The Evil That Is Buy to Let

[Giles1]

There is a letting market for housing.Why not supply it?There is a transient working population in the UK,they need somewhere to live that doesn't entail monumental solicitors fees,mortgages,surveys,waiting times and financial risk every time they move.I know plenty of folk more than happy to rent rather than buy.
Is it immoral to let land?

 

[How much]

Wile its fair to say buy to let is increasing some house prices , for some reason here in the uk the public at large assume they have a right to buy a house or indeed need to buy a house while most of the rest of the world and in European in particular don't have the same hang up 'ownership"

To buy a home you need to save some money save for something called a deposit that most of the younger population don't seem able to do! !! I grant you that the amount you need seems high, it did seem just as high when I bough my home but with a seldom seen commodity called effort it can be done.

But It may have something to with the constant need for most to spend money sometime in fact quite often money they don't have on stuff they don't actually need like the latest play station , phone new car Holidays etc.
Then after the money is spent then complain that that they don't have a deposit and cant afford a house with all of the monthly outgoings for that stuff they don't need !!!
That comes on top of a late start to earning a living after having lulled around university for 3 or 4 years to then have a gap year and then eventually taking a job they could have started 4 years earlier without that expensive additional education.
I am obviously oversimplifying it, there are i am sure many exceptions to my generalisation but buy to let is legal it is within reach of many of us to gain some additional income , the government is doing its best to snuff out that this small area where some can make a return from some savings, and that will make housing cheaper in the months to come , will it make the younger generation save some money and do without for a few years to accrew a deposit I doubt it .

 

[wasted years]

All my life I've tried to do "the right thing".

I have never borrowed money to buy property let alone bought property to let to tenants as I always thought this was somehow immoral. If you don't need it, let somebody else have it and that sort of thing.

So all my life, as my savings grew slowly, house prices outpaced them and the result is I'm 46 and living in a very small semidetached property, married too late to have any kids and all that kind of thing.

The thing is though, nobody thanks you for this. Not the government, or my peers. I just look like a fool, except that I'm not making a huge repayment every month.

I do start to wonder if I should be more evil as being evil seems to be where it's at these days, or maybe it always was.

Unusual thought process but we are all different!
Not many farm estate owners find letting land immoral and the state seems happy to rent out sub-standard accomodation but I do respect your views.
Too late for kids at 46? What about adoption or fostering?

 

[Strawgalore]

I wonder how many in the former USSR were actually beholden to the commie ideal?
Only those entrepreneurs at the top who were running the show I reckon.

This wk I was working with a lad from the former eastern Germany , he said it was better under the commys , in his words, " we had not many oranges or banana's , but good education , now we have oranges a plenty but no one can afford them "

 

[Blue.]

If I didn't buy houses to let out someone else would,the local thicko who's not even 40 owns 30+,he's made that much money he's gone and bought a farm.


Just have a look at what 1st cars youngsters are having now,a relation has spent £13k ffs saving for a house is the last thing on his list.

 

[Goweresque]

Swedish economist Assar Linbeck described rental controls as " the most effective technique presently known to destroy a city -- except for bombing".

Every country or city that introduces rent control experiences the same thing - a slow degradation of the housing stock as landlords lack the rental income to maintain current stock, no new investment is made in rental property due to the lack of returns, and rental properties are removed from the rental market at the first opportunity resulting in massive waiting lists to find a rent controlled property.

There are two ways of distributing economic goods - rationing by price, and rationing by waiting list. One either sells things for the market rate, in which case the the numbers of buyers and sellers equalise at a market price, or one artificially restricts the price, thus resulting in excess demand and reduced supply, leading to waiting lists. There is no other way of deciding who gets what in an economic system.

Here is a description of the practical effects rent controls have had in Sweden:

http://www.smartgrowthseattle.org/letter-stockholm-rent-control/

 

[topground]

Rather than tinker directly with the buy to let market, why not engage the State in building houses for rent, that would help the economy and if the rents were set at sensible levels, covering the cost of the interest on the build and management / maintenance costs then the market would bring down the buy to let Rents, buy to let would be less attractive as the competition for rental properties reduced which would bring more properties to the market which would help first time buyers who could be arsed to save for a deposit.
The state built homes could be managed locally by Local Authorities, tell you what, we could call them Council Houses!
( for those of tender years Council Housing provided affordable accommodation for those at the lower end of the wage pyramid and worked well in rural areas where wages are lower. Unfortunately Thatcher fecked all that up )

 

[roscoe erf]

46 is not too old for kids

thought 16 was the going rate

 

[glasshouse]

Just because you can make a fortune in buy to let doesnt make it right.
slavery used to seen as acceptable too, and the nonsense that rent controls dont work is rubbish, new york has had it for years.

