Why we should get ready to really say NO to George

Very well written piece, thank you for posting.
While I have not had the pleasure of enjoying the hit TV show Game of Thrones. I can fully appreciate the position of the King of Westeros and feel in a somewhat similar position myself.
Lady landlords please apply the relevant / equivalent example for yourselves.

But housing crisis what housing crisis in London? The Government has asked each London borough to provide 1000 new social housing properties to meet the growing demand. New not additional, though and here's the rub. Lambeth is complying by demolishing six estates so around 850-900 properties will go so they can build the 1000, and presumably pushing 850-900 families out to fend as best they can whilst the work goes ahead. I've no doubt other boroughs are doing similar. With most new build developments seriously overpriced because developers know they will be snapped up by foreign investors whatever they charge; these blocks aren't going to see many first time buyers. So if private landlords are forced out of the arena, what are people who can't afford to buy going to do?

I think these moves are not as unconsidered as we might wish, it looks like something of a rerun playbook.

In around 1983 there were 250,000 life assurance salesmen/financial advisers/brokers. Self regulation dawned with Lautro/IMRO/Fimbra followed by statutory regulation PIA/FSA/FCA, ever high levels of qualification, compliance costs, government intervention (Stakeholder pensions etc) and prohibition of commissions and regular doses of investigatory scandals (often misinformed and definitely myopic) and consequent media frenzy (definitely misinformed and willingly myopic). In 1990 I remarked that the regulator would not be happy until no one actually bought anything but they could be assured that they did so compliantly. Today there are approximately 50000 fee charging financial advisers but almost invisible to the general public and even the banks have withdrawn face to face advice for all but the better heeled.

The industry was forced to evolve from a cottage industry of largely single self employed to a corporate one. HL was formed in a spare bedroom and has a cap value probably more than some countries, you couldn't replicate that today.

So the big boys are taxed CT at 20% on retained profits with all the recent benefits while the smaller fish are allowed to fry, bail out or up their game. We have fire detector, checks, legionella assesments, landlord licensing, HMO criteria, right to rent and potential changes to landlord obligations and tenant rights and possibly, however misguidedy, rent controls all of which reduces margin.

I am not convinced that logic alone will address the iniquitous, and one shoe fits all, moves that have been adopted. Other than the immediate need to extend the tax take, and BTL is seen as low hanging fruit, I am not sure that recent measures are other than longterm policy driven to reduce the market diversity and achieve economies of scale. There ARE real issues such as rural second homes that cause a problem and that could have been adressed by more focussed interventions, they weren't.

If all of those people will be shifted into parents spare rooms, onto friends couches or council waiting lists then how will landlords sustain increased rents? Won't it just result in more void months and thus a reappraisal of rent according to market forces? Can't pretend to understand how councils set housing benefit levels so not sure how that would influence things.

Reply to the comment left by "Gordon Comstock" at "01/12/2015 - 19:36":

Rents would need to increase because Clause 24 won’t just increase the rate of tax that landlords pay on their profit. It is divorcing the calculation of that tax liability from a BTL landlord’s actual profit, and using primarily the value of an outgoing instead. For many landlords, the new tax liability + mortgage repayments will exceed the current monthly rent they are receiving. So they will have to increase the rent to pay both the tax and mortgage, and keep the roof over their tenants’ heads.

Furthermore if a proportion of landlords sell-up, there will be further upward pressure on rents in the market as a whole caused by the reduction in the supply of rental properties.

Part of why I am so sure of this is my own experience of renting and renting out. I am letting to people who specifically want to rent because they are new to their jobs or residing in town or the country on a temporary basis. Last time I had to re-let I had 8 consecutive viewings in one day by people fitting this profile, and ended up having to make a hard choice between 3 who wished to move-in.

My point is that there is a constant and growing demand for rental properties, largely because people are working and living on a more mobile and changing basis. If landlords like myself disappear, people like this will still need to rent and be left chasing fewer, more expensive homes.

In this scenario the poorest renters will be those forced out of the market. Landlords who previously had to hold their rents down to accommodate a target base of lower-income tenants will be the ones most likely to close down their operation and sell, as their increased tax bill makes it financially nonviable. Meanwhile those remaining because they're able to attract higher paid professionals will focus upon them to pay their mortgage payments + enlarged tax liability. The poorer renters who no longer figure in the plans of this reduced supplier base will be the people pushed out of the market into spare rooms, council waiting lists etc.

Reply to the comment left by "Gareth Wilson" at "01/12/2015 - 20:04":

But if the supplier base is reduced because landlords are selling up then doesn't it figure that the renter base will also reduce (as in its a fair assumption that renters are buying the property)? Also, according to the OP a substantial amount will also be priced out and so further reduce the renter base thus forcing reassessment of rents accordingly (bearing in mind that landlords most effected by the taxes will now be in competition with corporates and other landlords who aren't leveraged at all)? I appreciate that you'll have to put your rent up, but is it a given that the people you're competing against will have to as well?

