Landlords who have bought in good faith luxury new or off plan apartments could soon find that they have purchased a residential investment in the middle of a council estate according to the latest news from the Telegraph. This is because cash strapped housebuilders are now looking at selling off on the cheap thousands of unwanted properties to housing association in a bid to keep themselves a float.
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£1 billion indecent proposal
A proposal to free up £1 billion of public money from the National Housing Federation (NHF), the umbrella body for the UK's housing associations, is under consideration by ministers at the Treasury and the Department for Communities and Local Government. If the package is agreed, it could kickstart the moribund housing market by buying at least 10,000 units.
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Landlords stabbed in back by developers
I'm not a snob. But financially it is an added blow to landlords and property investors if they have bought a luxury apartment off a developer who marketed the property just as that. Only then to find out that most of the neighbours to their luxury apartments are paying a fraction of the rent they expect and need from their tenants. How will a landlords be able to square it with their tenants that they are paying a premium rent when next door is occupied by a bin man, bus driver and road sweeper?!
To cap it all housing associations are likely to demand significant real discounts, not the fake show ones that housebuilders were bandying about. This could be as much as 20-25% or all the developers profit, just to get the cash in get the units off the developers books.
Therefore a landlord could not only have been stuffed on capital values but also bear the cost in terms of a reduced rent.
Sounds to me that landlords have been stabbed in the back by developers and ouch it hurts!
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