I noticed that a couple of websites aimed at landlords have picked up on my suggestion that all tenants should be given the right to a three-month rent-free period if the coronavirus epidemic becomes as serious as many, including the UK's Chief Medical Officer, clearly think it will become.
As will also be apparent, there have been many comments from landlords on here, which are without exception deeply antagonistic to that suggestion. The ones published are the more acceptable ones: I promise you that there are others that are more offensive.
I readily admit that I have given many of those commenting short shrift, and some think I have been rude as a result. So let me, largely for the sake of providing a reference point for any further comments that come in, explain my logic for this proposal and the reasons for my reactions to comments upon it one last time.
Risk based reasons for this proposal
It would seem that many who have commented on what I have said have not appreciated the scale of the crisis that coronavirus represents.
It is widely thought that 60% or more of the people in the UK will get this virus over the next few months.
At any one time it is thought that up to 20% of people in the U.K. will be off work, either because they are sick or because they will be caring for those who are.
And such is the scale of the impact that this will have on the economy that many others e.g. many people who work in the hospitality sector, may well find themselves temporarily laid off without work by their employers because there will quite simply be nothing for them to do.
We face the risk of an economic downturn of almost unprecedented scale as a result. Of course, this may not happen, but the likelihood is that it will.
I am expecting the shortfall in government revenue that results from this to make the deficit of 2008 look to be of modest proportion.
The likely loss of GDP is at present almost impossible to estimate, but I am expecting it to be substantial.
And the result will be that many millions of households that have no savings and/or are highly debt leveraged will face an inability to pay their debts. As the Equality Trust has noted:
6.5 million households are in debt, or face the prospect of falling into debt within a month, should they lose their jobs. Over 40 per cent of non-retired households have too little saved to pay even a month's worth of household bills.
As a matter of fact, many of these households will be in rented accommodation: those with wealth tend to be owner-occupiers.
A massive economic downturn does, then, create at least four risks for landlords:
- Major risk of tenants defaulting;
- The prospect of very large numbers of tenants becoming formally insolvent;
- Substantial risk that landlords will not, as a result be able to find creditworthy tenants after the crisis has passed, even if they evict those in default during it;
- Mass sales of rental property as a consequence, leading to likely significant falls in house prices.
The latter risk would be exacerbated if owner-occupiers were not offered a waiver on mortgage payment obligations during a downturn, which is precisely why I have recommended this as well, as a matter of right. I have suggested that landlords should be able to take advantage of this opportunity, which effectively automatically extends the loan period without lender consent being required or penalty being imposed. Interest due from this period would be settled at the end of the loan period. This is a measure also completely intended to preserve solvency.
My proposal is based on the massive risks that face our economy.
Reasons for my suggestion in the light of the risks faced
The imperative that we face during the crisis to come is to keep the cash flow that UK households require to meet their basic needs going. Families will have to be able to feed themselves and meet their essential bills. Nothing is more important than this.
The same is true of productive businesses: many of them will need all the help they can get to keep going over the next few months, and tax deferrals, whilst important and crippling for the government's finances, will not be enough to achieve this goal.
In that case all available financial assistance during the likely crisis to come must be focussed on these two essential issues:
- Keeping households solvent so that they can return to more normal financial states as soon as possible after the crisis is over;
- Keeping ass many productive businesses as possible afloat during this period to ensure that as few employment opportunities as possible are lost as a result of it.
These two objectives underpin my decision-making process for the suggestions made.
It is my suggestion that all landlords should share these objectives: without people in employment they have no tenants. Without a strong economy the value of their properties will crash. My aim is to prevent both situations arising. Why landlords take objection to that is very hard to work out.
Why I have suggested that landlords and banks should bear the immediate apparent burden of this crisis, alongside the government
As already noted, the UK government is likely to suffer a staggering loss of revenue as a result of the coronavirus crisis: I am expecting deficits bigger than in 2008 as mass applications for deferral of tax payments, or straightforward defaults, become commonplace. The government can, however, withstand this decline in its income: if necessary it can be entirely covered by quantitative easing, which I expect to be in use well before the year is out.
