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)

@tanguero

A bit of history. The BTL fandango was kicked off by the 1988 Housing Act - which is key. BEFORE the 1988 Act, if you (were lucky enough) to rent a house, you essentially had a tenancy for life, which you could even pass on to your kids. RESULT....no-one wanted to rent houses, and (in the private sector) there were virtually no houses to rent. Rental agencies on every High St, just did not exist. The 1988 Act - with its introduction of 6 month tenancies - made it financially viable to be a landlord and kicked off the BTL boom. I've not particularly a fan of BTL landlords, but it's important to remember before they existed, it was virtually impossible to rent a house in the private sector, because no-one (with any sense) wanted to be a landlord.

Except that loads of people I personally know did just that... rented in the private sector. And, when I was renting in the mid to late 90s before the buy to let boom, many assured private tenancies were still available.

The difference between then and now is that in their 20s and 30s people were able to leave the insecurity and buy a home - to settle, put down roots, and build a family as members of their local community. They didn't have to compete with huge numbers of amateur landlord investors.

Now we have people stuck in private renting into their 30s, 40s, and beyond, with no security at all and an enforced permanently transient life

We also have a huge and growing homeless crisis, with low waged and disabled increasingly completely shut out of housing. In the 80s and early 90s it was perfectly possible to rent on benefits. Not any more.

@maggiesfarm - thanks. I inherited a fund in 2008. It has gone from around 141 per unit to over 680 per unit. It accumulates capital (so no income). What I am trying to say is that if you purchase wisely into good funds in the long run you can typically make much more money than in the property market with less hassle and no debt. It is just that people seem to think property is a safer bet.

What I am trying to say is that if you had invested 50000 pounds in the fund in 2008 it is now worth 240000. I appreciate it is a top performing fund. And they can go up and down. But perhaps the public just need better financial education from school age onwards. There are so many platforms to invest now. It is just that everyone thinks property is easy and safe money, which personally I don’t think it is. You are still overexposed to one particular Tenant etc even with insurance.

@Lanique

Agree that there is a market for rental, but YANBU op. There will be hordes along justifying their actions 'because capitalism' and accusing you of jealousy though.

We are in a position to buy a second home but when dh and I talked it through we decided we couldn't do it for ethical reasons. I hate to think what the state of the market will be when our children want to buy in ten years' time.

This. The hoardes justifying usually have several properties with extortionate rent charged to people on benefits, students or people who would love to own one home but spend so much on renting that they cannot save

Tricky one. My tenants couldn’t afford to buy and this will probably be their home for life (I hope!) We haven’t increased the rent since they moved in 6 years ago, nor do we intend to, even tho it’s lower than the usual rent in that area.

I rented very happily till I was 30 although I had a decent income and the means to buy - I just didn’t want the responsibility. I had the time of my life renting- didn’t use the oven once and out all weekend every weekend. Then I bought a flat (which I lived in until I started a family) and now rent out to students. I would struggle to feel guilty about it.

@Sunnyfreezesushi

What I am trying to say is that if you had invested 50000 pounds in the fund in 2008 it is now worth 240000. I appreciate it is a top performing fund. And they can go up and down. But perhaps the public just need better financial education from school age onwards. There are so many platforms to invest now. It is just that everyone thinks property is easy and safe money, which personally I don’t think it is. You are still overexposed to one particular Tenant etc even with insurance.

I have no idea this is possible. Where do you even begin to learn that sort of thing?

@LadyWhistledownsQuill

I wouldn't mind landlords so much if it was actually possible for everyone to rent, rather than the discriminatory approach they use. No blacks, no dogs, no Irish has become no DSS, no dogs, no kids.

As a dog owner, I've just run a search on Zoopla for properties to rent in my city. There's 537 properties within my budget. When I filter it to "pets allowed" there are FOUR. Two of those don't have gardens so aren't suitable.

So, simply because I inherited a (non-destructive, non-barky, scrupulously house trained) dog from a relative who died, only 0.37% of rental properties are open to me. In reality, it could be that those two landlords rejected me, in which case (were I facing eviction) I'd end up street homeless.

So, I remain in a property with chronic damp where I'm frequently scrubbing mould from the walls because the landlord hasn't got the rendering fixed, despite reporting it for years.

The rental market works about alright if you're young, no kids, no pets, don't mind insecurity, employed full time in a reasonably paid job, not disabled (heaven forbid you need adaptations!) etc etc.

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

So so true

@DustyMaiden

I see nothing wrong with BTL, I own three. I offer well maintained properties at a fair price. People would be homeless if they were unable to buy or get social housing. People buy and sell all commodities such as fuel, food, medicine and clothes.

You miss the point that the reason some people are unable to buy is because the demand from BTL investors pushes house prices up.

However I say that as a BTL landlord myself.

I think you have to look at what has happened to pensions, end of final salary pensions, pension funds not being run as they should. People feel safe with property (to a degree) and those wanting to invest for their future need an outlet. We are instilled to be self sufficient, yet people who are just trying to do the best for their families are criticised. It's not their fault that successive government policies has led to this in various guises.

Some people need or want to rent. If noone bought to let they couldn't rent. I agree the housing situation is unfair but I don't think it's just a buy to let issue.

@HotPenguin

Some people need or want to rent. If noone bought to let they couldn't rent. I agree the housing situation is unfair but I don't think it's just a buy to let issue.

