BOE to get new regulatory powers over BTL

cells

westernpromise wrote: »

There were two enablers for BTL - the introduction of the AST in 1988 and the property crash of 1988 - 1995. The latter frightened a lot of people out of owning and consequently made them prepared to pay top, top dollar to rent. By 1996 it was possible for someone who'd bought in say the 70s or early 80s to take equity out of their house (which even post crash was still worth way more than they'd paid), put it down as a deposit, buy a house with a newfangled BTL mortgage and get paid more rent than the mortgage was costing. Instant positive cash flow.

These two factors enabled BTL and it always puzzles me why BTL-hating HPCers want a crash when any such crash will ensure a second BTL expansion.

Before the AST it was very hard to find rented accommodation. Think Man About The House, think Rising Damp - that's what it was like. In London there was also the Capital Radio Flatshare line. You phoned in and left a message describing the room you were prepared to offer to a lodger and every afternoon the DJ would read out a list of the latest ones between records. Letting whole properties out was governed by the Landlord and Tenant Act - known to property lawyers as just the Tenant Act because it was all about them.

We're headed back that way.

there is also more demand for rentals now than there was 10 years ago. which is why even very cheap areas like stoke on trent have seen a rise in renters over the last 10 years

a lot more students: 350,000 more now than in the year 2000

more single mothers

couples getting married later thus renting longer

lot more immigrants (who need to rent a number of years before they can buy)

more divorce sometimes resulting in one or both having to rent

etc

Graham_Devon

cells wrote: »

etc

Less houses to buy as BTL buy the available stock up....

ukcarper

Graham_Devon wrote: »

I'm not sure anyone is planning to eliminate BTL. Simply reduce some of the risks which it seems currently exist and by doing so, reduce the pace of buying by BTL landlords.

ukcarper wrote: »

I agree and that's why I don't think like some of the anti BTL Posters that they will continue to squeeze BTL much further.

As you know we need more affordable housing and the government are only paying lip service to that.

Graham_Devon wrote: »

Not sure what you mean by this. It seems you only give 2 options which was nothing to do with my post which you quoted.

I've said what I think they are doing above your post in any case?

So why do you think not doing much more contradicts your post.

cells

Graham_Devon wrote: »

Less houses to buy as BTL buy the available stock up....

so the 18 year old without a job or any savings and just a student loan to buy food and books with was somehow going to buy a house if only those pesky landlords hadn't?

westernpromise

Graham_Devon wrote: »

Less houses to buy as BTL buy the available stock up....

Which helps, slightly, because more people occupy a property when it is rented than when it is owned. You don't get many HMOs in the OO sector.

mwpt

cells wrote: »

so the 18 year old without a job or any savings and just a student loan to buy food and books with was somehow going to buy a house if only those pesky landlords hadn't?

What has this 18 year old got to do with anything? What about the couples renting well into their 30s?

westernpromise

mwpt wrote: »

What has this 18 year old got to do with anything? What about the couples renting well into their 30s?

I think the point being made was that if you arbitrarily decide that 50% of school leavers must go to university, and they must all go through the existing universities (because you won't pay for more), then since most people don't go to the local university, they'll move out of mum and dad's, and will need to be accommodated in a rented room in a university town.

Most universities aren't funded to own all the accommodation they need to house all their students, so many have to rent privately. Add a whole bunch more students, and a piece of infrastructure - let accommodation for 350,000 people at one per room - had to come into existence to house them all. Nobody funded this centrally, so private landlords did so.

Four-up four-down town houses in (eg) Bath with two elderly people living in them duly got sold to landlords, who left one room as a lounge and put seven students into the other rooms. Note how the occupation density of their parents' home falls and how that of rented accommodation rises in consequence.

Simply put, the growth of the rented sector has made it possible for the existing housing stock to hold more people. If this goes into reverse, rents can really only go one way.

ukcarper

mwpt wrote: »

What has this 18 year old got to do with anything? What about the couples renting well into their 30s?

Rental properties are needed for people of all ages, there has never been a time where everybody has been able to buy.

HAMISH_MCTAVISH

mwpt wrote: »

What has this 18 year old got to do with anything? What about the couples renting well into their 30s?

What about them?

They mostly can't buy because of mortgage rationing, not prices, so selling their rented home out from under them isn't going to help...

The real problem is a housing shortage. You can't fix that by shuffling the existing stock around.

A simple illustration:

10 houses for sale, 12 people want to buy one, prices rise until the bottom earning 2 people are priced out. The market has allocated goods in scarce supply through price.

10 houses for rent, 12 people want to rent one, rents rise until the bottom earning 2 people are priced out. The market has allocated goods in scarce supply through price.

Now lets have some good old fashioned government intervention.

Force the movement of 2 houses from rented to for-sale via tax, BTL lending changes, etc.

You now have 12 houses for sale and 8 for rent. But you also now have 2 homeless renters.

So there are 12 houses for sale, and the original 12 people that want one, plus the two people that used to be able to rent that now have to buy. Still a shortfall of 2 people.... Prices still have to rise until 2 people are priced out.

And you still have two more people wanting to rent (10) than there are houses to rent (8). So rents continue to rise as well.

OR...

You keep the current mortgage rationing so no more people can buy.... You then have 12 houses for sale and the original 12 people that want to buy one. Prices now stagnate.

But then you only have 8 houses for rent and 12 people that want to rent one. Now rents really have to soar until 4 people are priced out. And even fewer renters can save up a deposit to buy.

Pick your poison....

The only way to cure a housing shortage is to build more houses.

Any attempt to target BTL in the meantime will only backfire spectacularly, just as mortgage rationing backfired spectacularly, and can only worsen an already critical shortage of housing.

michaels

HAMISH_MCTAVISH wrote: »

What about them?

They mostly can't buy because of [\QUOTE]

This is very scary.

I thought almost exactly this post but decided there was no point posting it again: the people who don't get that unless there are more houses or people are suddenly not willing to spend as much of their income on housing then housing costs as a proportion of income will not fall are never going to get it.