Stop voting for fucking Tories

[fishfoodie]

[_Os_]

Torq you can't disagree with me saying "you are entirely wrong", by first agreeing with parts of my original reply, then ignoring those parts of my reply where I agree.

I'm familiar with the UK PRS. The reason why I'm sort of doubting BTL being the sole reason for house price inflation (above the UK building considerably less than in comparable nations), is the numbers don't really stack up for it. Most landlords have a portfolio of one property (this accounts for about 80% of all UK landlords), the reason for this is simple, they think it's easy money then they actually try it and discover it's fucking difficult, then they quit but keep the property they have already (the property could've been acquired to rent, or from something like forming a new household with their partner, either way the equation is "being a landlord is difficult = fuck that"). These are usually sold by the owner eventually and do not become a viable stand alone business. There's a lot of limiting factors on your BTL get rich quick scheme, not least the renovation/maintenance costs (do you want to buy at the ceiling price? Or do you want to buy at below ceiling price/renovate/remortage at ceiling?), what about voids (lost income), what about yield (there are some houses that aren't viable as renters, it's not a case of buy anything), as well as what you do mention like the time it takes to appreciate (it will not be 1 year). Only about 5% of UK landlords own more than 5 properties (and they account for about 40%-ish of the PRS, and not the majority last I checked). Nor is the PRS the majority of UK housing stock, it's about 20%. Lastly there hasn't been some astronomical rise of the landlords since the GFC, there's actually been a small decline in the amount of houses in the PRS over the last half decade or so (for many reasons, the short version is it's not easy money).

What you describe was true in the 2000s, it doesn't really hold up anymore though.

What's actually happening right now, is there's a shortage of houses to rent (because as I say, there's not enough houses full stop). People will fight over a house to rent, like other people do over buying a house.

Sorry if I was unclear: I was referring to the cause of house price inflation in the US and UK and the cause of the 2008 crash.

I don't know where you get your data from but it's incorrect. I don't know any private landlords who own less than 2 properties. I know 4 who own more than 50. So, I checked. 70% own 2-10. 42% own more than 5.

I wrote that post from memory. But I looked up the latest UK government source for you (from 2021):
https://www.gov.uk/government/statistic ... -report--2

"Just under half of all landlords owned one rental property, though nearly half of tenancies were owned by landlords with five or more properties.
43% of landlords owned one rental property, representing 20% of tenancies.
A further 39% owned between two and four rental properties, representing 31% of tenancies.
The remaining 18% of landlords owned five or more properties, representing almost half (48%) of tenancies.
Landlords who operated as individuals had smaller portfolios than those that operated as companies or organisations.
More than four fifths (85%) of landlords operating as individuals had between 1 and 4 properties, with just under half (45%) owning 1 property.
Fewer than half of landlords that operated as companies or organisations owned between 1 and 4 properties, with just 11% owning 1 property. More than half (56%) owned 5 or more properties.


"

On the growth or decline of the PRS (from a 2019-2020 UK government report):
https://assets.publishing.service.gov.u ... report.pdf

"Just over 4.4 million households live in the private rented sector in England, 19% of all households. By comparison, 17% (4.0 million) live in the social rented
sector and 65% (15.4 million) are owner occupiers. The number and proportion of private rented households has declined from 20% and 4.7 million households in 2016-17."


So there's a difference between those that have established a ltd company (almost certainly for tax reasons) and those that haven't. My numbers were old, but the theme still holds that landlords with a low number of properties (often just 1 property) are a large component of the PRS, those owning more than 5 are a minority. Those owning more than 20 are an extreme minority (although to actually make decent money from it you need to be looking at those numbers).

If you know landlords, you know why your BTL get rich quick scheme fails today then. Aside from everything I've mentioned, it fails because of changes to the tax rules that came in under Osborne. Among other things interest on the mortgage payments is no longer tax deductible. Before the landlord paid tax on his profit (income from rent, minus costs including interest payments on mortgages). Now he pays tax on the income and there is no deduction of mortgage interest payments (his biggest cost) before doing that (there is a 20% of the mortgage interest tax relief for landlords that haven't put the properties into a company). That can be got around if the landlord puts the properties into a ltd company (not an insignificant cost if they're already owned in his own name and there's many to be transferred), he then pays corporation tax (almost certainly much less than he was previously paying as an individual), mortgage interest payments again count as a cost, but to get at the profit the company has to pay him a salary or a dividend and the normal tax rules apply.