I have suggested banks most grant automatic loan payment deferrals for three reasons. The first is that if they do not there will be a very large number of defaults, that may be sufficient to destroy the credit records of millions of people, in the process irreparably harming the future market for bank-created debt, whilst in the short term threatening the solvency of many banks. We simply cannot afford to let either of these situations happen. Nor will the resources exist to appraise applications for loan payment deferral: 20% of all workers will already be off work, remember, including in banks. Automatic deferral is then the only option. Mortgage, loan and lease terms can all be easy extended and critically bank balance sheet values are not threatened as a result. Nor is their income if the interest due is simply deferred. There might be a need for some increase in bad debt provisions, but to nothing like the degree that would arise if automatic deferral was not permitted. This proposal is, then, designed to keep banks solvent, and that is vital. It should massively assist achieving this goal.
And then there are landlords. I have, as previously noted, deliberately targeted them with my proposal. There are four reasons. The first is they cannot afford any of the situations I have noted, above, arising. Second, as a matter of fact (even if most were dispute it) landlords are wealthy. They have the means to ride out a short-term loss of income which the vast majority in the population do not have. And third, landlords have assets which will always grant them a line of credit which, once more, the vast majority cannot secure. And last, the measures that I am proposing are designed to preserve their asset value: the trade-off of a small loss of current income is very much in their favour when it is very likely that the vast majority of people in the economy will be faring much worse.
Is this politically motivated?
All economics is politically motivated, so of course this suggestion is. But it is only politically motivated to the extent that I would like as much of the current economy to survive as possible during the course of this crisis. If that shows are biased towards anything it is not Marx, as it would seem that many commentators would like to suggest, but the market. I agree that 'picking on landlords' looks like I have picked out that sector to suffer, but that's only because it will, if my proposals are adopted, probably come out of this crisis better than almost anyone else. And yet landlords cannot see that.
Do I have any apologies to offer?
With respect, I have no apologies to offer at all. I have been abused for doing three things:
- Exercising my professional judgement;
- Doing so in the interests of the population at large;
- Seeking to minimise the overall harm that the coronavirus epidemic might cause to the UK economy.
Did that justify people hoping that I might die from that disease? I don't think so.
Does it require me to be told that I am a Marxist, an idiot and much more? No, I don't think so.
And did it require that people say I have no idea how the real economy works when I most certainly do? I doubt that too.
Instead what all those comments suggest are three things:
- People have not read what I've written, which is deeply annoying;
- People are acting out of pure self-interest when that is the last thing we can afford;
- Plenty of people like trolling.
So I am offering no apologies.
Conclusion
What I am hoping is that this idea might be adopted: we're going to need something very likely if we're going to get through what might well be coming our way. And imaging what is required in that case is a responsible act, even if people do not like it. I am unrepentant.
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I think that you let entire position is based on the foundation that being a landlord is a passive investment income, and follows your narrow definition of what is ‘productive’.
My wife and I are a full time landlords. From daily maintenance tasks to compliance and legislative requirements, we work the same hours as most of the country. On paper we may be asset rich, but after tax our household income is the average for London where we live.
Your proposal (even with a interest payment holiday) would mean we could not feed our family or pay our bills. It seems that you suggest we should continue to work throughout this difficult period for no salary (would you expect that should no rent be paid that no maintenance on the properties should be carried out?) and take out (further) loans on the asset (which will still drop in value so perhaps with no capacity for further equity?) to simply survive.
Can I respectfully ask if you propose to continue to provide accountancy services for clients who suffer from the virus and are unable to work and cancel their bills? After all, following your argument, your clients will only remain your clients should they stay solvent and in business?
I applaud the spirit of your argument that everyone should try and do their bit. But then this should apply as can be afforded – for example, some of our tenants earn far more than we do (I know for a fact based on their referencing!)
It’s easy to reduce the argument to ‘rich landlords’ vs ‘poor tenants’ and the reality is never this simple. But that makes the need for creating a fairer and more equitable society much harder than grandstanding politicians and many supposed campaigning groups appreciate.
