Landlords are scared...but how bad can it get?

A lot of accidental and amateur landlords seem to be selling these days.

It is not as easy as they thought to make money when you are trying to just squeeze rental profits out of the properties and capital gain is uncertain

I suspect that a lot of amateurs cannot be bothered any more and are throwing in the towel - too much effort, time, risk and too little reward just for a dribble of cash from the rents after all costs each month

Which is great is it means less competition for me and higher rents - hurrah!

Time to go shopping for more property this Winter...

Professional landlords are loving the recession - it is the amateurs and accidental ones who are pulling out

There will be a considerable impact downwards on rental costs when the reductions in housing benefit come into effect.

UK housing stock is 30-40% over-valued. Its simply a jolly good time to unload and monetise your gains, or sell to avoid the coming loss. Those people taking a 20 or 30 year view probably aren't bothered, but if you use leverage the coming hike in interest rates will wipe out historically low yields. I agree with you Linton - wait and see is the best policy right now.

As an estate agent we are finding the negative and often contridictory press is making buyers, sellers and landlords nervous. A newspaper or internet article will one day have a story saying that prices are pridicted to rise for the next few years and flat prices in London are 6% higher than in the first quarter etc etc - then the very next day its all doom and gloom and prices are falling ......? very strange ... we are finding the market in West London buoyant between the £500k & £650k range and a major shortage of all rental properties - the Halifax survey which is alway reported as being the authority on prices does not take into account differnet areas of the country and their method is 'one size fits all' which in my opionion is wrong - but what would I know ... I am just an estate agent .......

It is fair enough that Landlords are scared. In a Godless country there is, depressingly, a profound lack of guarantee of Hell for those who deal in usury and make their beds in unjust practise.

It is only because Landlords bought up so much of the housing stock off the back of easy credit amidst the heady days of the credit boom, that first time buyers are now priced out.

Furthermore it is disgusting and immoral that the government's (NOT the Bank of England's!) policy of virtually nil interest rates has bailed out these feckless and selfish investors, as they look to make their investment nest egg off the backs of those less able to simply make their OWN nest!

Indeed, by buying up all the stock, they make Pushed Prices Up so much that FTBs have no choice but to rent off these lazy immoral scumlords.

It is indeed tragic that those who were sensible and chose not to partake in the idiocy of 100%-125% mortgages are now those penalised by so-called "mortgage rationing" and a horribly persistent house price bubble.

House prices SHOULD have come tumbling down, that is a FACT. But instead, due to governmental insanity and "baby boomer" self-righteousness, the kids (read: the MAJORITY who are aged 35 and below) have been sold down the river.

Landlords should be ashamed. Don't be surprised when "the kids" start a revolution.

the rents charged by many agents are disgusting and should be legislated agianst what you are getting for your money.

how the devil can anyone paying 7-800£ per month ever save enough for a mortgage when they have to pay such high rents. it beggars belief.

the sooner the rates come down the better and these greedy landlords get what they deserve. my son was paying over 700 a month for a tiny 2 bed place outside bath you could hardly swing a cat in it. disgraceful.

I love this statement! "Buyers, fearful of buying (or unable to borrow), hasten the property price drops they fear."

Utter nonsense. Since when did buyers of anything fear price drops?

I love the implication that falling prices are bad for everybody. Actually I believe much lower house prices would be good for us. The southwest is overrun with German holidaymakers at the moment. I suspect that is something to do with the fact that despite a weak Euro they haven't got all their income tied up in paying off mortgages and can still afford to travel in Europe in the depths of a financial squeeze.

Entirely agree with Anonymous 1 (Aug 12, 2010 at 09:43)! Having the rent my self, I am absolutely appauled by the property situation we are in at the moment. All I want to do is to be able to buy a house (noot too big, not too small) for our family and not for a potential future profit with the aim to resell it, but for something that i can call OUR HOME where we can settle for majority of our lives! But thanks to those greedy easy-fortune makers = landlors, the prices are way too high to be ieven n a position to get together a mortgage deposit for a start!

Greed has entirely blinded the majority of the population in this country by making them think money grows on trees (in this case on houses), it has to stop! It is quite scary to realise that the entire generation lives in rented accomodation (most of the time, fully furnished) and have nothing for themselves!

