Should Landlords Capitalise On Sky-Rocketing Rental Demand?

Should Landlords Capitalise On Sky-Rocketing Rental Demand?

10:40 AM, 22nd August 2022, About 2 years ago 41

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Whether or not landlords should capitalise on sky-rocketing rental demand is a political hot potato. There are polarised opinions even among the Private Rented Sector’s leading centre’s of influence.  For example …

Eddie Hooker, CEO of Hamilton Frazer (the owners of MyDeposits, Landlord Action and several other well known brands in our sector) is advising landlords -..

“Don’t be tempted to put the rent up”

“We are starting to see landlords putting the rent up; they want the same yield,” he says. “If they are coming out of a fix on a mortgage they are probably likely to see a threefold increase in the interest rate, and therefore their yield will drop, and so they will be tempted to put the rent up – and obviously there is a lot of demand out there, because a lot of landlords have been tempted to exit the market.

“I think landlords would be better to look at the long term and not be tempted to suddenly whack the rent up, which would exacerbate the problem for the tenant, causing arrears.”

However, Mark Alexander, Founder of disagrees. He said …

“Landlords have an obligation to themselves and their own families to maintain their own household incomes. They are feeling the financial squeeze on even more levels than their tenants. The mass exodus of so many landlords is caused by Government policy but it is creating demand for the landlords with properties still available to let. If they are able to sustain their own finances by letting to people who are ready, willing and able to pay higher rent that’s exactly what they should do. It is not their moral obligation to swallow the burden of Government failings and the anti-landlord policies that are driving so many landlords to sell up.”

He went on to say …

“The plight of tenants is not the fault of landlords. We are all in the same rat race and those who run the World are responsible for that. What do they expect is all to do? Maybe they expect tenants to get a second job and for their landlords to build, rent and manage more properties to solve the housing crisis and to pay the extra taxes and increasing costs of living, but we all need to live a little too don’t we? There has to come a time when we all say enough is enough!”

What are your thoughts?

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Ian Narbeth

9:46 AM, 25th August 2022, About 2 years ago

Reply to the comment left by Mark Alexander - Founder of Property118 at 24/08/2022 - 18:33
And if TheMaluka were to add the modest interest allowed under the Tenant Fees Act, the Universe would come to an end before the debt was repaid!


7:39 AM, 27th August 2022, About 2 years ago

I want to get out and have a potential buyer without the intervening estate agent. But my children tell me property is going up and it's the best asset to hold. Flip side: poor tenant (should never have taken her on!) now not paying rent and doesn't know the word 'clean' or 'hoover'.
Govt soon will reduce my rights even there. I am not a social worker.
I am 77.

paul thomason

8:57 AM, 27th August 2022, About 2 years ago

With Morgage rates now at 5.5 for portfolio landlords we have to at least break even if you buy a 2 bed terrace in Northampton for 260000 first stamp duty Morgage 900 a month rent 950 pcm ( up from 750 1 year ago) I think landlords can’t reduce rents and maybe tenants can’t pay higher rents so landlords will sell so fewer and fewer Propertys on market so higher rents

paul thomason

9:19 AM, 27th August 2022, About 2 years ago

Reply to the comment left by Ian Narbeth at 23/08/2022 - 17:40
Fixed rates have gone from 2.7 five year fix to 5.5 five year fix that’s a 98 percent increase for please advise how we cover these costs I will give example 2 bed terrace purchased at 260000 at 69 ltv 185000morgage at 2.7 is aprox 420 pcm rent 750 new Morgage 800 a month rent please advise what the landlord should do

Denise G

9:32 AM, 27th August 2022, About 2 years ago

Reply to the comment left by Monty Bodkin at 23/08/2022 - 17:37We are among the many I suspect who have let our rents fall way behind market rents, because our tenants have been in situ for years and are looking after our properties, bothering us only when absolutely necessary (mostly) and paying their rent in full and on time (mostly) ... so why would we have raised their rents and risked voids during that time?
But clearly we are now fast approaching a time when difficult decisions will need to be made. Somethings gotta give because, as our fixed rate mortgages come to an end, or the one that tracks the bank base rate goes up and up - seemingly every month (that mortgage is already costing us 150% more than it was at the beginning of the year), our rents are going to need to go up too - or we will be paying to house people.
In that scenario of course we would be more of a charity than the charity Shelter is - and we would DEFINITELY be housing more families than they do!

paul thomason

10:10 AM, 27th August 2022, About 2 years ago

Reply to the comment left by Denise G at 27/08/2022 - 09:32
Maybe we should all get a job with shelter 55000 a year pension retirement at 55 due to all the hard work ,plus maybe a cheap rent from housing association which gets 12 billion a year from government


16:33 PM, 27th August 2022, About 2 years ago

this is a very difficult one in my opinion.
there are so many potential variables to consider between now and the peak of interest rates (mortgage rates). repair costs, insurance premiums(i have recently renewed the annual insurance cover on 4 family owned B2L's and i was surprised at the size of the cover now required for re-build costs,) no longer below market value as in past, but a 25% over market value on one property i manage. Compare these increases against the increased amount a tenant can afford to pay. when did you last increase your rent. how much are you thinking of increasing the rent now? has your mortgage payments just been renewed and you are now potentially loosing money. do you want the risk of having a void period. Would it be better to wait until you have more info. then arrange to have a discussion with your tenants. an increase now of 3% might prevent you being able to increase rent again in 6 months by a further 3-5%, but it might be better to agree something now than wait.
can you offer the tenant something in return, by way of making the rented property more energy efficient so they might save on their winter heating bills. are you a long term thinking landlord? or promise there will be no more rent increases for a year, so the tenant can also manage their finances. its a big issue for both Landlord and Tenant and will have to be handled delicately not to upset either side.
one of my Landlords has a tenant of 2 years, never any issues re rent being paid on time, so far. the landlord and i discussed and agreed i should request a smallish rent increase of 4.3%. i verbally put this to the tenant about 4 weeks ago requesting what i thought was a moderate increase, as Landlord was having to remortgage. there was resistance, to this suggestion, which surprised me somewhat, and a request to think about it. In meantime i have formalised the increase, in writing, with the start date of the increase, as i had not heard either way. i guess time will tell if this works !

i hope they don't leave but my landlord is now at risk of a having a VOID period.
what ever the out come is with this property i may have to fine tune on the other properties i manage.
HMO's and Co-Living, Serviced Accom. and Holiday Lets i think have more concerns as i fear there may be less profit and more risky variables for these landlords to have to think about.

quick thought if an HMO landlord has gas from 1 supplier and electricity from another supplier will they receive 2 grants?, or is it per address or is it per separate tenant?

good luck everyone

Old Mrs Landlord

17:34 PM, 27th August 2022, About 2 years ago

Reply to the comment left by Jonathan Cocks at 27/08/2022 - 16:33Quite frightening that you are managing properties for others yet asking such basic questions. It was agent incompetence that drove us to self-managing after the first year,having been lumbered with dreadful tenants..


15:36 PM, 28th August 2022, About 2 years ago

Reply to the comment left by paul thomason at 27/08/2022 - 09:19
My suggestion is to go out and get a job as I did back in the 70s. It worked and I kept my head above water.
Now in hindsight, I earnt a ton of money with inflation. A lot of LL s seem to ignore that fact

paul thomason

15:38 PM, 28th August 2022, About 2 years ago

Reply to the comment left by Neilt at 28/08/2022 - 15:36
I think working 90 hours a week plus a full time job is a little challenging

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