The Moral of a BTL.....?

Prothet_of_Doom

I want to explore the morals of becoming a land lord.

Over the past 4 years, by drawing a moderate salary, and taking only a small dividend my Ltd company, has gradually built up a buffer a surplus if you like.

This surplus to put in context is basically worth an hour a day of " overtime ", given that my Ltd company is paid an hourly rate, by it's clients.

If I'd done a 38 hour week rather than a 45 hour week it would NOT exist.

Now if I keep some of the surplus as a buffer, in case of no work, this leaves me with enough for a 50% deposit on a decent flat in the city centre or a student house.

Now I'm struggling to persuade my wife that the long term investment outweighs the risks and should be seen as a way of supporting ourselves in our old age.

This is not helped by my sister in laws belief which she feeds to my wife, which basically says "nobody should own more than one house, nobody should make a profit out of other people's need for a roof over thier head"

Now I see this as the politics of envy. I'm not looking to make massive profits, but I do want to use any profit to fund another deposit, and another, and another, before using any profit to pay off all the mortgages as I see 4 propoerties providing enough to comfortably live on in retirement. I have some pensions, but quite frankly I'll be uncomfortable.

If people like me, are investing, that means that we compete in the housing market, with people like my kids who might struggle when they reach the age that they want to stop renting, and there is the option of helping them onto the ladder, but and this is both realistic and selfish, I need to turn the cash I'm making now, into something that will pay for my old age. And in any case I'll be handing it to them on my death. Unlike a pension which dies with you. :mad:


So, am I morally corrupt like my sil thinks, or am I just finding a way of making my money work.

CLAPTON

Strangely many people on this board praise the German model where 'most' people rent.

They usually don't say, but I assume they think it morally OK to be a German landlord even if it is morally repugnant to be a British one.

ILW

CLAPTON wrote: »

Strangely many people on this board praise the German model where 'most' people rent.

They usually don't say, but I assume they think it morally OK to be a German landlord even if it is morally repugnant to be a British one.

German landlords tend to be corporation who actually build the properties and rent out as a long term business. They tend not to just buy up what is already a limited supply of property.

Prothet_of_Doom

If there is private rental, then there has to be private landlords and letting agents, and there has to be a return on investment.

ILW

Prothet_of_Doom wrote: »

If there is private rental, then there has to be private landlords and letting agents, and there has to be a return on investment.

I would suggest the "morality" could depend on the source of teh property. If it was obtained purely by outbidding any potential owner occupiers, then I would consider it dubious overall. If you are going to actually create new housing then there is a general good. But in the end morality is a personal thing.

Prothet_of_Doom

ILW wrote: »

German landlords tend to be corporation who actually build the properties and rent out as a long term business. They tend not to just buy up what is already a limited supply of property.

Okay to split this up.

I'm not going to build a property.

If properties are in limited supply, then we are not allowing enough to be built. Not in developers interests to release the land banks, they have...blah blah blah planning laws, etc etc.

If I could find an unused property, (and shelter think there are 250,000 above shops alone) I would happily convert it into accomodation, but with my first I need to manage the risk I think.

the_flying_pig

OK, i'll bite.

"morality" is a really, really, difficult thing.

e.g. under a so-called 'golden rule' [you should treat others as you'd like others to treat you] then, yes, there are reasonably strong arguments that BTL is immoral.

comparing it with other businesses that provide essentials to customers, then, well, let's say that if the Sainsbury family lost their shareholding overnight, how would they feel about someone else coming along & setting up a big business that sourced food & stuff as cheaply as possible & sold it on for a fairly small margin, well, I daresay they wouldn't object. BTL is different to this of course because [etc - this isn't the place for a really, really, serious debate, I don't think]

CLAPTON

ILW wrote: »

German landlords tend to be corporation who actually build the properties and rent out as a long term business. They tend not to just buy up what is already a limited supply of property.

I've no idea whether that is true or not.

I'm amazed that German companies don't sell assets just like most other companies.

However I don't think that it is morally better for large corporations to have a monopoly of the rental market.

The issues of building properties in the UK are our planning laws, infrastructure charges and the requirement to subsidise social housing.

IveSeenTheLight

the_flying_pig wrote: »

BTL is different to this of course because................................

Why do you think BTL is different?

Loughton_Monkey

Morals are a very personal thing, and not one where advice is very helpful. Peter Rachman was a landlord, and I would suggest that his morals were completely different from your own [if you choose to go into the same business].

Similarly, the subject of how best to invest a lump of money, is somewhat an individual decision. Some of us would spread a large lump of cash around (e.g. as in funds) while others are happy to bung it all into a sh** or bust single venture (like a BTL).

Personally, I consider making money from someone's need for a roof over their heads is not immoral. A number of banks/building societies made money out of me when I was buying, and I didn't complain.

I never mind businesses making a profit out of me provided they are legal, compete properly, don't tell lies, and offer good products and services. This rules out Thames Water, and also rules out the nasty charlatons I saw last weekend at a country show, selling 'pure Aribica coffee', which they billed as fair-trade, sustainable, organic, and 'local produce'. About as ethical as a tapeworm!

the_flying_pig

IveSeenTheLight wrote: »

Why do you think BTL is different?

why different to a supermarket?

well, it's mostly common sense IMO and even if not is old ground that's been covered about a million billion pillion times on this forum alone but as a starter for ten of the things that Sainsburys does to get food on my table that I myself wouldn't be able to do if I tried to go alone:

(1) use its size/buyer power to strike favourable deals with [alternative viewpoint - 'shaft'] farmers & so on in this country & overseas in a way that i couldn't possibly do myself;
(2) similarly use its size to arrange freight transport of stuff by sea, air, rail, & road in ways that i couldn't possibly do myself;
(3) employs armies of in-house butchers, bakers, quality controllers, etc etc to do jobs that i couldn't possibly [etc];
(4) is loads better at storing [including drying, freezing, etc] stuff than i ever could be;
(5) etc.

etc.

etc.

i could probably string this list out to a couple of dozen points without really trying very hard.


a similar list compiled for BTL would be far shorter, probably exceptionally tenous in most cases, & glaringly incomplete if it omitted the obvious fact that in many cases it's crowding out/competing with would-be owner occupier buyers.