Anonomus 1 Reply get a life my freind you talk rubbish but i supect its envey

I suspect you to have made money over the years from buying a houses if your over 40 we all have so get of your high horse

Landlord X has said what is very true lots of small landlords who work 9 till 5 and thought they were on a good thing and easy money

Being a landlord is like running any large bussiness it need commitmet and effort buying the house is the easy part manageing property day to day need skill and a lot of common sence

I will be buying this winter just like Landlord X the deals are there 30% deposit 8% yeild mortgage fixed for 5 years and your makeing possitive money

Yes rents are riseing property values are dropping so get in there and fill your boots in 10 years you will make a fourtune

I already have and i dont tell lies

barz,

any landlord who has purchased a property in the last 5 or 6 years with maybe a deposit of between 15% to 25% deposit cannot rent out at much lower figures or there is no point to them being a Landlord is there?

I was a Landlord for 8 years and never put rents up for my existing tenants but obviously I bought my properties much cheaper back in 1999/2000 so I could afford to freeze the rents.

No way would I go back into that business now though...

My rents are up in some places, level or down in others. Overall cash flow is mega thanks to my trackers.

Arrears, never a problem are showing a slight increase in certain locations that may reflect local economic downturn or poor referencing by an agent I no longer use!

Re-lets are fast. Capital growth is level or shows a small increase.

Fears are more gov regulation, revised housing benefit limits although I only have 2 BOTS and one has a job and child maintenance. Not a market I seek but accidents happen.

Bye bye and good riddance HIPS since an opportunity to sell can at least test the capital values. All my EPC's are green so no problem with them.

Deposit scheme should be scrapped as it generates too much paper, delays for no gain to the honest landlord and what about when tenants do the moonlight flit owing rents, having done damage and owing utilities etc?

I rented a hovel in London when I was young - long time ago. Now tenants have a fantastic value and choice but if gov meddling continues and one prop accidental landlords find they can sell then - whoops a shortage again and even higher rents.

Making money doesnt make you right.

For those of you repeatedly knocking Landlords for making a profit from their investments....

It is the Landlord who has to take the risks with the possibility of them either making a nice capital gain (and in some cases a tiny profit from rental income) or the housing market drops and then the Landlord is left with large debt or could lose his main residence if he borrowed from equity on that.

I was always a gambler with various types investments and used credit card cheques to fund the 10% deposit on my first BTL. Then within a year used equity from my own house to buy 2 more BTL's. If I had done that at a stupid time like 2008 I could be homeless by now or looking at massive negative equity.

Risk = Reward (or losses) and Speculate to Accumulate (or lose the lot)

but JOB = Just Over Broke, meaning you just work to live and no chance of retiring early or living comfortably.

Deposits for first time buyers were always hard to come by if not dependent on The Bank of Mum & Dad but if you forego holidays, clubbing, eating out, decent cars, smoking and all the little luxuries you can get there.......

Anonymous 4 sounds a little envious!

Just live your life, what goes around comes around.

all landlords arn,t in the buisness to make pots of money ,some like myself are really accidental landlords and have aquired properties through part x or other means.i have five houses which i have owned for 35 years the rents are around £85.00 per week. this only really covers the upkeep and maintenence.i do it like this because my tennants are needy and have been long term.both parties are happy with this arrangement.

No Anon 3. I just meant that people who come on and bragg on a forum about how much they are making out of renting out houses remind me of 'loadsa money' from Harry Enfield. That was all.

I've only ever had one landlord and he was a cash in hand taking muppet with all the scruples of an SS commandant The house had been victim of criminal DIY over time and problems where slow to be fixed so I moved out

. However, I am sure there are good landlords out there and it would be wrong to tar an enitire industly with the same brush based on 1 particular cretin.....

I find the above comments very intresting

can I ask why we come to citywire its not for sport or fashion ect its all about money

I would think that we are all intrested in it or we would not be here some buy stocks and shares some buy bonds ect ect

so i cant help thing its the pot calling the kettle knocking landlords

there will be landlords till the end of time the queen is a landlord duke of westminster is a landlord and they are up right folks with large property intrests

so stop knocking BTL its no differant from what the upper classes have done for years infact its more honest the queens family in years gone by were thugs

if your here you are a money maker just like BTL landlords

I'm about to become a Landlord, but also currently rent so can see both sides. I'm a little concerned by the apparent "hate" some people have for landlords but I'm sure there are probably many people like myself with no choice. The situation is that I have a business, and like many businesses got screwed over by the banks early last year. This resulted in me having to sell our house to release capital to support the business in these lean times. Now that did leave me with just over 100K - no point investing it with usual suspects, and nowhere near enough to buy a property of any sort in the South East. So I'm buying a property in Yorkshire to rent out to not only keep me on the property ladder (whichever way that may go), but to also provide some income to cover part of the £850 rent I pay at the moment.

