Government to concentrate on BTL?

Graham_Devon

There is a rental review out tommorow, and it seems that the government may well start helping out private BTL's.

The idea, it appears at the moment (but it is just heresay) is that builders will be allowed to drop affordable housing on sites, but instead build purpose build BTL homes.

Shapps has stated he wants to see "tens or even hundreds of thousands of properties built for the rental market" in a response to general buyers not being able to gain mortgages, but BTL mortgages increasing.

"There is massive demand for rental housing, but there is a massive shortage of property built for the rental market" shapps said.

We'll see tommorow I guess. Gotta admit, it will be another nail in the coffin for the young family out there, but obviously a massive boost for those cashing in on the current housing problems.

If you can get the government on your side, hindering the young families even further than they are now, but providing business opportunities to cash in on that.....well, game set and match to the BTL's I'd say.

shortchanged_2

Why this current idea of Schapps won't work is because if you increase the supply this will drive rents down. So unless house prices fall significantly with the resultant rent falls it isn't going to make BTL a very attractive option at all.

Why the government don't give up on all these hair brained ideas and just do something simple like encouraging a large scale house building programme with little other interference and let the market sort itself out.

somethingcorporate

More supply will lower prices - not sure how that is of benefit for B2L as (already low) yields will drop further.

Linton

shortchanged wrote: »

Why this current idea of Schapps won't work is because if you increase the supply this will drive rents down. So unless house prices fall significantly with the resultant rent falls it isn't going to make BTL a very attractive option at all.

Why the government don't give up on all these hair brained ideas and just do something simple like encouraging a large scale house building programme with little other interference and let the market sort itself out.

First paragraph - this idea isnt changing the number of houses for people who cant afford to buy at the market rate. It's simply moving some from HA supported housing to private rental by increasing both the supply and demand for the latter. So the effect should be pretty marginal.

Second paragraph - Yes!!!

chewmylegoff

does it really matter what the properties are apparently "earmarked" for. surely any concerted campaign of housebuilding is good news for the economy and for anyone who ever wants to own a house.

@ shortchanged, if rents fall then (a) falling yields mean lower house prices and (b) people renting will be able to save for a house deposit sooner. so isn't this "good news".

of course, what will actually happen is that about 12 more properties will be built and it will have no effect.

chewmylegoff

shortchanged wrote: »

Why the government don't give up on all these hair brained ideas and just do something simple like encouraging a large scale house building programme with little other interference and let the market sort itself out.

won't this in of itself require pretty serious "market interference" by the govt.

at the moment, new starts are falling and falling fast. the level of new properties being built is now (only in the last 18 months or so in my view) clearly out of step with the increasing population.

what are the reasons for this? seems to me it is likely to be a combination of:

(i) housebuilders don't have the resources to build more houses

(ii) housebuilders can't get permission to build the houses they want to built

(iii) housebuilders cannot sell the houses they are building so they have reduced the numbers

the simple way to sort this problem out is to subsidise house building, either by paying builders an amount per house, or by giving FTBs a deposit. both of those are very expensive, and both of them are obvious "market interference" measures.

shortchanged_2

chewmylegoff wrote: »

@ shortchanged, if rents fall then (a) falling yields mean lower house prices and (b) people renting will be able to save for a house deposit sooner. so isn't this "good news".

Well of course it would be but that's the point because Schapps bright idea won't have the legs to take off for that reason. The returns from the BTL wouldn't be attractive enough for BTL'ers.

moneyinmypocket

Prices won't drop for people who ate buying - the shortfall in homes is too great. What this will do is give those with some money for a deposit a chance to buy ( mainly BTL) they then rent and the person will pay there morgage off.

brit1234

I don't think this will be buy to let in the traditional sense but turn out to be this new Affordable rent scheme. I have heard Mr Shapps talking about it a lot recently, these are going to be government or housing association homes where people pay 80% of the average rent.

I think it is funded by the old shared ownership/equity money and council house sales. So portentially a good scheme with renters paying the government rent which goes to build more affordable rent properties.

It would bring rents down and allow renters to spend more in the economy.

coastline

In recent years the government have been encouraging everyone to invest in a private pension plan...to reduce the burden on welfare payments..
We constantly hear about the rapidly expanding share of BTL in the housing market...do we really need anymore as you'd think the best solution would be home ownership for all..
Considering the average private rents are over £700 per month then any private pensions from individuals would be swallowed up in monthly housing costs...leaving folk in the postion of living off a basic state pension..
A private pension pot of £100,000 today would only buy an annuity of around £6,000 a year...hard times ahead for many folk..

chucknorris

coastline wrote: »

A private pension pot of £100,000 today would only buy an annuity of around £6,000 a year...hard times ahead for many folk..

I've been looking at annuities recently (single, index linked. not enhanced) and from what I have seen they only pay about £4,250. Do you have a source for that £6,000?