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.

But to let mortgages + lack of council housing + housing benefit that seemingly pays whatever a landlord asks for = perfect storm.

Previously market forces controlled house prices and rents. Landlords and house owners could only charge what people could afford. If councils are prepared to write open cheques then there is no limit.

I don't think HB has helped. It just means the states subsidises extortionate rents. So rents are not market value. I'd like to see higher earners not being allowed to remain in council housing. They should buy their own house and free the house for a more needy family. But if there aren't enough houses to go round then in a way it doesn't matter if they're rented or bought. There aren't enough. Also there are a lot more single people buying their own homes these days. So that doesn't help in the long run.

I think it's a combination of BTL, foreign investors, reckless mortgage lending and right to buy. Right to buy is a travesty in my opinion.

Special subject has nailed it, though I'd also add foreign investors buying to leave.

Im of tye teneration who bought 10-15 years ago. We were offered a massive amount- 4 times joint salary.
I know people who were offered 110% mortgages.
Combined with steadily dropping interest rates, people have been borrowing more and more.

I'd say easy access to loans are as much to blame as bit (accidental landlord here, but only own one property in total - we just don't live in it at the moment).

I agree with you OP. Things are ridiculous now - the traditional first-time-buyer properties round here are all far too expensive for anyone trying to embark on the first rung of the property ladder. Anything coming on the market is gone in a flash as they are really few and far between.
Although there are a lot of small houses, cottages and flats locally, most of them are already owned by the buy-to-let brigade. The rental on them is higher than what a first-time buyer would pay if they took out a mortgage on the same property so they are stuck. They have to rent, and because renting is so expensive, they can't afford to save for a decent deposit. It's sickening.

To the poster complaining about their tenant being subsidised by the tax payer. Don't you mean to say the taxpayer is paying your mortgage/pension fund, which is nice of us. If you object to this, don't accept tenants on housing benefit.

Are you aware of the argument that RTB discount is often only relative, e.g. if your house is valued at 100k and you get a 35% discount, but housing shortages have caused an 100% increase in prices you are paying more.

I think the shameful use of the Right To Buy monies caused it, if not RTB as a whole.

There were always landlords, but the plethora of council housing kept their rent levels in check. They could only attract people who didn't want council housing, who were waiting on council housing (short waits usually) or who were happy to pay more for bigger/fancier housing.

Landlords replacing council landlords meant that there was no large lower cost rent which meant private landlords could put their rents up without losing their potential tenants. This is turn made houses more valuable investments and pushed up selling prices.

Where I live there has been a huge investment recently in social housing by a big housing association. Private rents have stopped increasing and houses are selling for slightly less, I think that will continue as this HA build another 80 houses and flats next year.

And housing benefit doesn't pay anything it is asked.

Remember, mn landlords - it is considered immoral to have rent paid by benefits as that means ' the taxpayer is paying your mortgage'. So the obvious way to make mn happy is never to take tenants on benefits.

Logic is a bitch, isn't it?

But to let mortgages cost more for the property owner than a usual mortgage, so in the past landlords had cheaper mortgages. BTL hasn't increased the number of landlords- quite the contrary. It's not the problem it's actually part of an attempted solution.

YABU.

There's a lot of jealousy on MN. They think each desperate family are well meaning, but they are not. There are tenants who do not take care of the property, who don't report faults, fail to pay their rent on time, benefit for the law being on their side. Landlords take a risk every time they take on new tenants.

Oh, and many people seem to have forgotten lifetime tenancies which social housing tenants enjoy, and the right to pass the home to their next of kin too, means little housing becomes available.

Lets just talk about the negative side of landlords and RTB scheme.

No social housing tenants can not pass on tenancies to the next of kin. They can pass on tenancies to people who live there, and then only once. So my dad who is on the rent book will be able to pass on the tenancy to my mum who has lived there for 37 years. They won't be able to pass it on to me as I have not lived there for many years.

griefleaves - i cant accept tenants on housing benefits its against our mortgage agreement. i would dearly love to get rid of her, alas she has other ideas. my argument was against people who have no intention of looking after themselves and sponge off others - in her case her ex partner and the taxpaying public. And that people who cant be bothered to apply themselves shouldnt expect to own their own properties

Gosh when were you young? (If it's not a rude question ) It sounds lovely.

BTL is, of course, a parasitic canker.

I think you've over simplified

Yes prices drop to allow first time buyers - then someone had the idea of selling council properties, then creating first time buyer homes (small new builds) then flats, from disused warehouses, then came the house share scheme, now we have could houses being sub let, people in over crowed accommodation, people in BandB and homelessness-

What will they do next? I'm thinking small self contained pods, kettle microwave, bed.

Each prolong ip the market with first time buyers, each effectively reducing the value of standard homes.

I am mid 50s

And that people who cant be bothered to apply themselves shouldnt expect to own their own properties

It's lazy stereotypes like that reinforce the revived belief in the concept of a "deserving poor" back from the Victorian era, right up there with slums, which are also making a comeback (temporary B&B accommodation and market rent housing riddled with mould for people who can only afford it with HB)

It's no longer really a question of "applying yourself" when deposits are so far above the reach what people on an average, and not even minimum wage can afford. A whole generation will be effectively priced out of housing, bar those who can inherit, which will dwindle due to at least 3rd of families loosing their homes to fund their care. This will also have an effect on the birth rate as those who have spent most of their 20', 30's and probably now 40's "applying themselves" to get onto the first rung of the housing ladder.

So tempting to slate the no doubt far and few between housing benefit scroungers who sadly do exist, but I won't. I'm told there are very few cyclical families of multiple generations who actually do this.

I think you're oversimplifying massively, OP. The rent in my area is over £1000 for an average 2 bed terraced house which would sell for £320 000. 20 minutes up the road, it's £800 and the average sale price for a 2 bed terraced is currently £200 000. Two European families I know live in this area. Both adults in each house work, but there's no way they could afford to buy. Where should they live? If there were no rental properties, where would they go?

I don't think I'm unusual in that I moved from a far flung city to near London and started off renting. There was no way to buy at the beginning of my career.

but there's no way they could afford to buy. Where should they live?

That's what the OP is trying to say! You should on an avaerage salary X 3 be able to buy some decent property

If you want to look at London, look at the overseas buyers who are investing in a pension, without ever renting out the property - these are making London unaffordable.

Yanbu.

It is intentional.

Let's waste a few electrons arguing with stupid.

Food is sold at a profit.
Nurses, teachers, doctors work for money.
Houses aren't free if you own them. They aren't free if a social landlord owns them.
Water costs money.
Education isn't free.

All these are essentials. So why is all the hate spewed at private landlords only?

Someone will always be richer than you. Or me. Learn to cope, you have left the playground.

Buy to leave should be stopped. But it is London and it so terribly important to attract money. Unproductive money.

Someone will always be richer than you. Or me. Learn to cope, you have left the playground.

I think the point is that the market may be distorted.