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This is great

By unnecessarily forcing up interest rates it has:

Forced up landlords borrowing costs
Forced landlords to increase their prices as a result
Persuaded many landlords to sell up
Reduced market supply of rental properties as a result
Forced up market prices again as a result.

Landlords can cover their interest rate increases by raising prices but also landlords are forced to sell up by rising interest rate costs.

17 thoughts on “This is great”

  1. By unnecessarily allowing in hordes of asylum seekers, they’ve forced up the demand for rental properties, forced landlords whose properties they trash to increase their prices as a result, persuaded many of them to sell up because of the hassle, reduced the supply of rental properties as a result, and forced up market prices again as a result.

    There you are. FTFH

  2. Housing benefit for private tenants is restricted to the 30th percentile of local rented accommodation of the market frozen at 2020 prices.

    Given the massive increase since 2020, there is a significant shortfall between actual rents paid and housing benefit.

    More than 50 per cent of private tenants who rely on Universal Credit to pay their rent have a shortfall between the amount they receive and what they pay for housing.

    The revelation comes from analysis of government data by the National Residential Landlords Association.

    Official data suggests that 56 per cent of private renters relying on Universal Credit have an average gap of £100 a month between the amount they receive in housing cost support and the rents they pay.

    Almost 60 per cent of renters with two children relying on Universal Credit to help pay their rent have a shortfall between their rent and the benefits they receive.

    Regionally, the proportion of tenants affected ranged from just over 40 per cent in London – although based on a much higher number of claimants – to over 68 per cent in Wales.

    Shocking data on tenants who rely on Universal Credit to pay rent

  3. Bloke in North Dorset

    “ Persuaded many landlords to sell up
    Reduced market supply of rental properties as a result”

    So landlords do provide a social benefit, I thought Spud was against them but I’m not surprised that he has massive cognitive dissonance on this subject.

  4. “Landlords can cover their interest rate increases by raising prices but also landlords are forced to sell up by rising interest rate costs.”

    Yes, because not all landlords have the same amount of debt attached to their properties. Some may be mortgaged to the hilt, these are the ones being forced to sell up, as they can’t raise rents by enough to cover their rising interest costs. Others may have far more equity in the property, so are able to raise rents a bit to cover the smaller (in cash terms) mortgage rise. Similarly some landlords may be on fixed rate mortgages, so are less affected by rising interest rates, and others may be on variable rate mortgages so far more affected by rising rates.

  5. Yes, this seems reasonable. Higher interest costs may prompt landlords to increase rents, but they may find they are unable to raise rents sufficiently to cover costs. So some sell.

  6. And not many tenants will be buying.
    Wholesale eviction, and a transfer of accommodation to those with good wages and stable employment, i.e. mortgageable futures.

  7. Section 21. If tenants have security even if they don’t pay the rent landlords can’t repossess and neither can mortgage banks.
    Cue mass sell off before the new Act comes into force, regardless of interest rates.

  8. Many landlords will be bankrupted if they choose to sell up as a purchasing landlord will be liable for council tax and the cost of property maintenance even if the rental income is zero so a reasonable sale price will be less than the mortgage.

  9. I suspect the tax changes have had just as big an impact. For an individual paying 40% (or 45%) tax they’re ridiculous.

    Before tax changes – £12k rent and £6k mortgage interest = £6k profit = £2,400 tax @ 40%

    Now £12k rent = £4,800 tax less relief of £6k @ 20% (£1,200) so £3,600 tax.

    It’s possible to have no profit and a tax bill.

    And because the tax is charged on rent first, you’re more likely to be in a higher tax bracket.

  10. Bloke in the Fourth Reich

    But presumably interest charges on loans to commercial landlords are a fully deductible and legitimate business expense.

    One wonders sometimes where such legislation in our entirely incorruptible system comes from.

  11. @BitFR

    If by commercial landlords you mean companies, then yes, deductible in full.

    There’s also no higher CGT rate on commercial property as there is for individuals, nor any accelerated payment of tax, as there is for individuals

    It’s led to a number of landlords incorporating.

    Here, I think the legislation came from stupidity rather than any corrupt motive. BTL landlords were identified as evil and ‘something had to be done’.

  12. Murphy is boasting that his readers donations are paying for his daily coffee – in a 4 star hotel! Truly a man of the people!

  13. Sam Jones

    Ominously having targeted pensions, ISAs and property for state seizure he is turning his attention to All other assets with a view to their total confiscation. That image isn’t one for the faint hearted but it will no doubt be another scene in the 30 year epic of his life:

    ‘Low Fens Grifter’

    What a piece of work is that man..

  14. Some bloke on't t'internet

    As others have said, there’s a limit to how far you can raise rents. The rising interest rates aren’t solely causing the exodus of landlords – the writing on the wall is clear, politicians would rather pander to pressure groups like Shelter (Q: exactly how many people has Shelter actually housed – i.e. actually provided a roof over their heads ? A: I would imagine none at all as all they do is make up dodgy statistics to push to an unquestioning media) than anyone with real evidence. Tax changes, EPC changes, upcoming ban on S21*, and rising interest rates as the cheery on the top. It all adds up to a picture that is not looking nice for many landlords.
    * I’m actually not strongly against getting rid of S21, but the rest of the system needs to be fixed before it goes – which means it won’t be. There are plenty of stories of landlords taking many months or even over a year to get rid of non-paying tenants who have trashed the place. Most S21 notices are actually in place of a S8 notice simply because S8 is broken at the moment.

    And as asked, when landlords sell up, the people buying are certainly not the ones Shelter is campaigning for – simply because they generally are not in a position to get a mortgage. So far, it looks like Shelter and Gen. Rent are shooting themselves, and the people they claim to be supporting, in both feet.
    And these people won’t be getting into these nice build to rent developments the government seem to favour. They tend to be nice apartment blocks with amenities, a concierge, and so on – and a hefty rent to suit. The people suffering from these policies need not apply – their housing benefit won’t even come close to paying the rent.

    Luckily, I remortgaged just the the right time – the bulk of my borrowing is on a 10 year fixed deal 🙂

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