Ban BTL landlords from buying new builds

JencParker

Cornucopia wrote: »

I don't think that we've established that BTL is a problem. It's simply a feature of our malfunctioning housing market - one whose basic problem is lack of housing. The existence or otherwise of BTL will do nothing to address that issue. On the plus side, it's another way in which debt has accumulated in private hands, rather than to the public sector.

We haven't on here, no, but that is no surprise considering the forum is
frequented by BTL and those who wish to make money. I agree that it is a
feature of a malfunctioning housing market with landlords taking advantage of it
to make money.

Although we misuse the term BTL, we are effectively talking about all private
landlords - whether there is a mortgage on the rental property or not, and
whether that mortgage is a BTL mortgage or not. In practice, the rent
is set by the market, not by what a LL needs or wants to charge, The
market takes no account of how the purchase of the rental property is funded.
This is enforced by lenders' use of rental multiples to assess BTL
affordability.

Of course it is, because they can charge what they want within that market and the short supply of housing (particularly affordable housing) means they can charge high rates.

I still don't really understand why some people choose to rent.
But they clearly do. Some of those are clearly exercising a
preference for flexibility of tenure - the flipside of insecurity.

I would have thought that was pretty obvious. There are those who do not want long term tenure - mainly the young who are still to become established in their careers, but for most it is simply that there is no alternative - they either cannot afford to buy or there is limited housing available. There are those who will never buy, but neither do they have access to LA or housing association housing so they are forced into the private sector.

I think you misunderstand how the rental market works. If the market could not bear a particular level of rent, then millions of
properties would stand empty, whilst potential tenants slept on sofas. It is
the fundamental shortage of housing that creates the market conditions for high
prices and moderately high rents, which are at a level the market accepts.

I don't misunderstand it, I simply don't agree that such a basic necessity like a home should be in the hands of those who wish to cash in on the shortage. The market bears it because people have no other option. It is no surprise that young adults, in their twenties and thirties, still live with their parents, especially in London/SE.

I say moderately high rents, because I'm not clear what people's expectations
are. Personally, I don't think that, say, £150-250 per week for a well
maintained 2-bed flat is a bad deal - and those rates are typical of outer
suburban London/South East.

As I my daughter is currently looking for a 2 bed flat, your higher estimate is more typical and that is in the worst areas of London. That is still nearly double the cost of LA and housing association rent.

JencParker

IveSeenTheLight wrote: »

I'm a BTL LL.

If an existing tenant requested a long term contract then I'd be happy to provide for them.

Generally, I see tenants signing up for 2-3 years without wishing to commit to further.

Security goes both ways and if the tenant wants security, they should be prepared to sign up for a longer period.

Would you wish to sign up to pay for someone else's mortgage for the rest of your life? People sign up because at that time, they have no alternative. They don't want to commit for longer because they live in hope that one day they will be in a position to buy their own property.

Have you ever wondered why few council tenants and housing association tenants don't sign up for 2 - 3 years and move on? Rents are more affordable, they have more freedom to make the property their home and they have security of tenure for as long as they need it.

JencParker

IveSeenTheLight wrote: »

In Scotland, LL's are regulated through the Scottish Landlord Register

You can search who the LL's are of properties, report them, formalise property repairs / maintenance.

I once thought it was just a way to collect an administration fee and to monitor against taxes, but I did once receive a letter from the local council advising they had noticed a gutter which needed repair and requested it was fixed within a certain period.

I simply contacted the factoring company to resolve.

I think that would go some way to helping the situation. Tenants are at the mercy of LL with regards to repairs and living conditions.

CLAPTON

JencParker wrote: »

I don't misunderstand it, I simply don't agree that such a basic necessity like a home should be in the hands of those who wish to cash in on the shortage. The market bears it because people have no other option. It is no surprise that young adults, in their twenties and thirties, still live with their parents, especially in London/SE.

presumably you would agree that food is as essential a necessity as accommodation


do you think the food supply and delivery chain would work better if controlled by the state?

grizzly1911

JencParker wrote: »

I think that would go some way to helping the situation. Tenants are at the mercy of LL with regards to repairs and living conditions.

A good many landlords do provide, sound, fair/good quality living conditions, they are not all rogues.

Many also provide long term options and don't seek to crank the rent at any opportunity.

I think the SLR ISTL has mentioned (with some form of Ombudsman?) is good.

JencParker

CLAPTON wrote: »

presumably you would agree that food is as essential a necessity as accommodation


do you think the food supply and delivery chain would work better if controlled by the state?

Firstly, there is no shortage of food that meets people's needs (not desires) so the comparison does not apply. And secondly, if food had increased in price at the same rate as housing chicken would cost around £50, a loaf of bread would cost around £5, a carton of milk would cost around £10.....
And if food DID cost that amount then YES, I would say state intervention would be necessary.

Cornucopia

JencParker wrote: »

We haven't on here, no...

I'm open to the argument(s). What are they?

... but that is no surprise considering the forum is frequented by BTL and those who wish to make money. I agree that it is a feature of a malfunctioning housing market with landlords taking advantage of it to make money.

