The joy of being a landlord

[Nitefly]

Charging into this thread like a rhino to offer an unsolicited view

Surely the key question that anyone asks when considering buying a house is: is this a sensible financial decision?

It is not an absolute certainty, but a property is seen as an investment in capital, most likely to increase in price or hold value. In other words, it’s most often a very sensible financial decision to buy a house even for a short period (a couple of years), if you can afford it and have the ability to fund the outlay of buying the property, costs + SDLT.

That is principally (I suggest) why people don’t buy houses: they either literally can’t, or it is wholly impractical to be able to afford them as the high cost would make their quality of life dreadful (which would be a bad financial decision, I think).

It is an assumption, sure, but I would say the % of UK adults who did not want to own a house for reasons other than cost (i.e. between jobs, social reasons or similar) was very, very low.

Nobody deliberately makes a bad financial decision.

 

[ik9000]

In central london, zone 1 there are a number of properties that are not permanently occupied but occasional visitor/holiday homes/2nd homes. Westminster openly report that they would lose significant revenue if the old Council Tax reductions for unoccupied periods were reinstated. However the number of properties classed as permanently unoccupied is surprisingly low. In their 2021-2022 report:

161 properties unoccupied for 2-5 years (charged 100% council tax)
60 properites unoccupied for 5-10 years (charged 200% council tax)
25 properties unoccupied for 10+ years. (charged 300% council tax)

Note however a property is taken to mean a whole derelict building not just an apartment, so for the case of large buildings one of those could be capable of housing multiple families. For old derelict buildings the length of time to get planning permission then renovate can be rather long, so 2 years is not surprising to see. 5-10+ years though?! Wow.

Since there is no longer any discount for part-time occupancy people owning but only visiting for a few months of the year no longer declare it and just pay the full rate. This makes getting stats on it harder. However the report seems to suggest there are many properties in Westminster, (and indeed further afield) since the council states would lose significant revenue if the 100% rate were to be reduced.

This analysis by Benham & Reeves gives a breakdown of foreign ownership in the UK: https://www.benhams.com/press-relea...-value-of-homes-owned-by-overseas-homeowners/

Over 12000 properties in Westminster alone. Now that could be an apartment block that is then rented fully to UK tenants so it's not clear cut. What I'm struggling to find are stats on foreign owned, not then rented/occupied by tax payers. I imagine FOI requests might eventually get me there but I do not have time for it.

Why, however, if there is a housing crisis, do we allow this overseas/non-dom ownership and part-time occasional usage? Other countries seem to be able to pass laws preventing this. It baffles me why we don't. Not been resident in UK and paid tax here for 5 years? No owning property. Move away and become non-dom for more than 3 years? You need to sell your property. If you don't contribute to our economy why should we allow you to milk it?

 

[dlockers]

That is principally (I suggest) why people don’t buy houses: they either literally can’t, or it is wholly impractical to be able to afford them as the high cost would make their quality of life dreadful (which would be a bad financial decision, I think).

I mean you are missing one of the big points which is flexibility. I rented in Zone 4 and Zone 2 London because I wanted to; but no chance I wanted to "own" it. I guess you could argue I rented because I couldn't afford to buy it for 3 years

However that choice was removed from me as it would never be up for sale, as the LL knows it will just keep accruing in value and muggins here would cover all of his interest payments, maintenance fees and upkeep.

 

[dowie]

There's two markets at play here. The landlords are keeping the purchase market too high for prospective buyers. If you remove landlords from the equation then the influx of availability can lead to cheaper (relatively) purchase prices, and more people will be able to buy. So you have eased that pent-up demand for purchasing.

Demand for rentals is high because people do not have a choice (because they cannot buy). Do the above, and it eases the strain on the rental market too because more people are in a position to buy and will not be interested in renting. With less interest in renting (because more people are buying), there is less demand for the existing supply of rental property.

Playing musical chairs doesn't address the general issue. Remove landlords how? They tend to have tenants for a start, where do they go?

Why not increase supply?

 

[Bluecube]

There's two markets at play here. The landlords are keeping the purchase market too high for prospective buyers. If you remove landlords from the equation then the influx of availability can lead to cheaper (relatively) purchase prices, and more people will be able to buy. So you have eased that pent-up demand for purchasing.

Rubbish. It’s not landlords that are keeping house prices high. It’s a lack of supply. There just aren’t enough houses available for everyone to buy. The problem isn’t landlords, it’s nimbys that block housing developments across the country.

 

[Freakbro]

Nobody deliberately makes a bad financial decision.

You haven't met my boss have you?