Now does this make me a greedy landlord, or someone just trying to hang on to a property.

All you critics here, if you don't have the cash to buy that isn't someone else's fault just because they can, and almost without exception landlords will have seen their assets decrease vastly in value over the past few years. It's not always an easy ride. And I have to say, being a tenant now for the first time ever is quit liberating!

Absolutely Keith Simmonds, the twin upper-cuts of reduction in Local Housing Allowance and the increase in Capital Gains Tax will shaft a lot of slum-lords.

The key aspect is Housing Benefit which, not for much longer, has acted as a floor for private-rents. Come 2011 the BTL gravy-train should hit the buffers.

Fill yer boots.

As an apartment owner-occupier I can tell you that I hate BTL landlords. I am fortunate in that everyone in my block is an owner, but our maintenance charges include adjoining blocks where 60% of the apartments are rented-out. In those blocks tenants wreck the common area decorating (which we all have to pay for.) Half the so called reported faults that any owner would sort out for himself are pushed by the BTL owners onto the management company, so again, we all pay. Laminate floors have been put-in for easy maintenance, even though the leases require carpeting. Result: noise for the owner/tenant below. Car parking can be a nightmare, with many BTL owners keeping hold of their garages to store their own materials..

Management companies should, by law, be able to ask for deposits from owners if they are going to go for letting-out, and maintenance fees should be 50% higher than for owner occupiers to reflect the damage and wear and tear to common areas that simply does not occur with owner occupiers.

I can't understand many of the comments. Ian Gardner an estate agent in N.W. London is but one example. Too many spelling errors. Has anybody got a guide to using spell-checkers?

If Anon 6 is confused by a couple of obvious typos and therfore cannot understand the comments he has serious problems!

And there's another typo..... THEREFORE Anon 6 will now be totally confused!

I wouldnt buy now. Rents in any good place are 5% gross. Chance of capital gain in the next few years 10%, level 30%, drop 60%. What is the point of buying now if their is a v high chance of buying lower in a few year it's as simple as that.

I'm buying as the cash is sitting in bank accounts earning 2.5% at best (ISA's at limit etc), and to gain maybe 5k on rental per annum is a better use of the cash and should values go down I sit tight, if the rise all well and good.

Wouldn't borrow to buy though...

Dicklextic landlaord, now there is an example of `upper class` deserving his wealth.

obviously privately educated, first class degree (probably in English) and a great boon to the country. Yes what would we do without these wealth creators.

Is that sarcasm jo? ;-S

Peter Thoresen makes some very accurate observations. From my experience the leaseholders/freeholders need to act as one and enforce the no wood floor/laminate and place responsibility of tenants onto the owners and charge them accordingly with a strict sales/lettings policy in place. This has been my experience in two west london blocks and the behavior of tenants and owners was indistinguishable.

As with all property it depends on the area if letting makes financial sense.

The reduction in housing benefit I think is to be welcomed [although time will tell], but the fact that a london council will pay £1300 per month for a concrete tower block 2 bed flat in clapham only forces up rental prices and lowers standards.

I think that the housing market should have crashed alot more then it did. What is stopping this from happening? The simple answer is foreign investors. With the pound so weak Arabs and investors from Asia are buying up commercial and residential properties as investments. This way even if the property prices don't shoot up, the pound will (hopefully in the future) and bring an instant currency profit of upto 25% (due to the current weakend pound), so for them its a Win-Win.

Why are they allowed to buy residential properties when there are UK citizens on streets? We can't easly buy properties outside Europe, so why should they be allowed? (atleast stop them from buying residential properties) In my view this would be a better solution to ease the shortage, which is pushing prices up. Come on GOV sort it out.

Anon 6 - could perhaps start the trend of spelling everything right by actually spelling my name right - pot black?

I am a seasoned property investor and have never thought there is any money to be made from residential letting. True; you could buy a property and within a few years look at a capital gain, but only in a bull market. that's now over. For those folk that have a high BLT loan it's a mugs game, the managing and letting agents will make more money than you will. Although the market went badly wrong in the US, they do have more sensible mortgages availible on long dated fixed term interest rates, 10, 20 or 30 years. This is what landlords need to allow for a long term investment together with at least 30% equity in the deal to ensure you ride the highs or lows of your income streams. I will be staying with my shops let on 5year rent reviews.

