Treatment of BTL in the budget?

cells

littlegreenfrog wrote: »

The more money banks are prepared to lend people, the more prices will shoot up, and it becomes a vicious circle.

Good theory. All other variable equal maybe it would be correct but all other variables are not constant.

in the real world why have prices in the north and midlands been flat for 10 years while London prices are more than double what they were 10 years ago?

The same banks government rules and regs apply to both locations yet one has seen a boom in prices while the other has actually got cheaper in real terms over the decade.

Whats up with that?
Well clearly its down to supply and demand and credit is less of a factor.


Simply put the over reaction and over regulation of the mortgage market and the banks is causing a 10-15% swing in owners to renters.

littlegreenfrog_2

cells wrote: »

Well clearly its down to supply and demand and credit is less of a factor.

Or a combination of both!

littlegreenfrog_2

cells wrote: »

The problem with shrinking the rental sector is that renters use up less floor space and live more dense than owners. Therefore its impossible to shrink the rental sector without building more homes.

If you did what you suggest, which is already happening soon with the tax changes, without building a lot more new homes then the result will be that the renters that remain will have to live in yet more dense housing pushing up rents further

Take the simple example of four tenets in a 3 bed + living room house. Two of the tenants form a couple and the landlord sells the property to them. The new owners kick out their old buddies because as owners they dont want to share. Where do the two displaced tenants go? Imagine that but with say a million homes. Where do the 2 million displaced tenants go? Well they have no choice but to squish into the private rental sector which has in this example gone from 5 million to 4 million units. The renters in those 4 million units now need to budge up and accept the 2 million displaced to also live with them. They dont want that as they live dense enough already so they will bid more rent to avoid it

Nobody is denying that we need to build more homes. Part of the problem is that the social housing stock has been reduced, forcing people who previously would have been council tenants into private lets. Except they can't afford it, so they need housing benefit to plug the gap. Build more social housing and you take the poorest people out of the private lettings market altogether.

CLAPTON

littlegreenfrog wrote: »

Nobody is denying that we need to build more homes. Part of the problem is that the social housing stock has been reduced, forcing people who previously would have been council tenants into private lets. Except they can't afford it, so they need housing benefit to plug the gap. Build more social housing and you take the poorest people out of the private lettings market altogether.

actually those 'sold off' council houses now either have owner occupiers living there (you approve presumably) or tenant (who you seem to have less sympathy for )
building council houses merely means creating and maintaining dependency plus creating a lucky dip for a undeserving people.

littlegreenfrog_2

CLAPTON wrote: »

actually those 'sold off' council houses now either have owner occupiers living there (you approve presumably) or tenant (who you seem to have less sympathy for )
building council houses merely means creating and maintaining dependency plus creating a lucky dip for a undeserving people.

The sold off council houses largely haven't been replaced, which just means there is less social housing for people who genuinely need it.

I think some level of dependency is inevitable. People who get housing benefit to pay their rent are no less dependent on the taxpayer than people who live in council houses. The difference is that the council house is an asset owned by the local authority, whereas the housing benefit just increases the private wealth of the landlord at the taxpayers' expense and pushes rents up in the private sector.

What's clear is that the current housing crisis is threatening to create a lot more dependency in the future. What happens when "generation rent" retire? If you can't afford to get onto the property ladder and you're spending huge amounts of your disposable income on rent (which won't ever decrease or go away like a mortgage eventually will), then you probably can't afford to save for a decent pension either. I suppose the baby boomers don't care about that because they'll be long dead by the time generation rent get to that stage, and it'll be future generations of taxpayers who have to pay for it all.

cells

littlegreenfrog wrote: »

Nobody is denying that we need to build more homes. Part of the problem is that the social housing stock has been reduced, forcing people who previously would have been council tenants into private lets. Except they can't afford it, so they need housing benefit to plug the gap. Build more social housing and you take the poorest people out of the private lettings market altogether.

social housing or more accurately government subsidised housing costs a lot of money. Private rentals in the north and midlands probably cost less once you take into account that they pay income taxes and capital gains while the council stock does not

Also sales of council homes have resulted in more owners not a shift from council renters to private renters. This is clearly evident if you look at the three tenures overtime. At its peak ownership was nearly 70% a figure which could not have been hit if the council stock was kept at 30%. Therefore you need to stop claiming the reduction in the social/aka-subed stock


anyway there is an easy and quick way to add to the social stock if you think its important to expand that. Sell the expensive flats in London Z1 and Z2 for £500k a piece and buy in its place 10 x terrace homes in stoke-on-trent (or similar). Selling just 100,000 flats in London could gain you upto 1 million social homes elsewhere.

cells

littlegreenfrog wrote: »

The sold off council houses largely haven't been replaced, which just means there is less social housing for people who genuinely need it.

There are too many council homes more need to be sold. You should not want 17% nationally 24% in London and over 40% of some councils to "genuinely need it". Do you really want 17% of all households something like 5 million households to be in such a poor way that they can only function with a council home?

Some council homes are needed for truly dysfunctional households but I would hope thats a figure below 10% and one we would want to be lower and lower

I think some level of dependency is inevitable. People who get housing benefit to pay their rent are no less dependent on the taxpayer than people who live in council houses. The difference is that the council house is an asset owned by the local authority, whereas the housing benefit just increases the private wealth of the landlord at the taxpayers' expense and pushes rents up in the private sector.