 

[Old Boar]

Around 190 MPs are in the letting industry. There was an amendment to the Housing bill that is going through Parliament at the moment to ensure landlords are letting homes that are fit for human habitation. A good thing, you would think, and a shame that the ruling is even necessary. It was blocked by the MPs....
Now when I sat on the Council, we would have had to declare an interest in this case, and would have had to leave the room while voting was going on. MPs do not have to do this, and can vote, so in my mind, this is a bit like turkeys voting for Christmas.
I am left wondering if MPs had to declare an interest in anything they are voting on, and not be able to vote, how much safer our housing stock would be, and our NHS as many MPs have fingers in private health insurance. The list is long on subjects they are voting towards their own self interests, and not for what they are supposed to represent.

 

[Wombat]

The problem is where do you stop, they are now interfering in the Buy to let market by adding the extra sales tax and the changes to affect higher rate tax payers.

Why not interfere in the land market?depending your position it could be similar to the housing supply. Should you be allowed to roll building land back in with little to no tax?

From my point of view they should keep their nose out of all of it, but due to the fact they haven't been able to sort out housing policy to build enough they are now trying to create villains without fixing the route cause not enough houses and the fact this ball has been dropped by many successive governments

 

[Giles1]

Just because you can make a fortune in buy to let doesnt make it right.
slavery used to seen as acceptable too, and the nonsense that rent controls dont work is rubbish, new york has had it for years.

The more people doing it the cheaper the rents will get.Ask the dairy boys ,(assuming your not one!), what's happened to the milk price and why.Make it difficult to rent and you will force rents up,people onto the street and taxes up..Some folk cannot and will never afford any kind of deposit so buying is always going to be out to them.

 

[Old Boar]

Cameron has said that the base for "affordable house price" is £450,000. For a 6% deposit which is common, you would need to save £27,000. If you were on an average wage, and managed to scrape together £200 a month, it would take you just over 10 years to save for the deposit, by which time the price of the house would have gone up.....

 

[glasshouse]

The more people doing it the cheaper the rents will get.Ask the dairy boys ,(assuming your not one!), what's happened to the milk price and why.Make it difficult to rent and you will force rents up,people onto the street and taxes up..Some folk cannot and will never afford any kind of deposit so buying is always going to be out to them.

What utter pish.
The number of houses is more or less fixed, as new build is way behind demand, so if a house is bought for buy to let, it is by definition pricing a would be owner occupier out of the market, so increasing the demand for rented homes, not decreasing it.
House prices are now totally driven by buy to let, as would be owners cannot borrow the 8 times salary it takes.

 

[Pond digger]

Estate Duty, like all taxes, was a political measure rather than an economic one - the clue was in the word 'estate'. No one cried when many traditional estates were broken up, selling farms off cheap to sitting tenants in order to satisfy the Chancellor's tax demand.

Plenty of farmers, including some of my neighbours, profited by being able to bag the bargain that buying the freehold of their deceased landlord represented.

In fact, it was quite popular - it lasted from 1894 to 1975 - and, as intended by Lloyd-George, it broke the financial backbone of most of the landed estates. So, although it was confiscatory, it was (and still is) viewed as a Good Thing. Which, of course, it was - why should a bloke in a pair of corduroys inherit twenty pretty, let farms, when I've had to scrimp and save to buy one scruffy place and have to do it up at my own expense?

So Soaking the Rich is a bit like wet T-shirt contests - no one likes to admit it, but we're all secretly pleased if someone else suggests it.

Buy To Let is going to go the same way - you can't force an entire generation of young people into renting their homes, denying them the security, pleasure and hope of profit that their parents enjoyed, without creating envy and resentment among the tenantry.

One day, another Lloyd George will pop up and say this, loudly. And he will be right - it's immoral in a capitalist economy, full stop.

Things will, then, come full circle: Mrs Thatcher's abolition of rental controls in 1980 will be seen as ill-judged, and rolled back, rents will be 'affordable', house purchase more so, as our rich old folk can no longer invest their money in screwing the maximum rent out of our poor young folk. Confiscatory taxation on inheritance will finish off the BTL 'industry'.

