Government warned for 3 years lending changes would create issues

[Lilith7]

Apologies for bringing up an old thread but I was away and now I'm semi back and want to reply.

"Rents went up consistently before property investors were bailing out big time ... Renters have been squeezed for ages, it's only now that that squeeze is finally tight enough to hit landlords."

Rents have always gone up, just like everything else. They used to be primarily linked to interest rates, but now also have to incorporate all the extra costs imposed by the government - which the government was warned about... And so on.

Those "extra costs imposed by the Government" are because, regardless of how "rents have always gone up", the quality of rentals has lagged behind. Rentals being shittier than owner-occupied homes is a feature the world over but is commonly a result of a landlords lack of financial ability or lack of care to do more than is profitable, and either weak or non-existent housing regulation to support the quality of rentals. Our rental stock was noted to have worrying levels of mould, a lack of insulation for our weather, and poor maintenance.

Landlords, as a whole, don't want costs to increase upon themselves because it hurts their profit. That's the #1 concern. No landlord is providing a rental for the main benefit of the tenant. And when it comes to landlords, they also have the political capital and power to put pressure on any regulation that might hurt their profit margin (see: multiple property owners getting to vote in multiple council elections, and landlords considering rent rise threats on tenants over possible Labour CGT introductions).

Because regardless of how and when some landlords try to squeeze public pity for themselves by dangling their "poor tenants" as victims, truth is that tenants are used as political hostages in order to protect landlord profitability.

As for interest rates, they've consistently fallen since the often cried about 1980s where mortgage rates were in the late 20-percent region. Rents, however, have climbed higher and ever higher. Even before the "extra costs". When rent rises slowed behind the costs of owning a rental, it was more because tenants were already being stretched to their income's limit in terms of paying for housing. Not because landlords were being saints and putting themselves in financial hardship.

Landlords have tenants not because they like being altruistic but because no landlord could realistically afford the cost of owning two or more homes on their own incomes alone (let's set aside the fact that rents are also income, because that income is being paid for by someone else's labour - not because of your own). By that fact alone, it's an admission that the business of being a landlord is paying for your personal asset that has grown leaps and bounds for decades while the actual income of the people who are paying for your "service" have lagged behind your rent charges and everything else..

Speaking of which:

"Instead of crying about how hard it is now, they should be grateful they got away with creaming it for so long".

-On the whole, landlords have never "creamed it". They are just trying to make a living like everyone else. Supermarket owners, power companies, mechanics, furniture shops, etc are all essential businesses expected to make a profit but somehow landlords are expected to work hard and give everything to the tenants. Sorry, but they work hard (often harder than others) and need to make a profit =just like everyone else in business. Except that the free market no longer applies and interest is no longer deductible... And so it goes.

No investor would hold onto an asset that costs them more money than they can afford. So if you're not gaining in terms of passive income, capital gains or both as a landlord, then you're probably not a landlord anymore. Either because you lost your property due to bankruptcy or your sold out because you're smarter than the guy that did go bankrupt.

But, and to your point about other businesses such as supermarkets, power companies, mechanics, etc etc.. They all have regulations and compliance measures that they must meet in order to ensure a level of quality and service to their customers. The state of rental housing is what it was because of piss poor or non-existent regulations on landlords that encouraged a certain level of quality. The free market, as you mention, clearly wasn't providing it by itself. Now, if the product or service being offered was something inconsequential or luxurious but unnecessary to a person's basic needs, then who would care if there was no regulation? But we're talking about housing where on one side landlords are investors demanding a profitable return and on the other we have "customers" who have very little power or say in the product and service they receive.

If a supermarket sells me a mouldy loaf of bread, they have to replace it. If a power line goes down in a residential street, the power company shows up as soon as possible to rectify the fault. They're constantly working to maintain their infrastructure so that it doesn't fail. If a mechanic grossly overcharges me, I can either take the issue up with the MTA or I have the Consumers Guarantee Act to provide me with protection for dodgy service providers.

If I have an issue with a landlord, I have to take it to the Tenancy Tribunal and while I might just get a successful complaint upheld there, I risk putting myself on a black list and making it harder for me to find a replacement rental if that landlord is well connected, or if prospective landlords are uncomfortable with me having an interrupted tenancy. Tenants have such little power that when a Government finally does pull its finger from its arse and introduce regulations to fix the gaps in which the market doesn't and won't provide (because it's not profitable for landlords), most tenants won't have anything they can do if their landlord goes and passes the cost directly off onto them.

So, unlike other businesses, landlords have had it pretty fucking sweet. Landlords don't work a full 40 hour week to pay the mortgage of their rental properties, their tenants do. In the event their tenant is a welfare recipient, the taxpayer is working hard so that landlords can have their second, third, fourth mortgage paid for by someone else other than themselves. When you're sick of being a landlord, you can sell the rental and take home a huge payday that's tax free if you do it right.

The mortgage I pay now is less than the cost of a rental property that was available at the same time I purchased. Same size house, same quality. The house itself sold four months before I bought, for $200k less. So it sold earlier, for less money, probably around the same interest rate, and yet somehow the tenant across the road is paying more per week than I am. Even factoring in rates, maintenance, insurance and all the other shit I have to cover myself, at the end of the day my income is going towards an asset that I own myself.

The tenant across the street is probably going backwards financially, all while paying the mortgage of an asset of their landlord.

So, respectfully, landlords can fuck right off.

Don't apologise - that was well said, & sums up the situation very thoughtfully.

I especially liked your final sentence, & I doubt I'll be the only one to appreciate it.