Effects of house crash on economy

"Andy Pandy" wrote

I heard it depends on *who* the HB is paid to.

If paid *directly* to the landlord, then yes - "*landlord* is liable to repay the HB". But if HB is paid direct to tenant, and tenant pays it on to the landlord then the *tenant* is liable to repay the HB. Some people recommend asking the tenant to get HB paid direct to them (the tenant), because of this.

Err yeah. Now you don't see *that* on usenet every day!

Oh, I have a substantial collection of books on crashes and bubbles.

FoFP

I know a guy who converts houses into flats - usually one house makes three flats because the sale of the first covers the purchase cost, the second covers the cost of conversion and the third is profit.

Neil

In article , JF writes

I agree that is unbelievable.

Then you didn't do elementary research. Landlords do have rights under the housing act 1988 and the various landlord & tenant acts.

The procedures are straightforward, and are a normal part of the business. The risks of non payment and voids can simply be priced in to the rent.

The landlord can take a simple step to remove his liability.

Daytona (Landlord & tenant)

I did. By "lack of rights", I meant that for practically every other product or service a company or individual sells to others, if the customer doesn't pay for the product or service then the product or service can immediately be withdrawn by the provider and the provider can usually call the police to enforce their rights.

Imagine if people could walk out of Tescos with a trolly full of food, and Tescos could do nothing about it other than wait two months and then go to court to prevent them returning (and attempt to sue them for the value of the food). During which two months the customer could walk out each week with a trolly load of food without paying. But Tesco is a big business and most landlords are private individuals. Big business wouldn't stand for it.

All very well if you've got 50 houses to rent. If you've just got one what do you do? Take out insurance?

Yes, ask the tenant to get paid the HB and hope they pass it on rather than spending it down the pub (since the pub will bar them immediately if they refuse to pay for their pint, their landlord can't).

It typically takes around 5/6 months to get a tenant to leave a property if they are not willing to go without a court order.

They are only straightforward if you know them intimately - 1 slip, and a smart tenant can have you starting all over again.

How do you build the costs of eviction, and the non payment of rent during the period, when rents are dictated by the market?

What is this??

Like anything else, you make a best guess on the costs and loss of income and the frequency with which they are likely to occur and factor them in to your business model before choosing to purchase the property.

Don't deal with the LA direct.

Daytona

Letting property can't be compared with other services as it is treated differently in law.

Nope. It works just as much for one property. If the figures don't work out or no attempt is made to work them out and a landlord go's ahead anyway, it's their responsibility, no-one else's.

Daytona

Which was my point.

How can it work with one property unless you take out insurance?? You might be able to work out the risks of bad tenants, voids, etc and price them into the rent, but that'll only work if you have average luck. With just one property there's a high probability of having much worse (or better) luck than average.

You assume that the law is entirely in the tenants favour: this isn't the case. For example, if landlords could throw out tenants on a whim - fewer people would rent and/or rents would have to be lower to tempt people to risk renting. Giving tenants rights helps create a thriving rental market. Tenant rights also help reduce homelessness and indirectly crime and ill health.

Well - yes, but isn't that true of _any_ business (e.g., replace property with shop, factory, product). It also means potential returns are higher ...

Thom

Actually, it's not true at all. The probability of having bad luck with one property is exactly the same as that of having bad luck with any number of properties.

Clearly Andy didn't quite mean what he said. If you have just one property, then it either goes well or it goes wrong, and in the latter case, it doesn't matter what the probability was, you're stuffed. At least if you had more than one, it can help spread out the effect, i.e. so long as the probability is reasonably low to start with, then that of more than one going wrong at the same time is going to be extremely small.

Not paying the rent isn't "a whim".

Rents would have to be lower - good news for tenants wouldn't you say. Not bad news for landlords either since they wouldn't have to budget so much for bad tenants. Currently good tenants are subsidising bad ones.

Rubbish, it increases homelessness. Try being unemployed and looking through pages and pages of "no DSS" rental adverts.

Why should tenants have any more right to live in a house without paying than to walk into Tescos and walk out without paying? Food is more important to health than even a roof over your head. The social security system is set up to ensure that people have enough money for food (through JSA/IS) and enough for rent (through housing benefit).

There are more far more homeless people in this country than there are people who starve. Why do you think that is? Say Tesco's didn't have the right to stop people leaving their store without paying. What would happen? You'd see signs at the front saying "no DSS", just like on rental adverts now. People would have to provide references and proof of income before getting a card entitling them to enter Tesco's. People on benefits would struggle to find somewhere where they are allowed to shop. Just like now they struggle to find somewhere to live.

