Martin Lewis stands up for renters on breakfast TV

Loughton_Monkey

ruggedtoast wrote: »

......They had Martin on later who explained that people needn't feel bad about renting, and aren't losers.

He said that in places where prices had dropped 20% homeowners are the losers and renters are the winners.

Martin Lewis said some home owners are losers while renters are winners..........

It's not a question of winning or losing. It's a question of choice, or sometimes no choice.

A rental contract is entered into by two willing parties. The contract can - after sufficient notice - be terminated in favour of a different arrangement.

All people are different:

1. Education/brains - very poor, poor, OK, good, excellent.
2. Career - unemployed, low paid, average, white collar, management/executive.
3. Income - peanuts, low, average, high, very high, mega-high.
4. Health - paraplegic, bad health, OK, athletic....

And they all make different choices:

1. Marry, stay single, co-habit.
2. No kids, 2.4 kids, 10 kids. Straight away, or later in life.
3. Spend 80% of income, or 100%, or 120% on credit.
4. Live with parents, rent, buy.

Take any combination of the above, and try to chalk the "winning line" and partition people into winners and losers. Well you can't. Only the extremes.

Example loser: University Graduate, highly paid, started own business, owns 5-bed house, but over spent, £2m in debt, House about to be repossessed, wife & kids have left....

Example winner: Single parent mother, 8 kids, works 16 hours a week at Tesco, on full benefits, in 4 bed house, rent fully paid by Social Security.

But personally, I think buying is by far the best strategy.

Percy1983

Ok I will put an example together of how I can't see how you can lose being a landlord.

If I was to buy a house for £150k then rent it out for say 25 years and get strangers to full pay the mortgage for me.

Now in 25 years prices slowly drop constantly (not a prediction just for the point of the example) and the house is valued at £50k.

The question is have I lost £100k or gained £50k.

ukcarper

Percy1983 wrote: »

Ok I will put an example together of how I can't see how you can lose being a landlord.

If I was to buy a house for £150k then rent it out for say 25 years and get strangers to full pay the mortgage for me.

Now in 25 years prices slowly drop constantly (not a prediction just for the point of the example) and the house is valued at £50k.

The question is have I lost £100k or gained £50k.

Never been a BTL but I don't think it works that way.

First you need a deposit I think it is 20% not sure, so that is £30k of your £50k.

Second you could have long void periods or teneant could not pay rent and it takes time to evict them.

Third yealds might drop or interest rates rise and you might not be able to cover interest.

Like I said I'm not a Landlord and would not want to be one to much risk.

princeofpounds

Ok I will put an example together of how I can't see how you can lose being a landlord.

If I was to buy a house for £150k then rent it out for say 25 years and get strangers to full pay the mortgage for me.

Now in 25 years prices slowly drop constantly (not a prediction just for the point of the example) and the house is valued at £50k.

The question is have I lost £100k or gained £50k.

Believe it or not there is no guarantee that renting will cover the cost of the mortgage. It may feel that is the natural order of things because of the low interest rate of the 'great moderation' and 'new normal' of the post crisis environment, but anyone who remembers the early 90s (or the 70s for that matter) will be able to tell you it's very different sometimes.

chewmylegoff

ukcarper wrote: »

Never been a BTL but I don't think it works that way.

First you need a deposit I think it is 20% not sure, so that is £30k of your £50k.

Second you could have long void periods or teneant could not pay rent and it takes time to evict them.

Third yealds might drop or interest rates rise and you might not be able to cover interest.

Like I said I'm not a Landlord and would not want to be one to much risk.

here is another example:

i buy a BTL for £100,000 and find that i can only rent it out for £5,000 a year. my mortgage rate is 6% on my 75% mortgage, and due to voids, agency fees, breaking boilers, opportunity costs relating to my mortgage deposit and the roof falling off (as we know from this forum, the roof will fall off a rental property twice a year) and so on i end up making a loss of £2,000 a year (i.e. a loss of £2,000 before capital repayments to the mortgage). six years later i can no longer afford to cover this loss and am forced to sell, when i find that it is now only worth...£100,000. by the time i've paid my selling costs i only get £96,000 back, to go with the £12,000 i've lost during the time period i was renting it out.

have i (a) lost £16,000 or (b) got a free house?

answers on the back of a postcard.

JonnyBravo

Good luck to all of you. Been there and tried to explain it, he's a slow learner this one.

FATBALLZ

Going into BTL now with a 25 year plan is also a bet on no government deciding to actually do something about the housing shortage in the meantime, and house prices and rents staying artificially high for the long term.

Graham_Devon

Theres another article on it now. I know the house owners homeowners who have a fondness of HPI HATE shelter...so...

Shelter said the Government must take radical action to stop an entire generation being held back by a ‘desperate shortage’ of affordable homes.

Kay Boycott, director of communications, policy and campaigns at Shelter, said: ‘It's heartbreaking that so many people are being forced to put their lives on hold in this way.

‘Sadly, more and more couples are finding that despite working hard and saving hard, they're still priced out of a stable and affordable home, trapped in rented housing where landlords can evict them or raise the rent at any time.

Netmums founder Sally Russell said a family home was one of the most basic requirements for raising children, but many people are finding this increasingly unattainable.

She said: ‘Sadly for a number of these, leaving it too late may mean they may never able to have children. For others, it could mean both parents forced to work full time when their baby is tiny just to keep a roof over their heads.’

Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2194753/High-house-prices-putting-people-starting-family.html#ixzz24rnhkhAL

Percy1983

chewmylegoff wrote: »

here is another example:

i buy a BTL for £100,000 and find that i can only rent it out for £5,000 a year. my mortgage rate is 6% on my 75% mortgage, and due to voids, agency fees, breaking boilers, opportunity costs relating to my mortgage deposit and the roof falling off (as we know from this forum, the roof will fall off a rental property twice a year) and so on i end up making a loss of £2,000 a year (i.e. a loss of £2,000 before capital repayments to the mortgage). six years later i can no longer afford to cover this loss and am forced to sell, when i find that it is now only worth...£100,000. by the time i've paid my selling costs i only get £96,000 back, to go with the £12,000 i've lost during the time period i was renting it out.

have i (a) lost £16,000 or (b) got a free house?

answers on the back of a postcard.

I would say you would have made a very nice loss due to poor financial management.

Either way even if the rent doesn't full pay for the house you still get x% of a house for nothing.

Even if you make a 'loss' every month you are still getting a subsidised mortgage.

Loughton_Monkey

Graham_Devon wrote: »

Theres another article on it now. I know the house owners homeowners who have a fondness of HPI HATE shelter...so...

Shelter has always been bad enough, but now having to quote from "Netmums" to get their case articulated is rather tacky.

Why does their website proclaim "1 in 5 delay having children due to cost of housing", rather than "80% of people don't need to delay having children despite the cost of housing."?