 

[Scam]

Rubbish. It’s not landlords that are keeping house prices high. It’s a lack of supply. There just aren’t enough houses available for everyone to buy. The problem isn’t landlords, it’s nimbys that block housing developments across the country.

Tell me this. Let's say a new apartment block of 200 units gets built. 75% of the units are sold to landlords who then rent them out. The landlords had the bigger capital to put down, so could act quicker and bid higher. How has that not had a negative effect on prospective local buyers of those flats? In one fell swoop landlords have bought up 150 properties out of the local area, taking them away of live-in buyers... And not-only that but they have skewed the local market higher because they could afford to pay just that little more than market rate.

Now you see that happening in every suburb of big cities around the UK and you can see where we're at with the so-called "property market".

 

[bigmike20vt]

Tell me this. Let's say a new apartment block of 200 units gets built. 75% of the units are sold to landlords who then rent them out. The landlords had the bigger capital to put down, so could act quicker and bid higher. How has that not had a negative effect on prospective local buyers of those flats? In one fell swoop landlords have bought up 150 properties out of the local area, taking them away of live-in buyers... And not-only that but they have skewed the local market higher because they could afford to pay just that little more than market rate.

Now you see that happening in every suburb of big cities around the UK and you can see where we're at with the so-called "property market".

the way I see it there are 2 potential ways to improve things. both need government intervention
1) government build new properties which are rented out at fair value . old school council housing.

2) government build new houses , rent out and then after a set time the tenant has a right to buy, at a fair price BUT once that property is sold another is built in its place (or repossessed etc properties bought back) so that the number of council rentals does not decrease.

this won't be cheap but then apparently neither is what they are paying private landlords to do their job for them (some of which are doing a **** poor job)

was right to buy a total mistake? the way it was done absolutely.... but allowing long term renters to buy their house at a possibly subsided but still realistic price imo could have worked so long as the rental stock had been replaced.

 

[dlockers]

Tell me this. Let's say a new apartment block of 200 units gets built. 75% of the units are sold to landlords who then rent them out. The landlords had the bigger capital to put down, so could act quicker and bid higher. How has that not had a negative effect on prospective local buyers of those flats? In one fell swoop landlords have bought up 150 properties out of the local area, taking them away of live-in buyers... And not-only that but they have skewed the local market higher because they could afford to pay just that little more than market rate.

Now you see that happening in every suburb of big cities around the UK and you can see where we're at with the so-called "property market".

Some people are confused on how supply works.

 

[dowie]

Tell me this. Let's say a new apartment block of 200 units gets built. 75% of the units are sold to landlords who then rent them out. The landlords had the bigger capital to put down, so could act quicker and bid higher. How has that not had a negative effect on prospective local buyers of those flats?

Well, perhaps you could explain how an additional 50 units being bought by local buyers had a negative effect?

Also, this apartment block doesn't exist in isolation wouldn't many of the people renting the 150 BTL units otherwise be looking to rent elsewhere if the new apartment block didn't exist? It's a bit extreme to have 75% go to landlords but it still adds to the total supply, if you're providing more rental accommodation in that block then you've not necessarily got as much need for it elsewhere.

Back in reality though landlords made 12% of purchases in 2022 not 75%.

 

[dowie]

Some people are confused on how supply works.

I think you're talking about yourself tbh..

 

[bris]

Tell me this. Let's say a new apartment block of 200 units gets built. 75% of the units are sold to landlords who then rent them out. The landlords had the bigger capital to put down, so could act quicker and bid higher. How has that not had a negative effect on prospective local buyers of those flats? In one fell swoop landlords have bought up 150 properties out of the local area, taking them away of live-in buyers... And not-only that but they have skewed the local market higher because they could afford to pay just that little more than market rate.

Now you see that happening in every suburb of big cities around the UK and you can see where we're at with the so-called "property market".

99% of people who can afford to buy a house will buy a house. They wont rent because they don't need to, and they wont stop looking because a LL bought 10 properties from some housing developer.

 

[NVP]

Back in reality though landlords made 12% of purchases in 2022 not 75%.

Down from 2015/16 (just after the landlord tax):

The research, carried out by the Sunday Times and a major estate agency, suggests that just one in three properties sold to investors last year received any sort of offer from a private buyer intending to use the property as their main residence. This was further supported by separate research from Hometrack which suggested that 80 per cent of property sales are still being made by private owner-occupiers. (clicky)

 

[Scam]

Well, perhaps you could explain how an additional 50 units being bought by local buyers had a negative effect?

