To think buy to let has screwed the housing market(77 Posts)
When I was young what used to happen is house prices would rise, and then reach a level were first time buyers could no longer afford the cheapest houses, and prices would then fall. This cycle of increasing and decreasing house prices meant that house prices stayed at a reasonable level.
And then banks and building societies created buy to let mortgages. These did not exist in the recent past. Suddenly people could become landlords without outright owning the house. And house prices began to rise and rise and rise.
Potential first time buyers could often no longer afford the cheapest houses.But prices did not fall as they used to, because the buy to let landlords were still buying the properties.
To be honest I don’t even know what’s caused it, but I’m fuming! I can’t buy a house and my mum can’t sell hers
It all changed in the 80s, I think, and buy to let really wasn't around then.
No in the 80s you still had the rise and fall of property prices. It did change in some parts of London as you had foreign investors buying London properties, but outside those areas, the same cycles persisted.
Buy to let mortgages are just a way for banks and government to keep tabs on who is making extra income from rent - before that landlords just took out regular mortgages on second/third properties which they rented out.
There have always been landlords. I suppose the biggest difference is that nowadays money in the bank is worthless, as are pensions, so for people with a little money the best investment for their future is property.
Whose fault that is I don’t know but probably past governments and banks.
There is nothing free market about the housing market.
Conditions have been created to bring about this end.
It’s mtiple factors. Don’t look for an easy target to vent your frustration. No, I’m not a landlord.
This table is adjusted for inflation and shows house price rises and falls from the 70s to the 90s. It wasn't until after that that things really changed.
YABU to think buy to let is some sort of new thing.
It's a very recent invention to have owner occupiers.
Yes, buy to let is a scourge. That and the lack of council housing around has meant that landlords can freely fuck everyone poorer than them over.
The individual landlord is just doing it for a little nest egg, or it was the sensible investment at the time, or whatever, but really they're all part of a systematic problem that is causing huge pain and difficulties for others.
Owning a house to ensure that you have a stable place to live shouldn't be a must but it is, because otherwise your rent just spirals out of control over the years and you can be forced to move constantly because landlords don't want to renew contracts, knowing that they can either sell the place on having owned it whilst prices rise, or get new tenants in for greater rent.
It's shit. No one needs multiple houses.
No doubt someone will be along in about 30 seconds to tell me that I would do the same if I could afford it, why shouldn't their kids have millions of pounds worth of inheritance left to them, blah blah blah.
Capitalism for you. It does not work.
BTL has played a part but it isn't fair to say it is solely that. As with everything in life there are pros and cons.
A lot of investors will redo wrecks of properties that 1st time buyers wouldn't have a hope in purchasing then renovating. There will always be some that don't do it in a way you would agree with.
There will always be a need for rental property through need or lifestyle.
There are a lot of small developers now creating smaller sites that the large developers wouldn't touch because not enough money in it. That's extra new houses that wouldn't be done if not for the smaller developer.
An alternative would be huge pension funds owners being the only ones to own btl and develop new builds. Is that any better than investors with smaller numbers but prob care more? With recent changes, to me it seems that the government is trying to move it towards large companies that already have a lot of money...
No system is ever perfect
I don’t think it is buy to let. I think it’s just supply and demand. The more something is in demand, the more the prices will rise out of reach. Housing is unlike other commodities as it is necessary.
Yes, owner occupation on a large scale is a relatively recent thing. Right to buy had a massive effect in the early 80s because it reduced massively the number of houses available to rent as a council tenant. I think the ratio was 70/30 renters to owners at the time.
It's more complex than "btl has buggered the housing market".
I'm a landlord.
I totally agree. Everyone should be able to own a piece of this land and their own home. Nobody needs multiple homes. It's selfish and at the expense of others.
"No in the 80s you still had the rise and fall of property prices."
My recollection is of a major boom which, although it softened in the early 90s, never returned to the 3x 1 income (or 2.5 x 1 plus 1 x the other) that had constrained affordability before that.
The changes to mortgage lending ceilings (began 80s, rocketed 00s) were huge factors.
As was the (deliberate) policy changes from Thatcher and Blair years to encourage a greater %age of the population to owner-occupy. That really changed the outlook. There was loads of renting before then (and less good protections for tenants, before the reforms of early 80s) but no-one was making political points about it in the same way, as most if the population didn't expect to own.
It's a very recent invention to have owner occupiers.
did you really mean that . When I was a young adult there were professional landlords and the council (for council housing) everybody who scrimped and saved and bought their first home did so as an owner occupier.
Then the floodgates opened and everybody and his dog bought buy to lets as they saw the TV progs and realised they would make millions with their 'property portfolios'.
It is unethical and shameful I am an older person and would never, ever get into BTL - I have one house in which I live!
Look at the table I posted a link to prices adjusted for inflation. There was a boom in house prices in the 80s, and then prices fell again. People forget about the impact of high inflation
The 1988 act which brought in assured shorthold tenancies has had the biggest effect. It was only a question of time before housing became a commodity and with deregulated lending, low inflation and low interest rates a perfect storm arose between 2000 and 2006 resulting in a vast land grab. Over the longer term equilibrium returns, landlords now make lower returns but face higher taxes. When and only if supply is increased will the buy to let market start to look deeply unattractive. That will happen over a long time and not in the short term.
Yes, I remember interests rates then.
You are putting too much weight, I think, on that one table and not looking at %owner occupation, wage inflation and what earnings/loan ratios the lenders would contemplate.
Also, different indices for inflation give different results to the table linked.
If you think the ratio earnings/loans was restored in the early 90s softening, then you must have been in a fairly niche boom industry at the time.
Be Actually you are right, the 1988 act was a game changer.
These were the tenancy reforms I was thinking of, and I was under the misapprehension that they came in a bit earlier in the 80s than that.
One of the factors driving the increase in house prices, was when the bank of England made it easier to borrow money (mid 80s)
This was followed by the change in tenancy law in the late 80s with the introduction of assured short hold tenancies, specifically to encourage the private rented sector, and the removal of mortgage interest tax relief to create a 'level playing field'.
Add to this the effective privatisation of vast swathes of the most desirable social housing through right to buy, lack of housing building, increases in population etc, leading to a shortage of houses, prices increase.
Lots more factors, but you can't blame it on one thing.
Feminism has played a big part in the rise of house prices. It used to be possible to buy a house based on one wage. Now the majority of people buy a house based on two incomes, house price reflect that.
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