Are earnings too low / living costs getting too high??

Irish_Tom said:
1 — this seems like an arbitrary (and low) figure. After ground rent and service charges (for flats), plus general maintenance and upkeep, along with management fees (if you let through an agency), there's not going to be much left at the end of each month, never mind servicing a mortgage, which brings me on to:

3 — how do you propose to enforce this and what would you do to all of those rental properties that are currently mortgaged? Force the owners to put them on the market? This would see an influx of properties flood the market and reduce property prices. While that may be good for first time buyers and renters looking to buy, it's going to leave a lot of people in negative equity.

4 — Yes, but there needs to be some protection for Landlords who end up with nightmare tenants.

2 and 5 I have no issue with and, as you say, are fairly common in developed countries. But 1 and 3 are barking (and I don't believe are common practice in developed countries) and 4 would need strict legislation to work.

You say you're not against BTL landlords but points 1 and 3 are clearly intended to deter landlords. Your plans could actually have the unintended consequence of reducing the amount of available housing to rent and leave a lot of existing homeowners worse off.
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1) the cap is based on figures used in other countries. 3% is used in Switzerland for example. These figures are based on house prices, salaries, taxes, purchasing parity/living costs, investment schedules etc. You seem more concerned with landlord profits than manageable rents for tenants. The fact that profits would be restricted for property owners is exactly the purpose. There is no mortgage to service e, that is the entire point. Rental.agencies can make a small profit based on property value, while private individual don't have tenants paying off their landlord's mortgage but paying for general property maintaineince and controlled profit.

3) the same as any other laws are enforced. For starters you make it illegal for mortgages to be issued to private individuals for BTL purposes. Obviously some kind of transition period would be needed so existing BTL mortgages continue, potentially with additional regulations.

4) yes, which is why I said as long as tenants pay rent on time. There are of course more requirements for respecting the property, reporting damage or maintenance requirements promptly, keeping everything in working condition, not disturbing neighbours etc. Otherwise, with a well behaved tenant then they have a permanent contract.



These are the regulations used in Switzerland,Germany, the Netherlands etc. to protect renters. That is why in cities like Berlin or Zurich 90% of people rent, because renters are protected and the profit margins of rental agencies are controlled to prevent exploiting renters.


Again, you seem more concerned about the profits of property owners than the living costs of renters.
 
D.P. said:
3) the same as any other laws are enforced. For starters you make it illegal for mortgages to be issued to private individuals for BTL purposes. Obviously some kind of transition period would be needed so existing BTL mortgages continue, potentially with additional regulations.
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What would be the purpose of that? Developers make use of finance, other entities invested in property are leveraged - why target individual landlords?

I can understand (even if I don't necessarily ideologically agree) with the rent cap proposals. I also think that a change in the legal rights of tenants (when they can be kicked out, types of contracts) and the obligations of landlords + minimum standards of rental properties certainly could and should be revewed.

I don't however see why the above is necessarily a good thing, there would be some inevitable workarounds found anyway with more private landlords setting up ltd companies to bypass the legislation and no doubt mortgage brokers offering solutions for them to still accept liability for a mortgage etc...
 
I knew this thread would turn into, the skinflints coming out of the woodwork telling us what we should or shouldn't do with our own money, same old people being ever so predictable.
 
Spook187 said:
I knew this thread would turn into, the skinflints coming out of the woodwork telling us what we should or shouldn't do with our own money, same old people being ever so predictable.
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Yeah - tried to steer it a couple of times to what I think the OP was getting at with regard to what kind of standard of living you'd expect to be able to live relatively comfortably for a given wage bracket. Sure you can always be super frugal to afford something in one area above that wage bracket at the expense of another area. Increasingly an average wage struggles to sustain an average live style and so on. Complicated a bit by the fact that increases in minimum wage, etc. has meant that people at the lower end can afford some things that traditionally would have been beyond their reach (which isn't necessarily a bad thing) those that seem to have really been hurt by it though are those in the middle - who have done everything "right", got an education, put in some effort, saved some money, etc. but increasingly seeing less return for that.

Also seems it is a bit different in different parts of the country - here in the South West it seems to be ahead of many parts of the South (though some parts of the South East have it bad) and way infront of the North who will probably feel the same level 2-3 years from now.
 
