To not be outraged by people 'taking advantage of' Right to Buy?

[WeBuiltThisBuffetOnSausageRoll]

www.bbc.co.uk/news/uk-47443183

This article is about criticism of people making a profit with Right to Buy. It says that 140 people in GB made a collective profit of £3m by buying and selling their houses in the space of one month, including a man in Solihull who bought for £8K and sold for £285K just over a week later.

Firstly, the 'profits' amount to an average of under £22K each, so hardly a vast fortune.

Secondly, unless I'm mistaken, the idea of RtB is to take into account all of the rent that the buyer has already previously paid - that's why buyers get a very generous discount on the market value, so a 'profit' is clearly built into the system as a fundamental principal.

Thirdly, the people have to live somewhere, so it's not like they can just pocket the cash and continue as they were - in order to sell the house, they must vacate it, meaning that they have to buy somewhere else to live (or pay a much larger private rent, which would rather defeat the purpose of their selling in the first place). Considering that ex-council/HA houses and areas tend to sell for less on average than houses in areas that have always been privately owned, buying a different house with the proceeds is likely to leave them worse off - unless they seriously downsize - maybe their children have now grown up and left home - which means that a desperately-needed larger family house is being released into the system.

If RtB sale prices are calculated to take account of rent already paid over the years, then the buyer will, on paper, have likely made a handsome profit. What difference does it make if they remain living in a house for which they paid a knock-down price for another 20 years or if they sell it straightaway and buy a different house which they are then able to buy mostly with the proceeds of their generous 'discount'?

Am I missing something here?

And who is going to buy them? The cash strapped councils? I don't think you are quite getting the point. They don't have any money.

Resources are shit. So you think the best solution is to sell what little they have? It's that kind of thinking that keeps us in this mess.*

Why are councils cash strapped?

We change policy to dissuade uk property being used as a tax haven, to dissuade buy to let etc. Govt policy didn't always encourage these.

I don't think you quite get the point.

Why shouldn't private landlords be 'penalised? Why should it be the poor penalised yet again?

Why shouldn't private landlords be 'penalised?

Surely that's obvious? If private rental isn't profitable, people won't do it. Where do people live then, or in this Utopia do houses now cost £100 or so because there are no evil landlords?

(And no, I'm not one - I'm just bemused that people think businesses would operate as charities.)

If being a landlord becomes an unattractive investment then landlords will sell their rental property. That property won't cease to exist.

Yes, obviously, and that may overall lower the price of property on the market. That doesn't mean that someone on a lower income will have the means to buy it, or be able to obtain the mortgage to do so, though.

Houses aren't anything like food. A home should not be temporary but stock should be replaced.

Yes and if being a landlord isn’t attractive who will buy, renovate and provide suitable housing. Not those who aren’t in a position to get a mortgage. Think poor credit rating, no savings etc.

I’m not complaining about be a landlord, that’s up to me and it’s not a permanent state if it doesn’t suit me. I’m merely saying that forcing the sale of private rental stock isn’t necessarily a solution.

Never seen a rtb scheme where you can sell on in less than 3 years. Most are 5 years.
I don't think rtb is correct anyway. If the money were ringfenced to provide new homes for people in need, maybe.

I also don't blame individuals - why wouldn't you buy a house at a huge discount that you know will appreciate in value. It's daft not to.

However, what does outrage me is driving through council house estates where there are lots of "To Let" signs and you know the rent is way more than any mortgage. There are so many people who just can't get a deposit together and they are forced to rent.That's the group who suffer from RTB.

Thankfully, the Scottish Government pulled it a few years back and committed to new council house building.

You can sell whenever you want, you simply have to pay back the discount on a sliding scale depending on when in the 5 years you sell.

No one thing is a solution to the housing crisis and growing inequality in this country. Many things need to change. People treating houses as an investment was much less common a few decades ago. It can be again.

My mum works with a woman who made £2m on a house.
Could be my ex MIL, she bought her council house with a 0% mortgage in a now-fashionable area of Kensington. What amazes me is that five years later she was back to another council house and on welfare again.

@OllyBJolly

The rent has to be more than a mortgage to make it viable.
Insurance, repairs, income tax (your rental income is taxable). When the boiler breaks or the fence blows down and needs £500 you call the landlord! If the landlord is in deficit then where does the money for the above come from?

In my ideal world, social housing wouldn't exist.

I'd like to see a level playing field in which all renters have the same conditions.

If private renting is shit, for example due to lack of security, then make it better for everyone by making improvements in the law.

If housing benefit needs to be higher to pay private rents, so be it. Social housing isn't actually cheaper to provide, it just looks it because all the costs and benefits aren't visible in the same way.

If part-time landlords are shit, encourage institutions and large investment funds to do it. (Pension funds have traditionally been banned from investing in it, not sure if that's still true. To be fair, even without looking, I have recently come an investment fund that was specifically set up to provide housing for rental.)

So if x is working 9-5 for minimum wage and y is working 9-5 for 50-70k a year and both put in the same amount of effort a day, does x have the right to bellyache about y's wage and actively try and get it reduced?

It would seem they are in those positions because other factors are involved. Perhaps you need to look at the whole picture, starting with the guidelines of new buildings where there is a percentage of all new builds allocated for social housing. The housing crisis is down to over population and more and more people requiring housing. Including all of those who we actively encourage to leave domestic abuse.

