to think high house prices are the problem?

[benefitcapclaptrap]

Just watched a news item about the benefit cap being introduced today in some areas. Not sure I totally agree with it but I understand that the reason for it is that the welfare bill is too high. What I don't understand is how reducing housing benefit payments will solve the problem in the long term.

As I see it, the reason housing benefit spending is high is because the rents charged are also high. Too high in fact for the (mostly working,but low paid) tenants to be able to afford to pay without assistance. The usual reason given for high rents is lack of available properties, but I can't see the evidence for this locally (south east) or in other towns I have visited.

Instead, I would suggest that, the reason for high rents and demand exceeding supply is actually due to the cost of buying a house being far too high. A large proportion of people who would like to buy a house (and in the past would have been able to afford to) have been priced out of the housing market. Therefore they have no choice but to rent those same houses from a landlord that could afford to buy it. This means the rent is at a rate that not only covers the mortgage the tenant couldn't afford plus extra for maintenance and I presume some amount of profit. So it would follow that the tenant quite likely will not be able to pay the whole rent their self and must apply for housing benefit.

Am I being unreasonable in thinking that if house prices were lower and affordable to most people on an average wage there would be a lower demand for rental properties. In turn this would mean lower rents for those who can't or don't want to buy and mean lower bills for housing benefit. Also if people didn't have to spend such a high proportion of their income on the basic necessity of a home to live in, there would be less need for top-up benefits (e.g. tax credits) and people would be able to spend more which would get the economy moving again.

So AIBU?

I'm not in the majority, I dont know anyone in this position.

same as usual, bash those who have more than you,

have you ever heard of the phrase asset rich cash poor,

Ok well in that situation their parents have saved up for a deposit....

Even if a landlord has inherited their property or somehow acquired it without a BTL mortgage, they still have to do the job of being a landlord, or pay someone else to do it for them. They have to pay the costs associated with any property such as maintaining plumbing and heating systems, as well as safety certificates.

I have no idea why people seem to expect landlords to do this for free and charge rent that exactly matches their mortgage. They are doing a job and they have taken a financial risk, as well as providing someone with a home. There is nothing wrong with landlords charging market rate, I often find the attitudes towards them on MN completely bizarre.

exactly mn - landlord = evil money grabber who doesn't maintain their property and expected rent their home at a loss.

"Ok well in that situation their parents have saved up for a deposit..."

... and?

Bear in mind too that there are lots of reluctant landlords at the minute- having to move house due to changing circumstances, unable to sell previous home due to negative equity.

Op yanbu but I fear we're too far along to correct the problem. Even if there's a housing market crash those in power won't take the opportunity to try to do things differently to address the problem.

I had to rewind the news and check those figures. £350pw rent~?? A WEEK? Mine is just over that a month

But then I am North in social housing.

The 'reluctant' landlord is not helpful to the poor tenant who has to stump up huge fees to the letting agent, only to be told 6 months down the line that they have to move out again as the landlord has decided to sell after all. The kids have to be moved from school, they have to find that deposit again. There does need to landlords, but they need to be professional and operate as such. Reluctant landlords are a tenant's nightmare.

Oh I didn't expect this to turn into a landlord bashing thread My AIBU was that high houses were the problem, not landlords. I currently rent my home and my landlord is lovely and I'm sure the majority are also.

You're right claptrap, high house prices are the problem. My landlord is also good. I would still rather be able to buy by own house than rent though, as I worry about the security for my children and what we will do when we retire

The government (the previous one, mostly) are to blame for high house prices, not the landlords, who respond to government policy on tax, interest, and so on.

If the government allowed more houses to e built for the millions of new immigrants, there wouldn't be such a problem.

But as they generally own at least two houses each MP, they don't give a fuck about normal people without second home allowances, because insane house prices make them as MPs rich.

I totally agree with you about the last government Yoni, but this government haven't exactly done much to change the status quo and they've been in power for 3 years.

I think you can safely assume reluctant landlords are too busy trying to save themselves to worry about being professional. By definition if they're reluctant they're amateurs, not professionals. Not a good situation for lots of people.

Sorry YABU: It is just replacing your misery at not being able to afford a house with someone else's misery of negative equity. Imagine being forced into selling your house at a loss (after illness, divorce or bereavement quite likely) and then still paying off the remaining mortgage for years and years. For nothing.

No one will sell off at a loss unless they have to, so you also might not find much to buy.

My feeling it would probably be better if they increased wages and reduced taxes.

It is harder to reverse high house prices than to stop them inflating in the first place though, ihatego. The former can have knock on effects.

No-one's mentioned distrust of pensions yet (Equitable Life? Nah, bricks and mortar, thought many). Nor the slower-growing, even deflationary years which left people looking for yield (and lack of yield screwed Equitable Life, didn't it, with its idiotic guarantees, chasing market share?) both for pensions and shorter-term investments. Yield-chasing in conditions of balooning credit equsls asset price bubbles. Bubbles in assets like gold and equities can be tolerated (relatively) painlessly. Financially-driven inflation in assets necessary for life, like agricultural commodities (esp. grain) and shelter, is considerably less tolerable politically, and it's quite right that there have been food riots. Investors need to price in political risk, and that includes the risk of fluctuating yields (c.f. fluctuating rent mentioned by specialsubject) due to people balking at certain rent levels, wage freezes or unemployment levels, defaults.

Councils are supporting families to negotiate with their landlords as we speak. Now that there is a cap on housing benefit, many buy-to-let investors will simply have to drop their prices. Those that don't will lose tenants and have to find others who are prepared to pay. People will only pay what they can afford and so unless the nation is swarming with wealthy professional couples eager to part with their money, the likelihood is that rents will simply come down. Along with that, there may also be a drop in sales prices as BTL investors cut their losses resulting in more housing supply.

It is right that the taxpayer shouldn't pick up the bill for an inflated housing market.

how can you drop prices when the rent barley covers the mortgage as it is, thats not including fees gas certificates etc.

negotiate with me all you like there us only so much I can give.

Agree that house prices are a problem. I'd like to see them drop too (and yes, I am a house owner)

I think that there's a number of things that government could do to help - including encouraging more house building in areas where there's high housing demand, including social housing; reduce VAT on house refurbishments so that it's easier for owners to bring empty houses back into use; putting curbs on buy-to-let.

How can you drop prices when the rent barely covers the mortgage.

A good question. It all goes back to the banks. And the government does not want a mortgage crisis with lots of people in negative equity. And of course it would hurt their banker friends. And might even shock horror affect their bonuses. The tax payer has propped up rents for far too long.

When my parents bought their first house in 1967, a small terraced three story mill workers cottage, it cost two and a half times my father's yearly wage as a university lecturer, he mentioned it when we discussing relative house prices.

The same house when sold last year(according to a search) would be about equal over 15 years salary of a lecturer in the same job.

How can you drop prices when the rent barely covers the mortgage

This goes back to the supply and demand point. If there is no one willing to pay the price then you need to either drop the rent and take a hit on the mortgage, or if you cant affird that in the medium term, sell up, possibly at a loss. There are risks with most investments, which is why you get a return.

I don't hate landlords - not all of them ;) -but you can't have it both ways. The majority charge the most they can get now due to market rates, so you also need to accept the other side of the coin.

YANBU.

I have long thought that the outrageous cost of accomodation in the UK is the source of many of society's ills.