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)

I own a rental property as my pension. Not everyone has access to pension schemes where there employer will put in a generous amount for them.

My tenant is retired with a cat. She sold her house after she was widowed and wanted to move to be close to her family. I asked her if she was looking to buy somewhere in the future and she said no as she doesn’t want to be responsible for the upkeep of her house and likes knowing it will be maintained by me.

I am currently a landlord with just one property and I have no intention of apologising for that. My tenant, who prefers to rent, is provided with a nice,warm, safe, comfortable home at a reasonable rent. He is just as entitled to a home as an owner occupier is. It's all very well and good saying rental properties should never be privately owned but if it was left to social housing there could never be enough built to satisfy demand. I put my savings into a BTL because that way I get a 5% return on my investment instead of .5% if I left it in a savings account. With interest from a savings account I would be paying 12.35% of a very modest income in Council Tax but by investing in BTL I pay 8.65% so sorry, I'm not going to be lectured to about unfairness. And I also paid 3% more in SDLT than a homeowner would have paid. And as for rents being high, surely they follow house prices. And do people really believe that BTL is the only thing that has pushed up house prices? Oh please. People in the UK have a death wish about house prices, the greed of owner occupiers is every bit as much to blame - not to mention Govt schemes to help people pay prices they can't really afford. I have every sympathy with young people who can't afford to buy a house but it isn't all the fault of landlords. And as for making profits - supermarkets make profits from selling food, should they be nationalised?

How do people justify this ?

The same way they justify using Amazon and Google.
The same way they justify voting Tories etc....

Basically people do a BTL as a pension, an investment etc... calling it greedy capitalism is forgetting that greedy capitalism takes many forms and that we are, somehow, complicit in keeping it up

It’s also a way to blame small investors for daring creating something for themselves, within a crap system tbf, whilst completely ignoring the ROOT CAUSE (and supporting it)

@vivainsomnia It’s not about having the hang of it. The government has changed the rules and are now taxing heavily on letting. They have introduced new costly requirements almost every year. They are making it harder and harder to evict bad tenants. They have also made it more costly to sell on, so sadly, for some landlords, they are in a catch 22 whereas whatever they do, they are set to lose out.

My heart bleeds. The poor, poor things.

I was actually taking the piss out of @Xenia who was outdoing herself yet again with her claim that her sons are actually performing a charitable act by being landlords. But don't worry about that.

I can support it for another family member who then pays you rent, such as when they are at university. I can support letting out somewhere if your work takes you to a new place and you wish to return at some point, say at retirement.

However, in general, no, though my first target would be to end second homes.

@Whitney168, no I’ve never rented a holiday cottage. Local economies are better supported by staying hotels, caravans, chalets, tents and I’ve stayed in all of those.

Very good posts on this page.

@LadyWhistledownsQuill

For those claiming that they have their buy-to-let so as not to be a burden on the state, you are literally shifting that whole burden onto your tenants.

And it's a complete fucking irony when those tenants have to claim housing benefit to pay the landlord's high rents, who then kids themselves that they're not a burden on the state.

And when all these 4 million renters “retire”Imagine the size of the housing benefit bill.

Get cross with the system, not the individuals working it to there advantage.

In the 1970s we had a surplus of council housing and wealth inequality was at it's lowest. After the wars there was a concerted effort to reduce inequality and ensure everyone had a decent standard of living.

Now all those houses have been sold off, a massive number are being rented privately, many of those the state was subsidising with housing benefits (is it all UC now, I've lost track). Direct transfer of wealth from collective to private.
Population has grown, due to increased life expectancy and migration and housing hasn't been built for working class people.

We have had rising inequality since 1979, under all governments, and as a society seem to have adopted Victorian values, happy to have people on low wages and insecure employment. Happy to see council budgets cut so far they can barely afford statutory services, libraries closed, parks not maintained, leisure facilities privatised.

People will do whatever they can to make life more comfortable for their families. We need government to curtail behaviour that benefits a few at the expense of many.

NRTFT, but I think you are aiming at a symptom, not the root cause. Prices are high and houses are hard to buy because demand exceeds supply. If you had ample supply you wouldn't be worried about BTL.

www.investopedia.com/ask/answers/040215/how-does-law-supply-and-demand-affect-housing-market.asp

The Japanese solved this problem by encouraging new residential building.

www.vox.com/2016/8/8/12390048/san-francisco-housing-costs-tokyo

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.

There are many varied reasons that people buy to let, some out of greed but not all!

I know someone who has a buy to let because they work in an industry where they have no pension. They don't "profiteer" they rent it out at market value which actually doesn't cover the mortgage, the person tops it up themselves.

But at some point in the future the house will be sold so that they have a pension pot to live off when they retire because state pension let's face it, it's laughable!

I don't see how this is a bad thing?

@vivainsomnia

Social housing don’t want to deal with a lot of the problems that come with being a landlord. The manage,net of it all is adding to the costs. They much rather let private landlords deal with non payment of rent, problems with neighbours, maintenance and the rest.

You're not kidding! I've just had a call from a landlord who has an HMO. She was persuaded to keep it and to let the council house peolpe there temporarily rather than do it up and make it a student let.