So why are the amount of houses in the PRS declining not booming as per your BTL model? Because it's not easy money. If someone comes into this as a n00b and is on a decent salary (40% income tax rate) and doesn't setup a ltd company, they're basically fucked before they even do any renovations or deal with tenants. If someone accidentally becomes a landlord (forms a new household with partner, relative dies, etc), then they discover they're paying tax on their rental income then deducting the biggest cost from what they have left, then giving the letting agent their 10% or whatever of the rental income, leaving them with not much. Then they essentially give up, but keep the property that's appreciating in value.

... It seems you agree your BTL exponential growth model isn't driving property prices today. The question for you then, is what is diving property price inflation today then? I say it's just straight lack of supply.

[ASMO]

LT4PM

The dream lives on.

All aboard the Truss Bus

#SupporttheTruss

[robmatic]

So why are the amount of houses in the PRS declining not booming as per your BTL model? Because it's not easy money. If someone comes into this as a n00b and is on a decent salary (40% income tax rate) and doesn't setup a ltd company, they're basically fucked before they even do any renovations or deal with tenants. If someone accidentally becomes a landlord (forms a new household with partner, relative dies, etc), then they discover they're paying tax on their rental income then deducting the biggest cost from what they have left, then giving the letting agent their 10% or whatever of the rental income, leaving them with not much. Then they essentially give up, but keep the property that's appreciating in value.

... It seems you agree your BTL exponential growth model isn't driving property prices today. The question for you then, is what is diving property price inflation today then? I say it's just straight lack of supply.

I think you are broadly correct about BTL and it doesn't stack up very well for new entrants, although you also need to bear in mind that many of the people who will get into it are basically financially illiterate.

I am an accidental landlord as I kept my flat in central Edinburgh when I emigrated in 2014. Once you factor in agency fees, maintenance etc the cashflow doesn't look great. It basically only works for me because the mortgage is relatively small and my overall income is small for the purposes of the UK taxman. On the positive side, capital growth has been decent and the income is broadly speaking index-linked as rents tend to increase with wage inflation so property is probably still a solid bet for people with plenty of capital who don't need a BTL mortgage.

As for the general level of property prices, we have had absurdly cheap credit for a long time combined with a growing population and limited house building. It's no wonder they are high.

[tabascoboy]

[Tichtheid]

... It seems you agree your BTL exponential growth model isn't driving property prices today. The question for you then, is what is diving property price inflation today then? I say it's just straight lack of supply.

The recent stamp duty holiday, long-term low interest rates and high LTV have all kept the plates spinning recently, but ultimately yes, lack of supply v high demand.

[Biffer]

... It seems you agree your BTL exponential growth model isn't driving property prices today. The question for you then, is what is diving property price inflation today then? I say it's just straight lack of supply.

The recent stamp duty holiday, long-term low interest rates and high LTV have all kept the plates spinning recently, but ultimately yes, lack of supply v high demand.

Thing is, with all these desperate attempts to keep the market up, when the crash does eventually come, it'll be carnage. And it will come - the drop in demand for commercial property with the change in working patterns is already evident, retail is going through the floor, and both of these will have knock on effects to residential. When it starts to teeter, the sell of all these people with multiple BTL mortgages is going to be sheer panic.

[Tichtheid]

... It seems you agree your BTL exponential growth model isn't driving property prices today. The question for you then, is what is diving property price inflation today then? I say it's just straight lack of supply.

The recent stamp duty holiday, long-term low interest rates and high LTV have all kept the plates spinning recently, but ultimately yes, lack of supply v high demand.

Thing is, with all these desperate attempts to keep the market up, when the crash does eventually come, it'll be carnage. And it will come - the drop in demand for commercial property with the change in working patterns is already evident, retail is going through the floor, and both of these will have knock on effects to residential. When it starts to teeter, the sell of all these people with multiple BTL mortgages is going to be sheer panic.

...and quite likely the many cases of negative equity will lead to a stagnant market

Though I'm sure some people will make a killing buying at rock bottom in a year or three before we go off on another flight of fancy

[Tichtheid]

Thing is, with all these desperate attempts to keep the market up, when the crash does eventually come, it'll be carnage. And it will come - the drop in demand for commercial property with the change in working patterns is already evident,

Just a little anecdote in support of this, my wife spent the last six months of 2019 looking for a bigger property for her organisation, they were close to finalising a long-term lease on several floors in a building in central London when it all hit the fan.

