Cameron's housing plans

dowie · 14 Oct 2015 at 15:38

no that isn't ludicrous - that is just simple fact, they provide rental accommodation to people who do't want to or are unable to buy

I'm not denying there may be an issue with too much of the market being taken up by buy to let landlords and/or not enough development of new homes taking place. But some seem to try and deny that BTL is even needed or just solely blame BTL for their own personal problems in being unable to buy which may well still be there even if BTL landlords didn't make up so much of the market or even exist in the first place.

BuffetSlayer · 14 Oct 2015 at 15:46

Scam said:
Nonsense. Your examples prove that BTL is creating a false demand. There was no demand for those homes (because people couldn't buy them), therefore the house prices should have come down dramatically to compensate.

Not really, because developers were clearly happy to leave them empty and wait for an upturn in the market rather than sell at a loss. Prices didn't come down, all that happened was nobody lived there. You might as well have nocked them down. So it isn't a simple case of if you ban BTL house prices will drop because supply will increase. All that will happen is developers will hold off developing to maintain demand and therefore prices in a similar way to what they already do. They will sit on land and only develop when the market is in their favour. Remember, too, that the banks don't want house prices to drop either because they make more money in interest for higher value loans.

Eventually people did start to move in, but I honestly don't know how many were BTL tenants or owner occupiers. Also, let us not forget that one of the way parents have been helping their kids is via risky BTL arrangements and have them as tenants. So some of those nasty landlords could simply be parents helping their kids get a place to live and they are paying off a mortgage vicariously.

Tunney · 14 Oct 2015 at 15:53

Freakbro said:
£400K....for a starter home....what planet are you living on Cameron.

Hey, that's only 10.5x the salary of the average Londoner (assuming a 10% deposit). Over a 25 year mortgage, that's a mere 110% of their take home salary. That's perfectly affordable.

FoxEye · 14 Oct 2015 at 15:59

dowie said:
no that isn't ludicrous - that is just simple fact, they provide rental accommodation to people who do't want to or are unable to buy

So what about the people who are unable to buy, purely because 50% of new housing is bought to let out?

What service were they provided?

If at some future point that figure rises to 66% or 100%, would you still say BTL is providing a service?

You seem to think the the removal of a resource from the market in order to extract value from it is a "service" we should be grateful for, and thankfully many people are seeing through it.

FoxEye · 14 Oct 2015 at 16:07

BuffetSlayer said:
Not really, because developers were clearly happy to leave them empty and wait for an upturn in the market rather than sell at a loss. Prices didn't come down, all that happened was nobody lived there. You might as well have nocked them down. So it isn't a simple case of if you ban BTL house prices will drop because supply will increase. All that will happen is developers will hold off developing to maintain demand and therefore prices in a similar way to what they already do. They will sit on land and only develop when the market is in their favour. Remember, too, that the banks don't want house prices to drop either because they make more money in interest for higher value loans.

Eventually people did start to move in, but I honestly don't know how many were BTL tenants or owner occupiers. Also, let us not forget that one of the way parents have been helping their kids is via risky BTL arrangements and have them as tenants. So some of those nasty landlords could simply be parents helping their kids get a place to live and they are paying off a mortgage vicariously.

That's very true in the short term. Developers have bought land at sky high prices, because the price of land that can be developed is linked to house prices (obviously).

If house prices were to fall, land prices would fall also.

To fix the market and deflate the bubble, people are going to have to lose money. Developers sitting on land they've bought for a fortune are going to have to lose money. I'm not sure I'll shed a tear for them tho.

Over the longer term if BTL was killed, land prices and house prices would normalise, and it would again be profitable to build and buy, but at values below the current inflated prices.

But it would take time, I agree with you there.

balky12 · 14 Oct 2015 at 16:08

I am at that magical age of house buying and so are my friends. About 11 of them I think now have houses. As far as I am aware none of them struggled to buy a place despite 50% houses going to those pesky BTL landlords.

Come to think of it. 11 houses bought by late twenty something's in the South East. You could almost be forgiven for forgetting there was a housing crisis.

Well aware it's a small sample and anecdotal. But they didn't seem to find a huge problem with supply. (Just finding the perfect one). Even in the crisis it seems they could be picky.

dowie · 14 Oct 2015 at 16:09

FoxEye said:
So what about the people who are unable to buy, purely because 50% of new housing is bought to let out?

