Is Buy to Let dead?

FBaby

Whether someone being made homeless is a result of them having a greedy landlord or that of their own choices is totally subjective.

There is a thread at the moment from someone who was renting a home with at least one of them working FT and earning a decent salary. They then made the decision to have another child, give up their good job whilst the other took on an apprenticeship.

They had to give up the property as they couldn't afford to pay rent any longer. They are now facing homelessness as their parents won't have them any longer. Is it really the fault of the landlord that they are homeless?

People need to take responsibility for the choices you make. You want to be a home owner, or being able to rent knowing that if you are given notice, you can go and rent somewhere else, then you work FT and consider first if you can afford more children, rather than consider your lifestyle first and then whether you can afford it.

MyOnlyPost

SephirothX wrote: »

Your maths are wrong. Your profit there is £8000 per year. Money you pay into a mortgage isn't lost money, it is investment money that you see again one day when you sell the property.

Your assumption is wrong. BTL is usually done with and interst only mortgage so the £8,000 is the cost of borrowing and not the cost of repyament

MyOnlyPost

Bossypants wrote: »

Could you clarify this statement? I've heard a lot about landlords being responsible for people being unable to get onto the property ladder, but assuming that the vast majority of landlords are filling their properties, how do they contribute to homelessness, when the properties would be lived in one way or the other?

Your assumption is correct about landlords filling their properties but the media scapegoating doesn't take into account that when a landlord evicts one person/family they house another

Recently on Newsnight Emily Maitlis in a piece said: “in this next film we meet three individuals, each kicked out of their private lodging when things got tough…” very emotive words. The fist person in the film was evicted by a housing association (so not private lodging) after her partner was sent to prison.

Simply google landlords homeless

https://www.theguardian.com/society/2016/sep/28/eviction-by-private-landlord-making-record-numbers-homeless-in-uk
http://www.independent.co.uk/news/uk/politics/more-people-are-being-made-homeless-because-landlords-take-away-their-home-10515341.html

MyOnlyPost

itchyfeet123 wrote: »

With all due respect, "all the landlords you know" isn't really helpful as a data source. I have access to things like court records, and the data just doesn't exist to say "it's mostly tenants" or "it's mostly landlords". I'm sure in the circles in which you move you do encounter mostly decent landlords, or at least LLs who present themselves that way to you, but that doesn't say much about what LLs are like in general. I only know tenants who are great tenants, but I don't assume they're representative of the population.

To be clear, I don't think LLs are the devil. I have a great LL, and I have no desire to be a LL. There are terrible tenants and terrible LLs. There are also good people --LLs and tenants both-- who have all the best intentions but screw things up now and again. Depending on which side of the fence you sit it's easy feel your side is scapegoated.

But -- putting on my geek hat -- when you say things like most evictions are due to bad tenant behaviour, unless you've actually crunched the numbers on truly representative data, you're exhibiting what's called confirmation bias. That's not a critcism; it's something we all do. It's the same as how when you buy a car the same make and model is suddenly everywhere. As a scientist, I go to a lot of trouble to gather and analyse representative data so that confirmation bias doesn't affect my results. Unfortunately, the data doesn't really exist to answer the question.

I take all the points you raise and apologise that I was abrupt. Of course from an academic pont of view you need independent data from multiple sources to give accurate outcomes. Cases that go to court are probably in the minority as most tenancies probably end without getting that far whether it be ammicable or not. Once a case gets as far as court that is a skewed representation of all evictions anyway. I assume you also look at council reporting and rehousing?

However I think we are at cross purposes. My point is/was that landlords don't generally summarily evict good tenants on a regular basis just because they can get a bit more rent from someone else which is repeatedly stated in lots of online places. Most evictions are as a result of a break down in the relationship between landlord and tenant over either payment of rent or behaviour (by either party). I know their are some terrible landlords, I appreciate some of these may be known to me but present themselves otherwise. Tenants usuallly end a tenancy with a bad landlord by moving out (I appreciate not all can) whereas landlords end a bad tenancy by eviction.

I am very defensive about landlords because I am sick of reading mindless bile about landlords in the press or seeing it on the news and even worse hearing it from politicians. I am aware that in some areas landlords may have helped in driving up prices, however I am equally aware that in other areas there is high unemployment and a real need for rented accomodation. Everyone's opinion is probably skewed by where they live.

I personally have never bought a BTL with a mortgage and I don't buy houses that are in areas where I expect a massive capital gain. I have bought houses that anyone on minimum wage could have got a mortgage for and I had hundereds of options to buy, so the demand for ownership wasn't there. All my rents are set at or very close to the local council rent for similar properties but according to some I am a parasite profiting out of other peoples misery. What you never here from politicians is an appreciation for the private landlord who had to spend thousands to get their home back and repair it after a bad tenancy, money that local government would have to find if that tenant had been in council housing.

I think you can understand why I dislike landlord bashing so much

SephirothX

MyOnlyPost wrote: »

Your assumption is wrong. BTL is usually done with and interst only mortgage so the £8,000 is the cost of borrowing and not the cost of repyament

So he'd be paying £10k a year in interest? That is crazy. I think if I was going to do BTL in the future I would be doing repayment and have the rental income paying down the mortgage. Eventually you have the second home earning rent with no mortgage to pay. I thought that's what most people did.

MyOnlyPost

SephirothX wrote: »

So he'd be paying £10k a year in interest? That is crazy. I think if I was going to do BTL in the future I would be doing repayment and have the rental income paying down the mortgage. Eventually you have the second home earning rent with no mortgage to pay. I thought that's what most people did.

It is the traditional model of BTL portfolio's that has landed some people in real problems with the tax changes as they have leveraged everything they can to buy more houses rather than consolidating what they have. However unlike a traditional mortgage where you need some kind of vehicle in place to repay the mortgage with BTL the house is the vehicle as you won't be living in it when the mortgage term is up so you can sell it

JuicyJesus

Cakeguts wrote: »

What you mean is that you can't afford to buy a house where you live now. In some areas of the country 2 people earning the minimum wage can do it easily..

No, I can't afford to buy a house because I have to pay rent where I'm living and as such my means of raising a high enough deposit are very limited. And I'm hardly the only person in that situation.

MyOnlyPost

JuicyJesus wrote: »

No, I can't afford to buy a house because I have to pay rent where I'm living and as such my means of raising a high enough deposit are very limited. And I'm hardly the only person in that situation.

Juicy, nobody here knows where you live, how much rent you pay or what house prices are in your area. As stated you have the freedom to move area to where you can afford to buy

I do know where you can buy houses for £40,000 (cheaper in really bad areas) and in the same area you can rent a flat for £300 pcm so assuming a couple both on minimum wage most should be able to afford to save up a £4,000 deposit whilst renting. As I said earlier if you had a REALLY good credit score you could buy a house with a personal loan in some areas.

anselld

ognum wrote: »

It may not be but of course it can be applied to your buying costs if there is tax to pay on a capital gain.

... which would recover a maximum of 28% of what was paid for a high rate tax payer, 18% for standard rate.

ognum

anselld wrote: »

... which would recover a maximum of 28% of what was paid for a high rate tax payer, 18% for standard rate.

You are actually incorrect. The whole of the stamp duty can be deducted before a gain is calculated

https://www.gov.uk/capital-gains-tax-businesses/work-out-your-gain