She now has a tenant she was initially unaware of, the council moved him in when he came out of prison. He has not paid rent for 7 months, has kicked in door to the empty rooms, wrecked much of the property, and his PO won't send him back to rpsion despite the fact that he is reoffending, drugs, stealing, assaults etc.

She is thousands of pounds down in damages, more in rent. She served S21 months ago, has 2 more to wait for the 6 months to be up and then another 6+months to get it to court, maybe to bailiffs by then. And the council just shrgged their shoulders, official letter saying that they don't interfere between tenants and landlords in a private let!

She is in her late 70s and wants to know if she can sue the council for their actions. Her solicitor has suggested that the concil too advantage of a vulnerable woman, something she doesn't want to concede!

@Tallybeebloom- that is sad re the Italian town you mention. However, again these situations can be prevented by effective local or central government laws/permits. For example, in certain Communes in Switzerland only eg 15/20 per cent of properties can be sold to foreign investors or used as holiday lets. You need a permit before you can buy if you are a foreigner. There can be different tax treatment for you etc. Yet here we have a situation where government has constantly propped up house prices in an artificial manner and allowed unlimited foreign investment. We do have a problem with the housing market but it can be addressed. Rules for U.K. landlords have already changed to their detriment, just as 45 per cent rate tax payers do not get a proper tax free pension allowance anymore. Where we urgently need to crack down on is managing foreign investors in our property market. I am sure the government is well aware of this but digging their head in the sand as usual. Reminds me of outsiders still being able to fly into U.K. during pandemic but it being illegal for most of us to leave the U.K. Also if you do away with pensions for the richest in your own country, then I guess they will still buy property either here (or increasingly abroad). What we actually need is large responsible private sector property companies who rent out decent housing at stable prices (and individuals can invest indirectly in those property companies).

This debate is just so ridiculously polarised.

I am a landlord. My buy to let house is my pension. In 15 years of renting it I have rented to

A young Polish couple who had just arrived, had no credit history and both in minimum wage jobs.

A single woman on an IVA going through a divorce.

A couple who had poor credit and needed a guarantor..

A couple in their 30's who were doing minimum wage jobs with a young child who had a bad credit rating. They didn't even want to buy as they planned to move away when their child finished primary school.

A woman who had been made bankrupt recently and who planned to move to Spain in the next 5 years when she had saved up enough.

Current tenants are 3 students, one a student teacher working as a teaching assistant while she trains. All very young, under 23. I have just paid £20k for a new bathroom and kitchen for them. They don't want to buy anywhere yet.

None of my tenants has either wanted to buy or had the deposit to buy or the credit rating to buy.

Where do you suggest they live instead?

I rented until I was 32. I didn't have the deposit to buy as I was too busy establishing my career and enjoying myself to save up for one!

The Japanese solved this problem by encouraging new residential building. Aye! And that's workng so well here, isn;t it?

Brown sites that will take some cleaning and prep? Not on your nelly!
Proper search and compulsory purchase of abandoned houses? Nah!
Proper, long term planning for areas that have need as well as propsective sites? Nope!

Greenfield sites? Yay!
Areas that have road lnks to places that have need? OK!
Analysis of the areas infrastucture? No way!

And I am not NIMBYing. I just live in a rural area with geographically constricted infrastructure that has been designated as a great area to build to feed Bristol (45 miles away) and further!

LadyWhistledownsQuill

For those claiming that they have their buy-to-let so as not to be a burden on the state, you are literally shifting that whole burden onto your tenants.

And it's a complete fucking irony when those tenants have to claim housing benefit to pay the landlord's high rents, who then kids themselves that they're not a burden on the state.*

Plenty of people who rent work for their living. You are talking about extreme situations here. Also we have discussed that not all rents are high.

If I did not have my own house I would be able to afford to rent a place without going on benefits and I am far from rich.

My children and my nephew rent at the moment, they will buy eventually but it suits them in many ways to rent now; they are not on benefits. My nephew has managed despite being self employed. They have decent places to live without the responsibility of upkeep and the rents are affordable.

It's the same for their friends who haven't yet bought somewhere.

These are average, ordinary people, not wealthy. The landlords are not wealthy either.

@Iwonder08

It is not a greed, it is an investment decision. Based on this post I think you should try to move to a different more regimented country where people don't have a choice or money to do these thiggs. Try North Korea

There is a middle ground between authoritarian communism (N Korea) and "burn all regulations" extreme free market capitalism designed solely for the very rich (Tory scum). It's somewhere slightly to left of centre.

A lot of people need to rent not buy. The housing market should have a certain amount of properties to let and properties to buy. As a lot of posters have pointed out, there are phases in everyone's life, where renting is preferable (students, starting career, got divorced etc) but also where people go to work on a short term contract, or ex pats from abroad, here to work for a year or so. The idea that rentals somehow take properties out of the housing market is absurd, the people who rent now, would have to buy a house otherwise.

@vivainsomnia

There’s a massive misconception about landlords with them being all put into the same category that is called greed.

Landlords come in all form and shape. Yes you have those who e made it their main business, only care about profit and will only do the strict minimum, either within the law or worse, not even so. Some of them will be directed by greed.

