Landlords to blame for Britain's rising house prices

ukcarper

Graham_Devon wrote: »

Imagine you had an asset.

Say that asset is plywood.

You also have all the tools to make lovely wardrobes.

However, plywood itself is increasing in price. It's increasing faster than the price of lovely wardrobes.

So you look at your plywood and think "maybe I should invest instead in more plywood, it's making more than I could making lovely wardrobes".

You then ask yourself...why am I spending money on buying the tools and hiring the people to make lovely warddrobes when my plywood sitting there doing nothing is increasing at a faster rate than my lovely wardrobes are?

And then it hits home....hang on, if I buy more plywood, I'll have even more plywood and others will have less plywood. My plywood will go up even faster....

http://www.telegraph.co.uk/news/earth/hands-off-our-land/9522902/House-builders-sitting-on-400000-undeveloped-plots-of-land-with-planning-permission.html

Problem with that is if you keep buying plywood and don't build wardrobes where are you going to get money to keep buying plywood.

cells

Graham_Devon wrote: »

Yes.

Just as I'd prefer right to buy were abolished. Instead of helping one family, that government owned home could help many over its lifetime.

if the government selling a house to an owner is bad, then is the government buying a house from an owner to rent out good?

BobQ

stator wrote: »

Buy to let is evil and should be banned. All it does is increase house prices and rents and encourage amateurs to get into the landlord business where they innevitably become very bad slumlords.
Osborne's decision to turn pensions into cash slush funds will only make the matter worse. In Australia where they had a similar system for a while most old people put their money into property, pushing up house prices.

This is just silly. House prices rise because of the supply being insufficient to meet the demand. BTL landlords are just one source of demand. You may as well blame people who buy bigger houses than they need for the demand, or those who refuse to sell houses that are bigger than someone else thinks they deserve to have. Then you can blame those buying second homes for holiday or work, or who buy a house for the student offspring.

If we built more houses of the type buyers want to buy in the places they want to buy them the prices would fall. If we made it easier for ordinary people to finance the purchase of a house prices would fall. If we do both rents would fall and those interested in BTL would also fall.

cells

Crashy_Time wrote: »

Wrong. There are plenty of houses, it is just that reducing them in price will hurt the banks and landlords (Tory/Labour party represent them) so anything that can be done to put off the day of reckoning will be done, but there is a limit to the can kicking and we are getting close to it.

how do you expect prices to fall without rents to fall

and what would/could make rents fall and is at all remotely likely to happen

cells

BobQ wrote: »

This is just silly. House prices rise because of the supply being insufficient to meet the demand. BTL landlords are just one source of demand. You may as well blame people who buy bigger houses than they need for the demand, or those who refuse to sell houses that are bigger than someone else thinks they deserve to have. Then you can blame those buying second homes for holiday or work, or who buy a house for the student offspring.

If we built more houses of the type buyers want to buy in the places they want to buy them the prices would fall. If we made it easier for ordinary people to finance the purchase of a house prices would fall. If we do both rents would fall and those interested in BTL would also fall.

BTL does not actually add demand for property it SUBTRACTS DEMAND by allocating housing more efficiently

If more homes today were BTLs then rents would be a lot lower and there would be a much lower proportion of single person households (about 8 million homes in the uk are single person ocupied, id wager not many of those 8 million are rentals)

a trait of a market in under supply of new builds is this conversion from owners to renters


we actually need the opposite, an OVERSUPPLY of new builds so the trend of owners to renters reverses

cells

if for example owners live on average at 2 persons per home,
and renters live on average 3 persons per home.

lets say the population grows by a million people and no additional homes are built

there are only two possibilities.
1: a million homeless people sleeping in tents and under bridges
2: a million homes are converted to rentals from owners

Clearly #2 is what would happen and is more desirable than #1


that is the UK right now

of course option three would be the best of all, a sufficient number of new builds to meet the needs of both population growth and demographic changes.


an increase in rented homes is what is stopping the underbuilding of new homes from hundreds of thousands of people sleeping in parks

IveSeenTheLight

Graham_Devon wrote: »

Imagine you had an asset.

Say that asset is plywood.

You also have all the tools to make lovely wardrobes.

However, plywood itself is increasing in price. It's increasing faster than the price of lovely wardrobes.

So you look at your plywood and think "maybe I should invest instead in more plywood, it's making more than I could making lovely wardrobes".

You then ask yourself...why am I spending money on buying the tools and hiring the people to make lovely warddrobes when my plywood sitting there doing nothing is increasing at a faster rate than my lovely wardrobes are?

And then it hits home....hang on, if I buy more plywood, I'll have even more plywood and others will have less plywood. My plywood will go up even faster....

http://www.telegraph.co.uk/news/earth/hands-off-our-land/9522902/House-builders-sitting-on-400000-undeveloped-plots-of-land-with-planning-permission.html

How does the plywood hoarding business make any money, if it's only buying plywood and not selling it to release the value it holds

stator

cells wrote: »

BTL does not actually add demand for property it SUBTRACTS DEMAND by allocating housing more efficiently

If more homes today were BTLs then rents would be a lot lower and there would be a much lower proportion of single person households (about 8 million homes in the uk are single person ocupied, id wager not many of those 8 million are rentals)

a trait of a market in under supply of new builds is this conversion from owners to renters


we actually need the opposite, an OVERSUPPLY of new builds so the trend of owners to renters reverses

Could have fooled me. Most owners I know live in couples. The only renters I know are single.
It's only when men get tethered to a woman that they care about such things as "putting down roots"

IveSeenTheLight

stator wrote: »

Could have fooled me. Most owners I know live in couples. The only renters I know are single.
It's only when men get tethered to a woman that they care about such things as "putting down roots"

Other than single bedroom flats (and some of them may be shares), my experience is that most rentals are shared tenancies.

Why would a renter rent multiple bedrooms and live in the property as a single?

When I was young and bought my first flat, I was an owner and lived in the 2 bed until my wife moved in, so I can see OO's having the foresight to buy 2 bed or more properties, even if they are the only resident.

Cornucopia

The trouble with this country is that we've lost the ability to make good quality analogies. The whole plywood saga isn't working for me, at all.

There is no point in trying to visualise the UK housing market as having flexibility of supply, because it doesn't - that is the fundamental problem.

It's more similar to something like gold, where supply is intrinsically limited, and the rate of production is low. That means that there is inflexibility in supply, which puts pressure on the market when demand is high.

The *only* effects of BTL are:-

- Potential differences in occupation densities as already mentioned.
- Making property available to those who cannot or do not want to make the commitment to a mortgage.
- Creating a marketplace for rental, establishing market rents for properties in an area.
- Creating a balanced risk/reward relationship between tenant and landlord.
- In some cases, physically and/or financially restructuring to suit a particular need (e.g. HMOs).

There is no capability for BTLs to reduce the availability of housing - it makes no sense to keep property empty. If anything, they introduce a level of flexibility and short-termism that can optimise occupation densities.