Landlords can throw out tenants for not paying rent - the issue is when a tenant is deemed not to have paid rent. Most tenants by monthly in advance, so you'd have to allow at least 1 month before they could be deemed to be in arrears. So when do you set the cut off? 1 day in arrrears? 1 week? 1 second?

What if the landlord denies having received the cheque? I used to pay by post (at my landlord's request) and would have been p****Dd off if the law allowed him to chuck me out because the letter got lost (and he was too lazy to come round each month and collect it).

That's silly - tenants with no rights are less likely to take care to the property - a bad tenant can cause a lot of damage (easily more than the owed rent).

I don't believe that's true. Compare our homelessness levels to those of countries where tenants ahve fewer rights.

They don't. There are legal ways to deal with contract violations.

I'd say there are more peope with poor nutrition than with no homes.

Thom

It's not so much when as how. Having to go through a convoluted legal procedure which I've been told takes around 5-6 months during which time the landlord has no income, and often no realistic prospect of getting the money owed. In hardly any other form of business between two parties is one party obliged to continue providing the other with a service for several months which isn't being paid for (there are exceptions such as the water board).

You can get around such problems fairly easily. Pay by bank transfer (I imagine by now all banks offer this service). Pay by standing order. Insist on paying the landlord in person and get a receipt.

I'm not talking about tenants with *no rights*. I'd be happy with the existing tenants rights with the exception that they are subject to the rent being paid. A "bad tenant" will have a lot more opportunity to cause damage if it takes 5 months to get him out.

Why should good tenants pay an inflated rent just because the landlord has to budget for the possibility of legal action and loss of income in the event of a tenant refusing to pay?

Such as? Bear in mind it would be totally unrealistic to compare to countries which don't have a similar housing benefit system to here, since low income people in such countries would simply be unable to afford to rent.

Why do you think the majority of rental adverts state "no DSS"? And most of those that don't will still turn away applicants on benefits or low incomes? Have you ever been on benefits and tried to rent?

Yes....but it's a long process that will almost certainly leave the landlord well out of pocket.

Poor nutrition has nothing to do with not being able to get hold of healthy foods (or even affording them - healthy foods are usually cheaper than unhealthy ones), it more a matter of bad choices.

In message , Thom writes

Landlords cannot "throw" tenants out. It is a long, laborious process. If they get it wrong at any step, they can be back to square 1.

You can generally issue a section 8 notice giving 2 weeks notice of wanting possession when the tenant is 8 weeks or 2 months in arrears.

The time starts from when the rent is due.

If they dont give up possession, you have to issue a summons, and it seems to take about 8 weeks to get into court after the summons is issued. If the judge agrees to give possession, it is usually 28 days after the hearing. If the tenant does not give possession at this time, you have to apply to the bailiffs to attend and evict the tenant. This seems to be a further 4 weeks.

So, if a landlord does everything he can, on the trigger days, he could get possession after around 26 weeks at the earliest. The tenant need not pay any rent during this time, and most landlords would feel that a further action to recover the arrears a waste of time and money.

If the rent is say, £80 per week, this amounts to £2000+. In addition, the property is generally left in poor condition.

In message , Andy Pandy writes

As a landlord, having experienced the benefits system, there is no way I would let to a tenant on benefits ever again. This is not necessarily a reflection on the tenants - the system stinks.

I know.* I was arguing that being able to throw tenants out is not, in general, a good thing. The legal system exists to protect honest people who fall behind on rent and other kinds of exploitation.

I've been a landlord and a tenant in the past and I'd rather live in country that does have those safeguards than one which doesn't.

If someone can draft legislation that protects good tenants without allowing loopholes to be exploited by bad tenants that's great ... but I'd suggest that it isn't easy.

Thom

• Well some landlords can and do ... but not legally.

I would say it similar to late bill payment by businesses. What proportion of businesses pay their invoices within two months? How easy is it to get enforcement via the courts?

At the time the landlord didn't want SO or DD payment. Paying in person would have involved me in extra cost (time and travel).

The rent will always reflect the risks involved. A lot of landlords are lazy and don't do simple things check references (a very cheap way to reduce risk).

It is _difficult_ to compare, however I think that you can do historical and international comparisons. Tenants with few or no legal rights are much more vulnerable to exploitation than landlords because they tend to have fewer resources. Even under present laws intimidation of tenants by landlords is surprisingly common (for example I've had cases brought to my attention recently). Unsafe gas boilers or poor fire safety measures also mean that some tenants die as a consequence of inaction by landlords.

The truth is that honest landlords do get taken advantage by some tenants. The chief blame lies (in my opinion) with dishonest landlords who make tough legislation a necessary evil.

Almost identical to late payment of invoices. I don't think this is a situation unique to landlords.

Well - that's a separate debate - but I don't think you can divorce "bad choices" from poverty.

Thom