What service were they provided?

If at some future point that figure rises to 66% or 100%, would you still say BTL is providing a service?

No I'm just pointing out a simple fact - that buy to let owners provide rental accommodation. Rental accommodation is required by some people, they cater to that.

Pointing that fact out doesn't infer that I'm denying there can be negative effects from BTL occupying too large a percentage of the market. You're also still basing a premise on the rise in property prices being attributed to one sole factor - the existence of BTL landlords when there are multiple factors to consider. Pointing out that BTL landlords are also required and that they do provide a service doesn't infer anything about whether there are too many or too few.

Yes people who can't afford to buy are also reliant on BTL landlords - *some* of those people might be able to buy if prices were lower, quite a few others wouldn't anyway as they have no deposit or very low incomes. BTL landlords contribute to demand so there is some feedback there which isn't helpful but it is more complicated than simply blaming BTL landlords full stop or fantasizing about how the market would be a better place with them completely removed from the picture... since there is a clear need for them for people in various circumstances.

You seem to think the the removal of a resource from the market in order to extract value from it is a "service" we should be grateful for, and thankfully many people are seeing through it.

No that is just you projecting things again.

FoxEye · 14 Oct 2015 at 16:18

balky12 said:
I am at that magical age of house buying and so are my friends. About 11 of them I think now have houses. As far as I am aware none of them struggled to buy a place despite 50% houses going to those pesky BTL landlords.

Come to think of it. 11 houses bought by late twenty something's in the South East. You could almost be forgiven for forgetting there was a housing crisis.

Well aware it's a small sample and anecdotal. But they didn't seem to find a huge problem with supply. (Just finding the perfect one). Even in the crisis it seems they could be picky.

Your friends are probably in the same social bracket as you are. I won't ask, but there is obviously a lack of data here as to your salary (are you a well paid professional, etc). What help you had, if any.

There's just no way to draw any conclusion from you and your mates being able to buy, without knowing how you compare to the average Joe.

Even if 90% of new housing was BTL, you could still after all point at thousands of people buying their own homes. Would it mean anything?

balky12 · 14 Oct 2015 at 16:28

We all come from different backgrounds, hold different jobs, have parents that have/ haven't helped. Salaries at a guess would range from 20k to 50k. Vast majority of them have partners which would obviously help.

My point was that once they saved/ acquired the money, they had a good number of houses to choose from, and could afford to wait for that perfect house. Perhaps suggesting that supply isn't as much of a problem as some people believe?

Or perhaps the south-East is undesirable

ScoTTyBEEE · 14 Oct 2015 at 16:36

balky12 said:
We all come from different backgrounds, hold different jobs, have parents that have/ haven't helped. Salaries at a guess would range from 20k to 50k. Vast majority of them have partners which would obviously help.

My point was that once they saved/ acquired the money, they had a good number of houses to choose from, and could afford to wait for that perfect house. Perhaps suggesting that supply isn't as much of a problem as some people believe?

Or perhaps the south-East is undesirable

Supply isn't a problem. Go on rightmove, there's thousands. It's not the supply of houses that is the issue, it's the supply of credit, meaning more money (more debt) to chase the assets.

Now, what happens when one of their partners gets pregnant, considering they probably all need 2 wages to service the mortgage?

In a sensible economy, Germany for example the rent is easily covered by one earner. Now who benefits from our system (hint, it's not me or you)

FoxEye · 14 Oct 2015 at 16:37

balky12 said:
My point was that once they saved/ acquired the money, they had a good number of houses to choose from, and could afford to wait for that perfect house. Perhaps suggesting that supply isn't as much of a problem as some people believe?

Or perhaps the south-East is undesirable

Well obviously when they acquired the money they could buy a house. We aren't suggesting that only BTL can buy a house atm.

The problem is the number of people who either can't "acquire the money" or can't get a mortgage.

The fact still stands that lenders give more favourable terms to BTL landlords than first time buyers. And that many, many people can't "acquire the money" in the first place.

I *am* dubious about your claim that one of your friends got a mortgage in the SE on a salary of 20k.

balky12 · 14 Oct 2015 at 16:53

Not solely I did say most of them are partnered up, but I don't know specifics, just wanted to highlight that the sample included people who work average jobs on average wages.

