Are the Torys real Torys?

lawriejones1

Thrugelmir wrote: »

BTL is a business. Not one that benefits the wider economy though. As creates few jobs , doesn't generate exports, nor contributes to financial stability. Nothing entrepreneurial in leveraging with debt and taking a punt.

Interestingly, my father used to work as a tradesperson and he (and a large number of others) made successful businesses working with BTL landlords. Yes, this money may have been spent by homeowners, but I'm not so sure.

He then went on to run a profitable (now closed) removals company that employed 10 local people and was based upon the fact people moved more regularly and wanted a high quality service. Between the two businesses I estimate he and I must have added a few hundred thousands to the economy through taxation and employed about 20 different people. All based around our country's obsession with housing.

michaels

What if a btl landlord commissioned a builder to build on a plot of land and then rented out the new property - wouldn't that be a productive business providing a service to a consumer?

Now suppose that rather than commissioning the builder directly they just purchased a property (perhaps one that had been built in an area where the typical occupation arrangement was rental) - surely still a productive business?

I can't see how supplying housing services is less productive than supplying resturant meals or hair cuts or sticks in vases.....

CLAPTON

lawriejones1 wrote: »

My view on BTL is that as a business it doesn't create or produce anything, but it's a business Governments have been happy to see people start up and invest in. But this isn't about BTL - take that out of the equation and we're still left with a Tory party that's gutting business and the normal guy with higher taxes.

presumably in exactly the same way as a owner occupier house doesn't create or produces anything

michaels

Back to the original point, Osbourne has rushed to occupy the centre ground vacated by the Labour party.

The BBC have revelled in painting the Tories as the party of slashing govt expenditure where as actually the govt share of GDP remains well within historic bounds.

So the govt was never very right wing and has recently tacked right to the centre - despite what those with a VI to claim otherwise on both sides of the political spectrum would tell you.

lawriejones1

CLAPTON wrote: »

presumably in exactly the same way as a owner occupier house doesn't create or produces anything

I don't really understand what you're trying to say I"m afraid. Or perhaps I'm not well enough informed to answer. That's a reply you'll very rarely see on a forum!

It raises an interesting point about who spends more money on their homes over a period of time - a BTL landlord or a homeowner? I guess a BTL landlord front-loads their spending, whereas a homeowner probably consistently spends money throughout their period of ownership.

My point was that BTL is a business that successive Governments have encouraged people to invest in. But it's a business that many don't really have the acumen or ability to manage properly. Which is why I suggested taking it out of the equation here. Although Osbourne has now started to heavily tax the investment in the same way as he is doing for business.

I should really have left BTL out of the initial comment.

CLAPTON

lawriejones1 wrote: »

I don't really understand what you're trying to say I"m afraid. Or perhaps I'm not well enough informed to answer. That's a reply you'll very rarely see on a forum!

It raises an interesting point about who spends more money on their homes over a period of time - a BTL landlord or a homeowner? I guess a BTL landlord front-loads their spending, whereas a homeowner probably consistently spends money throughout their period of ownership.

My point was that BTL is a business that successive Governments have encouraged people to invest in. But it's a business that many don't really have the acumen or ability to manage properly. Which is why I suggested taking it out of the equation here. Although Osbourne has now started to heavily tax the investment in the same way as he is doing for business.

I should really have left BTL out of the initial comment.

It what way has the government encouraged landlords?
Why does it matter whether LLs or OOs spend more on their property or the phasing?
What evidence do you have that many/most LLs don't have the acument or ability to manage their property well?

In what way is Osbourne taxing investment heavily in normal businesses?

princeofpounds

I always think it's such a shame that most people don't understand the basics of rentier economics when arguing about the BTL business model and the contribution (or not) it makes to society.


https://en.wikipedia.org/wiki/Economic_rent


Providing capital to support accommodation is a valuable service - it releases the capital of the builders to reinvest in new construction - and there is nothing wrong conceptually wrong with BTL to the extent that it provides that service.


Unfortunately, this argument breaks down as soon as an artificial scarcity is introduced into the housing market (which we in the UK are excellent at doing through our planning system).


To reference the wiki article:

In economics, economic rent is any payment to a factor of production in excess of the cost needed to bring that factor into production. In classical economics, economic rent is any payment made (including imputed value) or benefit received for non-produced inputs such as location (land) and for assets formed by creating official privilege over natural opportunities (e.g., patents). In neoclassical economics, economic rent also includes income gained by beneficiaries of other contrived exclusivity, such as labor guilds and unofficial corruption.

BTL landlords are a rentier class, in the true economic sense, not just the collecting money sense!


That 'contrived exclusivity' pretty much defines how we arrange our housing in this country.

mwpt

michaels wrote: »

What if a btl landlord commissioned a builder to build on a plot of land and then rented out the new property - wouldn't that be a productive business providing a service to a consumer?

Now suppose that rather than commissioning the builder directly they just purchased a property (perhaps one that had been built in an area where the typical occupation arrangement was rental) - surely still a productive business?

I can't see how supplying housing services is less productive than supplying resturant meals or hair cuts or sticks in vases.....

It's a nice idea but in order for it to be valid you must show that the expansion of BTL has led to a corresponding expansion in the rate of building. I don't think such a correlation exists.

michaels

Lots of blocks of flats in Northern cities (which as it happens did very badly in the 'crash') were only built because of demand from BTL landlords.

In general landlords putting capital into the housing market must all else being equal lead to higher prices and thus more supply.

westernpromise

princeofpounds wrote: »

I always think it's such a shame that most people don't understand the basics of rentier economics when arguing about the BTL business model and the contribution (or not) it makes to society.


https://en.wikipedia.org/wiki/Economic_rent


Providing capital to support accommodation is a valuable service - it releases the capital of the builders to reinvest in new construction - and there is nothing wrong conceptually wrong with BTL to the extent that it provides that service.


Unfortunately, this argument breaks down as soon as an artificial scarcity is introduced into the housing market (which we in the UK are excellent at doing through our planning system).


To reference the wiki article:


BTL landlords are a rentier class, in the true economic sense, not just the collecting money sense!


That 'contrived exclusivity' pretty much defines how we arrange our housing in this country.

The problem with that analysis is that it isn't landlords who introduce, create or extend the "contrived exclusivity". That is all the work of owner-occupiers, who tend to be nimbies, and landlords as aspiring buyers suffer from exactly as other buyers do.

Landlords would, if they thought about it, prefer there to be more building rather than less. It would provide a greater supply of properties to buy and a landlord is better off buying five houses for the price of four and letting them out at 80% of the rent. His capital outlay and income are the same but his void cost is less and his stamp duty cost is definitely lower too.

The villains of the piece are owner-occupiers and uncontrollable immigration. There are no plans to address these.