Greed of ‘buy to let’

[LittleLottieChaos]

When did people start to think that they should profit from housing? It all feels incredibly Dickensian. Pees me off when I see housing being listed as buy to let investments rather than ‘here’s a house for a nice young family to live in’. Especially with the market so horribly skewed right now.

It is shocking that people seem to think they have a right to profiteer from those less fortunate by whacking on high rents, that more than cover their mortgages. Legit: you need one house, one house only. Or maybe I’m missing something... or these are genuinely just bad people.

Interested to hear how people justify it? Do you just think, fuck ‘em I want to be rich? Do you not think about the morality?

(I rent but am saving to buy an appropriate house to live in... not to profiteer from)

@GETTINGLIKEMYMOTHER

It’s all too easy to blame Maggie for flogging off council houses, but I doubt that anyone foresaw how house prices were going to soar some time later. I know at least one lifelong Labour voter who was only too delighted to buy the house where she’d lived for 40 years (and still does) at a discount.

Not forgetting that Labour had 13 years in which to abolish the right to buy. But they didn’t - I wonder why? Could it possibly have been because they thought it would lose them votes?

I might also point out that buy to let really took off after Gordon Brown’s raid on pension funds, which made a lot of people want to invest in something safe and tangible, instead, not something that was just ‘on paper’.

Incidentally, council houses were being sold off well before Maggie. A dd bought an ex council house that the former owners had bought in 1971 - for almost exactly a hundredth of what she paid.

Sadly I do blame Thatcher. House rental was at its west well before the labour government was elected.

“The right to buy”: it was a clever strapline selling off the housing stock labour had built because of aspirations rather than reality. Labour didn’t rescind it, that’s true, but most of the stock had long since been sold off at well below market rates. They are now looking to do the same with housing association properties, further reducing the availability of higher quality rentals.

This is a good summary.
www.theguardian.com/society/2015/aug/26/right-to-buy-margaret-thatcher-david-cameron-housing-crisis

@LittleLottieChaos With respect, you are living in a bit of a fantasy world and show no sign of economic understanding.

You suggest low rents- how low?
There will always be someone who cannot afford them.

LL invest to get a return on their investment which is usually comparable to what they would get on the stock market or in other investments.

If someone has £250K to invest, they can choose to buy to let and run it as a business. They might make 10% on their investment each year taking out all the costs they incur.

If the return was less than that owing to your low rent idea, they'd pull out. Invest elsewhere.

So there would be fewer rentals= higher rents (supply and demand.)

Hmm there’s never going to be a right or wrong answer here. My husband and I find ourselves accidental landlords in that we both kept our individual properties we had when we first met and we own our home together, a holiday home and a house we inherited recently.
My husband isn’t currently working so lives off the rental income from him property which is net after tax and mortgage £3000 per month.
We are lucky and I certainly don’t think there is anything unethical about owning a house and renting it out at market rate. He worked hard to buy to buy it in the first place.

So where do you think people who leave home should stay OP? Everyone has to stay with their parents until marriqge/moving in with a partner? Or rent a council house?

What about people moving for work? You have to sell up immediately and buy somewhere new each and every time you change jobs, even if only for 6 - 12 months? Maybe you should be campaigning for stamp duty, to be removed then?

As a young person, without a family to guve me a large deposit, I managed to stay in some of the most expensive areas of my city, with other people to socialise with. It was a great time, and I still managed to buy a property, albeit it was a small one needi g redecoration, not the large 4 bedroom new build some people seem to think is the only thing worth considering for a FTB.

Im not sure that house share would even be possible now, because the hmo registrations and other costs of renting have pushed up rents and that city centre property is now converted into 2 flats and sold for ££££££. Tax rises have also increased rents.

It's local authorities and developers who benefit from this socialist/communist stirring up of hatred of landlords. So many people now have a finger in the pie and it's certainly not landlords.