But you also have many landlords who have become so either by inheriting a property or by moving in with a partner and keeping their own property for security.

Many of the latter group work and will be taxed heavily on their rental income, so much so that by the time they’ve paid it, along with management fees, insurances, annual electric and gas checks, setting a budget for repairs and redecoration and ideally something towards potential non payment, they are actually making a loss and the only interest is that of the property inflation.

Sadly, these landlords were often the best ones, but many have now sold up because of that situation. This leaves areas where there are very few properties left to rent, especially in the SE, or renting from big property developers who couldn’t care less about their tenants.

Sadly, it’s government greed, tapping where it was easy to tap, that is the biggest problem. People who need to rent and can’t find a place. Landlords who are getting pickier and pickier because demand massively exceed supply, and no government intervention attempts to male it illegal to refuse pets or people on benefits will change that because all it does is encourage landlords to sell.

I’m getting there myself. I’ve got a very desirable home in a popular location that I let. It doesn’t pay my mortgage at all as after all costs, I’m left with nothing. In the meantime, the market is going insane and the house is worth 20% more than last year. It’s very tempting but who knows where that would leave my tenants as there are only 1 or 2 similar properties that come up, usually not as nice or in the desired location and rent is £100 more a month.

Sadly this is the reality of the rental market as it stands.

I agree

The supply of housing is what drives up property prices, not BTL.

I am really surprised that so many people don't understand that, or perhaps it's easier to blame BTL?

Look at what happens whenever there's a scheme to help FTBs buy a property - prices rise! Even though the schemes purposely exclude anyone already owning property (BTL landlords etc).

If the government gave £50k deposit to everyone who doesn't currently own a house, what do you think would happen? Would house prices stay where they are and all the FTBs live happily ever after in a house they've now bought?

No, because property prices are governed by demand and available funding. If you have more people wanting to buy than you have houses on the market, prices will rise to match the money available.

The same people will get the houses but they'll pay more for them (subsidised by the treasury).

If everyone has an extra £50k then prices rise by ~£50k too.

The solution to FTBs not being able to buy is not preventing BTL.

I have pensions, rentals & other savings
The state pension is not much, but plenty of others live on this

Op instead of moaning at other people
What are you doing to increase the possibility of buying ?
Retrain for a better salary ?
Move to a different area ?
Have more than one income stream ?
Live frugally ?
Buy with another person ?

The issue isn't black and white. There are so many variables here...

Some rental properties are needed other than social housing...students, young professionals who move often, people who haven't been in the Uk long (inc returning ex pats) wouldn't qualify for social housing. Also not everyone wants to live on a council estate. So there's a market for private lets.

Private rents are ridiculously high in many areas but that's because house prices are out of control, meaning the rents have to be high to cover the cost of the landlord's mortgage. Not every landlord is wealthy or owns multiple properties outright. A lot are accidental landlords rather than people who set out to be investors.

Wages are low compared to house prices, so many people will never be able to buy and are stuck renting. This is unfair but that's what happens when you let the free market dictate things. A significant number of people chose this by voting Tory. If we want things to change then government regulation of salaries and house prices needs to happen, which the Tories would never do. So, we get what we vote for ("we" being the country as a whole).

There are greedy, dodgy landlords and good landlords who look after their tenants. There are good tenants and awful tenants who don't pay their rent, cause £££ worth of damage and are anti social. It can actually be really difficult to evict bad tenants. It's also difficult to deal with bad landlords but more regulation is coming in.

Life is unfair. Some win and some lose out. Some have more and some have less. It sucks. Expanding energy on being angry about that isn't going to help you though, unless you're in a position where you can actually change the status quo. The best you can do is to look at how you can improve your particular situation.

I understand theres a need for some property to be made available for rental, but would prefer to see it owned either by non profit housing trusts, or alternatively property investment funds with incentives that make it optimal for people who don't already own property to benefit from them. Like a state sponsored scheme to waive fees for investment using help to buy isas, tax reliefs for individuals investing in property trusts but not available to high earners etc.

OP has a blinkered view of a single situation of tenants being exploited by an unscrupulous landlord. The BTL landscape is much broader than this....in my town many people come from overseas on work placements for 12 months. A rent suits them.

For local families, if people can’t afford to buy...what’s a preferable model...living with mum & dad until they can afford? This isn’t always feasible or realistic.

Personally (as a landlord) I'd advocate -

(1) 5 year long ASTs - one month notice from tenant at any time after 6 months, 3 months notice from the landlord at any point after 4 years and 9 months.

(2) Rent caps and controls.

(3) Higher rates of tax on rental income than people pay on earnt income (so long as property companies pay at the same rate as individuals do).

(4) Punitive taxes on second homes and vacant property. Tax people at 20% of it's value per annum if they choose to keep it empty.

(5) Abolish stamp duty to encourage people to move.

(6) Introduce property value taxes on residential property to pay for abolishing stamp duty. Instead of paying 5% (say) stamp duty when you buy pay 0.5% every year. Paid by the property OWNER, not the occupier. Give people more of an incentive to downsize instead of hoarding family properties that they no longer need.