The organisation has still more than doubled its workforce, but they've moved to a smaller place than they were in. Below executive level they only go in a couple of times a week/month depending on need and use hot desking.

[Mahoney]

Do we have an equivalent if three men we don't like are sitting together?

[I like neeps]

Truss despite being a mentalist with no charisma, character and absolutely no chance of bonding with voters is a better choice than a tax dodging billionaire during a the cost of living crisis unlike anything we've seen in most people's living memories. Winter will be brutal and he'll be swanning around saying he understands in a £4000 pair of shoes.

Either way, the Tories are done.

[yermum]

the three stooges?

but yes there is a undercurrent of misogyny in that tweet that is unpleasant.

[I like neeps]

Truss' plan to turn the UK into Japan has been received well:

Truss’s statement “feels like a comment made by a politician with only the vaguest idea what they were talking about and makes very little sense,” said Rob Carnell, chief economist for Asia Pacific at ING Bank

I mean that does sum her up very well tbf.

[yermum]

But hasn't the Japanese economy been the poster child for dysfunctional economic policy since the 90s or am I missing something?

[tabascoboy]

Do we have an equivalent if three men we don't like are sitting together?

Feel free to find one of Johnson, Rees-Mogg and Rabb

[Paddington Bear]

But hasn't the Japanese economy been the poster child for dysfunctional economic policy since the 90s or am I missing something?

Would take what's happened economically in Japan over Europe

[Paddington Bear]

... It seems you agree your BTL exponential growth model isn't driving property prices today. The question for you then, is what is diving property price inflation today then? I say it's just straight lack of supply.

The recent stamp duty holiday, long-term low interest rates and high LTV have all kept the plates spinning recently, but ultimately yes, lack of supply v high demand.

Thing is, with all these desperate attempts to keep the market up, when the crash does eventually come, it'll be carnage. And it will come - the drop in demand for commercial property with the change in working patterns is already evident, retail is going through the floor, and both of these will have knock on effects to residential. When it starts to teeter, the sell of all these people with multiple BTL mortgages is going to be sheer panic.

I'm less convinced it will be carnage given the amount of owner occupiers and those who won't need to sell up immediately. I agree BTL is fucked, which is world's tiniest violin territory

[robmatic]

The recent stamp duty holiday, long-term low interest rates and high LTV have all kept the plates spinning recently, but ultimately yes, lack of supply v high demand.

Thing is, with all these desperate attempts to keep the market up, when the crash does eventually come, it'll be carnage. And it will come - the drop in demand for commercial property with the change in working patterns is already evident, retail is going through the floor, and both of these will have knock on effects to residential. When it starts to teeter, the sell of all these people with multiple BTL mortgages is going to be sheer panic.

I'm less convinced it will be carnage given the amount of owner occupiers and those who won't need to sell up immediately. I agree BTL is fucked, which is world's tiniest violin territory

The BTL people who borrowed against their rising property values will be the ones particularly screwed. Real shame.

[Paddington Bear]

Thing is, with all these desperate attempts to keep the market up, when the crash does eventually come, it'll be carnage. And it will come - the drop in demand for commercial property with the change in working patterns is already evident, retail is going through the floor, and both of these will have knock on effects to residential. When it starts to teeter, the sell of all these people with multiple BTL mortgages is going to be sheer panic.

I'm less convinced it will be carnage given the amount of owner occupiers and those who won't need to sell up immediately. I agree BTL is fucked, which is world's tiniest violin territory

The BTL people who borrowed against their rising property values will be the ones particularly screwed. Real shame.

I remember a couple of years ago there were tonnes of people online talking about taking out multiple interest only BTL mortgages, which seems like a fast track to bankruptcy. Christ knows why those mortgages are legal in the first place.

[yermum]

But hasn't the Japanese economy been the poster child for dysfunctional economic policy since the 90s or am I missing something?

Would take what's happened economically in Japan over Europe

In the last 10 years EU has outperformed Japan in economic growth.

since 91 japan has only had higher growth in 8 years.

the Japanese economy has some serious structural problems.

[Torquemada 1420]

I can't imagine too many landlords who don't own their own home ?, hence the 2x properties !