With respect your income is not the same as a working person
You are deliberately ignoring your gains
You have massive lines of credit available to you
Your tenants will not
And what I propose might preserve your asset value
And will I suffer a loss of income in the case of coronavirus? Yes, is the answer
But your claim – that’s just pure economic drivel
Jason.
I’m guessing that you don’t own the properties outright and are paying off mortgages with some of the rent? In which case, under Richard’s proposals, you too would be able to defer mortgage payments for 3 months. If you don’t have mortgages, then you should be able to ride out a 3 month rent drought????
If it’s a full time job, then I am guessing you have a sizeable portfolio? Why else would it take up so much of your time? If the shit really hits the fan, you have capital to borrow against or you can sell up part of the portfolio. If your properties are in London, kerching!!!!! Not ideal, I know, but far more favourable than the vast majority of people’s options, should things go pear shaped.
If in London you’ve been making almost £20k a year per property in capital gains on average since 2012…
Please don’t tell me you have no equity
Banks like equity
I can see the logic of your position Richard but to me it lacks the compassion of “to each according to his need”. I rent out two properties with long term tenants of over 5 years. If either of them falls into arrear, one never has, I am happy to let the rent ride and for arrears to be paid off over time. I shall certainly keep your suggestion in mind and offer relief if it is needed and you are right that I, and many, but not all landlords can afford to lose 3 months rent. The element of compulsion in all circumstances would create too many tenant winners (who won’t need the relief) and landlord losers (who genuinely cannot afford the loss of income, and cannot realise their asset in a reasonable time frame) to make your idea politically viable. In an emergency situation council tax, water and energy bill relief would be an equally viable way of helping tenants. What are your thoughts on that?
Actually that is exactly the compassion it has
As a person renting out two properties you are dedicedly wealthy
You can meet your needs – and have lines of credit available if not
And yes – there is not a landlord in the UK who cannot afford to lose three months rent – especially if the mortgage is deferred – that is just simply not true – because all face that risk anyway
And what do you propose?
And please don’t say means testing – 20% of people will be off ill
Are we sure that all landlords can afford to lose 4, 5, 6…12 months rent (or longer)? Your, original, suggestion was for a minimum of 3 months; no upper limit was mentioned.
If landlords were facing losses of 12 months (and I cannot see why, but let’s suppose you’re right – which is a big assumption) can you imagine the state of the economy?
And if things were that bad who would you bail out first?
Tell me why it would be landlords, please?
It was you who put no upper bound (only a minimum) on the rent free time frame; so, obviously, you originally believed that 12 months (+/-) was, at least, possible.
In which case all my comments stand
Now, why not answer my question?
Thank you for your reply.
I neither said, nor implied, that landlords should be the first to be bailed out.
Have you had time to consider whether, or not, lodgers should be included in your proposal?
This is an unregulated sector
I doubt it..
I am open to persuasion
You ask what I propose and you seem to have over looked it, in the penultimate sentence of my response to you! I suggest that council tax, energy and water bill relief would be just as valuable to tenants as rent relief and these public authorities and large corporates can also withstand the loss. Why not spread the load?
Council taxes are stressed beyond limit
Energy and water supplies are vital and supply chains cannot be disrupted
And property is, well, just there
You really can’t see the difference?
I am staggered if not
Is it wilful, self interested blindness, I wonder?
I’m totally with you on this Richard.
Looking at the revenue aspect of the economy (Simplifying)
GDP = Earnings + Rents
Recession, No landlord rent reduction gives
GDP – (20%GDP) = (Earnings-20%GDP) + Rents
Meaning earnings are wiped out!
Looking at the Capital aspect
(20%GDP for 3 months) is negligible relative to Total-capital-collecting-rent-in-economy
Alternatively, A government seeking to redress the situation may implement a Capital tax. Like in France.
I think it is eminently sensible. Will the UK government do it? Almost certainly not.
All the landlords who have been hostile (to say the least!) to your proposals don’t seem to come up with any alternatives of their own?!
You are just throwing out an idea for discussion. The vitriolic response has been breathtaking!
Most seem to be ignorant of the scale of the potential problem that may (or may not) be heading their/our way.
