To a degree, I think landlords are, by virtue of the min EPC rating a property needs nowadays (IIRC a D or better wef 4/2022) - albeit I was staggered by the outcome of an inspection of a friend’s property recently (they were considering letting to ease holding costs), which generated a ‘pass mark’, in an Edwardian flat which is ‘very cold’ by any measure and impossible to viably insulate due to its age and fabric.
This is one of the biggest issues, in that so much of the UK property stock is very challenging cum impossible to insulate further on an economic basis - and the costs of addressing building fabric are increasing almost by the week.
And there is so much ignorance out there as to how effective insulation should be done e.g. using modern building products on Victorian/Edwardian houses is generally a no/no, as these were designed to breathe via the fireplaces.
I agree with your views on some types of landlords and think there should be a much better regime of control and punishments. But, on the flip side, tenants often create/add to issues e.g. by drying washing indoors and not venting a property (I had direct experience of this) = mold on many surfaces, their ire being directed towards me.
That is going to be interesting if they apply the same regulations and controls before you can sell a property. All those home owners having to spend money to bring up their failing properties to a minimum standard before moving on.
There are several drivers, interest rates, help to buy among them. But holiday homes certainly push up the prices, especially in areas such as Cornwall. We were on holiday in the Yorkshire Dales and from talking to the locals it was very obvious that wealthy holiday home owners were buying places that locals couldn’t afford. Sell to a local for £300,000 or a second homer for £400,000? It takes very high morals to not go for the latter. There are two houses just built where I live on the market at £2.75m. With no outside space and a private mooring they are not suitable for family living and will go to wealthy Londoners who come down occasionally and contribute bugger all to the town. Of course second homes push up prices, as do buy to let investors. Houses should be places to live, not investments.
The biggest driver of house prices is affordability, which for most people means how much you can afford to pay each month. The graph above shows that monthly mortgage payments as a % of net pay are in line with long term averages, so house prices are just as affordable as they have been in the past. The problem is that ridiculously low interest rates have inflated the asset (house) price. This means you need a bigger deposit than you needed in the past, which makes it harder for first time buyers to get on the market, and any over-payments of your mortgage have less impact on reducing the outstanding balance.
Fortunately, or unfortunately, depending on where you find yourself in life, house prices aren’t the only inflated asset class: equity markets, government bonds/gilts, fine art etc. All asset classes have been inflated by the low interest environment. Given the average age of most of the patrons on this forum, most here are beneficiaries of this. Sooner or later the bubble will burst and the system will reset itself. Buckle in for the ride
I think this is in the ‘never going to happen’ category, as the implications and required works would be/are massive - and, as I’ve said above, if done wrong (only time may tell), serious damage can be done to a property.
It wasn’t until the 1980s that UK builds and reg’s got serious on insulation. Many 1970s builds (and obviously almost all those before) had/still have minimal insulation in their general fabric e.g. walls and dormers, and other parts of the structures e.g. eaves-ends. And they tended to use 4’’ x 2’’ timber in the rafters and upstands, set against a min need of 6’’ of foam board nowadays.
A bit like the air-source HP debates, to insulate older stock effectively often means a sizeable rip-out or using external insulation, the latter needing to be correctly installed, in allowing the property still to breathe where it needs to.
What we look for is a modest increase in interest rates so that not everybody jumps in the property market.
I had property in the past - my previous house - for which it was easier to let than to sell. It gave me lots of worries I couldn’t handle when the kids were born.
I’d be very interested to see the comparison in carbon impact between demolishing & rebuilding a property, high one off environmental impact, and running the older less efficient property. I wonder what the payback period is.
Renovating without a doubt. Imagine what happens when we are going to rebuild cities based on the current wood based building trends. It’s the last nail on the plastic coffin of the rainforests.
There is maybe a small percentage of buildings for which it is better to rebuild them. In the town where I live the post war built houses are just replaced. The rest of the houses, build from the 50’s onwards are being improved at the moment.
Regarding renovations, it’s no rocket science. A simple law requiring house owners to replace single glass to hr++ glass makes a significant difference. It not really expensive too. A few thousands maybe.
It’s all very feasible. Within 5 years we had our entire country (Netherlands) connected to a gas network. A similar transition to eg. hydrogen is well possible if the pressure is high enough. Hydrogen is a good replacement for gas since it can heat a house in a relatively short term.
