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It's Christmas, but I am going to share this because it is bugging me. You don't have to read it!
I had a chap that used to work for me, helping to manage my buy to lets, bringing them up to scratch and decorating them between tenants. This really helped me and worked well.
I then bought, extended and refurbished a couple of houses and he helped me do this. He was paid through a payroll. I really enjoyed these times. Then the extra 3% stamp duty came in, on the back of runaway house prices caused by a pretty irresponsible interest rate policy, itself necessitated by messing up everything else in the economy. For quite a while since things have seemed peaky and I have become incredibly risk averse. I don't know if any other landlords feel the same but I always have this horrible feeling that something is going to take it all away from me. I downsized slightly in 2016.
(As an aside who really wins with really high house prices? I am worth a lot on paper, but can't spend it, and if I sell the Government has effectively pinched a lot of my portfolio by stealth with the creeping CGT bill meaning that I can't replace it. I therefore can't do this because I have 4 children and need the income for the foreseeable future)
So anyway I didn't have so much work for this chap. I still employed him to help maintain things, but this was really eating into my ever reducing cashflow.
S24 has impacted me quite a bit. We have lost child benefit because this seems to be based upon income before taking account of any mortgage interest as well as now having increasing tax bills anyway.
One of my rooms fell foul of the minimum room sizes so I lost £5k a year rent.
My hb tenants stopped paying because the cut over to universal credit banged them straight into arrears. ie the correspondence they got should have been worded "you are on universal credit now so your hb which was paid directly to your landlord will stop immediately and we will probably start paying you something soon - maybe after a month or two - plese try and explain this to your landlord."
So employing him became too risky. To be honest employing anyone now seems just so expensive and administratively burdonsome. It's madness.
Anyway, where I am I going with this?
Well I had to let this chap go. As a result he couldn't pay his own rent and got evicted from where he was living. Does the story end there? No.
He is 32 years old. There was no help for him. He couldn't rent anywhere because he had been evicted, so he lived in his mate's shed for 2 months. Then he got reported by a neighbour so he moved into his car which he had previously abandoned in a car park. His car was parked, not on the road anymore, obviously. So he spent a week in his car, not sleeping and went a bit mad. He got arrested once when he was reported for living in his car but was let go, so went back there.
He then got really low (as you would) so attacked his own car and took a knife to the seats. He then found the spare fuel can which had a little petrol remaining in it and poured it over the front seats and himself and sat there for a while with an unlit cigarette in his mouth and his lighter apparently thinking about whether it would be a way to end it or not.
Somebody saw him acting very strangely and luckily he was arrested again. He was put in a cell and became convinced he was going to die there, so when the door was opened he went for the police and it took 12 officers to restrain him.
He got sectioned and has been in hopsital for 2 weeks.
He called me yesterday from the hospital for a chat. He was just hankering after the old days when he used to work for me, had a purpose each day, had an income and had a roof over his head.
This man was a reliable, honest, 6'3" and ridiculously strong chap who could turn his hand to pretty much any task given. I can't believe how his life is turning out and I don't like it. I hear about increasing homelessness a lot but I now see it for real. If all the changes hadn't happened over the last few years, I would defintely have still been employing him.
That's a sad story at a time when many are celebrating but I don't see the cause and effect you are implying in the title. The government continually makes changes and we adapt to those changes.
You have clearly been successful to no longer qualify for child benefit. That success was, in part, due to government changes that allowed you to create what you have, it probably wouldn't have been possible 10 or 20 years earlier. It was never going to last forever but you have still been successful.
I can only presume that the gentleman previously employed by you is also dealing with other issues. There is strong demand for good tradespeople and unemployment in general is very low. There is a reason why he has not found new employment. I hope he finds the help he needs and achieves a full recovery.
The government can make some unpleasant decisions, but so can individuals. It doesn't necessarily follow that an individual decision is the fault of a government decision.
I can see why you say what you say, but, call it how you like, he is in the hospital with nothing now. We do nothing differently but can no longer afford to employ him whereas we used to be able to. There is a correlation.