I do know an awful lot of; what we call in Ireland, "Accidental Landlords"; i.e. those people who've met & married, etc, & ended up owning properties they owned before they met, & those the bought after they met, & never sold on, but ended up renting these out, & thus became landlords. They're almost always shite landlords, because they don't want to be, & they don't have the time or inclination to do the job properly.

I'm pretty sure the data did not include PPRs but forgive me if I'm wrong.

I don't doubt there's that here too but the numbers will be dwarfed by the "professional" landlords.

[_Os_]

But hasn't the Japanese economy been the poster child for dysfunctional economic policy since the 90s or am I missing something?

Would take what's happened economically in Japan over Europe

In the last 10 years EU has outperformed Japan in economic growth.

since 91 japan has only had higher growth in 8 years.

the Japanese economy has some serious structural problems.

The bit people forget about Japan, is that they're Japanese which is the main reason their society hasn't descended into total chaos. The UK's economic issues are nowhere near as bad as what Japan has endured for 3 decades, yet it's not the Japanese going through a nervous breakdown.

Truss talking about emulating Japan is madness.

[Biffer]

The recent stamp duty holiday, long-term low interest rates and high LTV have all kept the plates spinning recently, but ultimately yes, lack of supply v high demand.

Thing is, with all these desperate attempts to keep the market up, when the crash does eventually come, it'll be carnage. And it will come - the drop in demand for commercial property with the change in working patterns is already evident, retail is going through the floor, and both of these will have knock on effects to residential. When it starts to teeter, the sell of all these people with multiple BTL mortgages is going to be sheer panic.

I'm less convinced it will be carnage given the amount of owner occupiers and those who won't need to sell up immediately. I agree BTL is fucked, which is world's tiniest violin territory

Depends on your definition of carnage I suppose, I'm meaning drops of about 20%

Given the number of owner occupiers has decreased a fair bit in the the last 20 years (now at less than 65%) and private rental has increased, I think it'll be nasty for a lot of the BTL owners, particularly those with multiple properties.

[Torquemada 1420]

I wrote that post from memory. But I looked up the latest UK government source for you (from 2021):
https://www.gov.uk/government/statistic ... -report--2

"Just under half of all landlords owned one rental property, though nearly half of tenancies were owned by landlords with five or more properties.
43% of landlords owned one rental property, representing 20% of tenancies.
A further 39% owned between two and four rental properties, representing 31% of tenancies.
The remaining 18% of landlords owned five or more properties, representing almost half (48%) of tenancies.
Landlords who operated as individuals had smaller portfolios than those that operated as companies or organisations.
More than four fifths (85%) of landlords operating as individuals had between 1 and 4 properties, with just under half (45%) owning 1 property.
Fewer than half of landlords that operated as companies or organisations owned between 1 and 4 properties, with just 11% owning 1 property. More than half (56%) owned 5 or more properties.


"

On the growth or decline of the PRS (from a 2019-2020 UK government report):
https://assets.publishing.service.gov.u ... report.pdf

"Just over 4.4 million households live in the private rented sector in England, 19% of all households. By comparison, 17% (4.0 million) live in the social rented
sector and 65% (15.4 million) are owner occupiers. The number and proportion of private rented households has declined from 20% and 4.7 million households in 2016-17."


So there's a difference between those that have established a ltd company (almost certainly for tax reasons) and those that haven't. My numbers were old, but the theme still holds that landlords with a low number of properties (often just 1 property) are a large component of the PRS, those owning more than 5 are a minority. Those owning more than 20 are an extreme minority (although to actually make decent money from it you need to be looking at those numbers).

If you know landlords, you know why your BTL get rich quick scheme fails today then. Aside from everything I've mentioned, it fails because of changes to the tax rules that came in under Osborne. Among other things interest on the mortgage payments is no longer tax deductible. Before the landlord paid tax on his profit (income from rent, minus costs including interest payments on mortgages). Now he pays tax on the income and there is no deduction of mortgage interest payments (his biggest cost) before doing that (there is a 20% of the mortgage interest tax relief for landlords that haven't put the properties into a company). That can be got around if the landlord puts the properties into a ltd company (not an insignificant cost if they're already owned in his own name and there's many to be transferred), he then pays corporation tax (almost certainly much less than he was previously paying as an individual), mortgage interest payments again count as a cost, but to get at the profit the company has to pay him a salary or a dividend and the normal tax rules apply.

