To consider distancing myself from a friend over her views on renting and benefits?

In one sense of course the two situations are different. The main one being that someone on benefits only has it while they are eligible. So I’m not trying to hide that.

In terms of the equivalent value though, I think it’s instructive. I switched to an annuity example because that strips out the issue around residual value, leverage, etc (which also carries risk that isn’t there with benefits, eg negative equity, and also the work that BTL involves).

The fact remains that the capital value of benefits is substantial, which I think is relevant if comparing how “lucky” benefits claimants or landlords should feel.

I guess I’m a bit of an old patrician Tory on this point. I think those with capital should be thankful they have it, realise how lucky they are compared to most, and generally not resent those who they support (on the “there but the grace of god go I”principle). And I think those who rely on benefits should be thankful they have others to support them, and realise how lucky they have it compared to most of time and most of the world (on the same principle). I’m sure that will make me unpopular with all sides!

I think the issue is that you’re converting a safety net income into an annuity style capital value but that still doesn’t make the two situations comparable in economic structure.

Benefits are a non accumulating transfer designed to meet ongoing need. There is no ownership, no residual asset and no wealth build up (even if you express the stream as a discounted capital value).

A buy-to-let portfolio is fundamentally different: it is leveraged capital (with tenants servicing debt) and it converts into fully owned, transferable assets over time. That asset accumulation is the key difference the annuity framing doesn’t capture.

So yes, the present value of payments can look large on paper but that’s not the same as saying the recipient is in a similar position to someone building capital assets worth hundreds of thousands over time.

In fact, a significant portion of housing benefit ends up flowing directly to landlords as rent - which in many cases services the mortgage on those buy to let properties.

Yes it’s true that the benefits claimant is dependent on policies and politics, though the same is true of a BTL owner (who also has general market risk).

Wholly disagree but she may not have any profit on the property so no tax and no lump sum. Is it that easy to just not work and claim benefits ?
I know there are people who play the system.
Before anyone accuses me of benefit bashing I know several people who do this. Not friends btw.

It’s a fair point but doesn’t change the conclusion drastically.

As an annuity (ie a policy terminating on death, rather than a BTL), the equivalent value of the benefits is about:

£650k for a 25 year old
£500k for a 35 year old
£250k for a 65 year old

The two first ones are a bit theoretical as annuities aren’t really sold for young people.

But the point remains the same: it’s a lot of money. I think we should be glad that we live in a society that can and does do this. But the “landlords don’t know how lucky they have it” misses that if we are reducing things to numbers there are some pretty big numbers in the benefits-claimant’s column too.

Exactly. There could be no profit at all. And if she has no savings and no income, she'll be as entitled to benefits as the next person.

They're not, though. One is dependent upon the good will and absence of histrionic responses to perceived unfairness, whilst the other has an independent income and a significant asset or assets that can be liquidated at any point they feel particularly piqued about receiving insufficient admiration or the potential for the people responsible for the income they receive acquiring additional legal protections.

Lots of landlords have interest only BTL mortgages so there won't necessarily be a huge amount of money made from disposal of her assets.

It’s not really comparable. One is a safety net payment with no capital accumulation; the other is a leveraged investment strategy that ends in full ownership of appreciating assets. Treating them as equivalent because of a notional yield calculation is misleading.

If her tenants are on benefits then does she feel guilty that she is the final destination of those benefits? Does she heck as like.

I agree with the above that she won’t get benefits anyway, but it doesn’t really matter. She might have been joking anyway. I don’t think you need completely align with someone to be there friend but there needs to be room for healthy discussion and debate between friends

It works both ways though.

The average benefits cost of a benefits-receiving adult is £13,450 p.a. (or about £14,600 p.a if valuing the full implicit subsidy on housing).

To generate that in perpetuity needs about £490k of assets using standard actuarial assumptions (3% real return). Also equiv to a typical post-tax rental yield on a property.

£490k is a bit under two average-value properties.

So the person on benefits and the person with two BTLs are in a similar economic position.

(Thought about differently: society has arranged to give them the benefit of the income from two BTLs. That’s a fortunate position compared to almost anyone in history and to most people in the world today).

YANBU to stop being friends with her, she sounds grim. But id encourage her to do it. See how far she gets with a claim…

This!

It depends on how heavily mortgaged she is. If she foolishly bought her BTL properties with a massive mortgage which hasn’t been paid down, she may well not have much money even after sale.

I don’t blame a LL from giving up and selling, with the new rules, but if she’s got the proceeds of a house sale behind her, she won’t be eligible for any means tested benefits.

I couldn’t be friends with somebody this stupid so would distance myself from her.

Also landlords whining about how hard it is to have a second property are tiring.

It can’t be much of a friendship if you would ditch her based on one comment, seemingly made in understandable frustration.

I'm sure she’ll cope with the loss.

Total dick move to stop being friends with someone or distance yourself from them over that.

Just don’t talk to your friends about religion or politics.

I imagine she’s being a bit facetious. Are you on benefits? I could see how, if you are, that could be an unsettling viewpoint for you to find your friend has.

Have you thought of this not very novel concept of discussing your feelings, with this friend?

I think it's more reasonable to actually speak to friends instead of just knee-jerking into distancing yourself.

Then again Mumsnet friends seem to be a different breed.

One where none of them seem to talk to each other 🤷‍♂️

Perhaps I am too suspicious, but this thread feels like it will be a magnet for the benefit bashers.