What are the alternatives? There won’t be the time or manpower to “means test” those deemed worthy of State support. Statutory sick pay at £94.25/p/w isn’t going to be enough and is not available to the self employed.
A short term basic income for all? How much would it need to be? What about wealthy people that don’t need the money? Is it fair that they get it? Why should healthy people at work get it? If it going to be “means tested”, how do you know people aren’t pretending to have caught the virus? Who’s doing the testing them to confirm they have it. Time will be critical if we are going to try and contain the spread.
What about healthy people who can’t work because the schools are closed and they need to stay at home with the kids? Do they get financial support? What about the people who don’t have kids? It’s then unfair on them.
Hopefully it won’t be that bad, but………what if?
Doctors seem to think it will be bad…..
I trust them more than most
Anyone who has read Jaron Lanier’s ‘Ten Arguments for Deleting Your Social Media Accounts Right Now’ (like me) was not surprised at the response to that post. That explains my initial response which was ‘What did you expect?’.
See Argument 9 : ‘Social Media is Making Politics Impossible’
For those whose response was trolling, Argument 10: ‘Social Media is Making You into An Asshole’ and Lerner’s appeal to ‘Go where you are kindest’ might help.
Again I think your reasons are well thought through. All I would add is that in a society that seems hell bent on consumption I am not sure just how really wealthy landlords are in cash reserve terms as what seems to happen is that their status also opens up that line of credit (debt) from which they might actually be living/consuming the new car, holidays etc. Landlords I know seem to be cash poor and hate spending real money whilst they invest in their property with the hope of huge cash pay out at sometime by making a killing later on down the line. Their behaviour on this blog seems to be driven by the fear that their long term gains will be annulled by what you say when in fact it does not.
Generally I think the reaction you have got indicates to me something else: that although landlords might be in a strong economic position, there is an underlying fear to it all that dominates their lives. In a world of meagre pensions, a reluctance to provide properly and reduced wages, using real estate to make up for it in order to feel that you are keeping up is what is at work here. Knowing people who are landlords, even though they are benefiting from the risk they are taking, the risks also give them some sleepless nights. And it changes them as people because they are so focussed on what they are doing (paying down the debt they have taken on and also living from that income) and seem to become extremely defensive of their position.
I say this because money and credit (debt) does change people’s behaviour and not for the best. Some feel compelled to be landlords but would rather have better wages and pensions. Becoming a landlord may not be their first choice. The internet amplifies these fears and the resultant attitudes as Lanier points out.
Some will say that landlords have made a choice so what are they moaning about? But have they made a choice in a society that gives you little choice but to take on more personal risk/debt? I’m not sure. Hence why we need a more courageous state and to get capitalism working for us all, rather than working us over as economic Louis Hyman puts it.
Thanks PSR
PSR.
I agree.
I think Richard’s proposal has shown landlords the procarious nature of their “business” model. Any business that relies on a single client for their income is on very shaky ground. I have family members who are private landlords and do not work themselves. Their total livelyhood comes from the rent received. But tenants are human beings who get sick, lose their jobs, etc. If I ran my self employed business with only one client/customer, I would have gone pop a long time ago.
(I’m not sure that a tenant is a client/customer in the the business sense, which is why perhaps, Richard has questioned if earning rent is the same as creating profit).
But landlords can, as a last resort, sell up and probably walk away with £200,000 if they are mortgage free. (I believe average house prices are £250,000?) Tenants of course can not, or if they could, they wouldn’t be tenants! So landlords in absolute terms, better able, long term to ride out any down term. Where as, lots of other people will become bankrupt.
You get it
Oh dear, Richard you are so predictable, I really do feel sorry for you. I am sad, sad for you and your situation.
You so fit the new right mode of operation
That is, don’t argue: attack the person telling the truth
So Dennis.
What’s your big solution?
I see you don’t like Richard’s ideas. That’s fine, but coming up with nothing else doesn’t really add anything to the debate does it?