So why are the amount of houses in the PRS declining not booming as per your BTL model? Because it's not easy money. If someone comes into this as a n00b and is on a decent salary (40% income tax rate) and doesn't setup a ltd company, they're basically fucked before they even do any renovations or deal with tenants. If someone accidentally becomes a landlord (forms a new household with partner, relative dies, etc), then they discover they're paying tax on their rental income then deducting the biggest cost from what they have left, then giving the letting agent their 10% or whatever of the rental income, leaving them with not much. Then they essentially give up, but keep the property that's appreciating in value.

... It seems you agree your BTL exponential growth model isn't driving property prices today. The question for you then, is what is diving property price inflation today then? I say it's just straight lack of supply.

Osborne's tax transition rules only came into full force in 2021. By then, landlords were split into
- those in denial or hadn't noticed
- those who had restructured: usually reducing debt, sometimes by offing a few properties. Some who transitioned to Ltd although no real way to get existing portfolios in, as you've already highlighted
- a few who bailed. Oddly, those I know who did that mainly did do due to stricter requirements on landlords

It matters not, the train has already taken us to where we are. What has changed is not the proportion of numbers being bought at BTL level, but by who. The most profitable landlords are simply buying up what can't or won't be bought by those now burned by the tax reasons you cite + rising interest rates.

It can't be lack of supply because that means it has to be demand led, ergo
- if BTL is not responsible (let's assume they are zero for simplicity)
- then only home owners or wannabe home owners can be the cause and
- we know wannabes can't even get on the ladder....... the age of 1st time buyers continues to rise
- so who buys the homes of those still on the 1st rung to enable them to move up?
- there are an estimated 1m empty homes

[ASMO]

Truss at the despatch box is going to be comedy gold, i may watch it just for that.

[tabascoboy]

- there are an estimated 1m empty homes

What is the source for this? Google searches suggest somewhere between 250 - 300 000 homes empty on long term, and ~650 000 in total.
Secondly I guess you have to ask why are they not being sold? How many are bought for "investment" only and with no intention of letting or selling for occupation? Are many empty homes considered to be "in the wrong place"? How many are unfit for habitition or in need of serious refubishment and modernisation? Simply too expensive?

Gives the impression that it's not lack of supply so much the issue as the "wrong kind of buyers" and choosiness.

[Biffer]

The other thing that'll set this off is one of the Chinese property companies going to the wall. Could very well cause a knock on on property globally, with a domino effect in China, that could then lead to huge problems for countries already struggling with debt repayment to China off the back of the belt and road stuff

https://www.cnbc.com/2022/06/17/moodys- ... -high.html

[_Os_]

I can't imagine too many landlords who don't own their own home ?, hence the 2x properties !

I do know an awful lot of; what we call in Ireland, "Accidental Landlords"; i.e. those people who've met & married, etc, & ended up owning properties they owned before they met, & those the bought after they met, & never sold on, but ended up renting these out, & thus became landlords. They're almost always shite landlords, because they don't want to be, & they don't have the time or inclination to do the job properly.

I'm pretty sure the data did not include PPRs but forgive me if I'm wrong.

I don't doubt there's that here too but the numbers will be dwarfed by the "professional" landlords.

Fishfoodie was wrong about about PPR as you say, but correct about accidental landlords being a large component. What robmatic described is a common way people become landlords. I think this is the main aspect you miss, there's a lot of people unknowingly exposed to quite a bit of risk.

The first link I provided covered this aspect. Only about half of UK landlords acquired the first property with the intention of letting it out, and about half do not describe themselves as any type of "professional" landlord (doubtful someone that's in full time employment, or self employed in a non-landlord business, views being a landlord as their main economic activity).

How first rental property was acquired:


Employment status of the landlord:

[Tichtheid]

The Big Issue put figures of empty homes at around the 300K mark - approx 230K in England, 47K in Scotland, 23K in Wales, they used council tax figures and defined "empty" as being not occupied for 6 months

https://www.bigissue.com/news/housing/h ... in-the-uk/

[tabascoboy]

Truss at the despatch box is going to be comedy gold, i may watch it just for that.

It's actually more of a shock than it should be that Truss has more experience as a Cabinet / Junior minister than Sunak because her performances don't give that impression at all.


and...call me shallow but a free Twix could just sway me

[Hal Jordan]

Would take what's happened economically in Japan over Europe

In the last 10 years EU has outperformed Japan in economic growth.

since 91 japan has only had higher growth in 8 years.

the Japanese economy has some serious structural problems.