And Scott's point; No idea of each personal circumstance again.

However it would be foolish of them to not consider the variables. I'm quite fortunate, my partner is very career minded and wants to go back to work after having children.the extra income is always welcome. Whether that changes when we have a child (4/5 years time) remains to be seen.

But we have looked at our affordabity and based on just my wage now I could pay mortgage/bills/food. Social life would be almost non existent however. 5 years time I should be able to do all that and support a child on top, just in case my partner decides not to return to work.

But forward planning has always been a thing of mine, probably why I have saved for a house.

daz · 14 Oct 2015 at 17:04

I think that BTL mortgage leverage should be restricted - for example, 50% LTV should do the trick. It would mean that you need to have substantial capital behind you to even think about becoming a landlord - so instead of having 5 properties with 10% mortgages it would mean that landlords have to reduce their portfolio.

Terminal_Boy · 14 Oct 2015 at 17:11

Think the UK's housing policy is broken now? Wait until Cast Iron Dave is told that we have to take as many of those lovely "Syrians" as Germany has.

Kemik · 14 Oct 2015 at 17:17

Most people who do rent, rent because they either can't afford the mortgage (some argue this is because BTL are pushing up the house prices?) or because it is flexible in their circumstances. Very few rent with a long term view of continuing to rent for life.

Houses are available to buy, but the fact they go off the market usually before they are even built suggest that there is a large demand out there that is far outstripping supply. This suggests house prices are higher than they really need to be. You only have to look at land prices which have planning permission compared to the price of land before permission is given.

bloodiedathame · 14 Oct 2015 at 17:28

It's cheaper for me to pay my mortgage than it is to rent the place. Go figure.

Roar87 · 14 Oct 2015 at 18:01

The problem Balky is money breeding more money (as in people who can afford to buy) increases the wealth gap and makes social mobility decline. Housing isn't like other markets because no company can just go out and meet the demand required due to artificial limitations placed on that market such as space and planning permission.

Scam · 14 Oct 2015 at 18:31

Kemik said:
Most people who do rent, rent because they either can't afford the mortgage

Sorry, I know you're arguing my corner but it's not because people can't afford the mortgage. My girlfriend could afford the mortgage on our old £500k flat (that we rented).. we just couldn't afford the £50k+ deposit that we would need.

(I bring that up because it bugs me immensely when mortgagees look down on tenants as some sort of inferior species that can't afford to pay what they pay every month. In actual fact most tenants pay more than mortgagees and have to balance the books even more delicately because if they don't they would be homeless within 2 months)

Edrof · 14 Oct 2015 at 18:36

Scam said:
Sorry, I know you're arguing my corner but it's not because people can't afford the mortgage. My girlfriend could afford the mortgage on our old £500k flat (that we rented).. we just couldn't afford the £50k+ deposit that we would need.

(I bring that up because it bugs me immensely when mortgagees look down on tenants as some sort of inferior species that can't afford to pay what they pay every month. In actual fact most tenants pay more than mortgagees and have to balance the books even more delicately because if they don't they would be homeless within 2 months)

I'm in complete agreement. The monthly mortgage payments on a suitable property would be far below what we have to pay in rent right now. We simply didn't have the £40,000 deposit available when we needed to move.

helpimcrap · 14 Oct 2015 at 19:34

I agree and disagree with a lot of points. I have been fortunate to own my own home (bought a repossession and did everything to get it up to standard myself).

The one thing I have never agreed with (I can't see it but i'll say it anyway) is interest only mortgages. Completely pointless and counterproductive with how British people are with saving as it was designed to be.

I agree with the 10% deposit - always have. If you can't save or do whatever you need to get that 10% you are limited. By that I mean house sharing/living with parents or anything. It's a pride thing for a lot of people but they lose sight of their goal. I appreciate it is not possible for some people (and certainly not desirable but it depends how much you want to buy a house) but you have to do something to change your situation. You can moan and moan but it won't change anything.

I lived at home until I was 30 saving - paying board etc and looking after the house in any way I could as I'm a bit of a handyman I guess (my mum needed a new bathroom - so I learned how to do it and made her one etc). I know couples who have lived with parents at their houses saving up and now have their own house.

That's why rental companies can charge what the market commands.