I think it was you Vinnie that called me/landlords a parasite when I absolutely am not. As I previously said I am a good Landlord and all my tenants are happy. I also said that if any of my tenants had a problem with Corona virus or whatever I would help them as best I could because all of them are decent people. Lots of landlords are not in a position to do this and would crumble if rent was not paid and it would not just be for 3 months lets be realistic about this. Landlord gets into debt house gets repossessed. Who is then going to house the poor tenant, Shelter certainly won’t and believe me in this scenario there would 100’s if not 1000’s. I’ve always been very careful with my money and worked hard for it, at 70 years old my state pension is something like £160.00 per week, who can realistically live on that. That’s why I planned for the future so I would not be a burden on the system/tax payer. There are lots of dodgy tenants out there who would jump on the opportunity of free rent with no intention of paying it back. What would my solution be, I would put a one off emergency tax on all those earning over say £70,000 a year and a levy on business’s based on their profit levels to cover the cost of those who could prove they are off work because of the virus. Councils would cover the council tax/rates, utilities would cover gas electric etc. for these people This would be much fairer and initially financed by the Government and taken on the next years tax bill once the actual cost is known. Proportionally better than caning landlords, many of whom would help their tenants anyway as I would. Why do you hate Landlords so much when most of us offer a good service to those that want to rent. Why is a Landlord say with 10 houses who is a sole trader not able to claim loan interest in the way Ltd Company with 10 houses can, where is the logic in that? No doubt your mate Richard will slag me off as he does with all those he doesn’t agree with. He has admitted that Corbyn knicked his economic ideas for his manifesto and what a disaster that was, but of course Richard will never admit he got it wrong. I did not call him a Marxist as he said but he just can’t accept that he is not right with his leftist economic ideas.
So many “experts” got this last election totally wrong, even I was surprised at Boris’s success. Who on earth advised the Liberal Democrats, more “experts” got it wrong. I am happy to admit I am a fan of Dominic Cummings, who quietly works very hard in the background and has the gift of seeing what the people actually want or perhaps what they think they want. Unfortunately nothing is straight forward. If I was a troll as suggested why would I put my name to my comments, I meant everything I have said and not been rude. If Richard can’t take it he shouldn’t give it.
Why will the landlord go into deficit?
Why would their deficit be worse tan their tenants?
What are their non-deferrable costs during this period – when no repairs are being done as there will be no one to do them, and mortgages have been deferred?
I really would ask that you engage your brain, just a little. Is that really too much to ask?
Oh, and you did imply I was a Marxist, so stop the BS
And thanks for admitting your political agenda, which is neo-fascist
Who is this Vinnie character? He’s like a parrot on RM shoulder..more cringeworthy than the parrot on the other shoulder PSR.. funny lot
You mean you find it really hard to think there are people who might disagree with you?
Why is that? Can’t you stand competition in the world of ideas?
Or maybe, competition at all? After all, monopoly is so much more rewarding…..
I am a landlord, and I know other landlords who ARE/WILL look at the circumstances of their tenants and address their (mutual) problem.
Reasonable landlords will not respond on here as they are in agreement, only dogmatic ones will argue.
I.e. Don’t damn ALL landlords for the extreme comments of those on this blog.
Is the proportion of reasonable landlords v dogmatic ones healthy for the economy remains a question.
Sorry for the typo – Louis Hyman is an economist – an American economic historian to be precise – one of his interests being the relationship between income and debt in contemporary societies. I first came across him in the post crash documentary ‘The Flaw’ which I heartily recommend to regulars on this blog.
Hi Derek
I agree with you, I’m always happy to parrot good ideas as we’ve been using the wrong ones for far too long which are parroted elsewhere and everywhere. Lets say that when it comes to parroting therefore, I believe in the equality of it.
I don’t want to see tenant’s lives get any worse as a result of a pandemic and don’t want to see landlords get into trouble either. I think what Richard has suggested is reasonable and actually protects both even if it feels uncomfortable in the first instance for the landlord.
I have no personal issues with private landlords having lived in places like Manchester, York and London – my landlords have all been great. However, I work alongside a local authority private sector housing department and the stuff you see going on in the PRS there is simply unacceptable and even criminal, but also deeply shocking.