Reply to the comment left by "Gordon Comstock" at "01/12/2015 - 20:48":

I am a second generation landlord and I firmly believe we need more social and general house building to solve the housing crisis. Landlords do provide homes to those that cannot buy and in many cases are willing to share or rent small spaces to suit their lifestyle.

We are not the cause of the homes shortage in the uk!

Incorperated landlords not directly affected by the tax grab will still look to raise rents along with the market especially to compensate for other anti landlord tax changes and the perception that Osbourne is targetting landlords unfairly
The corperates have not invested in the uk so far as they look for higher yields and don't want to compete with our private rented sector. If they do invest they will charge high rents and have poorer service.They are waiting untill they can make a profit on their terms. Google american housing corperations for feedback.
You only have to look at student accomodation which they are building masive blocks of in cities like liverpool charging vastly overinflated rents than traditional shared student houses.
There are many statistics going back to the 80's showing that if the supply of rental property is reduced rents will rise.
Most renters do not want or are not able to buy their current home. No renter will want to buy a room in a shared house, which many are living in. Only 1 in 26 of my tenants (in self contained flats and houses) would be interested in and able to buy. If Landlords exit the market many people will be reduced to sofa surfing /homelessness

Reply to the comment left by "Gordon Comstock" at "01/12/2015 - 20:48":

No because we are talking about a market demand comprised almost entirely of people that need rental accommodation because they are either, too early into their current job to be sure of their position far enough into the future, working temporarily in the UK or a particular part of the UK, or prevented by unemployment, restricted working hours, single-parenthood, illness, disability or a poor credit record from being able to buy a house. When the supplier base is reduced these people will still be left looking for rental accommodation and remain unable to buy. But they'll have less choice and the average rents will be higher.

You're saying that rents might return back to lower levels due to the fall in demand of renters being pushed out, but the extent to which this would occur is going to be greatly restricted by the previous exodus of rental supply and the still present clause 24 cost barrier that caused poorer renters to be pushed out in the first place.

The reason why the market rent will go up as opposed to among isolated pockets of unlucky landlords, is because in most parts of the country cash-bought and corporately owned properties not impacted by Clause 24 account for a minority of the supply. As these parties see market rents creeping up, they may price a little shy of that to lead the market, but overall they will increase rents in line with the prevailing market trend to maximise their profits.

The other thing I would factor in as well is the potential bond individual landlords have with their tenants. Contrary to the most extreme cases reported in the media we have friendly, face-to-face relationships with our tenants: we want them to stay for as long as possible and to keep our rents the same for as long as possible as part of achieving this objective. Unlike the corporates, we don't just see our tenants as interchangeable numbers on a spreadsheet. These are people we know and like, and Clause 24 is going to make things just as bad for them as ourselves.

The corporates are not merely trying to prepare for their retirement and keep their properties ticking over like individual landlords. Their objective is to maximise profits. Regardless of lower costs, if they see the potential for higher rents in the market, they will pursue them ruthlessly: taking in and spitting out as many tenants as necessary to get it.

Reply to the comment left by "Richard Mann" at "01/12/2015 - 11:54":

Hi Richard,

Thank you for your kind regards.

I can't think of any specifically female comparisons. But the best Game of Thrones alternative I can think of to describe our own predicament right now, would be Property118 as the Night's Watch, a certain other online community as the Wildlings, and the Treasury the army of the dead coming to get us all while we're too busy fighting each other.

Hi Gareth
We are all in such a dilemma at the moment.
Businesses that have taken years to develop have been razed and looted overnight. Thousands of property letting business owners have had all of their hopes and dreams and hard work trashed.
Quite honestly I am still in disbelief and shock like a traumatised accident victim. Almost speechless and struck into a motionless zombie state, perhaps not too different to some of other TV shows you mentioned!
Zombie Landlords
Easy targets usually overcome with ease.
Until I hear of a realistic solution my whole plan for the future has been decimated.
I am sorry for the pain it will cause my tenants really nice decent people getting on with their lives. I am sorry for the loss of business that my many suppliers will suffer.
Painters decorators carpet cleaners electricians plumbers gardeners roofers shops local and distant carpet fitters local takeaways and supermarkets and many other professional services that I use.
All of these business people will be affected.
How does this possibly help our economy to improve and where will all these tenants ultimately go?
For that matter where will all the landlords go ?
Entrepreneurs wasted talented courageous individuals ready to give it a go. Banished from the kingdom.