Sure. 50 units is good. But not as good as 200. Obviously.

Also, this apartment block doesn't exist in isolation wouldn't many of the people renting the 150 BTL units otherwise be looking to rent elsewhere if the new apartment block didn't exist? It's a bit extreme to have 75% go to landlords but it still adds to the total supply,

It doesn't exist in isolation. That's my point. That slight jump of pricing (due to landlords ability to buy more expensive property than the equivalent FTB) is many-fold once you add more and more examples like this on around the country.. It's a snowball effect. Or are you in denial that property prices have been rising well over inflation for years now?

Back in reality though landlords made 12% of purchases in 2022 not 75%.

It has clearly sloed since some of the tax changes came into effect, I won't deny that. But historically things like this were happening; https://www.thisismoney.co.uk/money...s-snap-70-new-build-homes-central-London.html

99% of people who can afford to buy a house will buy a house. They wont rent because they don't need to, and they wont stop looking because a LL bought 10 properties from some housing developer.

Yes. Well done for stating the obvious. Yet the number of people that can afford a first-time home are getting lower and lower every year because of ever-increasing house prices. If you read above I explained how landlords buying up property has a negative effect on a local market. In short, if you're a FTB with a budget of £250k, perhaps 5 years ago that would have bought you a flat. Yet, in the present day, it won't because landlords have contributed towards increasing house prices by buying up stock and your budget now cannot reach the amount necessary for that flat in your local area.

 

[dowie]

Sure. 50 units is good. But not as good as 200. Obviously.

So you've kinda answered your own question there, it clearly isn't negative as the total supply of housing has increased.

It doesn't exist in isolation. That's my point. That slight jump of pricing (due to landlords ability to buy more expensive property than the equivalent FTB) is many-fold once you add more and more examples like this on around the country.. It's a snowball effect. Or are you in denial that property prices have been rising well over inflation for years now?

Again, lack of supply!

 

[thenewoc]

There's two markets at play here. The landlords are keeping the purchase market too high for prospective buyers. If you remove landlords from the equation then the influx of availability can lead to cheaper (relatively) purchase prices, and more people will be able to buy. So you have eased that pent-up demand for purchasing.

Demand for rentals is high because people do not have a choice (because they cannot buy). Do the above, and it eases the strain on the rental market too because more people are in a position to buy and will not be interested in renting. With less interest in renting (because more people are buying), there is less demand for the existing supply of rental property.

Seriously, go and look round developments like Royal Wharf in docklands. They've biult 3,385 flats there. It's hideous, in an arguabiy terrible part of town. There's so much housing out there, it's just not affordable, or available to normal people. Rich and/or landlords need only apply.

You can add at least another two markets to those:

* Capital investment / pension funds etc (incl. overseas) who don't necessarily buy them to rent out as they can just sit on them empty in a rising market which chokes supply until they're put back on the market.
* Shared ownership / housing associations.

Unless we see a change in the right to buy legislation and more private rental properties move into public ownership then there's only really a couple of options:

* 100% mortgages for people to move away from the private rental sector.
* More people turning to shared ownership.

Both of the above wouldn't be a bad thing to increase as it would increase the number of people having a vested interest in their home and the community that it is based. Less likely that people who own a share of a property, neglecting it. Maybe shared ownership will become the new private rental market where people only buy the minimal share and pay rent forever on the rest. The problem with this though is reducing peoples mobility compared to standard renting.

 

[Scam]

Again, lack of supply!

... caused by landlords.

 

[ik9000]

So you've kinda answered your own question there, it clearly isn't negative as the total supply of housing has increased.



Again, lack of supply!

well it's kind of like the GPU fiasco isn't it. Company N can only supply Q thousand units. If 0.8Q get gobbled by scalpers has the market improved because 0.2Q were sold to end users rather than scalped? A fairer market is for everyone to be able to buy direct and scalpers can do one. Perhaps a better way is just to cap the number of buy-to-lets on new builds and impose council quotas on rental % in each district/postcode area. If they assess there is a need for more rentals they can facilitate it, but if they see a shortage of housing to buy they can restrict it.

 

[thenewoc]

Rubbish. It’s not landlords that are keeping house prices high. It’s a lack of supply. There just aren’t enough houses available for everyone to buy. The problem isn’t landlords, it’s nimbys that block housing developments across the country.

It's also down to the economy because developers won't build what they perceive they won't sell at the required asking price. The market is also constricted by the amount of potential buyers in good enough employment to secure the required lending.

 

[dowie]

... caused by landlords.

Nope... landlords don't tend to keep properties empty, they have tenants.