whiteskifreak Surrey" at "14/10/2016 - 16:13":

We are still living in a pre-s24 world and rents are still set by supply and demand. A lot of new property came into the market before the stamp duty increase and i am sure a lot is still working through. I suspect some of those purchases may have been rushed and led to over-supply in certain areas.

But remember most of us only increase rents when seeking a new tenant and so the current rent we charge is below the market value.

Obviously landlords without mortgages will not be affected by s24 so will not be under cost pressure to increase rents, but I am sure they will use the opportunity of s24 to increase rents too.

But what seems utterly unfair is that wealthy landlords without mortgages will be able to undercut the rest of us and still be able to maintain their margin. It is like running a race with a lead weight tied to your leg.

I suspect that the reason that many landlords have not joined the campaign is that they simply don't care because they are not affected - their tax bill will not rise. But the state will come for them next, so they should make stand with us.

H B...

The difference is that landlords who do not have a mortgage or perhaps have low overall LTV, are not a risk to the economy/banking system. The government are clearly trying to disincentivise the "borrow as much as you can and buy as many houses as you can" business model. It works really well in a rising market, but when the market turns the dynamic works just as well the other way round and can have brutal consequences for the borrower and the lender. As I understand it the government have been pretty open about this being one of the reasons for bringing in S24. By a happy coincidence, S24 will also bring in a truckload of revenue. Two birds, one stone.

The fairness argument is a little weak as landlords are free to sell up at any time.

There is an argument that those landlords who have been hoovering up properties in this way have contributed the most to pricing out FTBs, so it's a vote-winner there too. Fewer landlords = more FTBs/OOs = more tory voters. Whatever the government do, they know they can rely on landlords' votes... Who else are they going to vote for? Jeremy Corbyn's Labour?

It will be interesting to hear what is said in the Autumn statement next month, but if there is nothing on S24 being dropped (and that looks pretty unlikely given the reasons above and the noises being made my Theresa May) I think you have to accept that it is going to go ahead and start making plans to work around it. This may include raising rents if you feel that the local market can support this and that it is worth the risk of potentially having to find new tenants.

Interesting times!

Reply to the comment left by "James Robertson" at "15/10/2016 - 18:57":

There is no evidence to suggest that highly leveraged BTL landlords are any greater risk to the economy than highly leveraged owner occupiers. In fact, all evidence points to highly leveraged owner occupiers posing the higher risk.

Stats used by BoE to suggest otherwise were proven to be flawed on the basis that BTL lending had been grouped with second charge mortgages.
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Reply to the comment left by "Mark Alexander" at "16/10/2016 - 14:44":

The problem is, if I am a highly-leveraged OO, I'll been over backwards, doing whatever is necessary (second job, overtime, borrowing from familly etc) to pay my mortgage and keep a roof over my head. If I ultimately fail,the bank can repo and worst-case-scenario, the bank lose a few grand. As a highly leveraged BTL landlord, I would be likely to have numerous properties in this position, probably with the same lender. I also would be much more ready to throw in the towel and let the bank repossess as they are not my home (precipitating the loss for the lender). This is one of the reasons that BTL mortgages generally have a higher interest rate.

As a landlord, my mortgages are also much more likely to be interest-only, so not only are my properties at a comparatively high LTV, they'll stay at a comparatively high LTV (unlike an OO who will gradually pay off the capital). If prices were to fall, even a little, then I (and my lender) could quickly end up in real trouble. It is a potentially-lucrative but reckless strategy for landlords IMO, hence the government want to clamp down on it.

And that's before you even get to the fairness angle, of course. Things that are damaging to society are often subject to punitive taxation.