Legal & General plans to become large-scale landlord

IveSeenTheLight

Graham_Devon wrote: »

Good grief ISTL, do you want me to provide a dissertation on it or something?

Most definitely not.
Although it would be interesting reading.
http://forums.moneysavingexpert.com/showpost.php?p=62875509&postcount=38

Graham_Devon wrote: »

GHow am I supposed to know detailed answers from one article on which we are discussing?

It's important for you to consider as part of understanding context.
If you don;t consider these things then you can't start to contemplate the impact.

Graham_Devon wrote: »

Something you have told me on many occasions is that if you want prices to fall you have to add more supply.

Yes definitely, however........

Graham_Devon wrote: »

That is what is happening here,

Is it?
How many NEW properties will be built, in which areas and what is the impact to those areas as a percentage.

I've yet to see the start on how many NEW properties this will produce or indeed if they are just investing in existing stock.

As I said context.

Graham_Devon wrote: »

to which you now state the opposite of what you have stated before.

Where?

Graham_Devon wrote: »

G
Another BTL [inset] Landlord [/insert] against a large company getting in on it....

Not at all.
As I've stated earlier, I'll assess if this impacts me and adjust accordingly.
So far this does not appear to have any impact on me.

toby3000

It's seems fairly obvious how it will reduce rents. Assuming they have even mediocre but realiable service they'll be a million times better than 90% of landlords. So if they charge the same (or even slightly more) than the current rents people will chose to use them. So the other landlords will have to lower their rents.

Surely it's fairly basic economics? Though really it should be the government doing this.

zagubov

IveSeenTheLight wrote: »

I see no direct comparison of how it would drive prices down.
How many additional homes are L&G building? or are they investing in existing stock?
For the additional building, how is this dispersed across the UK.
What will be the impact locally?

Let's assume that you are right and there is sufficient new builds BTL from L&G in a locale that directly affects my margins.
I'd then consider leaving the market, to them, thus reducing supply again.

There are a lot of if's surrounding this announcement, but certainly I have not seen any sound evidence that tenants would benefit financially from this deal.

Building new. Frankly if they weren't building new stock, they'd bring nothing to the current situation. England needs a housing construction boom.

And big rental companies work well in Germany.

I'm another fan of this!

IveSeenTheLight

zagubov wrote: »

Building new. Frankly if they weren't building new stock, they'd bring nothing to the current situation. England needs a housing construction boom.

I agree the UK (not just England) needs to build more houses, however there is no definate plans as to how much stock L&G will create.

The article says it will invest £15 Billion in housing, education, energy and transport over the next ten years.

So if you consider compound interest each year at 3%, your looking at approx £1.17 Billion in year one, split across housing, education, energy and transport.

How much is going toward housing?
Even if ALL of it went to housing with an average of £100,000 per property, it's only just short of an additional 12,000 properties.
Dilute the figure down by spending in education, energy and housing and I reiterate, how much property will be actually built?

So yes, more properties need to be built, but I question how much of this is publicity spin and how much will it affect the bottom line.

zagubov wrote: »

And big rental companies work well in Germany.

I'm another fan of this!

There was one poster who made a very good point about german rentals, although I can't quite recall it at the moment) or where it was posted)

Certainly a quick google search on "german rents" shows the picture is maybe not quite as rosy as some people paint.

German Rent Rally Stalls in Biggest Cities After Years of Gains

High Rents, Euro Crisis Among Main German Voter Concerns -Poll

Rents increasing in German cities

Germans develop a thirst to own their homes

German rental cap seen exacerbating housing supply bottleneck

German residential prices rising faster than rents

One from a couple of years ago comparing Germand with the UK

Brits buy homes, the Germans rent – which of us has got it right?
Germany seems to offer cheaper rents and more choice than the UK. But is the grass really grüner?

Germany, renting is the norm. Is the grass really grüner on the continent?

As the Germans like to say, "Jein" – or yes and no. For a start, renting is not necessarily the cheap option. In thriving cities like Hamburg, Cologne and Munich, tenants might be spending up to half their wages on rent. And the prospect of paying a landlord well into old age appeals to Germans no more than it does to the Brits.

