Scottish rent costs rocket amid the very idea of Rent Controls

Reply to the comment left by Ken Smith at 01/03/2018 - 12:08
Having come to this website just very recently, you seem hell bent on creating as bad an impression as possible of landlords.

http://www.thisismoney.co.uk/money/buytolet/article-5423439/Buy-let-crunch-landlords-sell-hike-rents.html

This ARLA report shows just how much the government are going to have to be careful what they wish for.

18% more demand by new renters and 8% less supply as a result of retreating landlords. That's just in one year. That's in a market where demand was already massive, and supply slowly dwindling.

The gap is going to be incredibly big when the docile, couldn't-care-less, landlords out there (who dont know the impact of S.24 etc until they get their tax bills) realise what is happening. They will exit pretty sharpish I reckon. If this trend continues then masses of those who cant afford deposits and who have to rent will be stumped (most renters now) .

If demand for any commodity had a supply gap of 26% year-on-year - then suppliers would be ramping up their prices. The ramping up in this industry will be needed anyway, regardless of this report, owing to S.24 - which will hit many, plus the anticipation of other costly future legislation.

A classic study into the unintended consequences of vote-catching, crowd-pleasing legislation. Throw into the mix the banks attitude towards us - and the nation has the perfect storm.

My point - put your rents up - and condition your tenants that this is the new normal every single year. Unless they are stupid, and ignore the news, they will be expecting it anyway, but they will never call you up to ask when you are putting the rent up.

This is an example of landlords collective value to the nation. the sooner the government and population realise it - the better it will be for them.

With the vilification and war on landlords from every conceived angle possible if you are the bogeyman in the dock of a kangaroo court you may as well play the part. Ian, sadly I think you are out of touch. Society defines us and no matter how good you are, as far as norms are concerned we are all scumbag landlords.

Reply to the comment left by AA at 02/03/2018 - 11:14
AA
The tenants we have certainly don't think of us like that. We often get complimentary remarks and favourable comparison to other landlords. As for being out of touch, I am being prudent in not boasting about evicting tenants. I have had to issue proceedings, obtain CCJs and evict tenants as many landlords have to.

My concern with Mr Smith's comments is that landlords should not give those people and groups who think of us as scumbags free ammunition. What is out of touch about that?

If you think things are bad now, wait until rent controls and the removal of section 21 are brought in by a Corbyn-led government. Don't give them justification.

Reply to the comment left by Ian Narbeth at 02/03/2018 - 12:20
I also get compliments and most of my rentals are word of mouth. When I advertise I let prospective tenants speak to my current tenants in my absence to let them freely express whether I have been a good landlord. The tenants that are moving on are under no obligation to say anything positive - they are leaving. Its a good feeling and great for the ego but it adds up to squat in the final analysis. The legislators did not legislate on a model of a good landlord. They decided to throw the baby out with the bath water. I have never chased the top end of the rent levels. Lower rent = more suitable tenants to choose from. But if your hand is forced .... One of my tenants has objected to a rent rise basis I do not need the money !. The following problems are of no concern or interest to the tenant - maintenance, s24, mortgage, compliance etc.. If it was not a cold business before it certainly is now. Corbyn has nothing on Sturgeon !

Reply to the comment left by Ken Smith at 02/03/2018 - 10:39
"The gap is going to be incredibly big when the docile, couldn't-care-less, landlords out there (who dont know the impact of S.24 etc until they get their tax bills) realise what is happening. They will exit pretty sharpish I reckon. If this trend continues then masses of those who cant afford deposits and who have to rent will be stumped (most renters now) ."

Who's been buying all of the properties that you've been selling?

Reply to the comment left by H B at 02/03/2018 - 17:43
Hi HB

Your question prompted me to do an analysis.

Of the 12 sold that I refer to, 1 of them was sold to the tenant. He was comfortably off and fell in love with his home. Paid cash. Easy sale - no voids, no preparation.

Of the rest, 6 went to second/third time buyers - who were trading up the ladder. Sold via local Estate Agents whom I work very closely with. These were the most tedious. we had 3 collapsed sales out of the 6 - but we got all 6 over the line eventually.

We sold then 2 at auction on the same day - which was a very profitable route - as we were fortunate to get 2 fierce bidding wars on each. Both overpaid in my opinion. That was very memorable and was on 'Homes Under The Hammer' too.