That is a really awful story, at this time, on Christmas Day. I do think there is a correlation between us as landlords having less money. I do think that the gov has come up with some strategies to muscle in on our income. I tried to remortgage a property the other day. In the past it would have been a breeze but the FCA has changed the rules, so I was only able to get a fraction of what I would have been able to extract in the past!!! I also had to jump through some challenging hoops to get it!!!
I am sad for you friend, what has happened to him is awful. There is probably some other reasons, as well, why he has ended up in such a bad place. Austerity has cut a lot of services that use to be in place. Thankfully, not everyone that gets laid off, ends up where he is.
I hope your friend gets the help he needs. ❤️❤️
James, that is indeed a sad story and I share your sentiments and your anxiety for the future too. I think the cause and effect is very plain to see in this story. Bad political judgements and orchestrated misinformation have bad consequences for us all, tenants and landlords alike.
Of course we must adjust to the prevailing circumstances and we do, but those adjustments will affect others in our industry. The past had its opportunities, just different ones. I guess it’s now and the future we all need to focus on, albeit that perhaps difficult times lie ahead with many similar sad stories to be told.
I would rather be an unpopular landlord any day, than join the ranks of the incompetent shortsighted political dummies messing up the lives of those who voted for them, regardless of which persuasion our votes supported.
Times are changing
I think I thought the worsted time to happen was the 2007 Crash losing half the value of the business
But I think 2018 is far worse
Its the drip drip effect on my Business which has taken me from a very positive Landlord to a very negative Landlord
The truth of the matter is we are in the people business and govt attacks have consciences on people
we are only at the start of major changes we are in second year of S24 and we have two more to go
The Govt just has not thought this through and it needs to start thinking quick
The UK Property market is in one of the most dangerous times it has ever been in
and I don't see much changing fast
But I do see some very sorry stories ahead One day I can see a Landlord taking there lives over Govt Policy its only a matter of time as Tax Bills and regulations change for the worsted
Your sort of blog is going to become a common type as the years progress
Rich Boy Osborne has a lot to answer for
Him and Cameron did the UK no favour's There arrogance is unbelievable
Learn Change and Adapt ?????
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The 5 yr tenure in Govt lends itself to any party in power leaning toward the "low hanging fruit" aka easy win type policies.
The media are also to blame - especially around levelling the playing field between FTBs/landlords - hence the new 3% SD surcharge for second homes.
As well as the progressive disallowing of loan interest as a tax offset for leveraged landlords.
FTBs themselves have also been hit - as the consumer outcry around prudent lending post Credit Crunch lead directly to MMR in 2013 - arguably the toughest lending criteria in living memory.
On latest data some 130,000 private rentals have been lost in PRS - and that will doubtless increase in near future - making things more difficult for GR and accelerating the boomerang of young adults back to parental home.
We are told that 5 out of 6 new buyers are now FTBs rather than landlords - though 80% of FTBs are said to be funded by BOMAD which has it's limits.
It is easy to envisage a return to an earlier era from 1940s/50/60s etc when people only left home after spending years as young adults living with parents whilst saving up to buy with a partner doing likewise - though that practice is also self limiting due to need to live within a sensible cost effective commute from jobs.
A very sad set of circumstances for this individual.
I do think it's a bit of a stretch to blame the government though, people get laid off, it happens, very few end up like this. Individual Responsibility for oneself and one's family needs to be reemphasised in this country, a six month emergency fund in savings should be a lesson given to all in an age where there's no such thing as "jobs for life".
Nevertheless, I really hope things improve for the guy.
Agree with emergency fund - though media say most peoples' savings could barely last 1 or 2 months after job loss - CH5 say 60% of PRS households have less than £1000 in savings.
Very true , it's a real problem, the savings culture of previous generations has been lost due partly to consumerism and partly to the cost of living crisis.
Consumerism probably took off in 1950s with hire purchase - and continued later via credit cards etc - latter being fantastic for convenience but can sink those with feckless spending habits.