"The interest in home ownership is certainly growing," says Dr Jan Linsin, head of research Germany at property services company CB Richard Ellis. But young Germans don't feel too frustrated if they cannot get on the property ladder, whereas the Brits do. The difference in attitude reflects the difference in the housing markets – over the past 10 years UK residential property prices have nearly doubled, while in Germany they have risen a mere 2%-3%.

It would appear that you can keep prices down, by having a dominant rental market.
Is this what people in the UK want, Low Prices but lack of options to buy?

So what keeps prices down, and why don't more Germans buy? Firstly, there is the supply of good quality rental accommodation. According to CB Richard Ellis, German housing associations and municipal authorities hold about 12% of stock, private housing companies 10%, and property funds about 1%; the rest is held by private investors.

Regional variations are enormous – in Berlin, the rental property share is an incredible 90% of the total residential market, which obviously keeps prices down; even in prosperous Hamburg the rental market is nearly 80%. But in other states like Saarland and Rhineland-Palatinate, homeownership is almost 60%, the highest in Germany.

So how does renting work out in practice in Germany? We compared renting and buying in London with Munich, which is easily the most expensive city and the closest Germany has to London.

Despite having a population of only 1.34 million, Munich is home to commercial powerhouses like Siemens, Allianz and BMW, several leading universities and institutes, and numerous high-tech firms.

Heike and Steffen Hengstler and their eight-year-old son Leon live in a decent-sized two-bedroom flat (105 square metres) in a prime location – just two minutes' walk from the fast-flowing Isar, five minutes from the prestigious Deutsches museum and 10 minutes from Marienplatz, the heart of the city. The closest equivalent in the UK would be London's Bayswater, with Hyde Park and Marble Arch just half a mile or so away.

The Hengstler's rent is £1,170, including bills totalling £200; the same kind of accommodation in Bayswater would cost about £2,000 a month, bills included, so you can understand why the Hengstlers are smiling: renting is about £830 a month cheaper than here.

If they were to buy a similar property in Munich it would cost them perhaps more than many British people assume to be the average in Germany.

In Munich, a two-bed centrally-located flat would fetch around £400,000. Assuming the Hengstlers paid 25% in cash, the repayment mortgage over 20 years at an assumed rate of 4% would be around £1,800 a month, plus £200 for bills – so renting saves them about £1,400 a month.

So while the grass in Germany is definitely a shade or two greener, it is not as verdant as you might have thought. The fact is that wherever you are, you don't want to be paying rent in your retirement. Although Germany is better value than the UK, buying property is still out of the reach of most.

The grim reality of today's property markets – whether it is Munich or London – is that most young people cannot get on the property ladder without parental help or inheriting.

Where tenants get a better deal

Heike Hengstler rented in London for a few years before moving to Munich where she works as a freelance graphic designer. She and husband Steffen, who has his own web-design firm, rent a generous, two-bed apartment in the centre of Munich.

Heike also has a flat in her hometown of Hamburg that she lets out, and one in Munich.

She has no doubts that Germany offers tenants a better deal than the UK: "There's more to rent here and it's all very transparent. You can check if your rent is fair using the Mietspiegel [rental index] on the Munich city website. If you are paying too much, the tenants' association will step in for you."

Rents are tightly controlled and cannot normally be increased by more than 20% nominally over three years. [insert] 20% nominally over three years. WOW, seems like there is potentially more movement than in the UK [/insert] Unlimited contracts are standard and tenants, if given notice, can demand continuation.

Deposits are normally for three months and must be repaid with interest on moving out. Agents normally take a two-month fee, although many landlords let directly.

Property is normally freshly decorated in white before tenants move in, and must be repainted when they leave.

"Because tenants rent in the long term, they may do some renovating. Sometimes the incoming tenants might have to pay extra towards them as a condition of taking over the flat – and that can run to a few thousand euros," Heike says.

But tenants get a "pretty good deal" compared with Britain, she says. "It's easier and cheaper for young people to get a place to live and to move about, but in the long term no one wants to be paying rent here either."

zagubov

IveSeenTheLight wrote: »

I agree the UK (not just England) needs to build more houses, however there is no definate plans as to how much stock L&G will create.

The article says it will invest £15 Billion in housing, education, energy and transport over the next ten years.

So if you consider compound interest each year at 3%, your looking at approx £1.17 Billion in year one, split across housing, education, energy and transport.

