Housing market

[matt j]

Maybe I'm a bit naive in current situations, but surely, if they've taken a deposit, in effect, the property's yours. Last I heard, agents cannot now charge fees to lessees (except for some admin.)

It's based on whether my application is given the OK, if for whatever reason I get turned down by them or the landlord then they refund it, if I get the green light it is taken off the first months rent.

Don't ask me Mike, I'm just a pleb playing the game, I jump when they say so and fill the forms in.

 

[Ponty]

I’m getting a feeling we’re being primed for a mortgage bail out package. Gas / electric bills have gone off the news, it’s clear the next crisis will be mortgages. I can’t see mass defaults / repos being allowed to happen, not just owner occupiers but landlords / tenants. Another huge govt intervention with money they haven’t got?

 

[Bob McC]

Really?
I accept that our failed state economy is entirely dependent on the housing market but I doubt it can be shored up as you hope.
Nobody stopped the mass repos in the 80s.

 

[Yank]

 

[stevec67]

Maybe I'm a bit naive in current situations, but surely, if they've taken a deposit, in effect, the property's yours. Last I heard, agents cannot now charge fees to lessees (except for some admin.)

it's a returnable deposit lending you passing credit checks. Stops the tenant putting in multiple applications and then backing out.

How would you get an assessment (even a guestimate) of current rental value of a property. The obv. one is ask a local agent, but then they'd want to view, or if not, it's sth I'd be cagey about doing.

"Hi, my name's Charlie, I'm looking for a place in, erm, your area, Hedgetown area say, say 2 beds, I'm new in town, used to live in, erm, Birmingham, what have you got to rent? How much do they cost per month? ".

 

[Mike Reed]

"Hi, my name's Charlie, I'm looking for a place in, erm, your area, Hedgetown area say, say 2 beds, I'm new in town, used to live in, erm, Birmingham, what have you got to rent? How much do they cost per month? ".

Not my style, Steve, but an idea to get someone else to enquire. Actually, the agent my sister and I have used a number of times shouldn't be too much of a problem with a suitably concocted story.

 

[laughingboy]

I’m getting a feeling we’re being primed for a mortgage bail out package. Gas / electric bills have gone off the news, it’s clear the next crisis will be mortgages. I can’t see mass defaults / repos being allowed to happen, not just owner occupiers but landlords / tenants. Another huge govt intervention with money they haven’t got?

Izabella Kaminska, former editor of FT's Alphaville, who is prone to making interesting-but-controversial statements thinks this (Twitter):

Financial markets are in total denial about the banking pain to come though. It is insane how many friends and family are panicking about mortgage rates to me. I have been saying since the War started that this leads to the nationalisation of the entire mortgage-financed housing market. Not just in the UK but in Europe too.

 

[Ponty]

Izabella Kaminska, former editor of FT's Alphaville, who is prone to making interesting-but-controversial statements thinks this (Twitter):

Yep, wouldn’t surprise me, it could be the only option. Would a govt let hundreds of thousands, even millions of people become homeless? All they’ve done since 2008 is bail outs, we’re in too deep.

 

[clivem2]

Isn’t it good that we’ve “taken back control”? We can now fully see the quality of our government.

 

[Gingerbeard]

I’m getting a feeling we’re being primed for a mortgage bail out package. Gas / electric bills have gone off the news, it’s clear the next crisis will be mortgages. I can’t see mass defaults / repos being allowed to happen, not just owner occupiers but landlords / tenants. Another huge govt intervention with money they haven’t got?

I’m not wanting to wish disastrous times and the awfulness of repos on anyone, but surely there has to come a time when the Government stop bailing out. It can’t be sustainable and sends the wrong message

 

[dweezil]

which of course most btl cant do as interest only and makes no differnce what length it is

BTL on interest only must be a high risk venture; if the rent won't cover some sort of payback over interest you're totally depending on capital growth?

 

[clivem2]

BTL on interest only must be a high risk venture; if the rent won't cover some sort of payback over interest you're totally depending on capital growth?

Agreed. If a landlord is very highly leveraged without long term fixes in place then they’ve taken a massive risk. There’s no way rents should go up because their risky business model has failed. Other less leveraged or better protected landlords won’t have such an issue.

 

[Ponty]

I’m not wanting to wish disastrous times and the awfulness of repos on anyone, but surely there has to come a time when the Government stop bailing out. It can’t be sustainable and sends the wrong message

Whilst I don’t disagree, they’ll pin this on Putin (incorrectly but that will be the messaging), therefore making intervention unavoidable. I mean think about it. The govt is already having to bail people out with their gas / electricity bills. That’s a drop in the bloody ocean compared with a mortgage doubling for many who are already close to the edge.

 

[mandryka]

The government should just cap mortgage repayments for a couple of years. Simples. I mean if it’s Ok to cap rents in Scotland, why not cap all property repayments in Britain?

 

[Ponty]

BTL on interest only must be a high risk venture; if the rent won't cover some sort of payback over interest you're totally depending on capital growth?

But house prices only go up? Well, long term maybe but if landlords don’t have resilience to subsidise their ‘investment’ in tricky times, they’re done. Trouble is, that invariably means upheaval and disruption for the tenant. There are tenant checks for renting a property. If I were looking to rent somewhere now, I’d want to understand the landlords balance sheet and whether the property could be at risk from repo.

 

[mandryka]

Yea!!! Andrew Stephenson, the undersecretary of state for Levelling Up, Housing and Communites, is a BTL landlord. Declared rental income of 10K p.a.

 

[mandryka]

BTL on interest only must be a high risk venture; if the rent won't cover some sort of payback over interest you're totally depending on capital growth?

I just don’t think it’s a problem for the landlord. Rents will rise to cover the mortgage repayments. Tenants who don’t pay will have to find somewhere else, smaller and cheaper in a less desirable neck of the woods, to live. The shortage of rentals will add to demand, increasing the market rents.

In Scotland tenants wil be protected for a short time, but the axe will fall in Spring.

Mortgage inflation leads to rental inflation, obviously. It’s the same logic as food prices. If the price of flour goes up, so does the price of cake. If the customers can’t afford it, let them eat bread.

 

[Ponty]

I just don’t think it’s a problem for the landlord. Rents will rise to cover the mortgage repayments. Tenants who don’t pay will have to find somewhere else to live. The shortage of rentals will add to demand, increasing the market rents. Mortgage inflation leads to rental inflation, obviously.

Not sure I agree. If IR’s increase sharply and a landlords IO mortgage goes from £1K a month to £3K a month (perfectly possible), there is simply no way the rent can go from say £1,500 to £3,500. People simply won’t be able to pay it even it they wanted to.

 

[mandryka]

Not sure I agree. If IR’s increase sharply and a landlords IO mortgage goes from £1K a month to £3K a month (perfectly possible), there is simply no way the rent can go from say £1,500 to £3,500. People simply won’t be able to pay it even it they wanted to.

Ah, well in that case, if the business plan means that the rents have to double to make a decent profit, then obviously the landlord will evict the tenant and sell the house. They may not sell at the top of the market, but it's better than being trapped in a loss making concern. What will happen to the tenant is anyone's guess.

 

[clivem2]

Not sure I agree. If IR’s increase sharply and a landlords IO mortgage goes from £1K a month to £3K a month (perfectly possible), there is simply no way the rent can go from say £1,500 to £3,500. People simply won’t be able to pay it even it they wanted to.

Yes, well-run businesses hedge against higher IRs or have a strategy (exit?) to cope. BTLs should be no different.