There are many reasons people rely on the council for housing and you need to be a dire situation for them to help (which you have to rigorously prove) I hope you don't ever have to find yourself in any of these positions.
If they had help from anyone else in their lives they wouldn't be entitled to council accommodation, and before you get it, you go through some hellish experiences.

Yes RTB is a huge advantage if any of the tenants can sort out their life to afford it. I can guarantee it won't be achieved solely on benefit money.

Even so, you'll likely be buying a flat or house in a council area, and are so lucky to have neighbours who play loud music, unkempt homes and gardens with grass up to your shoulder, a two piece suite and a fridge in the front garden with a load of broken/used kids toys and bountiful amounts of litter floating about (worst case scenario but frequently witnessed) and a lot of antisocial behaviour to boot.

In short, people who receive help from the council DO financially have it easier, but they PAY a very high price in many other ways, including how tolerant they are forced to be.

It's time the RTB policy was abolished, it causes huge difficulties for local councils, especially in areas with high property prices. Things have changed so much since that came in 40 years ago, Britain really is a completely different place now and that policy needs a major rethink. There simply isn't the land to build on half the time. Our small town is at the point now where there's very little building land left

The only way to make housing 'fair' is for the government to take all property and reallocate all inhabitants appropriately.

If your kids have left home, back to a one bed flat etc.

Housing isn't fair full stop. People born in the generation 1920's/1930's could easily afford a decent house on an average wage within 2 years. Why aren't you complaining about this rather than aiming your unhappiness at a majority of people to whom the discount is irrelevant because they'll never even dream to afford to buy the property discount or not?

Even if they do, they'll have had to work from nothing roughly £3,900 pa if on JSA to be in a position to buy, that is money they have to live on, rent covered, but that has to cover all other living expenses.

And for those that think "social housing shouldn't exist" the view from your ego must be breathtaking!

Picture a child, poor background,16, just left school. Mother kicks them out as child benefit stopped and overcrowded. No one else despite the child asking can or will put them up.
They look for somewhere to rent but need references, a months deposit rent and a month upfront...GL LOL.

How long do you think it would take for them to get and job and save that amount with no help?

There are so many other cases. NO ONE is immune, it's amazing if you speak to people how easy it is to fall from a great height, you're only one, maybe two unexpected disasters away from the uncontrollable downward spiral that leads to poverty & homelessness.

The real location of assets is arguably not fair as it doesn’t allow anyone the chance of betterment. Ie there’d be no incentive to train to become a professional if you’re only going to be stripped of your assets.

HTB is a complete mockery and has only pushed house prices up. I’d like to have seen HTB across the whole of the market and not just new builds where the price is already massively inflated in comparison to the rest of the market.

*reallocation

The rent has to be more than a mortgage to make it viable

My point is that social housing was designed to be a universal, affordable housing choice. People who could afford to buy, usually did. Housing inflation has put paid to that. I bought my first flat aged 21 with a 100% mortgage which was 3 x my salary £6k - long time ago! That option no longer exists. So for most people, private renting is their only choice.

But why should renters be paying someone else's mortgage? Don't you see how fucked up that is? People who don't have the wherewithal to secure a home of their own get ripped off funding someone else's second or third house?

I do get a bit outraged at the amateur BTL market where people buy property for "investment" and spend as little on it as possible, often neglecting their responsibilities as a landlord. There are some good landlords, but in many cases it's exploitation of vulnerable people with few options.

I'd like to see RTB abolished.

Now that the maximum discount has been capped, it's not the massive bargain it used to be, at least in areas where property prices are high.

I think the cap is around £70k. I know this is still a massive amount of money, but in an area where the cheapest house is still around £350k, you'd still need a good income (way above the local average) to raise a mortgage for the rest.

Could be my ex MIL, she bought her council house with a 0% mortgage in a now-fashionable area of Kensington.

Someone I know bought a flat round the corner from Holland Park for £8k around 1980-81.

They'd been allocated a basement flat under the GLC's short-life housing scheme (they gave short leases on properties that had been bought for development or road building schemes, and rented them to young, child-free people because they needed extensive refurbishment).

Some years later, the scheme it had been bought for was then abandoned and the licence to occupy was switched to a council tenancy. The whole period of their occupation counted for the discount though, and it was dirt cheap because of the condition.

The flat was amazing, still had its moulded ceilings, deep skirtings and internal shutters, and French doors opening on to a decent sized garden. My friend was a carpenter and renovated it beautifully, put in a handbuilt kitchen and everything.

I often wonder how much that flat would be worth now.

I think RTB is a terrible idea. The notion that because you are housed by the council you can buy your house at a huge discount is ridiculous. Those in privately rented houses don’t get this benefit.

Imagine the screams if someone suggested extending RTB to the private sector.

The worst things about rtb are that Thatcher forbade councils from using the money to build new council housing and that whenever thetmy are sold on they usually end up in the hands of private landlords who get a relatively cheap property so the property is again occupied by renters but at a higher rate than their neighbours and with no security.

Yay capitalism.

@OllyBJolly
Because why else would you do it?
That’s how the entire economy is ran. You have a car on PCP, you’ll never own it, you just hire it.
You go to work to profit for your employer, they benefit more than you from your employment else they wouldn’t do it.
I could go on, but essentially if you’re going to provide a service you’re not going to do it at a personal cost. Else that’s charity. Charity doesn’t pay the bills!