I don't want to live in crappy state provided housing, I wanted to share with other young people in what is now referred to as an hmo when I started working. As is normal in the rest of Europe. All the countries with rent controls and high state interference in rental properties all have a shortage of rented accommodation and irs all really exiensive, because there are fewer private landlords. If you've never actually lived abroad and don't know what it's like to live in a youth hostel for months because you can't beat the queue of 60 other people to the room thars become available, then don't try to tell people who have done that what it's like.

Instead, get out of your socialist/communist bubble and get a bit more exierience of life before trying to stir up hatred.

You quite likely have an uncle/sister/nephew in the local authority or who runs a business likely to gain from driving current landlord's out of business. Thars the usual story with socialists.

@Ohnomoreno

My sister bought a buy to let because she had a deposit, but didn't earn enough to qualify for a residential mortgage. So she got a buy to let mortgage and rents. She had a DSS tenant but the bank made her raise the rent to have enough "yield". So the DSS tenant had to move out. It's not as simple as saying there are "greedy people".

I didn't know banks did that. It's obviously more complicated than I thought, what a headache for her! Bad luck for the DSS tenant too, sounds quite unfair all round. Still, she will no doubt find another tenant easily enough (she 'lets', the tenant 'rents'.)

I bought a flat as an investment. I actually lose money on it every year as the rental income is less than the mortgage repayments. But, I hope that in the meantime it is appreciating in value. I live with my husband in the house he owned before we met. Marriage laws in the country where we live mean that any property we owned before we married remains exclusively ours. So the flat is also a safety net should our marriage fail.

We plan to buy elsewhere, more expensive, for retirement, so will release the capital from our two properties at that point in time.

I don't think it's selfish, it's investing in property to plan for our future.

I do think there's a problem with what's being built as new.

Like a PP, we live in an area that would really benefit from lots of 1-2 bed homes for FTBs. We've had a huge amount of development in the last five years, two new huge housing estates and three smaller developments plus new schools and sports facilities.

The vast majority are large 3,4 and 5 bed properties, some semi but loads of detached. There's the odd 2 bed in terraces I expect to make up the quota of affordable housing but that's it. I've got Rightmove alerts set up and most of the ones I get sent the houses are 500k plus. They're packed in with postage stamp gardens.

We're in an area that's ideal for commuting to London and Birmingham. So most of these houses have been bought by new people, with large salaries commuting in and out.

Where I grew up, in the same town the estate was built in the late 70s and early 80s. There are loads and loads of 1-2 bed homes on there. I'd say the majority are 3 beds and you have maybe 3/4 4 and 5 beds in each street. The smaller houses rarely come up for sale and when they do, they're snapped up by landlords.

But then what is your average Joe who has money sitting in the bank supposed to do? We actually sold our 1 bed to a (much older than us) family friend before we bought our family home. He's paid off his mortgage, and inherited as both parents had died. There are very few investments out there that offer a decent return unless you're talking huge amounts of money. He used his inheritance to buy our house outright, and rents it out. He's an excellent landlord, he makes a small profit (maybe 2k a year) after paying a management company to run it for him, and he will make money when he sells it. They people renting have been in there seven years - since he bought it, so they must be happy.

Why shouldn't he use that money to have a pot for his retirement? He paid off his own mortgage (originally obtained way back when in the 70s) by working hard all of his life and yes he's lucky to have inherited - although I'm sure he'd rather have his parents - shall we just ban inheritance then, because it's not fair that everyone doesn't get it?

There are always going to be people with more money than others. There are always going to be people with more opportunities in life than others. There are always going to be people who work harder than others. There are always going to be people who work damn hard but still cannot afford to live as they'd like. Life, unfortunately, isn't fair!

I agree with buying buy to let. It is very difficult to incest or grow your savings at the moment. However a large portfolio of properties is pure greed. Also, unfair to the young ones trying to get to the property ladder.

Invest not incest

Anyone who falls outside of that very narrow range of people generally gets rejected by the vast majority of landlords

I think that these are often blanket requirements set by estate agents. If you are able to contact a landlord directly you might find that a lot of them are open to one well behaved pet. Some don't even realise their agent is refusing them

This is true. We were accidental landlords for a time, and I was in the agents office for something while our house was first being marketed to rent.
At the next desk an agent was talking to a potential renter, saying "No, there are no pets allowed in any of our available properties in x area"
I had to quickly point out that mine definitely was available and pet friendly!

