Real rents v LHA rents – info request

Reply to the comment left by Jonathan Clarke at 15/07/2019 - 20:18So now you are aware of how the VOA measures rents, will you be submitting a return to them?
After years of regular returns, once the rates are unfrozen in 2020, personally, I'll be packing it in.

I started contributing to the rent survey in the Durham area/northeast years ago by spreadsheet. They wanted non HB rents. Now they ring me every year for updates

Reply to the comment left by David Lovegrove at 15/07/2019 - 20:27
Yes the service charges are a separate issue to the LHA rate . As are maintenance costs, refurbishing costs and mortgage costs etc . All those figs are individual and personal to the buyer when assessing ROI . The market rent is the figure the VOA are interested in irrespective as to how you personally arrived at that figure . Flats are cheaper than houses to buy at the outset in the main partially because of service charges but that is of no consequence really to the tenant or the VOA .

I invested in 2 bed low market poor quality badly fitted non standard construction flats as i got the same LHA rent as the posh 2 bed upmarket ones with house and a garage and garden with new everything in but for twice the price . I used to call it my `two for the price of one` policy!
So a 2 bed ex LA flat at 75K attracted say 650 LHA rent at the time so 10% yield where the posh ones in the estate long the road were around 150K to buy for the same 650 private rate and only 5% yield
The crude calculations which went into arriving at the LHA rate was then distorted in my favour so i took advantage . Then 15 years later or so the government finally twigged and froze the LHA rates to try and stem the leakage of public funds but in doing so created another problem for themselves by doing that ...... Mass homelessness .

Governments ( unfortunately for the country but sometimes fortunately for investors) make short term policy as MP`s only have a 5 year vision because they focus on what to do to get re elected . So they make populist moves like freezing LHA rates . It creates a problem but only for the next Parliament term and they will sort that out in the fullness of time if still in power. An investor though will focus more on a 25 year vision because of mortgage terms and long term stability they want for them and their families .

That disconnect in our respective visions creates opportunities

Reply to the comment left by Darlington Landlord at 15/07/2019 - 22:17
That`s interesting . Can i ask - do they ask for documentary evidence to validate your figures or just take your word for it over the phone ?

Reply to the comment left by Monty Bodkin at 15/07/2019 - 21:01
Probably not as personally I`m tired and I think its just a paper exercise . For the last 3 years the LHA rents have risen 3% pa so to the wider public they say its frozen but in reality they are not . So they continue to speak falsehoods. I think they just look at the breakdown of the sec 21`s on their desk as an indicator to how big the DHP fund should be the following year . The actual LHA rate has become largely irrelevant. Bit like the council tax bands when they were introduced

2020 will be interesting year......will there be a massive leap of say 15% to catch up with market rates or/and will they come up with a much more focused and relevant LHA policy . With UC still filtering through as well I have moved slowly and surely away from the HB market for the past 4 years . I may also take my money and run if they continue to put the boot into me

Reply to the comment left by Jonathan Clarke at 16/07/2019 - 03:49- do they ask for documentary evidence to validate your figures or just take your word for it over the phone ?
I don't think they need to.
They've never asked me.
95% of returns will just be confirming what they already know.
Anything of interest they can dig deeper;
Land Registry, rental ads, EPC's, veracity of previous returns, accredited landlord, landlord licensing etc.
Compare that with dozens of similar returns and you get a pretty accurate picture.
Bullshit returns are easy to spot and a waste of everyone's time.

Reply to the comment left by Jonathan Clarke at 16/07/2019 - 04:04
Probably not as personally I`m tired and I think its just a paper exercise .

I can understand that but I think the returns leading up to April 2020 might be quite influential.
For the time taken discussing it on here, a return could have been submitted.

I may also take my money and run if they continue to put the boot into me.

I've been casually picking up my money and strolling out for some time. I'll be continuing to do that for the foreseeable future. A get rich slowly plan.

Reply to the comment left by Jonathan Clarke at 16/07/2019 - 03:49They just take my word for it. Having said that my rents are average/below average Market. They do ask for addresses and if its the same tenant as last time. They will have my previous responses going back about 10 years.

Reply to the comment left by Darlington Landlord at 16/07/2019 - 10:50
In those circumstances the submission of that data will continue to suppress future LHA levels.

In those circumstances the submission of that data will continue to suppress future LHA levels.