to have upset a friend over her investment decision

[pixienott]

I've a always had a real problem with borrow to let. I've a problem with buying properties to rent outright too in a time when housing is so badly mis-allocated, but I think if it's your own funds, then you make your choice.

But borrowing money to do it is much worse because (in my opinion)

#1 It's a leveraged investment which is regarded as a highly risky and sophisticated strategy only to be used by people who fully understand the risks (i.e. not an unshakeable belief in 'property always goes up'). Most people wouldn't dream of doing with other asset types.

#2 It's just totally questionable in a world of near infinite investment vehicles to pick one so intrinsically tied to people's lives, and to do it by borrowing money and bidding against potential owner occupiers doesn't seem right.

#3 (this one might have been a bit too much - see below) the money is credit money created by a bank - i.e. conjured out of thin air on a promise it will be returned by the fruits of some poor person who may never be able to own their own.

#4 I don't even think it's a good investment financially - most people are relying on capital appreciation, the yields where we would be are very low and the rents are dictated by salaries/housing benefit (aka landlord benefit!).

So a friend of mine is (planning on) doing the former. We'd gone out for a chat and we were discussing pensions. She says her and her DH are going to release some equity and look at putting it down on an investment property. I explained the above, and said that she could look at a self invested pension instead - which wouldn't necessarily have such ethical points but she was adamant that this was the way she wanted to go, and wasn't happy with me questioning it.

I feel bad, but it is how I feel. Was I wrong to bring it up? I just feel so strongly about this.

The problem is that there aren't enough houses. Saying people buying houses to let is ethically wrong is incredibly dubious. (As an example my MIL recently bought a nice family house to rent out. There were hardly any similar properties to rent in her area, and she now has some very thankful tenants.)

The arguments over how sound the investment is, leveraging etc are completely irrelevant to the ethics involved.

I think in this country we have a relatively low proportion of houses being rented (compared to France and Germany for instance). Rent controls would perhaps help (but I can't see that happening) and as I said before, more houses.

There are not enough houses in areas of the country with jobs. There are a lot of empty houses in deprived areas of course and they change over time. My family moved to the NE in the 1800s because there were mining jobs just as I moved to London because the money by then was not in things like mining but things like London law.

If there are core people who do not want ever to work in the UK though I don't see a problem with them being where there are no jobs as that's a sensible swap.

(Yes bitcoin can be a bit dubious)

Apologies, but The Real Asset Co's crypto has had a name change since Skoylsey announced it, it's now called Goldbloc, with each coin having the value of one gram of gold which I think makes it a great investment for when the chickens come home to roost vis-a-vis gold ETFs. There are bullion traders who are making markets based on what people will pay, not what the twice daily fix is. In my experience gold is not available for anything like the current price, yet it's all the gold buyers will pay.

As for bitcoin, there will only ever be 21 million of them, with the last being mined around 2050. As I told somebody today, crypto is the future of democratic money, and the blockchain is the future of secure computing.

So yes, I would recommend gold, especially Goldbloc, and crypto as hedges to other investments, because there are massive bubbles everywhere that are all primed to burst.

Thanks for posting that I sound like a loon blue42, us lefties often get that. Then again I think those who believe in the current economic model are, or they're already rich.

And I agree TheChandler, inheritance tax should be higher, but it ain't a vote winner. Not amongst the self obsessed right whingers (sic).

Feckeggblue, yes, millions of pounds of pension funds were lost in the 2008 crisis.

Lots of links but an e.g. money.usnews.com/money/blogs/planning-to-retire/2008/10/08/retirement-savers-lost-2-trillion-in-the-stock-market

Bit coin is a horrible investment from an ethical standpoint - it's used to launder money and is linked to some horrible stuff-also very volatile.

Actually as a free market libertarian I am not against bitcoin but I don't recommend mumsnetters sink any spare money into that as there have been more than enough cases of your wallet getting lost and cash gone. This is just one from February:
"Digital currency exchange BTER announced that it has lost 7,170 bitcoins, or roughly $1.75 million at press time, in an apparent hack on its cold wallet system. In a statement posted to the China-based exchange's website, the company said that it had shut down its platform in the wake of the attack and that withdrawals for user balances "will be arranged later"."

Buying a property is becoming more attractive if you have spare money to do so over pensions because of all the changes to pensions and the constant raids by the state on them and it's a tangible asset. Of course that makes it visible in terms of the state seizing it and taxing it but still remains a good long term investment for most people.

An awful lot of women on the planet particularly from cultures with dowries seem to like having a lot of gold but you have the problem of keeping it safe. I spoke at a private family office conference (my slot was on private islands as I then had one) which went through all the alternative investments on that day including gold and of course art, but the main thing for most people is to have a balance so you spread risk and have enough cash so that if you lose your job you have the cash to get through the next few months.

In the current global economy, no investment is exactly safe, because governments and central banks of the world are doing their damnedest to get you to spend your disposable income rather than save it. The low interest rates, savers getting hammered and constant talk of deflation is all desperately aimed at getting you to go out and buy the cars and TVs that another poster was talking about on the "do I need to buy a house?" thread. Ironically, the government and central banks feel that the people throwing away their money like this are the "responsible" citizens, and the ones wanting to save and get a return are the irresponsible "greedy" (there is arguably some merit to this argument, but not something to write here) ones.

Why do they want this? So they can put out a nice healthy GDP figure. Why do they need that? So that people keep buying government debt. Why do they need that? To keep interest rates low. That's the vicious circle we are in.

So why not buy or borrow to let? Because it's utterly static - there is no way to pretend you don't own it. A couple of simple tax law changes mean you're right there in the firing line as soon as the government want some money. And our government NEED money. Think of Gordon Brown's pension raid, but many times worse. Better still, BTL is commercial. It's easy to argue that anyone in BTL is doing so with capital that is de facto disposable (or at least available for investment and thus loss) that they can afford, or are prepared to lose. It's a commercial investment - nobody is going to be crying for landlords when they are getting hit with bills that they don't think are fair. It's not liquid - you can't simply sell the day they decide to change the law. If you do, you're going to be competing against many others doing the same thing.

The pension raid was terrible because it hit people who has responsibly saved for their future, and it stole from them. The BTL tax raids, when they come, will be seen as perfectly acceptable because it's a business raid. Landlords who think they will simply pass the costs on to their tenants will find that their tenants are already squeezed to the limit, and can't afford to pay more.

This is all risk taken by a buy to let landlord. Anyone thinking of borrowing to let has a whole bunch of other worries to contend with.

All that is in my opinion, of course, I appreciate none of us have a crystal ball.

I completely agree. Speculation, mindless consumption and devt over sustainability. Public and private. Its destroying society. And yes, no one should shed tears for any commercial operation who didn't assess the risks properly when the time comes for the next bust. And there will be a bust. Demographics and finances. Something will give eventually. Yeah, you can devalue the currency to make your creditors pay, but good luck retaining simultaneously stable social/economic conditions.

The BTL tax raids, when they come, will be seen as perfectly acceptable because it's a business raid
Except for some, BTL is effectively their pension...

Yes, and I completely understand why people who had their pension funds mugged felt the need and desire to do something different. But it doesn't change the fact that BTL is whopping great tax target, and, pension alternative or not, it's a commercial investment which doesn't carry a lot of sympathy from the wider electorate.