How much is going toward housing?
Even if ALL of it went to housing with an average of £100,000 per property, it's only just short of an additional 12,000 properties.
Dilute the figure down by spending in education, energy and housing and I reiterate, how much property will be actually built?

So yes, more properties need to be built, but I question how much of this is publicity spin and how much will it affect the bottom line.



There was one poster who made a very good point about german rentals, although I can't quite recall it at the moment) or where it was posted)

Certainly a quick google search on "german rents" shows the picture is maybe not quite as rosy as some people paint.

German Rent Rally Stalls in Biggest Cities After Years of Gains

High Rents, Euro Crisis Among Main German Voter Concerns -Poll

Rents increasing in German cities

Germans develop a thirst to own their homes

German rental cap seen exacerbating housing supply bottleneck

German residential prices rising faster than rents

One from a couple of years ago comparing Germand with the UK

Brits buy homes, the Germans rent – which of us has got it right?
Germany seems to offer cheaper rents and more choice than the UK. But is the grass really grüner?


It would appear that you can keep prices down, by having a dominant rental market.
Is this what people in the UK want, Low Prices but lack of options to buy?

I'm not seeing much there that suggests the Germans have got it wrong. I'm willing to bet their pension schemes will be fine to allow them to rent in retirement.

Maybe they'll downsize which would be a good thing. I doubt they'd have to sell a house to pay for care when older, which everyone assumes we'll have to do here.

They certainly get a lot of space to live in compared with in the UK. (well, down here in the south east we're living in shoeboxes compared with how my friends and relatives in central Scotland live).

It seems to me in Germany they get to live in good modern spacious accommodation all their lives. Then their kids get to live in good spacious accommodation all their lives.

We could very much do with that over here.

CLAPTON

zagubov wrote: »

I'm not seeing much there that suggests the Germans have got it wrong. I'm willing to bet their pension schemes will be fine to allow them to rent in retirement.

Maybe they'll downsize which would be a good thing. I doubt they'd have to sell a house to pay for care when older, which everyone assumes we'll have to do here.

They certainly get a lot of space to live in compared with in the UK. (well, down here in the south east we're living in shoeboxes compared with how my friends and relatives in central Scotland live).

It seems to me in Germany they get to live in good modern spacious accommodation all their lives. Then their kids get to live in good spacious accommodation all their lives.

We could very much do with that over here.

probably related to their planning laws rather than their ownership model

also I would guess (but don't know) that their economy isn't as concentrated in one area like the UK (London and the SE)

of course their pension model is the Bismarck system- high (unaffordable and unsustainable) state pensions.

zagubov

CLAPTON wrote: »

probably related to their planning laws rather than their ownership model

also I would guess (but don't know) that their economy isn't as concentrated in one area like the UK (London and the SE)

of course their pension model is the Bismarck system- high (unaffordable and unsustainable) state pensions.

As if on cue, the beeb has an item about "rabbit hutch homes".
The German economy doesn't seem so concentrated, in my limited experience. Industry seems widespread, the financial sector is located somewhere far from the capital. They've managed to do what we can only envy, and made their whole country rich with no forgotten areas. The UK is made almost entirely of poorer forgotten areas.forgotten areas. What a cr4p way to run a country.

German pensions: is their system worse than ours?

CLAPTON

zagubov wrote: »

As if on cue, the beeb has an item about "rabbit hutch homes".
The German economy doesn't seem so concentrated, in my limited experience. Industry seems widespread, the financial sector is located somewhere far from the capital. They've managed to do what we can only envy, and made their whole country rich with no forgotten areas. The UK is made almost entirely of poorer forgotten areas.forgotten areas. What a cr4p way to run a country.

German pensions: is their system worse than ours?

Eastern Germany ....... a forgotten wasteland


The German pension model is one of high STATE (i.e. taxpayer funded) pensions.


The Uk is a great place to live.

grizzly1911

CLAPTON wrote: »

Eastern Germany ....... a forgotten wasteland


The Uk is a great place to live.

A bit like the North East and Wales then.

zagubov

CLAPTON wrote: »

Eastern Germany ....... a forgotten wasteland

Hardly. A newly-integrated area getting massive infrastructure investment, autobahns, the massive Berlin airport, the site of the new capital.


There's an idea. A new capital city. :beer: