• The Choice

The Property Problem


As interest rates continue to rise, this will undoubtedly lead to thousands becoming homeless. Decades of record levels of low rates have led to people taking out maximum mortgages unprepared for the rises in interest and increased mortgage payments which beckon. Many think that this will allow others onto the property ladder, but I doubt it. There are plenty of cash rich investors, domestically and internationally waiting in the wings for a housing market crash. This will see another transfer of wealth handed over. Another cost of covid. Another collateral. When I lost my job during covid, I remember someone saying, at least you're still alive. At least those made homeless are still alive. Right? Thank god the glorified flu didn't take them down, no, it was the Tories assisted by Labour and the SNP.


I was raised in a council house, it was a shit hole, poorly maintained by the council. I used to share a room with my younger brother. I remember one night we were sound asleep, all of a sudden I was awoken by a loud crash and then screaming a few seconds later. I switched on the light to find my brother covered in head to toe with plaster which had come down from the collapsed ceiling. The boiler which was kept above had been leaking and the dampness caused the plaster on the ceiling to collapse. The dampness in the poorly insulated home was a constant pain in the arse, I had asthma as a kid... I grew out of it, or rather it went away when I moved out at 18. The electric storage radiators were only good for keeping the house warm in the mornings, otherwise the house was freezing, particularly in the evenings. It seemed to be warmer outside than in. Kinda like living in a fridge.


After moving out, I spent a number of years renting varied states of private rental accomodation up until my mid 20's where I managed to secure work in the oil and gas industry. A high salary meant that I could afford my own place, but I didn't stop with just one, I invested in property to create a small portfolio. A mixture of former council houses and purpose built flats. My properties are all maintained to standards that a tenant renting directly from the council could only dream of. Yet my properties are all rented out at Local Housing Allowance rates, some are rented to those living on benefits. When it comes to my properties, I go by the mantra that I wouldn't have someone living in a property that I wouldn't live in myself.


Take Edinburgh for example, where my properties are based, covid along with the governments announcement of licensing for short term lets led to quite a few investors pulling out. It sent the market crazy, but property prices didn't go down, they went up. Government has tried taxing landlords more through additional dwelling Land Buildings Transaction Tax... That was a cost which was simply added onto the rent. On the matter of the Scottish Governments vote winning punishment of landlords, i.e, their temporary ban on evictions and rent rise freeze, notice that they haven't done anything to punish the banks who are making billions through interest rates going up. Interest rates won't just punish landlords, but will genuinly make people homeless... Who's ready to buy the homes... Investors. Where's the Scottish Governments actions or even words on the banks?? Yellow Tories, that's what the SNP are.


So why the rent freeze, most landlords will not increase rents if they have decent tenants, the cost in terms of having a vacant property for a few weeks whilst searching for a new tenant usually outstrips anything gained from a rent increase. Rents usually increase after a tenant leaves, which landlords are still entitled to do. The eviction ban is simply ridiculous. Landlords don't evict tenants unless it's a last resort. Imagine living next to an unruly tenant who can't be evicted. Who pays a landlords mortgage if he can't get rent? These policies are simply politics, politicians trying to win votes, yet it is also a sign of the SNP supporting the larger corporations than the average landlord.


The fact that the policy ends after 6 months, just before large corporate social housing establishments review their rent shows who's side the SNP are on. I was told when I was younger that large corporations love red tape. They have the resources to deal with it. When the average landlord goes bust, who's ready to take the property, these social housing corporations.


There is a shortage of 100'000 houses in Scotland, a figure which is only set to get worse. This demand pushes prices up, many people will never be able to afford a home. Pushing out the landlords will only deepen the crisis. Pushing tenants towards substandard social housing is not the solution. It will cost more in the long run.


So what can be done to ease the pressure on private tenants? Increasing taxes will just be passed on to tenants. It doesn't work.


Licensing short term lets will assist the private rental market by freeing up property, but the demand is still high due to the ever growing population.


Ensuring that banks only lend to those who can actually afford it, ban interest only mortgages. Cap the number of mortgages landlords can have... I currently have 4, could I afford to pay off 4 mortgages on my salary? Each mortgage affordability is done individually not taking into account the other mortgages and is based on salary. I like to take a calculated risk, so if all 4 tenants stopped paying, then I could still afford the mortgages because my deposits were high. However, I could have done small deposits and bought 8, or 10 properties, like many investors have done, but could they afford 8 or 10 mortgages with their salary? Doubt it.


Ensuring that landlords maintain their properties to acceptable standards. Much more needs to be done in this area. There are thousands of landlords who have portfolios based on interest only mortgages. These type of landlords usually make a living from their rent and do barely any maintenance to their properties, they are on a par to council housing standards, if not worse. This would mean that local councils would need to hire more inspectors to go round and visit properties. It would also require tougher enforcement for those landlords who are reported by tenants for substandard properties.


There are measures which government could take to reduce the pressure on tenants, but lets face it, 40% of MP's have property portfolios, so why take effective action when you can play smoke and mirrors with legislation which will just see the additional costs added to tenants rents.