I agree with the sentiments expressed by Peter Thorenson. I act in a support role to the Directors of our RTM company who have now acquired the freehold. It has been my experience that certainly at the lower end of the rental market, BTL landlords have absolutely no concept and care even less as to how the rental and leasehold markets intereact.

They have only been concerned about their rent, nothing more. Having said that though, these are the ones that are having their flats repossessed, at least on my development , so perhaps the current situation may be what's needed to sort out the wheat from the chaff.

Kind Regards

Miss Sharon Crossland AIRPM

Leasehold Life

@Dislexic Landlord

"Anonomus 1 Reply get a life my freind you talk rubbish but i supect its envey"

>> Haha. Did I touch a nerve? If you've any market awareness you know I'm basically correct. BTL got absurdly lucky when interest rates went to 0.5%.

>> I suspect you to have made money over the years from buying a houses if your over 40 we all have so get of your high horse

YOU, "friend", do not know what YOU are talking about so please stop making assumptions about me when you have no chance of knowing my particular scenario. I have a life and I find my perspective of it profoundly undermined by unscrupulous folk such as YOU who will buy all the nests they can so they can feather their own in luxury.

You could perhaps describe the way I feel about the whole debacle as "envy" but why should it be envy when my generation, the ones who dutifully got good educations and, CRUCIALLY, are now in above-average earning jobs, RE PRICED OUT OF BUYING A MODEST HOME?? It is a basic commodity. I believe there will one day be riots on the streets about this but I guess it'll take a while yet.

Just because you're a successful landlord don't think for a SECOND that your tenants think you are providing a good and decent service to society. YOu are parasites, leeching off the basic fundamental human need of SHELTER.

If you could buy up air and water you would do the same, BUY it up, force a "free market" rationing effect and FORCE The price up. THAT, my immoral friend, is the price of your "speculation." And I bet you sleep like a baby at night.

Are you really dyslexic?

Round of applause to Anon1!

Anon 1

Why are Landlords parasites, leeching off the basic fundamental human need of shelter?

If there wasn't a bit of competition from private Landlords then the larger companies like social landlords etc would be charging renters a hell of a lot more for their properties.

For those who take the plunge into the rental business, it is only a form of investment like equities, bonds, antiques, fine wines etc and carries a lot more hassle at times with ever increasing legislation, a small minority of tenants who damage properties or fail to pay rent, and other problems.

Any investment carries a risk of loss or gain and every investment has cycles, I liked BTL for a few good years and then cleared out and went back into cash with a good fixed rate, then gradually back into equities.

One thing I am sure of though is although my former BTL's gave me a capital gain, it wasn't an enjoyable business to be in at times and probably won't be for a while for recent and future Landlords

Anon 1

Work hard, get a mortgage buy a house.

Work hard, fund a house yourself.

Work hard, can't afford a house then rent.

Things are just reverting to how they used be, i.e you work, save and eventually buy - it's only recently that people have, through outlandish mortgage deals, been able to buy with little or no deposit. It is not a God given right to own your own home, and for many not even desirable.

We all do what we have to do, don't whine if you can't afford to buy and are left renting. Take heart that the UK is quite unique in the number of people that do own their own home, in many countries it's the minority. And thanks to the welfare state you shouldn't ever be left without your basic human needs (not rights) for shelter.

I totaly agree with The Dislexic Landlord

ask the question why are we all here not for the good of our heath because we all like money makeing it in one way ore another

think back my freinds if you bought privitised stocks and share ie British Gas ect are you not doing the same thing as so called slum landlords

your makeing money of customers the same way as a landlord rents ex council houses to tenants

if you point the finger there are three pointing back

tosh

Human beings are driven by greed, selfishnes and self interest and that will never ever chnage whether it be a house owner, a BTL landlord, a sports star, an MP or a celebrity. What we have is never enough and we always want more. Its in our nature.

Question is then, what does one invest one's hard earned cash in for one's up and coming retirement whenever that may be.

TT Max

depends how close one's retirement is, and what sort of risk tolerance you are happy with (ie if you were suffering paper losses on your chosen investment for a couple of years, how would that affect you. Can you wait for it to return to profit or do you need a regular income?)