D.P. said:
Snip!
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As far as I'm aware, (just above) 3% is the average yield on Swiss rental income, so it is linked to the property value but it's not strictly capped per se. In Berlin, they've recently introduced a 10% increase cap when a new tenancy is agreed but it's not based on property value, rather the rent that's already in place. I'm happy to be proved otherwise.

While these countries do favour the tenant over the landlord in most cases, it's more to do with your original points 2, 4 and 5 (which I agree with) rather than 1 and 3. My better half is German so I'm quite familiar with the housing market in Germany.

I'm very much in favour of improved living standards for renters and for a more equal distribution of wealth in general (not just housing). However, I also don't believe all landlords are evil.

dowie said:
What would be the purpose of that? Developers make use of finance, other entities invested in property are leveraged - why target individual landlords?

I can understand (even if I don't necessarily ideologically agree) with the rent cap proposals. I also think that a change in the legal rights of tenants (when they can be kicked out, types of contracts) and the obligations of landlords + minimum standards of rental properties certainly could and should be reviewed.

I don't however see why the above is necessarily a good thing, there would be some inevitable workarounds found anyway with more private landlords setting up ltd companies to bypass the legislation and no doubt mortgage brokers offering solutions for them to still accept liability for a mortgage etc...
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Exactly.
 
answer this please "what do you suggest they do when they retire? How do you expect them to pay £600+ a month on state pension? As well as all other costs."

this is why people buy
 
I earn way above median wage, but I can't afford a median priced house. The guardian or someone had a thing that asked for your salary and then told you how much of the uk housing stock you could actually afford to buy, and it's like 4% for me. Ridiculous.
 
My parents managed to buy a 3 bedroom house in a good location by saving for 1 year while renting - both of them were working in a factory 40 hours a week on about £3 an hour (early 1980s).

It would take 6-8 years for my wife and I to save for the same % deposit on such a property and our household income is above average for the south west.

Instead we're looking at 2 bedroom terraced houses with no intention of moving up the property ladder.
 
Vonhelmet said:
I earn way above median wage, but I can't afford a median priced house. The guardian or someone had a thing that asked for your salary and then told you how much of the uk housing stock you could actually afford to buy, and it's like 4% for me. Ridiculous.
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what is median wage though? it's below £12K LMAO. Anyone with a full time job earns more than that
 
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Vonhelmet said:
Ok. I was thinking of that median wage for one person as my wife doesn't work right now so I'm mixing things up. In any case I earn way more than that median wage for two people and I can barely afford any houses. A couple of £24k combined? Forget it.
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you can buy a flat in scotland for £10K

http://www.rightmove.co.uk/property-for-sale/property-64369871.html

http://www.rightmove.co.uk/property-for-sale/property-58403500.html

2 bedroom £15K

might buy some to rent out to single mothers claiming all the benefits
 
badgeruk said:
Im just one example of someone living in the SE. I earn an alright wage and still living my parents so I can save. So far I almost have enough savings to buy my family home out right had I been born 15 years earlier(I've been working 4 years after getting my masters). At the moment the only options I would be able to afford are 1 bed flats in terrible areas with the same total floor space as 2 of the rooms in my parents home. My boss who happens to have done the same course as me 15~ years ago was earning the same wage as me give or take.

Not everyone is just spending there money on crap, some of us have saved plenty only to see it earn 15p in interest while house prices in their area still rise by silly amounts each year. These flats I have looked at were sold for 80k 10-15 years ago. They are now going for 170-190k. How ever you look at that it is mental. And that's if your lucky enough that someone does not go well over the asking prices due to a lack of choice. (Happen to me and a work colleague).

In before I get told to move away from my friends/family motor meet and the job I love so I can buy somewhere up north.
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yeah man, the same here.. I've no idea what I'm going to do in the future. For now I am renting but I want to own a property sooner or later but with the way prices go(say purley, 2 bed houses have increased on average 110k over the last 5 years) which is just silly! My wages can't keep up.

I dont want to move away from south and I actually can't, my GF grew up here and she will not move anywhere else, her family, friends etc are all here.

So I'm kinda stuck in croydon or further out say redhill(horrible area) etc if I want to get an average 2bed house for 350k ish.. :|
 
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