The bit people forget about Japan, is that they're Japanese which is the main reason their society hasn't descended into total chaos. The UK's economic issues are nowhere near as bad as what Japan has endured for 3 decades, yet it's not the Japanese going through a nervous breakdown.

Truss talking about emulating Japan is madness.

The reverse of that is the Japanese corporate culture of never questioning the boss, e.g. Toyota stealing a massive march with the Prius, but then stagnating by concentrating on Fuel Cell
Evs when it was clear batteries were the prevailing market. At one point they were in with Tesla. Christ, Tesla's tech with Toyota quality controls would have been a dream.

[Torquemada 1420]

- there are an estimated 1m empty homes

What is the source for this? Google searches suggest somewhere between 250 - 300 000 homes empty on long term, and ~650 000 in total.
Secondly I guess you have to ask why are they not being sold? How many are bought for "investment" only and with no intention of letting or selling for occupation? Are many empty homes considered to be "in the wrong place"? How many are unfit for habitition or in need of serious refubishment and modernisation? Simply too expensive?

Gives the impression that it's not lack of supply so much the issue as the "wrong kind of buyers" and choosiness.

It's an industry stat that has changed little for several years.
https://propertyindustryeye.com/1m-home ... ure-grows/
https://www.independent.co.uk/news/uk/p ... 56263.html

I don't have proof of this but at least some of it will be down to geography i.e. Tory policy to continue to underfund work opportunities in the North and so labour (not the party) migrates South.
Who knows how many empty properties there are in London owned by dodgy foreign nationals (Saudis, Russians, Chinese etc) looking to launder money away from their own regimes.

{EDIT} Sorry. Looking at your numbers, I think this is down to a distinction between "empty" and "vacant" which is all pretty vague. I think empty is designated as no owner whereas empty is just that. To me, it's all the same i.e. homes that are unoccupied.

[Torquemada 1420]

I'm pretty sure the data did not include PPRs but forgive me if I'm wrong.

I don't doubt there's that here too but the numbers will be dwarfed by the "professional" landlords.

Fishfoodie was wrong about about PPR as you say, but correct about accidental landlords being a large component. What robmatic described is a common way people become landlords. I think this is the main aspect you miss, there's a lot of people unknowingly exposed to quite a bit of risk.

The first link I provided covered this aspect. Only about half of UK landlords acquired the first property with the intention of letting it out, and about half do not describe themselves as any type of "professional" landlord (doubtful someone that's in full time employment, or self employed in a non-landlord business, views being a landlord as their main economic activity).

How first rental property was acquired:


Employment status of the landlord:

I think we need to look at numerical distribution because it doesn't matter if about half started that way
- it doesn't state how many stayed that way or went on to buy more
- and, for example, I know one landlord who has >100 properties and so the implication there is clear

[_Os_]

Osborne's tax transition rules only came into full force in 2021. By then, landlords were split into
- those in denial or hadn't noticed
- those who had restructured: usually reducing debt, sometimes by offing a few properties. Some who transitioned to Ltd although no real way to get existing portfolios in, as you've already highlighted
- a few who bailed. Oddly, those I know who did that mainly did do due to stricter requirements on landlords

It matters not, the train has already taken us to where we are. What has changed is not the proportion of numbers being bought at BTL level, but by who. The most profitable landlords are simply buying up what can't or won't be bought by those now burned by the tax reasons you cite + rising interest rates.

It can't be lack of supply because that means it has to be demand led, ergo
- if BTL is not responsible (let's assume they are zero for simplicity)
- then only home owners or wannabe home owners can be the cause and
- we know wannabes can't even get on the ladder....... the age of 1st time buyers continues to rise
- so who buys the homes of those still on the 1st rung to enable them to move up?
- there are an estimated 1m empty homes

There was a phased reduction of tax relief for mortgage interest rates, which is why it only fully came in long after Osborne was gone.