In a lot of the country its cheaper to pay a private landlord £500 a month who will then hand 20-45% of that back as income tax and who will pay capital gains on sale and transaction taxes too rather than pay a council £400-500 a month.

What's clear is that the current housing crisis is threatening to create a lot more dependency in the future. What happens when "generation rent" retire? If you can't afford to get onto the property ladder and you're spending huge amounts of your disposable income on rent (which won't ever decrease or go away like a mortgage eventually will), then you probably can't afford to save for a decent pension either. I suppose the baby boomers don't care about that because they'll be long dead by the time generation rent get to that stage, and it'll be future generations of taxpayers who have to pay for it all.

yes its a problem that needs attention but the way to fix it is to reverse the overreaction to the banking recession and allow 100% self cert interest only mortgages.

About half the country is very cheap and affordable yet ownership is falling in those areas too and the reason clearly is not price in those areas its access to finance

littlegreenfrog_2

cells wrote: »

There are too many council homes more need to be sold. You should not want 17% nationally 24% in London and over 40% of some councils to "genuinely need it". Do you really want 17% of all households something like 5 million households to be in such a poor way that they can only function with a council home?

Some council homes are needed for truly dysfunctional households but I would hope thats a figure below 10% and one we would want to be lower and lower

OK... but then we are kind of coming full circle. You and I both agree that people being dependent on the state to meet their everyday living costs is a bad thing. We just disagree on the extent to which dependency is inevitable.

So financial independence is a good thing.

What is a really good way of achieving financial independence? Buying your own home.

What is the result of already wealthy people investing in BTL? Fewer properties available for owner occupiers to buy, meaning fewer people able to buy their own home and become financially independent.

How do we increase the percentage of available housing stock being bought by owner occupiers rather than investors? Make it easier for owner occupiers to buy and harder/less profitable for investors. Which is what the increased SDLT and reduced tax relief are trying to achieve, and I really hope it works. I don't agree with many of this government's policies, but if they are genuinely trying to tackle the plague of buy to let investors then on that they have my full support.

I understand the point people have made about owner occupiers taking up more space than renters. But that means we should be building more properties (and allowing higher rise developments for new builds, particularly in population-dense areas), not expecting people to live like students forever in overcrowded rented flats.

CLAPTON

littlegreenfrog wrote: »

The sold off council houses largely haven't been replaced, which just means there is less social housing for people who genuinely need it.

I think some level of dependency is inevitable. People who get housing benefit to pay their rent are no less dependent on the taxpayer than people who live in council houses. The difference is that the council house is an asset owned by the local authority, whereas the housing benefit just increases the private wealth of the landlord at the taxpayers' expense and pushes rents up in the private sector.

What's clear is that the current housing crisis is threatening to create a lot more dependency in the future. What happens when "generation rent" retire? If you can't afford to get onto the property ladder and you're spending huge amounts of your disposable income on rent (which won't ever decrease or go away like a mortgage eventually will), then you probably can't afford to save for a decent pension either. I suppose the baby boomers don't care about that because they'll be long dead by the time generation rent get to that stage, and it'll be future generations of taxpayers who have to pay for it all.

what is true is we need more properties and to restrict immigration but we don't need more social housing.

cells

littlegreenfrog wrote: »

OK... but then we are kind of coming full circle. You and I both agree that people being dependent on the state to meet their everyday living costs is a bad thing. We just disagree on the extent to which dependency is inevitable.

So financial independence is a good thing.

What is a really good way of achieving financial independence? Buying your own home.

What is the result of already wealthy people investing in BTL? Fewer properties available for owner occupiers to buy, meaning fewer people able to buy their own home and become financially independent.

How do we increase the percentage of available housing stock being bought by owner occupiers rather than investors? Make it easier for owner occupiers to buy and harder/less profitable for investors. Which is what the increased SDLT and reduced tax relief are trying to achieve, and I really hope it works. I don't agree with many of this government's policies, but if they are genuinely trying to tackle the plague of buy to let investors then on that they have my full support.

I understand the point people have made about owner occupiers taking up more space than renters. But that means we should be building more properties (and allowing higher rise developments for new builds, particularly in population-dense areas), not expecting people to live like students forever in overcrowded rented flats.

a BTL landlord just bids on behalf of tenants. If you increase the cost for BTL landlords then tenants will pay once equilibrium is reached.

So the question you need to resolve should simply be....why are tenants not bidding directly? and instead having to go ask landlords to bid indirectly for them?

The problems are almost always (at least for single family units) an over regulation of finance.

If a tenant could go to a bank and get a 100% interest only mortgage self cert or normal, then they would have no need for a landlord and would bid directly. but the do gooders in government and the public have made such mortgages disappear they regulated them out of existence.

So people who could only get a mortgage with 95-100%, with self cert, with interest only, or a mix of all the above, can no longer go to a bank and buy a house. instead they are forced due to the regulations to go to a landlord and ask the landlord to be the middleman.

I reckon this applies to 10% of households (ie the ones who can own using the above products) which means some 3 million households are either owners or renters depending on regulation :eek: