Monday, 15 December 2008

Forced Landlord? Meet Your Forced Tenant

One indication that you’re properly grown up is having friends who are not only married, but divorced. Now there’s another sign: when your mates are landlords.

I have friends lumbered with houses they can’t sell, and so in the interim, they must let them. It’s not all good. One was shafted by tenants who did a runner owing a fortune in arrears. He’s not a scumbag landlord who ignored repairs; he simply needed to cover his mortgage when he’d been compelled to move.

‘Forced Landlord’ is the slightly melodramatic term for this new and growing phenomenon. Even though I generally write from the tenant’s point of view, it’s still a major cause for concern. One of my friends bought a house at the height of the madness, but now she wants to move.

Several houses carry ‘To Let/For Sale’ boards on her street. It’s not the nicest area in the land: a mix of student HMO’s, family houses and some rough spots. Certain houses are visibly nicer, and judging by the amount of skips blocking the pavement, owners have been doing them up, so they’ll sell or be let first.

Being a landlord is harder than anyone imagines, especially of you aren’t a property magnate by choice. Rents are falling, and fast. Letting agents devour around 15% of rental income (if tenants ask for repairs, they’ll be referred to the owner.)

Even well-intentioned owners who go it alone are frequently ill-informed about new deposit protection schemes, Energy Efficiency Certificates or HMO licences. They are also blithely unprepared for voids, where they must go without rental payments when in between tenancies. As for insurance, burglar alarms, fire precautions and their own repair obligations? Don’t get me started.

The amount of forced tenants is also increasing. They want to sell their house but can’t, so they let it, and rent temporarily while house-hunting to avoid a chain. Do not mess with them. They know exactly what they want, which is never a shabby hovel that owner never got round to refurbishing, but a safe, empty, clean, neutral-toned, well-insulated family home.

Landlords with only vague memories of their own student renting experience may have bought a draughty wreck and filled it with cracked vinyl sofas and crusty unsprung mattresses. It’s not good enough for anyone, let alone the children who might live there.

Forced landlords might be happier if they saw tenants as long-term house-sitters, and cast aside any resentment that the property conveyor-belt has stalled. They’d also benefit from treating tenants not as trespassers (that’s how bad landlords still regard those unfortunates kind enough to safeguard their mortgage and underwrite their pension) but creatures after their own image, in similar circumstances, and to cherish that thought.

Ultimately, this craziness is creating an absurd carousel of owners renting property to residents who in turn own a house that they are also renting out to another home-owner. To rejig a childhood rhyme:

“Tall landlords have small landlords
Upon their backs to bite ‘em
Stuck landlords have broke landlords
And so on, infinitum.”


Dot.Hakers said...

Good morning!

Until people stop considering a house an investment and start seeing it as a "home" again, this malarkey will not go away..! I have a few friends too that bought at the height of the market and now they despair with the fact that they're paying now so much more than they signed for...

Anonymous said...

I think the issue is education (or the lack of it), RenterGirl. Landlords, like everyone else, need (or needed) to be educated. When you're talking about dealing in real, living people's homes - it's no joke...

yeah, it IS me said...

I think I'm the person referred to at the beginning of the post (who inadvertently became a landlord in the past and got ripped-off by those tenants). I've switched to another name here because... well, I want to. Anyway, I just wanted to say that I got ripped off by those tenants because I had a seriously shit management company looking after the house who accepted any number of flimsy excuses as the debt piled up. This was during kinder times, I guess.

When I first purchased the house for myself, the mortgage was less than I could rent for at that point. Only I was actually studying/working part-time and thought that, once I graduated, I might want to move to away so - at the advice of a family member - I had already investigated the rental potential of the house due to its proximity to the university. Other people thought I was crazy to be "tied-down" but apart from that one tenancy, I had years of great people who treated the house as a home.

Those exceptions that abused my trust by not paying what was a ridiculously small amount now have the CCJs against them and, in an era where credit is harder to come by, I hope it comes back to haunt them.

Boff's right: you have to do your homework. When working out my finances before I even put in an offer on that house, I had already anticipated what would happen if I took a job elsewhere and couldn't rent it out for an extended period. And when you do have control over your tenant's living situation, you have to be even more responsible.

the reaper said...

