Here`s the thing......

IveSeenTheLight

Percy1983 wrote: »

I do believe BTL is out of control and should be taxed heavily, yes there is always going to be a market for it and I am not saying it shouldn’t be there, but it got to a point locally where all the ‘FTB homes’ where being bought up by BTL’ers which caused prices to rise which caused more people to rent, which caused more ‘investors’ etc (bit of a chicken and egg problem).

Just to take this point in context, the increase in private BTL has been lower than the reduction in social housing.

That means that there are less rental properties as a percentage than there has been historically.

What that means is that BTL has only partially taken up the reduction in rental properties that were sold off under the RTB scheme.

It's not BTLers that are to blame, it's the governemetn that created such a marketplace by selling off the social housing stock and never replaced it.

Percy1983 wrote: »

which caused prices to rise which caused more people to rent, which caused more ‘investors’ etc (bit of a chicken and egg problem).

On this point, prices had been rising as there has been a limitation on the anount of properties being built.

Increase the amount of properties (both for owner occupancy and for rental) and both prices to buy and rent will come down.

It's within the governments powers to do something about this, but they don't.

This re-emphasizes my point that it's not BTL to blame, but the governments.

BTL have only filled the gap (void) created by the government

Percy1983

I don't completely disagree, but ont he flip side houses are approx 7% higher than they would have been without so many landlords.

I will admit they aren't THE problem, just one of the elements of a bigger problem.

HAMISH_MCTAVISH

Percy1983 wrote: »

I don't completely disagree, but ont he flip side houses are approx 7% higher than they would have been without so many landlords.

I will admit they aren't THE problem, just one of the elements of a bigger problem.

That is correct.

BTL has added about 7% to house prices as approximately a million properties have been added to the rental stock instead of the owner occupied stock over the last 2 decades.

BUT....

The flip side to this is rental prices have been kept very low by historical terms. The owner/occupied stock fell by around 5%. But the rental stock nearly doubled. This kept rents depressed for the last decade, (allowing FTB's to save more) and it's only recently that they've started to rise significantly as population growth continues whilst housebuilding is at record lows, and mortgage rationing diverts demand into rented stock.

Regardless, the real issue is that we have a shortage of housing, and without significant housebuilding both rents and house prices are only going to get more expensive over the medium to long term.

Percy1983

HAMISH_MCTAVISH wrote: »

Regardless, the real issue is that we have a shortage of housing, and without significant housebuilding both rents and house prices are only going to get more expensive over the medium to long term.

Yet again can't argue, but I do still believe there is a correction needed (and happening), the other problem was lax lending.

In short anybody could buy a house hence the bidding war started and prices rising.

Hopefully now the not so lax lending will keep the financially inept out of the market until they straighten themselves out which will bring houses down or keep them level.

By all means I would welcome a crash as it will save me a fortune, but a slow stagnation with houses dropping in real terms should benefit most and not harm anybody.

Linton

Percy1983 wrote: »

I don't completely disagree, but ont he flip side houses are approx 7% higher than they would have been without so many landlords.

I will admit they aren't THE problem, just one of the elements of a bigger problem.

Agree with most of what is being said, but not the bit about landlords putting up house prices. If there had been fewer BTLs, rents would have been higher and so more people would have wanted to buy.

It could be argued landlords have actually helped keep prices down. Everyone needs to live somewhere. It is in a landlord's interest to house people at a high density whereas owner occupiers prefer to have more space. So the more people live in rented accomodation the less pressure there is on the small number of new houses being built.

Linton

Percy1983 wrote: »

Yet again can't argue, but I do still believe there is a correction needed (and happening), the other problem was lax lending.

In short anybody could buy a house hence the bidding war started and prices rising.

Hopefully now the not so lax lending will keep the financially inept out of the market until they straighten themselves out which will bring houses down or keep them level.

Is there much evidence of unreasonably lax lending to financially inept buyers? The evidence I would expect is sharply increasing levels of default. I must have missed it.

Percy1983

The banks are holding off the reposetions right now.

I will say there will be many who got mortgages on the lax lending and will be doing just fine.

In short the current system is keeping people who would be fine, eg, I know I could support a 100% morgage right now with no issues, but the thing is how can the banks define who can when everybody says they can, in tightening lending it causes people to save which causes people to budget harder.

As I say the current system is delaying me but I would rather be delayed with less competition at the end than buy now with more competition.

the.ciscokid

Linton wrote: »

Is there much evidence of unreasonably lax lending to financially inept buyers? The evidence I would expect is sharply increasing levels of default. I must have missed it.

It seems you may have missed SMI, and sharply decreasing interest rates (AKA: robbing savers to pay for financially inept buyers)?

DervProf

the.ciscokid wrote: »

Erm, you replied to your own post, asking someone else to answer. In your original post that you quoted you said:

I replied to this, as you asked, by listing a few things that you need to remember that I believe have helped sustain house prices, rightly or wrongly depending on your point of view.

Are you going to DISCUSS these, or just get on your high horse about missing points of the discussion (which I don't think I have)?

I`ll answer that question for you.........

Neither of the above, by the looks of things.

HAMISH_MCTAVISH

the.ciscokid wrote: »

So, are you saying that if and when interest rates return to normal, SMI is withdrawn, public sector job losses kick in, banks stop getting bailed out and savers stop getting robbed, that Mortgage funding will go back up by 70%?

When have I said that?

But more importantly, lets look at the factors you appear to be so interested in.

SMI--
There has been an increase of people on SMI, as you'd expect in a recession, but the total numbers are still relatively low. Not to mention, 75% of the people who lose a job are back in full time work within 6 months, and 90% within a year. So the time limited expiry of SMI only affects a tiny number of people.

And if you want to claim SMI creates moral hazard, then you also need to look at the fact we pay rent for the unemployed as well. So unless you want to abandon the safety net for everyone, it would be unfair to penalise homeowners over renters.

Public sector job losses---
It was going to be 490,000, but because the economy has been performing better than expected, it is now estimated 160,000 less jobs will go, so 360,000 in total. And almost all of those will be through natural attrition..... The government already loses 300,000 people a year to retirement, so will still be hiring over a million people in the next 5 years.

Regardless, the OBR is forecasting private sector job growth of 2.5 million over the term of the parliament.

2.5 million more jobs in the private sector, 360,000 less jobs in the public sector.

Total job growth = 2.14 million.

Perhaps you'd care to explain the mechanism through which you think job growth of 2.14 million over the next 5 years is bad for house prices?

Bank bailouts--
What about them? The government is already in profit from the deal, based on the current share prices.

Low interest rates--
Here to stay for many years..... I doubt we'll see 5% base rates in the next decade, and most economists agree we'll be unlikely to see much more than 3% in the next 5 years.

Mortgage funding--
More of an issue.... But as supply is so short we've already seen that the market can sustain prices on lower volumes, and there's nothing to indicate that won't continue. Regardless, soaring rental yields are already starting to attract securitised funding for BTL lending through specialists such as Paragon. And this will continue as rents rise still further.

Perhaps Northern Rock will start dishing out 120% mortgages again?

A vanishingly small percentage of the market, and certainly not required to see strong HPI return.