Summer Budget 2015 – Landlords Reactions

Would fall off my chair if any lender helps us out they will just start lending on these new big developments controlled by GO cronies in London banks never loose out wishful thinking

Reply to the comment left by “Barry Fitzpatrick” at “23/11/2015 – 09:36“:

Barry, you are correct that, lenders are money grabbing so and so…the fact they will be helping landlords, they will do so to retain their business as opposed to some chartiable do.

What they were saying is half of landlords trouble will be sorted by lenders and half by rent. So, if lenders can entice borrowers by giving them cheaper rate, ultimately helping their cash-cashflow then this business may make viable sense.

Saeef

As Barry mentioned in his post, Basel III is going to massively change the face of BTL lending.

Preparations need to be made now imo, it goes live in 2017

Saeef – Lenders have to set aside a certain amount of reserves for each mortgage and for BTL mortgages it is higher than owner occupier mortgages and this will be reflected in pricing.

David – How can you justify saying increase rents now, the changes to the tax treatment do not start until April 2017. If there is a massive pre-emptive increase in rents expect the Chancellor to take further action – and the government may look at rent controls.

Also in the MortgagesForBusiness survey put on by Kathy

https://r1.dotmailer-surveys.com/b4dal03-601j7pfd?dm_i=DAL,3TEOC,5SOSMS,DR90E,1

there was a link to the results of an April 2015 survey in which it showed that 49% of landlords had no borrowings and a further 32% had borrowings of less than 50%. I don’t expect these landlords will be rushing to put rents up.

It may be that 20% of landlords own 80% of BTL property and will push rents up but it doesn’t feel right pushing all the pain onto tenants as soon as possible.

Reply to the comment left by “S.E. Landlord” at “23/11/2015 – 10:06“:

I think it is sensible to gradually increase rents so that tenants can see what is coming as well – and maybe they will then also protest to their MPs. I have increased some rents by between £10 and £25 a month and explained exactly why. I will then see if the market can take a further similar increase this time next year. I’ll play it by ear. I have had one disgruntled tenant get furious over the rent increasing by £20 and she handed in her notice – but the other increases more than compensate for that and she was on a very low rent, so I can increase it a bit now. I think this steady approach is the way to go, starting now.
SE Landlord, you are forgetting the fact that the sky is the limit now for mortgaged landlords’ costs – we could be pushed into losses by, for example, 2022, with a few interest rate rises – as sensible business-people we have to start preparing for these future costs and building up our ‘surplus’ just like GO wants to…

Here’s the example:

Typical BTL 65% LTV = 3.39% @ £160000 = £452. Therefore Tax due @ 20% = £90 per month (rounded).

If lender reduces it’s rate = 2.99% = £398.00 and you push up the rent by £60 then happy days.

Reply to the comment left by “Saeef Khan” at “23/11/2015 – 10:43“:

Saeef, do not expect any favours from the banks. The banks will charge whatever the market forces dictate and whatever they can get away with. My fear is the banks may start to call loans in or make changes to existing terms, and cite extraordinary circumstances to justify it. My rather negative view at the moment is that things will certainly get worst, and probably won’t get better for landlords anytime soon. I am fully expecting all tax relief to go if Labour get in next time, as well as rent controls. The government may even extend ATED to lower value properties. Government debts are out of control and I’m afraid they will go for the easiest targets first – hence the lunacy of clause 24. I have a funny feeling GO will be making changes to housing benefit on Wednesday knowing full well that landlords will bear the brunt of the changes because tenants have no additional disposable income. Sorry to be negative but I really do not see anything positive to report – unless anyone can convince me otherwise?

Reply to the comment left by “Manchester Landlord” at “23/11/2015 – 11:12“:

ML, I hear what you saying, on the flip side of the coin, landlords can equally charge whatever market dictates. If they were to bring rent controls then, I recall some article stipulated that, nothing destroys any city quicker than rent controls.

Reply to the comment left by “Manchester Landlord” at “23/11/2015 – 11:12“:

I’ve been expecting to be picked on for about 5 years as it is evident that our politicians are unequal to the task of controlling expenditure. the culture of entitlement once confined to the upper classes now seems endemic everywhere. I am one of those who has concentrated on buying unmortgageable properties, beyond the reach of FTBs, restored and upgraded them continuously to provide vastly improved accommodation.

I look forward to the time when Local Councils will stand as guarantors for the homeless and DHSS tenants and help pay for the cleanup and payoff the arrears when they finally leave at the last hour before the bailiffs arrive. That’s if the Councils can’t be made to see the waste of national treasure in encouraging tenants to stay on after the notice to quit has expired rather than leave on time and stop wasting the court’s time.

Reply to the comment left by “Ros .” at “23/11/2015 – 10:13“:

I agree that a gradual increase in rent is preferable to a sharp increase. However the message in a number of the posts is coming across as landlords have been attacked by the Chancellor and it is only right that landlords target tenants – that may not be what many landlords think but it is the message that is coming across in some of the posts.

I don’t like the change in the tax relief or the removal of the 10% allowance for furnished properties but equally understand that the deficit is a problem and all sectors are being hit. Nor have I forgotten that the sky is the limit for mortgaged landlords’ costs – it always has been, I am planning for no tax relief and for increases in interest rates.

As an aside for anybody that is increasing their rents and have deposits held on an insured scheme, at least one of these schemes require the landlord to re-register the deposit if there is a rent increase.