I don't do many rants. This is one. That's it.

You're sounding like a bitter old socialist Mr Walter.

I'm not sure that breaking up the big estates was such a great idea actually: and why shouldn't wealth be handed down? It's the natural wish of parents, that their children should enjoy the benefits of their labours.

Anyway, the lack of affordable housing, is to a great extent, the consequence of our planning policies; so why don't the politicians sort that out, before they indulge in state sanctioned theft, from hard working, successful people. As my father used to say, "if you've made yourself a fortune, you've undoubtedly, also made one for the government." It's not just the entrepreneur, that benefits from his success.

I guess at the end of the day, it is up to the politicians to smooth out the extreme inequities of life; but their reactive nature, can make for clumsy, unjust, and rotten policy.

As others have said, there's nothing inherently wrong with renting, it's just that we've become conditioned to aspire to ownership, regardless of whether it's suitable for individual needs.

 

[glasshouse]

Houses are not homes in the UK, they are financial instruments which underpin our fecked up financial system otherwise known as a house of cards.

 

[Dr Evil]

Typical @Walterp devils advocate style post here- not that there's anything wrong with that. If I remember rightly, back in the BFF days, "Julie" was busy converting any building owned into housing to let out. What became of that enterprise?

Personally, I was fortunate enough to borrow to buy a house to live in, renovate, and subsequently borrow against to buy another, both of which are now let out. I worked bloody hard to pay for both through my twenties, and improve to a state where a tenant would be willing to let them, with considerable support from my family. My friends took trips to NZ, South America etc, which I had to turn down, thinking I'll see those places when I've paid off the mortgage. Rental income on them covers the mortgages, but only just- and they are seen as a part of the pension pot essentially, as I won't get much out of them until I hit the ever increasing retirement age.

Introducing a tax on the interest I pay from 2017 is going to decimate any positives, and realistically mean I'll be paying for the property well into retirement, let alone any improvement work which will be needed. This situation is made all the more galling, by the fact a significant proportion of those living in rented accommodation in this part of the world, have their rent paid by the tax payer... I've had six different tenants in recent years- two of whom were employed. The others showed little interest in working, let alone any aspirations of home ownership. heck, one tenant moved from Aberystwyth to Dundee- because they were told they'd get better benefit payments in Scotland...

I presume you've seen the "fly on the wall documentary" based just down the road from you in the Mount estate, Milford Haven Walter-

http://www.bbc.co.uk/programmes/b0163zdb


How many stars of that particular reality tv show aspire to own their own homes do you think??

 

[Osca]

What utter pish.
if a house is bought for buy to let, it is by definition pricing a would be owner occupier out of the market, so increasing the demand for rented homes, not decreasing it.

The places available for rent are not usually the places you would choose to buy. I'm renting at present; I'm happy to live here in the short term but I wouldn't choose to buy it; its a nice little flat as a temporary measure but not a home.

Likewise council housing; the tenants who bought their council houses and so got a foot on the housing ladder didn't necessarily want to stop there and many of the ex-council houses have became starter homes for young buyers.

I don't think the reduction in places to live, following the sale of council houses, is quite as straightforward as it seems, either. A lot of the better houses were in permanent occupation by the same family through more than one generation and were no longer available for new tenants in actual need.Only the trashy flats in bad areas remained - just as they do now.

 

[JNP]

Cameron has said that the base for "affordable house price" is £450,000. For a 6% deposit which is common, you would need to save £27,000. If you were on an average wage, and managed to scrape together £200 a month, it would take you just over 10 years to save for the deposit, by which time the price of the house would have gone up.....

But if you were earning £27000 you wouldn't even get in the door of the bank looking for a £423000 mortgage even if you had your £27000 deposit in tow. In reality you would need £25000 to buy a £150000 house and then you are pushing the bank to over 4x salary for the mortgage. Its all madness.

You can pay rent for 3years of say £850 per month. Walk in the bank with a deposit looking for a mortgage which costs £750 per month and they will refuse because computer says you cannot afford it... because of income multiples

 

[wasted years]

Why would someone on 27k need a house at 450?
Plenty of good townhouses up here for 150k, nice places to live or a country pile for 250-300k.
Realism needed on this thread.