Martin Lewis stands up for renters on breakfast TV

chewmylegoff

ILW wrote: »

The failure rate for start up businesses is around 70%.
Think BTL is a lot less risky than this, but has much less social benefit in terms of employment etc.

what is the failure rate defined as though? rate of businesses which go bust, or the number of businesses where the person who sets it up loses money and gives up?

obviously with BTL there has historically been HPI to cover up the mistakes made by the amateurs, but that isn't happening at the moment in most places. plus you need a 25% deposit so you can really screw it up without actually ending up going bankrupt.

Percy1983

ukcarper wrote: »

I thought you were an accountant so you would realise that if you don't pay all your interest you owe more at the end of the year than you do at the beginning.

Ok here is another very basic sum for you.

I buy a house at £100k by the time the mortgage is paid it will have cost me £150k.

I rent it out very cheaply so rent doesn't even cover the interest and over the term get a stranger to pay £30k of the interest.

So a house which should have cost me £150k has cost me £120k.

I see a £30k saving... and a house at the end.

By all means I very much doubt example as extreme as the above would ever be the case, but even in worse case there is a saving.

chewmylegoff

Percy1983 wrote: »

Ok here is another very basic sum for you.

I buy a house at £100k by the time the mortgage is paid it will have cost me £150k.

I rent it out very cheaply so rent doesn't even cover the interest and over the term get a stranger to pay £30k of the interest.

So a house which should have cost me £150k has cost me £120k.

I see a £30k saving... and a house at the end.

By all means I very much doubt example as extreme as the above would ever be the case, but even in worse case there is a saving.

and someone else got the benefit of that asset for 25 years for only a fraction of its cost - whilst you got no benefit at all from "owning it" for that period.

i'd rather have lived in the house and paid £150k for it personally. each to their own though if you think that is an example of a free lunch. (and if that's the LL getting subsidised housing then what is the tenant receiving - 25 years of housing for virtually nothing - seems more like a charity than a business).

oldvicar

ruggedtoast wrote: »

There was a piece on breakfast tele this morning about renters delaying having families because they dont want to have kids on private ASTs. Who can blame them?

A young couple were shown having to live with their parents to try and save for a meagre flat.

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.

Its great to see a respected and high profile television person who has made a great success of himself sticking up for renters, and not pouring scorn and shame on them for not owning a house, due to reasons beyond their control.

Hopefully there will be more to come.

It would be nice if this view filters through onto this part of the website.

:money::money::money::money:

Would you like some more chips with your shoulder, Sir?

Percy1983

chewmylegoff wrote: »

and someone else got the benefit of that asset for 25 years for only a fraction of its cost - whilst you got no benefit at all from "owning it" for that period.

i'd rather have lived in the house and paid £150k for it personally. each to their own though if you think that is an example of a free lunch. (and if that's the LL getting subsidised housing then what is the tenant receiving - 25 years of housing for virtually nothing - seems more like a charity than a business).

Thats is my point, even if you run it at way below market rates you still end up with ahouse at the end of it for less than it should have cost you.

Like I say you would have to have extremely low rents for it to not even cover the interest.

Did you forget that my extreme example is in replay to your comment about what if your rent income doesn't clear the interest.

As you can see the answer is you still get a subsidised house at the end of it.

By all means the example leads more to a free happy meal, but its still a free lunch.

ukcarper

Percy1983 wrote: »

Thats is my point, even if you run it at way below market rates you still end up with ahouse at the end of it for less than it should have cost you.

Like I say you would have to have extremely low rents for it to not even cover the interest.

Did you forget that my extreme example is in replay to your comment about what if your rent income doesn't clear the interest.

As you can see the answer is you still get a subsidised house at the end of it.

By all means the example leads more to a free happy meal, but its still a free lunch.

Lets assume that with voids and after routine maintenance and fees the landlord covers all of the interest but is short £100 a month of the full repayment mortgage. If he put that £30k and the £100 a month in a bank account paying 3% after 25 years he would have £110k with no risk.

If he took a higher risk investment that paid 6% he would have £200k.

Percy1983

ukcarper wrote: »

Lets assume that with voids and after routine maintenance and fees the landlord covers all of the interest but is short £100 a month of the full repayment mortgage. If he put that £30k and the £100 a month in a bank account paying 3% after 25 years he would have £110k with no risk.

If he took a higher risk investment that paid 6% he would have £200k.

Yes I agree in a badly thought out BTL venture you could get more money by investing elsewhere.

But a lessor profit is still a profit. I still fail to see how BTL can make a loss without a massive amount of mismanagement.

FTBFun

Percy1983 wrote: »

But a lessor profit is still a profit. I still fail to see how BTL can make a loss without a massive amount of mismanagement.

Perhaps you should consider heading in then?

the_flying_pig

Percy1983 wrote: »

Ok here is another very basic sum for you.

I buy a house at £100k by the time the mortgage is paid it will have cost me £150k.

I rent it out very cheaply so rent doesn't even cover the interest and over the term get a stranger to pay £30k of the interest.

So a house which should have cost me £150k has cost me £120k.

I see a £30k saving... and a house at the end.

By all means I very much doubt example as extreme as the above would ever be the case, but even in worse case there is a saving.

i dunno what the heck you're getting at here.

in this example you've paid out £120k to get something that you could at the end sell for £100k & that provides you personally with no benefits [such as shelter] in the intervening time.

as moneymaking schemes go it's decidedly sub-prime.

Thrugelmir

Percy1983 wrote: »

I still fail to see how BTL can make a loss without a massive amount of mismanagement.

Probably why BTL has become so popular. Why build a real business when you can borrow money, buy a property and sit back while watching the profits grow. All too easy.