@Nilesh Kerai,

Blame the foreigners? With a name like yours that's akin to throwing stones in a greenhouse. The number of houses owned by foreigners is minuscule and generally the top 5%. Therefore I doubt throwing the foreigners out will permit you an opportunity to buy in Knightsbridge.

It's simple; there aren't enough small houses to go round so the demand and thus the price remains high. This is likely to get higher because the government has torpedoed most house building programmes.

I'm an accidental owner of two houses having moved just as the crash started. Rent one out? Not a bloody chance, I've seen what the rental scumbags did to a friends place when he worked abroad for a couple of years. Estate Agent management was woeful with no comeback.

So my house is empty, waiting for sale and costing me a packet. I have sympathy with the landlords having to deal with trashed properties, one reason the rents are so high. Not only do you have to factor in a profit on the rental but you also have to add the damage factor.

All you sad folk who knock landlords: the private rented sector in the UK is very small by international and historical standards - a mere 10% of all housing

70% of housing is owner occupied. 20% is social. Onwer occupiers over 40 are the people who have really hit the jackpot with residential - largely at the expense of the young. Tough.

So stop blaming landlords for your personal failures - coz even if they all sold up tomorrow it would make little difference to house prices. Investors bid prices down not up.

If we need more houses and some people here think they are too expensive then maybe the Govt would like to a) control our borders to reduce immigration and b) reform the ridiculous planning laws in this country which strangle the supply of new housing. Don't hold your breath

Anyway, plenty of cheap houses outside the South East, if the miseries on this page would bother to look at Rightmove. Cuts in HB might free up some more housing for FTBs as people on benefits will no longer be able to block-book the limited available rental stock courtesy of the taxpayer...

Roll on cuts in Housing Benefit. We taxpayers are funding the landlords by a hugh amount, not the tenants. All we are doing is making sure landlords can charge high rents as they know they will get the money from the government. Ditto working tax credits - again mug taxpayers are aiding employers who pay poor wages as they know that the government will top up wages by tax credits.

am amazed that so many ultra left wing socialists are reading and attempting to write on Citywire - a website for money makers. The opinions and bias expressed towards age groups and property owners suggests everyone has a plan to 'get them' and people who own shares are exploiting people. I suspect some fundamental education is required and a bit more focus on improving their lot through some hard work and less time spent moaning about others would benefit all.

The new regulations that you have to obtain planning consent for change of use to let property is a distinct worry.. Here in Chichester, although we were told any application would be considered sympathetically, (the University is 250 bed spaces light for this September and it is expected to rise to 500 for 2011/12) several have been turned down... so where does that leave would be landlords. This should be good news for Landlords..... but the risk of investing a considerable amount of money in buying a house to let and then not getting planning permission is too great .

Anon 1 - Investment in housing is no different to any other investment .Only the small minority of unscrupulous Landlords should attract criticism.You wrongly generalise

By the way, I can think of two real-life examples of people I know milking the benefits system living it up in luxury - paid for by all you taxpayers. Think of this when you are next stuck on a crowded commuter train early in the morning on your way to work:

- one person, on benefits, generally drunk or on drugs, abusive and violent living in a 2-bed garden flat in an Edwardian house worth in excess of £450K, in a nice part of North London in a pretty conservation area where houses sell for over £2m. Paid for by you.

- another woman, East European, 2 kids, never worked, also anti-social, living on benefits in a £300K luxury flat in Sussex in a smart block with a caretaker. Paid for by you

Both occupying properties that even wealthy people in full time employment would have a hard time affording...and completely beyond the reach of FTBs (you HPC crowd better see this and weep - because social services has priced you out of the market for good)

Both independently wealthy courtesy of the taxpayer. Landlords raking it in...but then the benefits system is insane so who can blame them

No point working in UK, just become expert in milking the benefits system!

I find it incredible that in this modern day landlords are seen as greedy capitalists. I was a mineworker for 11 years and following closure went to university and built up a residential portfolio. I make no excuses for wanting to achieve a position whereby I retire by 55 yrs of age and enjoy whats left of my time. We take the risks involved in borrowoing significant amounts of capital and deserve our reward.

In the early days I went short to support my houses and tenantsand lets be clear rather than been tagged slum landlords I have had tenants that have created a slum by their own actions of vandalism.

Its hard work and takes up much time in managing and we can all be envious of people who build up large capital from property gains but instead of envy some would be well advised to channel this negative energy get saving and secure that deposit to buy a property to let.