I think you misunderstand. This is an investment, and if the law or the economics of it changed, we would seek out something else. If many private landlords went, it would possibly leave the market worse, not better.

Of course it is, because they can charge what they want within that market and the short supply of housing (particularly affordable housing) means they can charge high rates.

It is the shortage that is the defining factor, not the BTL mortgage. If a landlord wanted to keep all of the rent money, they would not have a mortgage. Whether they did that or not would make no difference to the potential rent for the property.

I would have thought that was pretty obvious. There are those who do not want long term tenure - mainly the young who are still to become established in their careers, but for most it is simply that there is no alternative - they either cannot afford to buy or there is limited housing available. There are those who will never buy, but neither do they have access to LA or housing association housing so they are forced into the private sector.

I see people paying 2-3 times in rent what they would do with a well-chosen mortgage. Apart from wanting flexibility of tenure, and a few who cannot get to, say, 10% deposit against a 25% share of equity, what is the reasoning for the rest? Is it that they have unrealistic expectations, perhaps of a massive crash in house prices?

I don't misunderstand it, I simply don't agree that such a basic necessity like a home should be in the hands of those who wish to cash in on the shortage. The market bears it because people have no other option. It is no surprise that young adults, in their twenties and thirties, still live with their parents, especially in London/SE.

Your two points above contradict each other. If everyone who was a potential buyer/renter stayed at home with parents/slept on friends' sofas, there would be no market. Prices would fall.

The reason why that is not happening, is because that is not the problem. The problem is too many people chasing too few properties.

As I my daughter is currently looking for a 2 bed flat, your higher estimate is more typical and that is in the worst areas of London.

And do you think that offers reasonable value for money? If not, what would be a more appropriate figure?

That is still nearly double the cost of LA and housing association rent.

Why would you compare the rents available to those on low incomes/priority needs (where there is also a shortage of properties in many areas) to those on the open market? Not sure I understand why it is relevant.

In the present economic situation, there is zero likelihood of a massive increase in public sector house building. Personally, I think the solution might be the relaxation of planning rules to gradually release land specifically for the purpose of affordable development.

IveSeenTheLight

JencParker wrote: »

Would you wish to sign up to pay for someone else's mortgage for the rest of your life? People sign up because at that time, they have no alternative. They don't want to commit for longer because they live in hope that one day they will be in a position to buy their own property.

Well, I am a BTL LL, but I am also a tenants at the moment.
This is because I am building my own home.

I could have provided notice to one of my tenants and reduced my costs, however I also believe in looking after my tenants and are happy for them to stay as long as they want.

I initially signed up for 12 months as I was optimistic the build would be completed in that time frame, however unfortunately we have had to agree a 6 month extension to cover the hurdles we faced

That said as a business, you need to have exit strategies / options.

JencParker wrote: »

Have you ever wondered why few council tenants and housing association tenants don't sign up for 2 - 3 years and move on? Rents are more affordable, they have more freedom to make the property their home and they have security of tenure for as long as they need it.

I have one professionally employed tenant of 6 1/2 years where I have not increased their rent in those 6 1/2 years.
Initially, they wanted to stay only 12 months till they found a place of their own.

The rent I received is way below the market value, but I have rewarded them as tenants looking after the home and as I have also seen increased profits through reduced mortgage rates.

They are on a periodic tenancy, meaning they have totally flexibility to move with 1-2 months notice and I have no intention to provide notice to them, however in theory they are at risk such that should I need to adjust my business model, I also have to be prepared such that should I receive notice, I am ready to move immediately to ensure little or no voids

JencParker

Cornucopia wrote: »

I'm open to the argument(s). What are they?

I can't see the point when your only criteria seems to be money!

I think you misunderstand. This is an investment, and if the law or the
economics of it changed, we would seek out something else. If many private
landlords went, it would possibly leave the market worse, not better.

I don't misunderstand at all, I just find it sad that we live in a society that puts money and profit before anything else - and lets face it, it doesn't just apply to the property market - but because it is a need rather than a luxury and there is a shortage, it makes it an easy target.

It is the shortage that is the defining factor, not the BTL mortgage. If a
landlord wanted to keep all of the rent money, they would not have a mortgage.

In the past landlords did not have mortgages, but are encouraged to do so for
tax reasons.

Your two points above contradict each other. If everyone who was a potential
buyer/renter stayed at home with parents/slept on friends' sofas did so, there
would be no market. Prices would fall.

They don't contradict each other, there is simply no one reason that applies to all.

Why would you compare the rents available to those on low incomes/priority needs (where there is also a shortage of properties in many areas) to those on the open market? Not sure I understand why it is relevant.

I'm not surprised that you cannot understand.

JencParker

grizzly1911 wrote: »

A good many landlords do provide, sound, fair/good quality living conditions, they are not all rogues.

Many also provide long term options and don't seek to crank the rent at any opportunity.

I think the SLR ISTL has mentioned (with some form of Ombudsman?) is good.

That's good to hear and I'm sure they are not all rogues.