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Helen Rogers

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Benefit Recipients are often excellent tenants but all sadly get tarred with the same brush as the minority that are not. Many mortgages and insurance companies specifically excluded then as permissible tenants. Coupled with that, unless they have a suitable guarantor, rent guarantee indemnity insurance is not available as the tenant won't pass references. Many landlords therefore can't take HBRs without breaching the terms of their mortgage and/or buildings insurance, which is highly inadvisable. Coupled with the absence of ability to take out rent guarantee insurance this renders HBR's unattractive tenants. Unless there is a change policy somewhere along the line the future looks very bleak for this type of tenant in the PRS especially if Universal Credit makes arrears more likely, as a tenant with arrears will automatically fail references even with a gold plated guarantor.

From: Helen Rogers 19 October 2018 12:11 PM

This makes for interesting reading https://www.cml.org.uk/documents/the-profile-of-uk-private-landlords/the-profile-of-uk-private-landlords-20170118.pdf The significant point is that the majority of UK landlords will not be immediately affected by the most publicised tax changes as they are not mortgaged. Add to that the fact that 65% of landlords are currently lower rate tax payers and will therefore not be affected. Whilst some of them will be tipped into the higher rate less than half of tenanted property is mortgaged anyway and over 60% of landlords own only one rental property and are therefore less likely to be nudged into the upper tax bands. Some landlords will be affected. They will be the ones with newer portfolios who are heavily geared, and for them this will be very painful. S24 is undoubtedly a disaster for some but the vast majority of landlords, and therefore tenants, will be unaffected. The landlords that are affected can try and force up rents, and we are seeing that locally to an extent with some asking £150pcm or more above market rent, but those properties are attracting voids and eventually prices are reduced. Why would a tenant even look at a property which is going to cost them £1,800 a year more? The most noticeable thing I have noticed in our area is the number of reductions in asking rents not the increases.

From: Helen Rogers 01 June 2018 12:54 PM

Indeed they are. But it's worth remembering that not all landlords will be affected by a rise in fees, some agents will not increase their fees, some landlords don't use agents, and some landlords will take any rise on the chin as they were used to paying much higher fees. Equally the changes in tax treatment of interest only affect some landlords. Many will be unaffected. Therefore the market may not support an increase in rent for either of those reasons.

From: Helen Rogers 15 May 2018 12:49 PM

Not necessarily Terry - If my newsagents rent increases I don't expect to pay more for my Crunchie Bar and daily rag. Some things are fixed price, some are down to market forces and some can be marked up.

From: Helen Rogers 15 May 2018 11:58 AM

Landlords have, to some extent, already had their money. The hike in tenant fees has been the result of a decrease in landlord fees. Landlords used to pay around 12-15% for full management but agents competing for business have reduced those fees and swung the deficit onto the tenant for whom the fees are not tax deductible. The pendulum has swung too far in many cases leading to the tenant bearing a large cost whilst the rents did not decrease to factor that in. The agents have been happy as one way or another they have got their money, the landlord has been happy as they have been paying reduced fees, and the tenant has borne the brunt.

From: Helen Rogers 15 May 2018 10:27 AM

My best guess is no - s24 is here to stay. Any government's history of revoking a change of tax legislation that earns them any decent amount of money is poor no matter how fair or unfair it is. The landlord is way too popular a target for them to about turn. Reversal of s24 is not a vote winner because a lot of landlords won't care as they are not affected, new landlords are pre-warned and will factor it in, and tenants would be unhappy if they perceive that their landlord just got a tax break and they didn't get a rent reduction. It isn't going to happen IMHO. Sorry re-read my comments and now understand why you thought I might think it would be revoked - in a couple of years various financial factors will change for me and at that point it is possible that I will sell some of the portfolio to render the others mortgage free, or more likely tax plan to make s24 irrelevant.

From: Helen Rogers 02 May 2018 14:49 PM

I have, but the jury is out on whether they will work long term, or indeed short term, or whether that particular veil will be lifted. HMRC have a penchant for veil lifting so I would guess sooner or later they will have a go. In my case the cost of doing it would be greater than the s24 cost at least for the next couple of years and after that it may be irrelevant so it's a high risk to take for me, that BICT doesn't work in the longer term compared to the potential s24 saving vs the CGT. There are other implications which may or may not crystalise which would also be financially irritating.

From: Helen Rogers 02 May 2018 14:37 PM

I'm not trying to downplay it, I'm simply putting forward my observations. The vast majority of our landlords are either unaffected or minimally affected. We may be unrepresentative but recent stats are that over 50% of landlords own only 1 rental property and they will generally be unaffected unless they are high earners. Your assertion that millions of tenants will be affected is likely therefore an over statement. Whether your portfolio is an investment or an investment business is moot. I also looked at incorporation but the CGT implications were horrific and by far a bigger bullet than the one it would have dodged.

From: Helen Rogers 02 May 2018 14:11 PM

Unfortunately rule one is that life doesn't have to be fair. It is for sure irritating though. However property is an investment just like any other and tax and legislative changes impact all investments at one time or another, it's just not quite so 'personal' usually. The landlords that will be affected are those who have built up their portfolio recently and quickly. Those that have held property for a couple of decades or more will have low mortgages even if they started with the 75% model. There are plenty of such landlords, plenty also of the mortgage free variety, and I suspect they account for a very sizeable percentage of the market, especially if you take into account corporate landlords. The impact on tenants I suspect will be small. I am a landlord of a sizeable portfolio built up over a couple of decades on the 75% or 60% model with repayment mortgages. I haven't increased any of the rents this year apart from 2 properties which are currently still catching up with market rate, and have some way to go. I am also a letting agent and across a few hundred properties we have barely increased any rents this year as the market rent in the area is drifting slightly downwards. The number of landlords that we have that are potentially going to struggle is very small indeed. Off the top of my head I can only think of one, but I could be wrong.

From: Helen Rogers 02 May 2018 13:43 PM

There are a lot of landlords out there for whom s24 will make little or no difference. Those paying the lower rate of tax will not be affected (the typical 1 property landlord owned in joint names which account for about half the rental market) as well as those who are well into or at the end of their repayment mortgage or who have a mortgage free/inherited property etc. They are, and will continue to, slightly undercut the market to attract the best tenants. IMHO landlords should never forget that they have 2 types of income - the rent and the capital gain. Rent should not be pegged to costs, it should be pegged to market value and if costs exceed that then it is a cost of achieving your capital gain not the tenant's cost. The deal is not that you are passing on your tax and mortgage costs to the tenant, they are pay a market rent. The landlords who will suffer are those who have built their portfolios on a low rate interest only and low equity basis and have income that takes them well into the higher rate tax band but are heavily mortgaged. They have invested, and are feeling bruised, but on the flip side had they chosen any other investment, for example the stock market, they would not have been able to borrow and offset the interest against their earnings ever. Their portfolios are at risk not only from s24 but also potential interest rate rises, which could be a serious flaw in that investment strategy and lead to a significant amount of distressed selling.

From: Helen Rogers 02 May 2018 12:43 PM

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