'Ultimately, this craziness is creating an absurd carousel of owners renting property to residents who in turn own a house that they are also renting out to another home-owner.'

very true.where I think you go wrong is feeling any sympathy with people who are now getting the flip side of the 'property will never go down' adage.

on the way up,all through the noughties,I've had lots of smug people telling me I was mad to rent etc etc.Even now I have acquaintances buying on 7% gross yields thinking it's a safe investment.

my patience has run out.I can no longer cope with dumb people.earlier this week a friend got in touch.turns out he was needing a little reassurance that things weren't going to get as bad as it sounds like they will.

having ignored my sensible advice over the years about leverage-I trade indices for a crust-I advised him to turn back the clock and listen.

seriously,what do people expect.he was smug as f*** on the way up.not so smug about leverage on the way down.

the reaper said...

'Those exceptions that abused my trust by not paying what was a ridiculously small amount now have the CCJs against them and, in an era where credit is harder to come by, I hope it comes back to haunt them.'

it will,the days of people with CCJ's sourcing credit at base +4% are long gone.

the reaper said...

oh and is it me or is the for sale/to let board a phyenomenon of the alst three months.never seen a two in one borad before then

RenterGirl said...

Morning to you Dot Hakers! And Boff: nobody's laughing. And Yesitisme: hi!
I am specifically writing about not about Buy To Let landlords, but forced landlords when homeowners need to move, for example to downsize, or when they have kids.

Reaper - nobody can blame you for feeling smug, but here's a thought. If you buy a modest suitable house to live in as a home for - say thirty years, you could have a the house and some savings, couldn't you? Renting is bad for the practical insecurity; that's the only reason I'd buy if I could. Any problems would be down to me, and not at the whim, caprice or errors of a landlord. Yep: the board thing is new. As is seeing too many of them seperately. See rental rights (links) for tenants actually being asked to show prospective buyers around!

the reaper said...

'Reaper - nobody can blame you for feeling smug, but here's a thought.'
RG never claimed I was smug,arrogant,possibly,but smug I think is unfair.I don't take pleasure in seeing peoples lives ruined but I sure as hell get angry when savers,people who didn't partake in the Ponzi scheme,are forced by the govt to subsisdise tracker rates for people who borrowed wayyyyyyyyyy too much money.

another factor.what is it with this country and young people buying rabbit hutches.I can see the attraction of buying when you're settled in an area but why oh why are people buying houses for their kids at Uni.I know of two friends kids,stuck with RH's they bought at Uni and now looking for non existent jobs nationwide.

The only education people in this country need is about debt and leverage.

RenterGirl said...

Okay, okay: sorry - you're arrogant! No, I know how you must feel. But it's not really young peopl ebuying rabbit hutches, but investors. Young people, and indeed anyone renting in a city often have little choice other than live in one. And please don't say move out of the city: I support the idea of inhabited cities, so as not pave over the countryside. Education is good. But. There were very few economists or financial advisers who would have counselled against investing in property. Even now.

RenterGirl said...
This comment has been removed by the author.
the reaper said...

'There were very few economists or financial advisers who would have counselled against investing in property. Even now.'

we jsut couldn't get any airtime on the BBC till recently.

consider this,over the last five to ten years what BBC1 s morning schedule has been.I remember checking a year ago and it was virutally two hours out of three(9-12) was property porn of the 'try before you buy'/homes under th hammer/house doctor/ variety.then you had economic dislocation,economic dislocation,economic dislocation,and sarah beeny's quite effective efforts at convincing everyone you couldn't lose on property.I thought proeprty was overvalued in 2001 and using average house salary mulptiples I'd have been right.

I just sorely underestimated the medias power(remember the brick chicks in the times and that hoorible woman who's now deep in debt after bailing on her BTL's,rosie millard) and obviously the banks willingness to open up their balance sheets to the shorts.

the reaper said...

and anotehr why oh why...

wow did they enver put the disclaimer on these shows
'the value of property may go up as well as down,borrowing six times salary and leaving your day job to become a property developer may not be such a good idea if you have tens of thousands of crecit card debts' etc etc etc.

they never even gave the dates of purchase and sale until recently,thereby giving viewers a distorted view of the likely effect of renovations etc etc

beeny was totty though.