Derek.
Not really adding much to the debate are you. What’s your big idea?
Dennis 5.18pm.
Why are landlords going to face repossession under Richard’s proposal?
I’m not suggesting that you are a rouge landlord or a bad person, just that rent and usury are both just ways for people to extract wealth/labour from other people. I fully understand the economic reasons for choices you have made.
I too am a private landlord. But I’m not kidding myself about what my situation is. I’m in a far better position than my tenant.
Well time to go, thankyou very much for an entertaining couple of days. I’ve just sussed it, Richard is actually a stand up comedian practising his lines for his next show. I wonder what his sponsors, colleagues and various organisations he represents will think of how he treats others. I look forward to hearing from them once I have forwarded this particular blog to them. Bye Bye.
I have been writing this blog for 14 years
It has been well known throughout that period that I have very little time for right wing trolls who offer ad hominem abuse in pursuit of their own self interest and who have no actual argument to offer
What astonishes almost everyone is that I bother to engage with such people
You fit right into the standard stereotype
Send away. What they will say is what all Guardian journalists know: never engage with the idiots in the comments because they really aren’t good for your mental health
On this blog I have worked hard to build a safe place for sensible comment. But every now and again the trolls break through. It never lasts that long.
Dennis.
I’m not sure that the next few months are going to be funny or a joke for a lot of people.
It’s fine not to disagree. (Though I see the logic, I think it’s unlikely that Richard’s proposals will be implemented by this government. I think it is more likely they will bail out the banks) but it doesn’t need to get personal.
I for one, will miss your input.
Keep safe and I hope you and your tenants can ride out the storm.
I am struck by this phrase I see a lot about not wanting to be a ‘burden on the tax payer’.
What does that mean exactly? That you became a landlord out of the kindness of your heart because you feel others shouldn’t have to help to support you? Or, perhaps you just wanted more income in your old age (nothing wrong with that BTW) because of its fixed nature?
Or is how society makes us feel as we get old – that we are burden (this line of thinking really worries me)? I hope not, because I thought that our capacity to do this is what sets us apart from other animals for a whom a weak and ailing body is an easy meal.
I worry about older people feeling this way – that they are burden – because we too often are lied to about that we cannot afford this, that or looking after our elderly. It has been drip fed into our society for far too long – a society that can bail out a private banking disaster to what is the bill now – a trillion quid? – or pay for a billion pound bung to a political party in order to prop up a Government with a small majority.
Dennis! We can pay for you, we should pay for you – even I would want to look after you – even though you have come here in the atypical certitude created by the faulty ideas and thinking that you seem to have unquestioningly adopted.
I’m probably going to be sorry I said this, but …PEOPLE! I’m a moderator on another forum, and I can assure you, my ‘ban’ finger twitches as I read these unpleasant and unproductive troll-like exchanges. For pity’s sake. Learn to play the ball, not the man?
This is Richard’s blog, where he quite rightly explains his point of view on various issues. That’s what blogs are for. Nobody can doubt his expertise to do so, even if you disagree with his conclusions. If you disagree with him, by all means, show us your reasoning. Persuade us that your view is correct. Offering personal insults in place of coherent arguments is not a persuasive tactic at all, and is usually the tactic of one who has no coherent argument to offer. Online bullying is not a good look.
If you really can’t stand Richard or his views …why are you here? This is HIS blog. Personally, I read it every day and feel I have learned a lot from it, even though we are not always in total agreement on every issue. He knows a hell of a lot more than I do about finance, and I’m delighted he’s willing to share these perspectives with us.
Thanks Jan
And they’re here for a very simple reason – they’re frightened I might be right
Apropos of recent comments (here and many other places), the latest offering from the Parody Project seems very apposite: Let it Go! https://www.youtube.com/watch?v=OXYqjXSlwf8 .
Very good….
[…] do whatever is necessary. That would mean radical action of the sorts I have already outlined to maintain personal, corporate and banking solvency, because all are going to be under massive threat in coming […]
I would make the observation that for a landlord their asset is the property, which as you point out will still exist after the crisis is over, but in the case of a loan the asset is the capital repayable.
