PeteMorris Posted March 7, 2013 Share Posted March 7, 2013 It occurred to me the other day, that there seems to be a proliferation of private landlords buying houses on the cheap (or some at great expense), doing them up and renting them out. I can see the logic in that pensions etc are severely devalued and you get practically nothing back in interest on savings. It's a good nest egg. However. I'm assuming that most of them take out mortgages to fund these purchases. We all know at the moment, if you have some funds for a deposit and can easily get a mortgage then it's all too easy. Plus the interest rates are pretty much as low as they've ever been, so the repayments on the mortgage will easily be funded by a tenant paying rent. So what happens when the interest rates start to creep up, as they inevitably will at some point? I know at least 2 landlords that have acquired more then 4 houses each in the last 12 months. Will they be overstretched when the interest rates move upwards? Or will it be bad news for the tenants...Higher rents? Link to comment Share on other sites More sharing options...
gnvqsos Posted March 7, 2013 Share Posted March 7, 2013 It occurred to me the other day, that there seems to be a proliferation of private landlords buying houses on the cheap (or some at great expense), doing them up and renting them out. I can see the logic in that pensions etc are severely devalued and you get practically nothing back in interest on savings. It's a good nest egg. However. I'm assuming that most of them take out mortgages to fund these purchases. We all know at the moment, if you have some funds for a deposit and can easily get a mortgage then it's all too easy. Plus the interest rates are pretty much as low as they've ever been, so the repayments on the mortgage will easily be funded by a tenant paying rent. So what happens when the interest rates start to creep up, as they inevitably will at some point? I know at least 2 landlords that have acquired more then 4 houses each in the last 12 months. Will they be overstretched when the interest rates move upwards? Or will it be bad news for the tenants...Higher rents? Tenants can move out so landlords have the problem funding repayments.However some lords default on the repayments and the tenants are evicted despite paying the rents. Link to comment Share on other sites More sharing options...
PeteMorris Posted March 7, 2013 Author Share Posted March 7, 2013 Tenants can move out so landlords have the problem funding repayments.However some lords default on the repayments and the tenants are evicted despite paying the rents. Exactly my point!..or at least one possible scenario Link to comment Share on other sites More sharing options...
truman Posted March 7, 2013 Share Posted March 7, 2013 Exactly my point!..or at least one possible scenario Is there a shortage of tenants? Link to comment Share on other sites More sharing options...
PeteMorris Posted March 7, 2013 Author Share Posted March 7, 2013 Is there a shortage of tenants? Not as far as I know...but maybe in time a shortage of tenants able to afford inflated rents.. Link to comment Share on other sites More sharing options...
truman Posted March 7, 2013 Share Posted March 7, 2013 Not as far as I know...but maybe in time a shortage of tenants able to afford inflated rents.. So what will they do?.. the tenants I mean..they have to live somewhere.. Link to comment Share on other sites More sharing options...
geared Posted March 7, 2013 Share Posted March 7, 2013 The tennants will have to move, but it's unlikely they'll be out of pocket because it's a complete nightmare evicting someone and they can easily stay for a couple of months rent free if their landlord tries to do them over. If the person can't afford the house then they sell it surely, and take thier risks recovering money that way. It's pretty simple maths really, if you take too much of a risk buying up houses then you accept that you may not be able to afford repayments and may have to sell. One person buying up 4 houses in 12 months is a risk IMO, unless they have serious money behind them. If it all falls apart for them it's their fault. Link to comment Share on other sites More sharing options...
MrSmith Posted March 7, 2013 Share Posted March 7, 2013 Is there a shortage of tenants? Many of the properties my daughter looked at three months ago are still vacant so I imagine it depends where you live. Link to comment Share on other sites More sharing options...
gnvqsos Posted March 7, 2013 Share Posted March 7, 2013 So what will they do?.. the tenants I mean..they have to live somewhere.. Find a more prudent and responsible landlord who charges a fairer rent-some landlords are completely untutored and should be removed from the sector. Link to comment Share on other sites More sharing options...
PeteMorris Posted March 7, 2013 Author Share Posted March 7, 2013 So what will they do?.. the tenants I mean..they have to live somewhere.. Well...therein lies the problem. Interst rates go up, so the landlord increases the rent to compensate. The tenant can't afford the higher rent...or if on HB the council will only pay so much of it. So the tennant is left up the proverbial creek without a paddle ---------- Post added 07-03-2013 at 13:01 ---------- The tennants will have to move, but it's unlikely they'll be out of pocket because it's a complete nightmare evicting someone and they can easily stay for a couple of months rent free if their landlord tries to do them over. If the person can't afford the house then they sell it surely, and take thier risks recovering money that way. It's pretty simple maths really, if you take too much of a risk buying up houses then you accept that you may not be able to afford repayments and may have to sell. One person buying up 4 houses in 12 months is a risk IMO, unless they have serious money behind them. If it all falls apart for them it's their fault. That's not much help to the tenant though is it?...and of course the council won't be able to provide alternative accommodation, cos that's presumably why there are private landlords and tenants. ---------- Post added 07-03-2013 at 13:04 ---------- Bloody hell...Where's Chem1st Link to comment Share on other sites More sharing options...
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