Your first list looks about right, the only one you're missing is moving mortgages to a fixed interest rate. My view is the big weakness is to increasing interest rates (was obvious when Sunak started getting the money printing machine going, inflation was coming, which would mean higher interest rates), those most impacted by that will be landlords that haven't moved the properties into a ltd company (94% of landlords own them personally, 1% have some but not all in a company, 5% entirely in a company) and anyone on a variable not fixed mortgage. In a worst case the landlords that have <5 properties and aren't professional landlords (there's no huge money pot anywhere), get swamped by the rising interest rate and go bankrupt and because there's no ltd company separating their personal finances from the properties they lose everything.

Agree that there's PRS consolidation. But that's how the UK economy works isn't it? Consolidate, squeeze the little guys out, the consolidated big dogs extract rent. Retail is the classic example (you would know more than me, but French retail seems entirely different and more regulated). Did the ones you know who sold up sell their entire portfolio to a bigger player?

On supply and demand. Those who can't afford it but are in the market, still set the floor price, if the demand remains the same it never goes below the maximum they can afford. It's shit for society if people are basically only starting out in life in their 30s, but does it really matter for supply and demand what age the demand is? The question is only "demand, yes or no?"? London or anywhere commutable to London, has insane demand from locals/people within the UK moving there/immigrants. Anecdotal, but rent seems to be moving up much faster than inflation. I can only see it being fixed by a large increase in supply.

[tabascoboy]

Well, on the subject - this could go tits up!

Lenders will no longer have to check whether homeowners could afford mortgage payments of higher interest rates after the Bank of England have ditched the rule originally designed to avoid another credit crunch.

[robmatic]

Well, on the subject - this could go tits up!

Lenders will no longer have to check whether homeowners could afford mortgage payments of higher interest rates after the Bank of England have ditched the rule originally designed to avoid another credit crunch.

That's amazing timing, just as rates are heading up.

[tabascoboy]

Well, on the subject - this could go tits up!

Lenders will no longer have to check whether homeowners could afford mortgage payments of higher interest rates after the Bank of England have ditched the rule originally designed to avoid another credit crunch.

That's amazing timing, just as rates are heading up.

Actually just found that came in a month ago, but yes today there is talk of an up to 2% increase on interest rates...while Truss ( and probably not alone in this) wants to increase borrowing to finance tax cuts!

[I like neeps]

The other thing that'll set this off is one of the Chinese property companies going to the wall. Could very well cause a knock on on property globally, with a domino effect in China, that could then lead to huge problems for countries already struggling with debt repayment to China off the back of the belt and road stuff

https://www.cnbc.com/2022/06/17/moodys- ... -high.html

The belt and road stuff is a total red herring. China heading for a recession off the back of their property bubbles and lack of demand is bad news for the countries it invests in as it doesn't need their raw materials to the same quantity. So the (wrong) reading of the belt and road is deliberately harsh lending terms to access minerals below market value is immediately disproved as they won't need the minerals. China actually pretty much always provide debt forgiveness to these countries and Sri Lanka's current challenges have less to do with China then they do previous governments and western financial institutions if you believe the experts. China and Russia's end game in Africa is basically to access resource (as is ours) disrupt the west's democratic capitalism with their model and getting loads of potentially revelotionary working age men they have no use for miles away building infrastructure (or in Russia's case as mercenaries).

China and Russia being f*cked is bad news for Africa of course but not because of debt traps. The debt trap they need to worry about is loans from the World Bank etc.

[Paddington Bear]

Osborne's tax transition rules only came into full force in 2021. By then, landlords were split into
- those in denial or hadn't noticed
- those who had restructured: usually reducing debt, sometimes by offing a few properties. Some who transitioned to Ltd although no real way to get existing portfolios in, as you've already highlighted
- a few who bailed. Oddly, those I know who did that mainly did do due to stricter requirements on landlords

It matters not, the train has already taken us to where we are. What has changed is not the proportion of numbers being bought at BTL level, but by who. The most profitable landlords are simply buying up what can't or won't be bought by those now burned by the tax reasons you cite + rising interest rates.

It can't be lack of supply because that means it has to be demand led, ergo
- if BTL is not responsible (let's assume they are zero for simplicity)
- then only home owners or wannabe home owners can be the cause and
- we know wannabes can't even get on the ladder....... the age of 1st time buyers continues to rise
- so who buys the homes of those still on the 1st rung to enable them to move up?
- there are an estimated 1m empty homes

There was a phased reduction of tax relief for mortgage interest rates, which is why it only fully came in long after Osborne was gone.