The other 3 went to investors, 2 to the same guy. However, interestingly enough, after doing his research too late (after buying...doh!) , he decided BTL wasn't for him and he listed them both and eventually sold them on. He made a loss - but that, he admitted, was his own foolish fault.

The remaining one went to an investor and we managed to keep the same tenants in there. Great way - because there are no voids/preparation to finance once again. It had tenants who were A1 (8 years there) and a great yield. I charge high rents and always increase every year - compound interest is a magical phenomenon. We had an open day just for cash investors registered with my Estate Agent - with proof of liquid funds and got 3 sealed bids over asking.

We have just exchanged today on another that is going to the tenant. Interesting story was I did a sale and rent back when they were possible 11 years ago. He has got his act back together financially now - and bought it back! He is saving having to be paying rent when he's 80+.

Finally, I've just given 4 months notice to the 2 we are selling in 2018/19 and they will be listed in late July. That will be 15 in total by year end.

As I said earlier, every sale increases our liquid wealth and reduces the hassles of this mad industry.

It's a great feeling. the ones Ive left alone so far are my Jasper/former MX ones. Not highly geared either. However they are my most profitable ones anyway - so they are at the back of the queue.

Slowly but surely waving bye, bye to buy-to-let.....

Reply to the comment left by Ken Smith at 02/03/2018 - 18:41
And then place your money in a bank account earning 0%.
The smart money jumped into property before the barriers went up. From what you have described you were operating in the high risk low end pain in the *** market. There are 3 rules of life.
People with money will always have money, people will always have aspirations and location, location, location. Follow these and you will do well in any kind of market.

Reply to the comment left by AA at 02/03/2018 - 19:52
Hi Asif

I must say, you are very presumptuous in knowing exactly where I Park my liquid wealth. I can only presume that the limited context of your mind would lead you to act as described yourself.

Do you really think I would put it in sleepy bank accounts that effectively cost money from an opportunity cost aspect?

Asif...as if...

I'm doing very well thank you. This business is only the tip of the iceberg regarding my business and investment affairs.

I bought very low when there was blood on the streets in early2009.

I had sold my business in 2006 and received a 7 figures sum after tax. This was all parked in the bank for the time being. Great returns then (5%+) so why not? In March 2009 Interest rates were dropping) I took out a third of the cash and put it into property. The rest (two thirds) went into equities at the very same time. That's still there - not touched and has grown just over 400% since March 2009. Almost magic isn't it?

I already had 15 rental properties since 2000, and I saw the benefits of leverage in property - so did the following:
Appointed 3 'finders' to find me £4m of residential property (post crash values) for £3m. They did their job over 12 months and got me twenty odd properties - and I put £1m into it and borrowed £2m.
These properties had been worth almost £5m 12 months earlier. I'd just got them for £3m plus expenses - for £1m in of my own.

Now I'm pulling out....

Guess where I'm parking the proceeds? Yes, you got it in one - all in equities.
If you are familiar with Buffet and Bogle etc, you will understand the notion of tracking the market long-term. Ignore the headlines and the noise and just let the market trundle along through peaks and troughs.

Check out the Dow Jones chart over 10 years. Pay attention to March 2009 too. My entry point for equities and property.
Buffet always says to 'act contrarian'. It took some nerve at times - but it's paid off.

http://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years.

All this from a £1000 start up sum in 1988.

So, before you jump to conclusions about my circumstances and strategies, either do some research, or keep shtum.

In Scotland Edinburgh has the largest Private Rental sector.

Rents in Edinburgh had been rising at below inflation until 2014 since then they have skyrocketed.

The main reason for this is that long term lets are over regulated and soon to be over taxed whilst short term/holiday lets are under regulated and under taxed. So landlords around the city centre have moved their properties to the short term sector creating a doughnut effect in the city for long term lets.

I don’t expect rents to continue to increase above inflation as most of the regulation is now in place, we must now be near the top of affordability constraints and there are plans soon to be announced to regulate short term lets.

I would suggest that whenever Shelter, BBC or the Guardian tell you how well things work in Scotland that you remember that there is a cost for this regulation and it is being paid by tenants in increased rents.

Banning letting agent fees in particular was a massive own goal. Who would have thought putting more money into the same people’s pockets who are competing for the same goods would have led to inflation. A lesson that should have been learned from the Spanish Conquistadors in the 17th century.