But increasingly buy to let landlords won't let to them. Instead they rent out their houses and flats to the people they've priced out. The people who would never have afforded to buy can no longer rent either. Hence the growing numbers of homeless.

Lots of people want to rent. And people who want to invest money should be able to invest in property if they wish.
However there should be strict rules and constraints on landlords to protect tenants.

I rent to a single mum working pt and on universal credit. Where would she live without private landlords renting to her? There’s a shortage of council housing as it is. Take away the BTL market and you’d add pressure to it.

Also if the BTL property is mortgaged then you have to charge more than the mortgage (usually 25% more) or they won’t lend to you. This is to cover tax and if interest rates went up.

I havent RTFT but can I ask what the posters who think everyone should only own 1 house, think people who are living somewhere short term should live?
Eg- students
People leaving their parents home
People moving to a new area but unsure of preferred areas
People on temporary/6 months contracts
People whose own house is having renovations/is uninhabitable

Also re holiday homes - which are ethical? Is a hotel ok? What about a caravan?

Btw I dont have a btl or holiday home.

@buckingmad

I rent to a single mum working pt and on universal credit. Where would she live without private landlords renting to her? There’s a shortage of council housing as it is. Take away the BTL market and you’d add pressure to it.

Also if the BTL property is mortgaged then you have to charge more than the mortgage (usually 25% more) or they won’t lend to you. This is to cover tax and if interest rates went up.

Where would she live without private landlords renting to her

We could end right to buy and build more council housing.

It's not as if many landlords are like you nowadays. Increasingly they refuse to let to people on benefits.

@Anonmousse

It's not necessarily that people should only own one home. It's that the balance is wildly out of control.

It's also an issue that too many current landlords won't let to the low waged and those on benefits (often the disabled) - who are then left without any home at all.

It's perfectly possible to have a smaller pool of private rentals to cater for short term and temporary lodgings. For longer term settled homes, first time buyers shouldn't be priced out, and low waged and vulnerable on benefits shouldn't be shut out.

One of the biggest issues is housing benefits were frozen for many years and now frequently fall way short of market rents. Loads of people, including many full time working, need to claim because of the high cost of private renting.

The real.problem is the selling off of council housing by Thatcher.

I'm sorry but all the people saying that houses should only be LA or council owned, have you ever actually lived in one?

Apart from the fact that you have little to no choice about the property type you're allocated, most are grim and are in unsavoury areas. The whole point of renting privately is to be able to choose your surroundings and hopefully the type of neighbours you'll encounter. Most public-owned facilities are inefficient and are just generally not run well.

Increasingly they refuse to let to people on benefits
Imagine if we let private individuals buy up hospitals and schools who then refuse access to people on benefits.
Of you might counter that these situations are not analogous, but if we agree that a home is just as fundamental as healthcare and education surely it's a reasonable comparison?

@Movinghouseatlast

The real.problem is the selling off of council housing by Thatcher.

And continued by every government - Labour, Tory, and Coalition since.

Yes it was one of the worst and most immoral (and deeply short sighted) polices ever.

That's what I thought was having a conversation with a friend and was saying they shouldn't have allowed the right to buy then there wouldn't be the shortage.
She said then people like her On low income wouldn't get a chance to own a home (she has bought Hers from council). I'm also on low income but private renting.
To me, security of tenancy and availability of housing is more important than owning a property?
I'm in the same situation about opportunities to own (never rented from council so less opportunity to own)
She just thought the scarcity is from letting immigrants and refugees in because there's not Enough room

OP you make a lot of assumptions. I have 6 btl properties. All are in excellent repair and have insurance, boiler insurance, gas, electric and energy certificates. I provide built in appliances ovens, hob, fridge freezer, also a tumble dryer and microwave. I charge below market rent and therefore can choose my tenants. I have a waiting list. I have been invited to tenant weddings and am a Godmother to one tenants DC. I gift tenants a voucher when they have a new baby. Some tenants have been with me for 8 and 6 1/2 years. In the time I have owned the properties they have significantly gone up in value. That is my reward. If I invested money in the bank I would get very little interest. Not all LL are horrible just like not all tenants are wonderful. You have a very black and white attitude to LL, and in reality they, like the test of the world, are generally shades of grey.

@Sparklfairy

I only recently found out (here) that when you buy a house to rent, the mortgage company insists you rent it out for at least 145% of the monthly mortgage payment amount, so it's not just greed. It did go crazy a few years ago with people buying up loads of property to rent out. My own landlord has dozens with a yearly turnover of over £1 million

That said, people need to live somewhere, and wherever theres a market there will be people willing to fill that gap.

There are shitty landlords, but there are also shitty tenants who dont pay and especially with the pandemic, this has far more serious consequences for the landlord.

There comes a point OP when you just have to accept that this is just the way it is, and it wont turn around in my lifetime, or maybe ever. There are too many people on a tiny island with limited space.

I don't know where you got the info about 145% of mortgage cost as rent but that definitely isn't the case with every buy to let mortgage - we are onto our 3rd different mortgage company and that hasn't been a condition/expectation with any of them.

I agree with you @purpleme12
There's a big difference between want and need. Everyone needs a home. They might want to own but they don't need to - as long as they have security of tenure and affordable rent.