To think buy to let has screwed the housing market

[crunchymint]

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.

yes its all down to the bad landlords (not). the thousands of people moving to this country and the tenants who insist of working the minimum they can in low paid jobs so they qualify for benefits have absolutely nothing to do with it (not). there is nothing stopping my current tenant get off her fat back-side and working longer hours in a better paid job - she just prefers not to and sponging off others by getting housing benefit to subsidise her life-style

The population has increased but the housing stock hasn't and that is deliberate policy between the developers, the councils & the government and it is not an accident there aren't enough houses to go round and they don't care,
cos they are alright jack and none of them are embarrassed that in a time of a housing shortage, they own two homes or more!

I think it is a combination of several things that have pushed up house prices. The biggest being the reduction of houses being built.

I would suggest that Right To Buy had a big impact as well, as it removed a large amount of social housing, thereby directing more people into private rentals which in turn drove up the buy to let figures.

MyDC feminism has nothing to do with it. Women are entitled to go out to work if we want, we don't all want to be dutiful housewife at home with the kids. Great if you do, also great if you want to go out work.

Mortgages only used to be given on 3 times salary of a man and 1.5 times salary of a woman. Women worked too when house prices were lower.

Why would feminism be to blame? It’s capitalism that has led us to needing two wages. It’d be nice if we could live on one wage, but why must it be the man earning it?

I also blame right to buy. There are simply not enough council homes. I used to let out an ex council house that had been bought in the 80s and ended up in the hands of my LL who owned three on the same street. I was paying 1100 in rent on an ex council house, while my neighbours who were still council tenants paid around 400.

I think the problem has been just as much banks giving 100%-in some case more, mortgages and also gving more time salary.
What happens there is that the first wave of people do get a better house than they thought they could afford, which was lovely for them. But then the second wave, people start bidding against each other and by the third wave the sellers were expecting more so put the prices up accordingly.

It's a bit like take the stamp duty out and the people who actually gain are the sellers as the buyers will just have a little bit extra funds to bid with.

Lots of other factors too, but I think buy to let isn't that big a factor.

" the tenants who insist of working the minimum they can in low paid jobs so they qualify for benefits have absolutely nothing to do with it (not)."

Chicken and egg mate.

Maybe if working full-time bought the kind of lifestyle it did even 20 years ago, then it would go back to being the more attractive choice over claiming in work benefits.

No one enjoys working full-time on NMW to pay the whole lot (and then some) over to their landlord just to rent the kind of houses that were selling for £40K not that long along.

You also have to remember that a lot of people end up letting out properties because they can't sell them. It happened to DH and I. We couldn't sell our 1st flat so had to rent it out when we moved to a bigger property when DD was born. We didn't make any money on it. In fact the rent just covered the mortgage and we ended up out of pocket every month due to incidental costs. We finally thought enough was enough and sold it at auction for the exact amount that was left on the mortgage. I dread to think how much money we threw away on that flat. But we need to move again next year as DC2 is due in a few weeks and we couldn't afford a larger mortgage on top of the buy to let mortgage. Not everyone who has a buy to let mortgage has necessarily chosen to go down that path.

It's one of many factors, that have created a perfect storm. Council housing sold off, successive governments ignoring the problems, Councils banned by central government from building social housing and any time there's a hint of house building armies of nimby's protesting it will spoil their view lower the inflated price of their own properties which have become pensions. No government has the balls to take on Tory voters who object on principle to mass house building, because they would be kicked out after one term. Meanwhile commercial and office building construction continues even if the finished properties are left empty shells afterwards (there are 2 massive ones near me) and unscrupulous landlords shove vulnerable people into mho rabbit warrens and charge market rents x 5 flats crammed into one tiny house, all paid for with housing benifits.

I read the other day that in London housing costs now take 79% of the average persons pay. 79%. Even in a capitalist system it makes no sense for one sector to hoover up such a massive proportion of wealth, especially when it's a basic necessity. And I know that London is expensive, but London is often indicative of what will follow in the rest of the country.

Right to buy screwed the housing market.Blaming 'buy to let' is a strategy pushed by politicians so they can complain without having to fix the problem that they caused.
Selling off swathes of council house stock without replacing it created a housing deficit. Then you had housing stock being transferred to housing associations which also impacted on supply and demand and the criteria for being eligible for housing.
Plus you have less refuges/hostels which again pushes people into the private market.
No government has committed to replacing the stock that was taken from public hands and put into private through right to buy. If they did, then the market would re-balance. Since they haven't then people have to look to private LLs or buy from developers instead.

Without a landlord I’d be homeless.