If someone has savings which they’ve worked hard for (or an inheritance which their parents worked hard for)?
The banks are not paying any interest so the money is just sitting there, doing nothing and depreciating over time. Buying a house and renting it out is probably the best way to get your money to work for you right now. What else would you recommend people do with their savings? A lot of people have no pension to speak of so need to make their savings work for them.

'JinglingHellsBells', I get what you mean about low rents and 'how low'. I know what i want from my rental property is to have mortgage and maintenance expenses covered, plus a bit more. That seems reasonable enough to me, I've no wish to rip anyone off but obviously I don't want the flat to cost me anything.

My nephew has no complaints about the house that he rents in a greater London borough; I doubt his landlords are living the high life on what he pays them (it's their only property apart from where they live), but hopefully it makes them a little extra money, much needed during the pandemic, especially for those self employed. He in turn lets a flat, like the one I have, to a friend who is extremely happy to live there.

@blueangel19

Invest not incest

I agree in the main OP.

I’m currently selling our house. It’s a classic FTB type - small and cheap! - but a lot of the interest was from investors. From 200 miles away. Every FTB that viewed (three of them) said that most of the time they couldn’t even view a house as it had been snapped up hours after being listed, and I have no doubt it was cash investors.

For reference, my mortgage costs me £250pcm. If I wanted to rent a similar house in the area, because most are student lets and therefore let by the room, I’d have to pay £700pcm.

Obviously there is a need for rent. But the market at the moment is booming and for the most part, investors are reaping all the benefits and hard working people that have saved diligently are being left high and dry and will be priced out when prices increase again.

There should definitely be a cap on BTL, and IMO investors from Hong Kong should not be allowed to buy up all available property in any given area - which is what is happening here.

@LemonRoses Sadly I do blame Thatcher.

How about blaming the politicians during the last 31 years since her?

I think 31 years is enough time for other politicians to correct the situation, don't you? Including 13 years of Labour?

@Blacksheepcat

If someone has savings which they’ve worked hard for (or an inheritance which their parents worked hard for)? The banks are not paying any interest so the money is just sitting there, doing nothing and depreciating over time. Buying a house and renting it out is probably the best way to get your money to work for you right now. What else would you recommend people do with their savings? A lot of people have no pension to speak of so need to make their savings work for them.

This is so true. I know literally dozens of people who've reluctantly become buy to let landlords simply because there's nowhere else to invest their money and they need it to be invested for their future retirement etc.

Can I just also point out what happens in an over-regulated market?

I live in Scotland, and have a property in the city of Aberdeen which I've been trying to sell for several years. I can't, because the market has crashed there, more so in some areas than others. There's been so many job losses due to the downturn in the oil industry, and the problem has been exacerbated by the inexplicable building of tens of thousands of new builds on the city outskirts.

So you can now buy one bedroom city centre flats for less than 50k. You can buy 4 and 5 bedroom flats for 125k. Prices have halved in the last 5 years in the city centre. Even so, no one wants them, because its harder to rent them out as well, other than to tenants receiving benefits, so less people want to live in the city centre. Lots of businesses have closed too, and an entire indoor shopping centre has gone into receivership, so there's less and less facilities for city centre dwellers.

Have rents become lower? Only slightly, because in Scotland, there are so many licenses, permits, expensive compulsory training courses, annual checks, fire equipment provision (emergency lighting, mains operated smoke alarms with battery back up, fire extiguishers and blankets needing checked annually and reviewed every 3 years, self closing doors, fire action plans, monthly smoke alarm tests, fireproof letterboxes, and so on) that it's not possible to even break even unless the rent is fairly high, and those on benefits are the most likely to be able to pay those rents for what is now mostly a fairly undesirable inner city centre.

Do I rent my property out while it's empty? Do I heck! It's not worth it financially for the rent id get, the hassle of dealing with a tenant and the hassle and expense of all the annual checks, plus the risk of damage or even just wear and tear. So it sits empty, on an interest only mortgage that costs me only slightly more per month than the damned council tax I have to pay.

