Is BTL the reason many people cannot get onto PL?

[Bananallama858]

Simply this.
Had a really interesting chat with someone recently who felt very strongly that the reason it is so hard nowadays for people to get onto the properly ladder is because there are a huge amount of greedy people who are buying properties to rent out. And if they limited the amount of properties that were bought through BTL scheme then perhaps housing prices would reduce therefore making it easier for many people to buy their first home. Would be really interested to hear people's views on this.

There are plenty of reasonably priced houses for sale in my area. They are not all being snapped up for BTL.

Problems:

1. FTBs in low-medium paid jobs just can’t get a deposit saved.
2. HTB is only available for new builds which are are expensive than the older houses for sale.

Of course it's a factor! We're always being told that the UK isn't building enough homes, but if some people weren't buying multiple properties then surely good sense dictates that there would be more properties out there for others to buy?

It's not only that, obviously. There are many reasons for the housing shortage, just off the top of my head: more single occupancy households, people living longer, high levels of immigration, etc.

There's a general shortage of housing in the UK, that pushes prices up. Previous governments started allowing council tenants to buy their houses and I believe this happened at non market rates (I may be wrong on that), which has reduced the availability of social housing. Private landlords buy houses and flats in areas where they believe they will be able to get tenants, minimise void periods and have low overheads. Often that means that in areas where buying your first house is perhaps more affordable, first time buyers are up against cash buyers. The last world recession resulted in mortgage lenders tightening their lending criteria and insisting on higher deposits from ftbs.

FTB priced out due to supply and demand. Limited new supply as not enough being built and high stamp due means people staying longer in each property. Also this limited supply is tapped by BTL investors not just from UK but large international property buying consortiums.

You need the same amount of homes whether people are buying them or renting them. So if BTL people own them, people rent.

There are lots of other factors including money laundering and zombie flats and a whole load of other stuff but yes, of course BTL affects it.

It’s a combination of factors but generally you will find, in some cultures, that even lower earners will own a property because they make it a priority. I am of Indian origin and know of young people who don’t go on holiday / buy a car / spend more than a carefully budgeted amount a month to be able to buy their first homes by 25-30 (even if it’s usually just a flat at first).

In many areas there is. Shortage of rental properties and many people. Even with a reduced property price still couldn't afford to buy.

I think putting the reason you cant afford to buy down to the amount of rental properties is a bit of a cop out to be honest.

It's many factors usually that drive people into long term rent.

There's no shortage of homes you'd class as FTB here. But prices now reflect dual incomes and deposits are really hard to save when cost of living is high and social expectations seem high too. Mortgage payments are often lower than rent on a smaller home but the deposit is so hard to save for, I think.

And if you can't buy, you need somewhere to rent so I guess it's a vicious circle.

BTL creates it's own demand.

It's that simple.

It’s a factor but not the only reason.
Lots of other things in play too like properties being snapped up by overseas investors and left empty, house price inflation and wage stagnation, lack of housing stock etc.

Property is expensive because there isn't enough to go round. It's basic economics. This is partly caused by BTL landlords and people who own second homes they don't live in.

No government is willing to properly address the problem because successfully reducing property values would leave many of us who've managed to buy in negative equity and unable to move if we needed to, and would annoy a lot of people who are hoping values increasing will fund their retirement. So instead we get tinkering around the edges, and the current HTB scheme which is just a handout to the builders.

If potential buyers have got the deposit (and associated fees, stamp duty etc), they can buy. There's no shortage of properties for sale. The problem is the house prices are too high and saving up is almost impossible, hence these people have to rent. It's not that BTL landlords have bought everything up. If others could afford to buy, they have an equal chance.

I agree it is a very large part of it.

I'm not speaking for the whole country because I'm not a property expert, but in London we literally have tower blocks of new flats empty because they have been purchased by foreign millionaires and billionaires and they aren't even bothering to let them out because they are just relying on the upward trajectory of the property market to provide their profit. They are happy to wait 10/20/50 years whatever. The scandal is we could have tax measures in place which would deter this, but the Government won't address it for some reason that is not abundantly clear from the point of view of this parent who worries that their children will never be able to afford a home of their own.

But that's slightly a side issue. I don't know if it applies to other big cities in the UK?

We need a cap on how much property an individual is allowed to own imvho.

This crops up a lot on MN, probably because it is such a goady topic. No, I don't think it has anything at all to do with BTL. Private rental properties account for a fifth of the market at best. From the most recent Family Resource Survey

The year-on-year change from 2016/17 to 2017/18 shows an increase in the percentage of households buying with a mortgage, from 28 per cent to 29 per cent, though this is not a statistically significant increase. Over the same period, the percentage privately renting decreased from 20 per cent to 19 per cent. The percentage owning outright has remained at 34 per cent over the same period, whilst the percentage in the social rented sector remained stable, at 17 per cent.

Singlenotsingle - you post doesn't make any sense whatsoever.

"A fifth of the market at best" - and don't you think 20% is enough to make a difference?

I think it's a huge problem. I'm selling my first home at the moment and I've had offers from btl who haven't even viewed it. I want to sell to a ftb but they are only able to make low offers nowhere near the asking price. I'm only going to be able to give it another couple of weeks before it'll go to a btl landlord. It sucks.

No, I don't think one fifth of the market controls the whole thing!

@ChicCroissant come in! You don't think 20% of the market could be influential? Really?

Of course 20% of the market affects the rest of it. Particularly those type of properties.

There are always going to be rental properties, because not everyone can or wants to purchase a property. There is nothing wrong with that. There is less social housing available so private rentals fill that gap.

Going back 50 years, in the late 1960's the percentage of people privately renting was 20 per cent (same as today), this percentage almost halved in the mid-eighties until it started to rise again in the mid-noughties. The big difference is social housing, in the 1960's it was around 29 per cent. There are no quick fixes for the social housing issue, unfortunately.

Ever since I've moved to the UK I've been utterly bemused by this idea that it is somehow immoral to own a property which you rent out. If people didn't do this, where would the rental properties that people need to live in while they save for a deposit / live in a group house / try living together as a couple before buying together / try out an area to see whether they like it before buying / live in a different area for a shortish period of time for work? Or any of the other host of reasons people rent. Surely those of you who dislike BTL don't believe everyone who doesn't want to or can't yet buy should be in council accommodation, and there should be no private rental?

I'm from Australia, where there are all sorts of tax incentives to encourage people owning rental properties!

The problem is FTB have to have such a large deposit now. That's because the bank's got way too greedy and got into such a mess but now the ordinary person is again suffering because of their ineptitude. The banks could at least drop the deposit that young couples need before they'll lend to them. 10% for most young couples starting out is just too much when you factor in buying furniture for the property.