Housing Benefit Rate Changes, Bumper Bank Profits and a Grouch

A colleague at the on line letting agency, Upad sent me this document: http://www.dwp.gov.uk/docs/impacts-of-hb-proposals.pdf which is a government paper looking at the impact of the future changes to the rates of Housing Benefit / Local Housing Allowance. At first glance, it seems to play down the cap effect from what I had understood. A bit wordy but worth a read, especially page 7, table 9 on page 27 and table 23.

We will return to this issue again later because the changes to the LHA rates have big implications for all landlords, not just those letting to people claiming Local Housing Allowance. Read the category, “Housing Benefit” over to the right to read more on this issue which we have already covered extensively.

Bank Profits but Buy to Let Mortgages Still Rationed

The chunky profits unveiled last week at the high street banks points to the need for more competition in banking and especially in retail banking. The ongoing exhortations from ministers to the banks to lend more and at decent rates and all the associated hand wringing is just a show put on for the public – Ministers like to be seen to be doing something about the naughty banks.

In the case of Lloyds and RBS where the taxpayers have a stake some would like ministers to be doing a lot more than just murmuring words of discontent. But what’s really needed urgently is some competition and we hope that the likes of Metro Bank will one day open things up for more sensible lending at fair terms for both businesses and consumers. It’s a shame that in the meantime the economy is going to have to suffer because of this lack of credit.

Specifically in the arena of buy to let mortgages we desperately need the money markets to reopen fully so lenders with no access to retail deposits can offer up some real competition to Lloyds and Nationwide who I understand currently have a whopping 80% share of new buy to let lending.

Right now, I’m not adding to my portfolio – not with buy to let mortgage rates at SVRs of about 5% over base rate (on anything north of a 75% loan to value). If base rate were to rise in future to 4% – not unrealistic in a 2 year time frame – that would mean I would be paying 9% on any new mortgages taken out now, which makes any new houses purchases uneconomic as I think it would be unlikely I could jack the rents up enough to compensate (and neither would there be any significant capital growth) in such a scenario.

In the June issue of “Mortgage Finance Gazette” – one of the financial services industries trade publications – I criticised the banks for their poor showing in buy to let mortgage lending and especially for weak customer service and non existent landlord support and advice.

I said that many banks simply do not understand the private rented sector. This caused a stir but, interestingly no rebuttals. Instead we got a number of enquiries about our work helping this sector. Maybe, just maybe, the lenders are listening after all.

Barmy Brussels Bureaucrats Ban the British Banger. “The Mail” Makes a Stand

Whilst on holiday abroad the only two British papers we could get (at least on same day as printed) were the “Daily Express” and “The Daily Mail”. After 2 days or so of holiday, I was hungry for news (I leave my lap top at home on hols) so I bought both papers.

But I only did this once. The depressing strands of news in them – Britain is being swamped by bogus asylum seeking scroungers and there are paedophiles infesting every children’s playground apparently – meant that one day’s read was enough. No wonder some Brits can be such a grouchy lot if they read such stuff on a daily basis.

Post Office Grouch

It seems anything bigger that a postcard or weighing more than a feather now requires more than a standard first class stamp. What’s your experience?

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One comment

  • Only a government paper at the minute on housing benefit but really think this could have huge ramifications for landlords. It is looking like the next 5 years will be hard ones for people who own the house they live in and landlords, I think private tenants could benefit as monthly rents fall.

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