Darwinian natural selection will ensure property will once again boom.

chucky

no problem - BTL will suit individuals - many do quite well out of it, for others they just followed the herd and have been or will get burned.

in my current situation it works for me.

Conrad

For clarity I would like to re state the core point of my submission;

The value we place on property, whether owned or rented, stems from the whole purpose of existence - that is to say, the inante drive to pass on of genetic material through survival of the fittest.
For this reason property will always be highly valued by us.


Organisms compete for the best habitat so as thier DNA (which controls the organism) can maximise its chance of longevity and thereby increase the chance it will be passed on via the organism reproducing.

Humans just like Lions, Robins or clown fish engage in activity to secure the best habitat available.

This central drive from the DNA up, is what will ensure property will again boom, unless the majority of us disengage with this survival traite deep within us.
The fact some will not buy does not in any way undermine the argument, as those individuals will still seek the best accomodation avialable at any given moment and still therefor drive general property demand.

HelpWhereIcan

Conrad wrote: »

Yield after monthly service charge is 7.2% - ok ish

Not a bad yield - is that Return on Capital Employed or a yield based on the whole purchase price?

vigesimal wrote: »

They are tax breaks that a first time buyer doesn't get and BTLers usually buy the properties that first time buyers would get. These are unfair advantage and not in the interests of being "fair and competitve" which is the sort of market lethal0r wanted to ensure the governement did.

Do not forget that the First Time Buyer does not pay Capital Gains Tax when they sell.

Most BTLetters of any real size will.

Most BTLetters of any size will be paying income tax on profit they make on rental (or their company will pay corporation tax).

It is possible for a residential buyer who is also a company director to get tax relief on at least part of their residential mortgage at the highest rate they pay - and that can inlcude FTBs.

Contrary to popular belief amongst some, BTLetters cannot offset any losses against their other earned income. They have some capital allowances but not all of the ones available to most other businesses. It is not all roses for the BTLetter and their tax position. Without a decent yield, their capital can be better employed in other investment classes/businesses due to some of the tax advantages that rental businesses cannot get that others can.

The tax regime is nothing to do with competition and the fact is that most FTBs could beat a professional BTLetter to a property simply by offering more - one of my landlords is currently offering no more than 80% of asking price as long as he gets a yield of 8% or more.

He is therefore not offering on that many properties and is seen in the area as a buyer of last resort so most agents would prefer a FTB.

Even at the height he could be easily beaten as he relied on the speed he could move being the major reason to sell to him.

HelpWhereIcan

carolt wrote: »

Re the rest of it - glad you agree that BTL is no more a productive business than banking - and likely to go the same way.

The 'productive' part of a Buy to Let business is the home they provide to people not able/willing to buy a property of their own. Before you dismiss this, you may want to reflect on the rental market in some areas before the real growth of BTL.

I do not remember my first rented property fondly and can assure anyone that the advent of the BTLetter has seen an increase in the quality and choice of rental accomodation in my area.

Renting a house in my village would have been practically impossible then, today there are a number to choose - albeit at a cost.

There is/was an element of BTL amateur who bought anything that went on the market (we had south east based investors paying silly money up here cos they thought it was cheap) but they were actually in the miniority of my BTLetters and I have only one who subsidises the rent from his own pocket and that is only because he used to live in it, has it on repayment and sees the property as the one he will trade down to when he retires in 5 years.

Anger at the madness of some amateur BTLetters may be justified to an extent, but I do not believe that (at least in this area) they were responsible for pricing FTBs out.

In the case of my area, young professional FTBs have spent the last years bidding eachother up, moving after 2 years etc etc all at the bidding of their parents and friends.

Some would argue that this and the innate 'need' to be a homeowner is just as responsible for the breed of bitter young professional who cannot get on the housing ladder.

I find it strange that many of those who rail against BTL and HPI seem to do so from a certain sense of entitlement to being a homeowner because they are 'professionals' who 'went to university'.

Most poor amateur BTLetters I have come across have been in their mid 30s and from the "professions". Many of the good ones have come from the trades having spent time building a business and knowing how to make a profit.

Sometimes we need to be careful what we wish for. Conrad is right that the market will go 360 - we've seen this before and we'll see it again and partly for the reasons he suggests. Just that 'next time' it will be some of the current HPC brigade who will be claiming that 'this time it's different'.

ruggedtoast

I think property probably will boom again in the UK, home ownership seems to be pretty hard wired into the british lower middle classes as an essential thing.

Darwinism though? I heard one statistic (forgive me for not checking) that until the 60s more than fifty percent of people lived in rented accommodation. Often through the council. Many people that would be considered affluent, rent in Europe and the US and have no problem with it.

Thanks to Thatcher and Nu Lab theres little suitable council housing here now, and private landlords offer zero security or accountability.

