Councils in England facing bankruptcy

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  • #285085
    John Boxall
    Participant

    The Iceberg is well and truly here

    https://www.theguardian.com/society/2023/oct/30/councils-in-england-facing-bankruptcy-as-lack-of-housing-pushes-up-costs

    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

    #285094
    Mike Hughes
    Participant

    Not a shock to anyone working in a local authority who has a pulse and their eyes open. If you remove sufficient money that it becomes difficult to fulfill statutory obligations; difficult to recruit; difficult to retrain etc. then I’m not sure what other outcomes one might think likely.

    #285101
    peterdelamothe
    Keymaster

    The three issues given are the need for rent controls, increases in housing benefit rates and investment in new social housing.

    Rent controls will never work until AIRBNB is restricted imo. Freezing of HB is clear enough but the current HB bill is staggering. Social housing investment? More complaints about social housing than ever before, rents are often higher than in private rented (I found a social housing property for a medically retired woman recently. She is not yet pension age. They want £1400 per month inc the “service charges”. Over double the private sector rent).

    #285103
    peterdelamothe
    Keymaster

    Incidentally I dont think many private landlords “kick tenants out to raise rents”. The costs of finding new tenants and voids is very high. Airbnb is far more profitable and with much less regulation. Then there are landlords with mortgage rates on a fixed 1.5% now being told the new rate is 8% on expiry. The property auctions are full of tenanted property up for sale but no one will buy them unless repossessions with no reserve at bargain lows. Where I live on the South Coast, the number of available rental property is at an all time low. Partly because as the article points out, the Home Office will pay far more for such property than HB levels. Different Government depts fighting each other …..nothing new there. Leaving local Councils in an impossible position.

    #285105
    John Boxall
    Participant

    Experience suggests that there are a significant number of landlords who are ‘over extended’ with very little equity in their properties who have been caught out by tenants defaulting/repairs/mortgage rates rising etc because BTL mortgages were treated as business loans so not subject to the sorts of controls that residential letting was.

    Friend of mine has ‘issues’ with a neighbouring BTL property, landlord could not get a mortgage for a home to live in so bought it as a BTL instead and lets it (!?!)

    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

    #285106
    peterdelamothe
    Keymaster

    John….a lot of £50,000 “bounce back” loans went straight into the BTL market. Of course it was not intended for that but who bothered with that? One local landlord apparently realised the potential

    “Companies in a business which left investors facing losses of up to £30m collectively received Covid loans up to the value of £2m, the BBC has found.

    Kent-based Group told its clients that they could receive more than 10% interest on their investments.

    But many of the companies linked to the group folded last year.

    Documents show that companies in the group controlled by received more than 40 Covid bounce back loans. Mr denies any wrongdoing.

    Many of the associated companies collapsed at the beginning of 2022 and are now in the hands of administrators”.

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