It seems one drawback of hydrogen is that it ‘eats’ ferrous pipes and a lot of the UK gas pipe network is elderly iron - although there has been a project, which I think remains ongoing(?), to replace local iron piping with plastic.
I think one driver for this is that natural gas rusts-out the iron pipes and water is always finding its way in to the pipe network.
We’re way off @popeye 's original queries here (and IIRC, he’s very well aware of energy matters in his job) but all these things would weigh on my mind if I was looking to buy another property nowadays.
There’s also ‘noise’ that mortgage lenders will invoke conditions.
The whole piece (media newflows and others) needs far more balance and reality-checking.
I would consider it a medium to long term investment, however I think you need to be fully aware of the facts and laws relating to rental before you dive in.
Whilst we have a 2 bed flat in the UK rented, it was originally my mothers, having lent her a fair amount to buy it.
Success pivots on tennant choice and whilst many use agencies I’ve heard even that, still carries some risk.
Our tennant is an elderly lady, has lived there 12+ years, so we act accordingly to meet her needs and she has told us many times how much she enjoys living there. I think choice of tennant is very important as a no rent / house trashed situation, must be avoided at all costs!
You will need to consider a fund for any ongoing repairs and organise HomeCare cover or similar for heating, drains, ect as things do and will go wrong.
Whilst you might be tempted by a good return, I would say if you’re going to have to borrow a lot to buy, then it’s probably not worth the risk, especially if/when interest rates may rise?
We will probably sell the flat when our current tennant leaves, feet first is the only way I will go, she said…
Maybe the press attack on private investors is a ploy to make way for this
“Enter Lloyds Bank. This month the Financial Times reported that the bank was planning to become a large-scale private landlord. It will compete with a clutch of property developers, life assurance companies and other large investors that have flooded into the UK private rental market. They have been attracted by the surge of demand (the Office for National Statistics projects more than 3m new households by 2041) and appealing long-term investment returns (an annual 11 per cent over the 30 years to 2019, according to Savills). Longtime UK operators such as Grainger, which has 9,000 properties and 9,000 more in the pipeline, have been joined in recent years by US rivals such as Cortland and Greystar. Legal & General, best known as the UK’s largest life insurer, is another big landlord, with 2,400 homes built and rented, and a further 3,400 on the way. According to Savills, institutional investors are putting record amounts into the sector — £3.5bn in total last year. Over the past eight years they have quadrupled their exposure to UK rented property to £30bn, according to a report last week from the Investment Property Forum, a trade body.”
These institutions often want running yield (especially the insurancecos), with the potential for active liquidity via securitisation or simply attractive returns on capital, as domestic property as security enables a cheaper capital risk weighting and, ergo, better returns on capital.
Plus, it used to be the case that the likes of insurancecos, wouldn’t/some couldn’t, engage with these assets until they were complete and let. However, with spare capital in many cases, the penny dropped that they could disintermediate the traditional lenders and developers, thereby reducing acquisition costs.
Two and a half years ago we rented a property for 6 months so we could support our son and his family with childcare (they don’t work 9-5).
At the time we considered letting our house out for 6 months. It would have rented for 50% more than the rent we were going to pay.
However, taking all the costs involved and potential refurbishment at the end of our rental it just didn’t stack up.
We used our own house as a holiday home for those 6 months, had a fortunate PPI payment that really helped.
On our development of 10 houses 3 are rented out. I’ve seen the state of one house where the renters (bought a 700k house) didn’t cleaner for the year+ they were there and said they were willing to lose their 2k deposit.
Personally, I’ve seen the places my children rent and the dealings they have with landlords (6 in total), not impressed. It’s clear they want to spend as little as possible and charge as much as they can. One house had major defects, hidden at start of letting, which created health issues. Lack of investment. If we could get one son out of paying 1300 per month for a 2 bed terrace in Surrey we would. The house would be circa 400k. He and his partner earn good money but it would take them decades to save.
These are aspects that seem to get very little coverage in the mainstream media and yet it has the potential to be catastrophic for the middle classes who have saved hard for retirement.
I suspect that at best we are in for a sustained period of high inflation to erode some of the high levels of debt but at worst I agree that the bubble could burst. Maybe that is what the intention is to enable them to implement Central Bank digital currencies that the Fed, ECB, BofE etc are all looking into.