Personally I'd love to see renters given the same protection they receive in Germany for instance. Note that throughout our crisis germanys housing market has been mostly unaffected, as being a landlord there actually requires some responsibility thye havent had all the get rich quick btl prats distorting the market, and tenants are happier too.

But then Germans have this odd idea that wealth creation is about working hard and producing things, not pyramid selling to one another and creating unfathomable algorithms designed to pretend theyre not just printing more money.

Conrad

Rugged toast

I have bought 2 properties in Germany (1 of which I sold recently). Thier property market crashed from the late nineties and only began to recover recently.
In affluent parts of what was West Germany, the owner occupier proportion is similar to the UK.
In the former communist east, few of course owned thier own property as the state did everything and it will take time for ownership to embed, so of course thier ownership levels are lower.

Biological security is the inner impulse that drives organisms to want a secure private habitat, whether its rented or owned.
Property is therefore highly valued.

Conrad

I keep hearing 'property is non productive' and not as valuable as manufacturing stuff.

I'm not so sure. Lets consider all that stuff. Where does all that stuff end up? Mostly on the tip. Do we really need all this stuff? I would say the bulk of it is innane and pointless yet people buy it like obiedient uncomprehending robots, even engaging in road rage on thier way to buy all this croppy stuff from the shops.

Property on the other hand is the bed rock of our civilisation. I derive immense happiness from being at home, and very little value from yet another must have pointless gaget.

carolt

Ignoring Conrad's theories which I find somewhat suspect, and I find it hard to believe he takes seriously, let alone expects anyone else to , I have to disagree on a personal level with HelpWhereIcan - my experience in a village has been being outbid at least 50% of the time by BTL landlords, and a lot of properties locally I have had no interest in have been snapped up by BTL or amateur developers.

Likewise, thinking back to the market pre-the BTL boom (I've rented since the early 90's) I don't ever recall, as a student or since, ever finding the slightest difficulty in finding suitable rental property - the idea that there was a shortage prior to the growth in recent BTL is an absolute myth.

As for BTL in villages, the property I currently rent, in a village, has been owned and rented out since the early 90's or previously. So rental properties, even in villages, DID exist. There undoubtedly was less BTL but less was needed, as a whole swathe of reluctant renters, like myself, did not exist - they bought instead, as the house they wanted to buy cost c. 80K instead of the 325K it cost at peak prices (now worth a shade over 250K and falling).

Once house prices fall to suitable levels, people like myself and the vast majority of those who post on these boards will buy - at reasonable multiples of salaries. And without demand from renters, BTL will make no sense financially.

JayScottGreenspan

Conrad wrote: »

DARWINIAN THEORY

As a life long nature nut I am reasonably well versed in the evolutionary process.
All organisms exist for a single purpose, and that is to pass on thier genetic material to ensure the continuace of the DNA. The organism itself is not really in charge, as everything stems from the cellular and quantum level.


All organisms compete for secure space, as in this manner the DNA is more likely to survive longer and be better able to replicate itsself through reproduction.

We cannot undue billions of years of evolution.
As such, your DNA tends to drive you to desire a secure, sustainable long term private habitat.:A

It is this evolutionary engine that drives most of us to want to own our own habitat. Given we live on an island, it is the case that property in areas of high demand will once again boom.

The only question is how long the next boom will take.

And beofre you say 'but I have a brain, I am in charge, my DNA and its mollecular processes are not - consider this;

Did you tell yourself which particualr foods you enjoy and which you dislike?

Did you tell yourself to be an owl or a lark?

Did you decide which people you like as freinds? You did - how so? Calculations are made at a mollecular level that determine which types of freind we get on with.

Did you decide on which things interest you? You did? On which day? Again, you are not in control of these process's.

"All organisms exist for a single purpose, and that is to pass on thier genetic material to ensure the continuace of the DNA."
Don't agree. I subscribe to the selfish gene theory - genes that are good at getting passed on will flourish, so it could be said that a gene's single purpose is to be passed on. As for me, that is not my single purpose - a by-product of evolution is that I can think for myself. Many people are abstinent, gay, use contraception, have vasectomies, smoke, drink, wear pants that lower fertility, etc... they do what they want, often to their genes' detriment.

I agree that people like to have a home. However, I don't think the Darwinian angle really helps much. In fact, I think the argument could be dangerous if it encourages people to have unwarranted faith in property as an investment and ignore contradictory evdience.

"The only question is how long the next boom will take." What about the question "how low will prices go in the meantime?"?

vigesimal

chucky wrote: »

the above was in reply to vigesimal's post on tax relief not on justifying BTLing. his/her post was wrong, end of.

My post was about FTBers not getting the tax relief that BTLers get. Read the page again.