Giving a rent free period eliminates the income on the property, which is really little different to giving an interest free period on a loan which eliminates the income on the property (the capital debt).
You could argue for no interest to be paid or charged as well as no rent, because everybody is left with their “asset” at the end of the day. There is no reason why the interest should need to be paid at the end, unless you also think rent should be paid at the end.
For many poor people the interest on debt is a major cost and that isn’t restricted to mortgage interest.
As a landlord of four residential flats, I have to agree with you that these are sensible measures.
I have been conflicted on the ethics of investing in rental flats for quite some time. I recognise that this type of activity almost certainly contributes to price inflation which is keeping first-time buyers out of the market, and it troubles me. I feel like a hippocrite but then my family has become reliant on the income. I try to be a good landlord: I have never evicted anyone, I regularly invest in repairs and upgrades to the flats, I am understanding of late payments and have always successfully agreed a payment plan with the tenant when they have trouble paying. I have not increased rents at yearly intervals, as many landlords do.
How would I deal with a break in rental payments for three months? Assuming only one of the four flats I rent out stopped paying at any one time, things would be fine, there would still be enough coming in to service mortgage/service charge costs. If two stopped at the same time, things would be a little more difficult, I would probably have to party fund shortfalls in mortgage payments from savings. Three or four stopping at the same time would mean mortgage payments stopping, or only partial payments. This is where automatic payment deferrals would be very welcome.
Many landlords are on tracker type mortgages, so some of the mortgage costs would be coming down anyway in line with the (anticipated) rate cuts, and I take the view that longer term stability is worth short terms financial pain.
Anyway, part of me views this financial pain as justified to some extent considering the ethically murky practice of investing in rentals: just deserts?
Hi, Alex
How would you cope if, as has happened to me over the weekend (quote = £2570 – I do have enough funds, just, to cover it)), one of your gas boilers (or something equally as necessary/expensive) gives up the ghost? I appreciate that Richard has suggested that, due to the likely paucity of builders, repair work will necessarily have to be put on hold, but I can’t see either the tenant, or the Council, accepting the lack of boiler for a minimum of 3 months.
I note that it has been suggested that, as a landlord, lines of credit are supposed to be open to me in order to cover such situations; but as my only source of income (if the rents dry up) will be £66.15 per week Carter’s Allowance (I look after my elderly parents – my choice, so not complaining), I don’t believe that the banks will be climbing over one another to lend me money.
Peter
You do have lines of credit
All landlords do
Please do not claim otherwise
Richard
Richard
I do have lines of credit; I haven’t claimed otherwise.
Peter
So you are not then facing a crisis in paying business costs
No, I’m not. I do not, as things stand, have a problem with covering any of my ‘business’, or personal for that matter, responsibilities. But in the worst case scenario (no rental income for an extended period, and, or, I incur a major repair bill – for something that can’t wait), then I’m not as confident as you seem to be that the banks will be lining up to extend me credit.
Heaven help the rest of us then
Dear Mr Banker, I would like to borrow some money.
Certainly, Sir. We need to carry out an affordability check first – we’d rather not do it; but the pesky Government insists. What is your monthly income?
£288 (Carter’s Allowance)
What is the total of your outgoings?
£407 – not including any car expenses (fuel, tax, insurance); dentist; or phone.
That’s the way out, Sir…..
Have you not noticed yet that even the IMF is now picking up on my theme and is saying support must be provided?
Or are you too busy trolling?
Trolling??? How?
When/where have I even implied, let alone stated, that I believe that your idea re. support is wrong? If the Government mandates that I am to let my properties rent free for an indefinite period, then that is what I will do without complaint – I am mature, and responsible, enough to know that goalposts move all the time, and that no amount of planning will change that.
I believe that your wrong in your assertions that all Landlords are cash rich (see, I can strawman with the best of you), and that they will have no problems accessing copious credit. If, in your book, disagreeing with you on certain points is trolling – then I suppose I’m a Troll.
I didn’t say that they were necessarily cash rich – after all, they may be profligate with their spending
I said they had lines of credit not available to most
That’s quite different