Your first list looks about right, the only one you're missing is moving mortgages to a fixed interest rate. My view is the big weakness is to increasing interest rates (was obvious when Sunak started getting the money printing machine going, inflation was coming, which would mean higher interest rates), those most impacted by that will be landlords that haven't moved the properties into a ltd company (94% of landlords own them personally, 1% have some but not all in a company, 5% entirely in a company) and anyone on a variable not fixed mortgage. In a worst case the landlords that have <5 properties and aren't professional landlords (there's no huge money pot anywhere), get swamped by the rising interest rate and go bankrupt and because there's no ltd company separating their personal finances from the properties they lose everything.

Agree that there's PRS consolidation. But that's how the UK economy works isn't it? Consolidate, squeeze the little guys out, the consolidated big dogs extract rent. Retail is the classic example (you would know more than me, but French retail seems entirely different and more regulated). Did the ones you know who sold up sell their entire portfolio to a bigger player?

On supply and demand. Those who can't afford it but are in the market, still set the floor price, if the demand remains the same it never goes below the maximum they can afford. It's shit for society if people are basically only starting out in life in their 30s, but does it really matter for supply and demand what age the demand is? The question is only "demand, yes or no?"? London or anywhere commutable to London, has insane demand from locals/people within the UK moving there/immigrants. Anecdotal, but rent seems to be moving up much faster than inflation. I can only see it being fixed by a large increase in supply.

Bear in mind the housing supply round London looks better than it is because a lot of professionals seem comfortable living in uni style house shares. Which is not good news for society in a number of ways.
London should have probably about 20% more housing than it does.

[I like neeps]

Osborne's tax transition rules only came into full force in 2021. By then, landlords were split into
- those in denial or hadn't noticed
- those who had restructured: usually reducing debt, sometimes by offing a few properties. Some who transitioned to Ltd although no real way to get existing portfolios in, as you've already highlighted
- a few who bailed. Oddly, those I know who did that mainly did do due to stricter requirements on landlords

It matters not, the train has already taken us to where we are. What has changed is not the proportion of numbers being bought at BTL level, but by who. The most profitable landlords are simply buying up what can't or won't be bought by those now burned by the tax reasons you cite + rising interest rates.

It can't be lack of supply because that means it has to be demand led, ergo
- if BTL is not responsible (let's assume they are zero for simplicity)
- then only home owners or wannabe home owners can be the cause and
- we know wannabes can't even get on the ladder....... the age of 1st time buyers continues to rise
- so who buys the homes of those still on the 1st rung to enable them to move up?
- there are an estimated 1m empty homes

There was a phased reduction of tax relief for mortgage interest rates, which is why it only fully came in long after Osborne was gone.

Your first list looks about right, the only one you're missing is moving mortgages to a fixed interest rate. My view is the big weakness is to increasing interest rates (was obvious when Sunak started getting the money printing machine going, inflation was coming, which would mean higher interest rates), those most impacted by that will be landlords that haven't moved the properties into a ltd company (94% of landlords own them personally, 1% have some but not all in a company, 5% entirely in a company) and anyone on a variable not fixed mortgage. In a worst case the landlords that have <5 properties and aren't professional landlords (there's no huge money pot anywhere), get swamped by the rising interest rate and go bankrupt and because there's no ltd company separating their personal finances from the properties they lose everything.

Agree that there's PRS consolidation. But that's how the UK economy works isn't it? Consolidate, squeeze the little guys out, the consolidated big dogs extract rent. Retail is the classic example (you would know more than me, but French retail seems entirely different and more regulated). Did the ones you know who sold up sell their entire portfolio to a bigger player?

On supply and demand. Those who can't afford it but are in the market, still set the floor price, if the demand remains the same it never goes below the maximum they can afford. It's shit for society if people are basically only starting out in life in their 30s, but does it really matter for supply and demand what age the demand is? The question is only "demand, yes or no?"? London or anywhere commutable to London, has insane demand from locals/people within the UK moving there/immigrants. Anecdotal, but rent seems to be moving up much faster than inflation. I can only see it being fixed by a large increase in supply.

Bear in mind the housing supply round London looks better than it is because a lot of professionals seem comfortable living in uni style house shares. Which is not good news for society in a number of ways.
London should have probably about 20% more housing than it does.

One thing I notice flying around is that London has very few high-rises. Fly into cities in Europe and you see high-rises - London very few.

Sunak wants to build up. It's the only way.