I don't think it's just BTL, but that has certainly been a factor in pushing up prices and pricing out first time buyers. Tax relief on mortgage interest for BTLers, but not for owner occupiers, was grossly unfair and definitely skewed the market.

Changes to the tax regime, cutting interest relief and the automatic wear and tear allowance, plus the extra 3% stamp duty on 2nd and subsequent properties, will I think have a significant effect. An awful lot of landlords are wailing on LL forums that they'll no longer be able to make ends meet, and how unfair it is when they are so nobly providing homes for people who can't afford to buy. They often make it sound as if the properties would just disappear, pouf! - if they didn't own them.
If they can't make ends meet - often because they are over-leveraged - they need to sell up to someone who can, or preferably to an owner occupier.

It started with the selling off of council houses. Thatchers big plan to make everyone an owner occupier. Except that didn’t work. Not everyone wants to own their home. Students, people moving areas for work for example. And we need social housing. Btl fills a need for housing the government sold off as for some bizarre reason didn’t reinvest in easier to maintain housing stock.

Then of course came deregulation at around the same sort of time as cited above. Thus the gap in the market was formed. Btl fills the gap. Who do you think would house these people if btl landlords didn’t exist?

You also forgot the foreign investor. The new elite and super rich driving prices sky high, which has had a massive effect as it filters down. And easy borrowing.

Btl isn’t actually the big factor. It’s an easy governmental target.

Cheap places are still available. I’ve just found places 15 minutes from Birmingham city centre for under £100k and houses in rural Lincolnshire for under £40k

What first time buyers need to realise is that being on the first rung of the ladder doesn’t mean you can afford central heating, double glazing or a new kitchen.

The increase in population has also been a major factor. Understandably adults who move to the U.K. want to buy houses to live in and raise their families. The government should have realised not enough houses were available and planned accordingly - supply and demand. In many areas of the U.K. 2 adults on 40 hours each at minimum wage with a 5 % deposit can buy - if each set of parents gift 3k and the couple have 3k saved (and no huge car loans) they can buy in many areas. 125k loan, £603 a month over 30 years plus service charge. Cheaper then rent where I am and gets them a 2 bed flat.

There are some horrible replies on this thread

PricillaQueenOfTheDesert

would you really want to live in an area with so little infrastructure as "rural Lincolnshire"?

Because in the 1980's people who had substantial capital got good interest on it. Now they get next to nothing so need to invest it somewhere hence buy to let. There's low interest rate and no interest rate. We are in no interest rate zone now more or less for investors. So low interest rates have caused house price rises IMHO.

One of those cheap places is shared ownership, and one is ‘attention investors’ which means the seller is most likely looking for a cash buyer.

A friend of mine has scraped a deposit and is trying to buy at the moment. But keeps losing out on places as cash buyers snap up cheap places.

I purchased my council house back in 2002. Best thing I ever did. Got the full council discount so got that house fairly cheap..

Did it all up, spent a few thousand pounds on it, and sold it in 2013. The sale of that house enabled us to downsize, in a lovely area and greatly reduced our mortgage. The house we now live in was purchased for a lot less than we sold the RTB house for, and we took full advantage of the low interest rates :)

Only 9 houses on my side of the road - 5 privately owned like mine and 4 are BTL's with the most awful tenants in 3 of them!

Earlier this year 9 'new builds' for a housing association were built and, later next year, another 11 will be completed for the same housing association - all of them are split between 'council' tenants, HTB tenants and 'private' renters.

In my small area alone, there have been upwards of over 750 new houses built - so looks like things are looking up for the 1st time buyers in my area, at least.

9 new builds' and 11 to be completed later next year - on my street I meant to say.

I have to agree that Help to Buy has pushed up prices. Only recently one of the major housebuilders announced a 10% increase in prices 'because of increased demand and government (i.e.taxpayer!) support via Help to Buy.' And the CEO of Persimmon recently awarded himself an bonus of well over £100m - how much of that came courtesy of the taxpayer, I wonder?

Besides that, Right to Buy (council homes) is well known to be frequently associated with fraud and dodgy dealing. It's high time it was much more strictly regulated. And I loathe the hypocrisy of Labour politicians who blame it all on Thatcher - they had 10 years to either stop it or more strictly control it and did neither - presumably because they thought it would lose them votes.

Well done on getting the slime out from under their rocks, op.
For those not hard of thinking

• 70 million people. Not enough houses
• everyone wants to be in the south east
• right to buy with no replacement
• nothing else to do with hard earned money that wont get destroyed by high inflation

BTW the majority of rentals are social housing, and they do most of the evictions.