to think all buy to let people are just in it to get someone else to work to pay off their mortgage?

[madhurjazz]

I wish people would say it as it is. Buy to let in my mind is just about getting someone else that can't afford a deposit / without a stable job to do all the hard work to pay off the mortgage of someone else. It does feel like a massive step backwards in equality.

Very few actually want to rent, the vast majority are stuck doing so as speculation keeps pushing ownership out of reach.

[ByGaslight]

IMPO no-one who has a mortgage on a property is a ‘homeowner’, they are a prospective homeowner in debt to the lending bank, but the lending bank owns the property by default unless and until the mortgage is fully paid. They can call in the debt, they may change the terms of the debt and where the debt isn’t satisfied, they lender gets to sell the property to recover it.

Buy to let can mean two things: people who acquire property on a large or small scale and rent it out, but they actually own it. This is a long-term feature of British life, people will always need rentals.

What is new (approx. since the 1990s) is the buy to let mortgage, whereby banks lend to preferred customers who have a better credit rating i.e. a better record of acquiring and managing debt, the older you are and the more borrowing you do, the more change you have to build up a ‘good’ credit record.

Banks came to lend BTL mortgages to ‘good’ debtors which helped to push the price of houses up, doubling them in some areas, during the noughties, as houses became a new type of asset, and via the BTL mortgage, it was banks who by default owned the properties.

The 1988 Housing Act removed many of the obstacles to being a landlord, it got rid of long-term tenant security and at the same time rent controls were mainly abandoned.

BTL borrowers, often ‘ordinary’ people, who could not afford to buy a property outright to start a renting business, could get a BTL mortgage with a minimal deposit and many, many were taken out on an interest-only payment, the idea being to get tenants to fulfil the mortgage payments so the landlord ends up with a paid-off asset. They got to have a ‘business’ with few of the risks of other types of business because the law didn’t get round to treating small-scale landlords as businesses, relying on laws formulated for people e.g. taking in lodgers and giving tax breaks on the income from renting.

Sometimes people took out a BTL mortgage because they ‘couldn't sell’ their house so had to rent it instead. With a few exceptions they meant they couldn’t sell their house for the price they wanted for it, or to cover a debt.

So people without the means to buy properties, but with the credit record to borrow the BTL mortgage from the banks secured housing (still owned by the banks until the mortgages are paid off) in their name and were able to rent it, at a higher price than rentals in previous decades (because rents rose in the new market, the bottom line rental in many cases being the amount the landlord needed to pay the mortgage to the bank), to the people who weren’t able to borrow as much to pay inflated house prices but who pay inflated rent instead. Those people being overwhelmingly younger people, people with less secure work or variable incomes, or whose family life broke down, or people who missed out on the profits from the housing boom.

People with these mortgages, especially taken out recently, may well be in trouble in the next few years, because they aren’t funded like good businesses and the breaks which made them viable are now being removed, George Osborne started the process of removing the breaks and public sentiment will probably support more of it.

[user1471439240]

It is over for Borrow To Let. Buy To Let possibly also, as the former collapses capital appreciation on the latter.
Yes, there has been an echo boom in the last months before the penny dropped.
That is understandable, following a 20 year bull market of unimaginable price gains. But over its is. Really will return to housing.
Speculative greed, in many cases disguised with faux altruistic intent has impoverished the upcoming generation of young people.

[Pisssssedofff]

I like to think the younger generation will claw it back, one thing they the boomers cannot buy is their health. I hope the young people charge £200 an hour for the basic human right of having their Arse wiped, just because they can, supply and demand and all that 😉

[mammmamia]

Wow. That's a lovely attitude to life PissssssedOfff.
What about looking at the bigger picture? The social, sexual, gender, equality rights the older generation didn't have or had to fight for?
Casual racism, sexism, homophobia. House or no house I know in which era I'd rather be living my peak years.

[Lweji]

Pisssssedofff

In case you haven't noticed, care of the elderly is expensive, pensions are laughable. That is why people do their best to prepare for retirement. Because some of us know what our parents and grandparents are facing.

[Puzzledandpissedoff]

You're in danger of bringing common sense into it, Lweji

It also raises the issue of folk taking responsibility for themselves wherever possible, instead of relying on others to provide ... a concept which doesn't always go down well

[Pisssssedofff]

Pensions is the problem, you won't get an argument from me there. People are living longer than the pyramid scheme required for it to work.

[Pisssssedofff]

Pensions are, I meant typed too fast