Buy to let replacing first time buyers

geneer

vivatifosi wrote: »

I hate news stories like this. They state their case - in this instance BTLs replacing FTBs - without giving supporting evidence, just quotes from the industry. It's an interesting story if true, but where are the metrics?

Calling JulieQ. Base calling JulieQ. Come in JulieQ.
Seems we need you to confirm your falling OO demand = increased prices theory.
You know, the one where BTL landlords will automatically buy up any and all properties before it falls in price.

Percy1983

So greed is causing BTL landlords to buy up typical FTB homes, this causes a further shortage to FTBs pushing prices up to which greed is then causing said BTL landlords to up rental costs.

I already knew that...

julieq

Geneer, you utter plank, this is what I said would happen and the article suggests it's happening (but I'll wait for metrics before declaring myself vindicated).

Investors are sustaining the market as a function of yield. As rents rise and yield rises, prices will rise, with a floor set by acceptable ROI levels. As savings rates are low, and rental income is relatively low risk, BTL is a very attractive investment (as it was in Jan 2009 when I pointed this out to widespread derision). There is also a very real prospect of capital growth in the shortish medium term.

When mortgage availability increases and prospective buyers have saved up deposits there will be more upwards pressure still. I think I used the term "coiled spring" previously.

Now it may be difficult for you to get this into your 3" thick skull, but if you create more households than you create homes then you are going to see the cost of accomodation increasing. If you prevent a section of the population buying, then someone will provide rental accomodation. That is a simple statement of fact.

Percy1983

julieq wrote: »

Geneer, you utter plank, this is what I said would happen and the article suggests it's happening (but I'll wait for metrics before declaring myself vindicated).

Investors are sustaining the market as a function of yield. As rents rise and yield rises, prices will rise, with a floor set by acceptable ROI levels. As savings rates are low, and rental income is relatively low risk, BTL is a very attractive investment (as it was in Jan 2009 when I pointed this out to widespread derision). There is also a very real prospect of capital growth in the shortish medium term.

When mortgage availability increases and prospective buyers have saved up deposits there will be more upwards pressure still. I think I used the term "coiled spring" previously.

Now it may be difficult for you to get this into your 3" thick skull, but if you create more households than you create homes then you are going to see the cost of accomodation increasing. If you prevent a section of the population buying, then someone will provide rental accomodation. That is a simple statement of fact.

So all we need to do is stop BTL landlords buying everything and all will be fine?

Graham_Devon

Turnbull2000 wrote: »

There'd be uproar from lenders, property developers and landlord groups.

I know.

As I say, just reading some of the buying and renting board posts makes me cringe. Law allows it, or, as in most cases, doesn't specifically say something can't happen, and therefore landlords all group together to suggest there is nothing that can be done.

On a moral level, some of the stuff is just downright wrong.

Evicting tenants because they have children, and/or have fallen pregnant....landlord doesnt want children in his precious house, so starts the ball rolling on chucking someone out who is pregnant. Law states there is nothing wrong with that, therefore landlord says he/she is doing nothing wrong. 6 months arrives, and landlord simply doesn't extend the tenancy and gets new ones..

Morally, it's disgusting.

Landlords doing their absolute best to withhold deposits, to pay for simple wear and tear. There was one the other day withholding a deposit because the 22 year old door was in need of replacement. So he blamed the tennants for damaging the locks. Tenant now needs to go to small claims court to get this sorted.

The whole system needs changing and looking at. But you are right. If it WAS changed. Landlords would likely be bailing out left right and centre. Only the serious (and good) landlords would remain. That's a good thing. But would throw the whole system into turmoil in the process.

FTBFun

Percy1983 wrote: »

So greed is causing BTL landlords to buy up typical FTB homes, this causes a further shortage to FTBs pushing prices up to which greed is then causing said BTL landlords to up rental costs.

I already knew that...

.....we live in a mixed economy and therefore no restrictions are in place for individuals to invest in a particular asset class?

chewmylegoff

abaxas wrote: »

I would just enforce wrapping of rentals inside an limited company. Makes it open and transparent.

how would this improve anything for tenants? it might make it a bit easier to tax, but if anything a special purpose vehicle corporate landlord would be less accountable to the tenant.

ninky_2

i had to check when the OP of this thread was. thought i'd gone back ten years.

desperate ramping imho.

of course lenders are going to favour those with large deposits whether they are ftbers or btlers but in a stagnant market with less mew potential then where are all these btl-ers going to come from?

twadge_face

julieq wrote: »

Geneer, you utter plank

Insult lol.

this is what I said would happen

Congratulation for your insight.

the article suggests it's happening

Yeah, that wholly credible and reputable publication known as moneyhighstreet.com... no, I've not heard of it either. But judging from the brilliance of articles such as "what is a Kindle?" I can't imagine it's really aimed at the brightest of demographics. The Financial Times need not be panicked yet.

(but I'll wait for metrics before declaring myself vindicated)

You generous soul. Trusty, trusty metrics. </sarcasm>

Investors are sustaining the market as a function of yield. As rents rise and yield rises, prices will rise, with a floor set by acceptable ROI levels. As savings rates are low, and rental income is relatively low risk, BTL is a very attractive investment (as it was in Jan 2009 when I pointed this out to widespread derision). There is also a very real prospect of capital growth in the shortish medium term.

It's unattractive though from the point of view of maintenance costs and time, "real" (i.e. versus RPI inflation and versus the rest of the world currencies) capital deflation.

Also you've got to consider the ongoing concern of an aging (not as in elderly, just as in "getting older") population in private rentals... tenant security and dogy landlords in the UK are massive concerns and will be addressed as they become increasingly political.

We'll end up in the position where there is legal fairness for tenants. Y'know, like Germany. Legislation to ensure that IF a landlord has to give notice to the tenant it'll be 6 or 12 months, not just a frankly unacceptable TWO months.

This will be enshrined in law and, guess what, will again be unattractive to landlords who will have to incorporate it into their business model and put up with red tape (oh, boo hoo for the landlords!).

When mortgage availability increases and prospective buyers have saved up deposits there will be more upwards pressure still. I think I used the term "coiled spring" previously.

Versus increased BOE base rates, increased unemployment, increased students debts and reduced pressure from student lets... gotta look at both sides of the coin.

Now it may be difficult for you to get this into your 3" thick skull, but if you create more households than you create homes then you are going to see the cost of accomodation increasing. If you prevent a section of the population buying, then someone will provide rental accomodation. That is a simple statement of fact.

In your opinion!

Percy1983

FTBFun wrote: »

.....we live in a mixed economy and therefore no restrictions are in place for individuals to invest in a particular asset class?

I agree, and that is the problem.

Houses should be homes, not investments.