It makes a loss, but it's still less risky and less hassle than renting it out in the over regulated, over taxed rental market in Scotland now. I can't sell it, even though I've reduced the asking price by 30% because I need to sell it for enough to cover the mortgage, although it's now on at 20k less than I paid for it 9 years ago. It's just cheaper to let it sit empty and check it occasionally. There are other properties in the same development which are the same, including the one next door.

So I guess thats what you want to achieve OP. No landlord here, just an empty property and me paying council tax for almost nothing in return (it's even in a private road with private rubbish collection and grass cutting). I would say this is what happens when the state interferes too much with the private sector, which is fairly self regulating in terms of rent, and then cannot respond to market changes and fluctuations, because the state isn't flexible or responsive.

We will never resolve these issues to the satisfaction of both sides. On the one side some want all property in public ownership as in communist Russian days - no one owns anything. The FLDS group in the US even required people to send regular lists of all possessions such as hair clips as all property was held in common. The might be the ideal of Jesus Christ, Karl Marx and North Korea but the West tends to have more freedoms for people to own things.

I regard the provision of good quality housing to tenants (we will always have tenants and many do not want to buy or are young and moving around) as a moral good. Landlords with mortgages are now taxed on profits they do not make and plenty have sold up. In other cases the rent equals the cost even not allowing for the mortgage and sometimes house prices go down (as we found in the 1990s).

Many landlords are also tenants or only have one property.

On rents in central London they are falling like a stone due to covid and working from home - the FT had an article yesterday about it - "New lease of life: young renters lured back to the heart of London "

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"Becky, 28, who only wanted to give her first name, has just relocated from Clapham to a two-bedroom flat in Soho costing £1,408 a month; prior to Covid, it let for £2,383. The property has access to a communal garden and is near the restaurants and shops that have just started to open up on Carnaby Street, while she can walk to many parts of central London within half an hour.

Mariana Santos, 23, an intern at a communications company, was pleasantly surprised she could afford to live in a two-bedroom flat near Hyde Park with a friend. Their new home costs a total of £1,680 a month — before Covid, it let for more than £2,400. "

A rent cap would help when people in above the average wage job cannot rent a house or need top ups, something is wrong.
Also landlords have put up the prices of houses so many who want to buy find it out of reach
Also goverment including all previous ones to help fund more social housing , too easy to blame maggie thatcher for selling iff houses 30 off years ago when we have had 30 years to replace them and with better quality housing, think how many could of been built in that time,

Buy to let shouldn't exist in my opinion. If you can't afford to buy your second, third etc...home outright then you shouldn't be allowed to borrow and make a profit.

Oh FGS, not everyone wants to buy! Renting works perfectly well for many people, the attack on landlords is so tedious and illogical.

@RickiTarr again Thatcher has not been in power for over 30 years why have successive goverments not stopped it sooner and it was under labour that the buy to let really seemed to boom

Not all landlords make a profit.
We make a loss every month but are in it for the long haul as my rental is my security.
Our tenants have everything they need as soon as they ask as I care about my property.
Please don’t tar everyone with the same brush.

I don’t have a problem with local and responsible buy to let. There are no final salary pension scheme left and people do need to be able to invest. The government have already put in place tax disincentives for buy to lets for individuals (cannot deduct mortgage interest, capital gains taxes have increased etc).
The real problem I have is with foreign investors able to purchase (I am not convinced it is all clean money either) and then not pay taxes like capital gains taxes locally because they are resident abroad. We really need to crack down on foreign ownership, that is the main problem. There are far too many empty houses. There needs to be a penalty for that. For example, in Switzerland you pay wealth tax on property owned there plus an own usage fee plus you cannot actually buy in many places if you are a foreigner. We have all these property companies selling to foreign investors constantly who then can leave their property empty and just pay council tax.

I am keeping the records for the houses each of my two sons lets out. So far the rent is less than the costs of repairs, agents etc as is common with many landlords and if the property values also go down in a sense you are providing a charitable service to the less well off (or in my sons' case to people who are better off than they are).