Home Ownership at Lowest Level for 30 Years

GreatApe

ruperts wrote: »

They would be available to buy as soon as the home hoarder put them up for sale and that increased supply would lower prices and allow those forced to rent an entry point. There is no double counting. There is a finite number of homes, if some people hoard them then others have to miss out.

renters tend to live more dense

For instance I have one large property with 2 young men and 3 young women all in their late 20s. Say two of them got together and got married and offered to buy the house off me. Lets say I agree. What happens to the 3 others who were living there? They have to move out and find another rental. No additional house is available

A rental of 5 became an owner home of 2
This added +3 to the rental stock and rents rise as a result

Overall the rental stock is lived in more efficient (more dense) than the owner stock for a given type/size of property.

So if the landlords sold up, the result would be the rentals that remain would have higher rent s

ruperts

GreatApe wrote: »

Also in some parts of the country the average terrace costs not much more than 1x the average full time male+female earnings. I am thinking of stoke-on-trent as one such place

Rightmove lists 436 terraced houses for sale in Stoke-on-Trent and the 218th of those is on sale for £85,000. Here it is: http://www.rightmove.co.uk/property-for-sale/property-56450188.html - using median doesn't tell the whole story because the bottom end is full of places like this - http://www.rightmove.co.uk/property-for-sale/property-46961226.html - that would require an additional investment of upwards of £50k to make habitable, so the realistic average cost to acquire a habitable terraced house will be higher, but I'll be generous and use £85k.


By your theory then the average full time male+female earnings in Stoke-on-Trent is not much less than £85,000 per annum, or £42,500 each. In actual fact according to the ONS' 2016 hours and earnings data based on place of residence by Local Authority the average full time wage in Stoke-on-Trent is £22,826. There isn't actually a single Local Authority in the country that reaches your target of £42,500 - the highest is Westminster with an average of £42,141.

ukcarper

ruperts wrote: »

Rightmove lists 436 terraced houses for sale in Stoke-on-Trent and the 218th of those is on sale for £85,000. Here it is: http://www.rightmove.co.uk/property-for-sale/property-56450188.html - using median doesn't tell the whole story because the bottom end is full of places like this - http://www.rightmove.co.uk/property-for-sale/property-46961226.html - that would require an additional investment of upwards of £50k to make habitable, so the realistic average cost to acquire a habitable terraced house will be higher, but I'll be generous and use £85k.


By your theory then the average full time male+female earnings in Stoke-on-Trent is not much less than £85,000 per annum, or £42,500 each. In actual fact according to the ONS' 2016 hours and earnings data based on place of residence by Local Authority the average full time wage in Stoke-on-Trent is £22,826. There isn't actually a single Local Authority in the country that reaches your target of £42,500 - the highest is Westminster with an average of £42,141.

So that person can borrow £90k + £10k deposit what can that buy them.

economic

GreatApe wrote: »

renters tend to live more dense

For instance I have one large property with 2 young men and 3 young women all in their late 20s. Say two of them got together and got married and offered to buy the house off me. Lets say I agree. What happens to the 3 others who were living there? They have to move out and find another rental. No additional house is available

A rental of 5 became an owner home of 2
This added +3 to the rental stock and rents rise as a result

Overall the rental stock is lived in more efficient (more dense) than the owner stock for a given type/size of property.

So if the landlords sold up, the result would be the rentals that remain would have higher rent s

but why would the couple buy your property that large? surely if they were renting you place sharing with 3 others, they cant afford to buy let alone buy your property fit for 5 people? maybe a more sensible example is if you had a 2 bed flat with 2 people sharing. you sell the flat to one of them. that leaves another person needing to find another rental. but then maybe the person who bought the flat decides to flat share and let out the room to the homeless guy. so we are back to square one.

its not as easy as it sounds. lots of moving parts. hard to see what the overall affect would be if all rentals were sold.

LydiaJ

ukcarper wrote: »

Your probably right there are not a significant number of people who want to rent long term on an AST, but there are significant numbers of people who want to rent short term and people who would not be able to buy even if prices were lower. As social housing has decreased deliberately reducing the number of private landlords would not help large numbers of people in fact it would make it worse for them.

I don't agree. A house that ceases to be let by a private landlord doesn't cease to exist. It usually gets lived in by owner occupiers. Then there is one fewer house available for rent, but one fewer family renting, because now they own. Think again about the example I cited of my friend selling her house to the tenant who was already occupying it.

The argument about renters living more densely isn't really relevant either. Young adults at the "house share" stage of their lives will always live densely. It doesn't matter whether they're all renting from some landlord, or they club together to afford to buy, or one of them buys a place and has mates renting rooms. But having young adults at that stage of life renting is not particularly a societal problem. The more significant problem is families stuck in private renting on ASTs for the long term. If there was for any reason a decrease in the number of houses owned by BTL LLs, the market would adjust until the houses thus released were bought by the households currently just below the level of being able to buy. These "only just able to buy" households would only be able to afford smaller properties where they would doubtless live as densely as they are currently living in rented houses. They might even buy somewhere a little smaller than their current rented house because they might feel that the security of owning was worth the sacrifice of a little living space. There would be no change in how many households have housing, but more families would have the security of knowing they're not going to be given notice to leave, etc. This would be beneficial to society.

BTL is something that people do as an investment, because it makes financial sense for the LL. It's no coincidence that the number of BTL LLs rose hugely at around the time DB pensions stopped being available to most private sector workers. Many of these LLs treat their tenants decently, and I am certainly grateful to the conscientious LLs whose houses I rented at various stages of my life. But let's be realistic, buying a BTL is not something that people decide to do in response to a passion to make the world a better place, is it?

You are right that the country needs to have some LLs. The problem is not that there are LLs. The problem is that too high a proportion of the housing stock is owned by them.

GreatApe

ruperts wrote: »

By your theory then the average full time male+female earnings in Stoke-on-Trent is not much less than £85,000 per annum, or £42,500 each. In actual fact according to the ONS' 2016 hours and earnings data based on place of residence by Local Authority the average full time wage in Stoke-on-Trent is £22,826. There isn't actually a single Local Authority in the country that reaches your target of £42,500 - the highest is Westminster with an average of £42,141.

The average sold terrace in stoke is £82k according to the land registry

The average full time male wage in Stoke according to the ONS £25,272 and for women £23,244 so combined £48,516 or 1.7 x joint income to buy the average terrace.

Here is the link http://www.neighbourhood.statistics.gov.uk/HTMLDocs/dvc126/


Also the median price is lower than the mean, at least that is the case in scotland where the scottish version of the land registry lists both the mean and median averages but even without considering that the prices are 1.7 x joint income.


Also it is not alone in being under 2x income. Plenty more places here are two more as examples
Middlesborugh it is £79k for the terrace and £51.6k joint income so = 1.5 x joint income
DArlington £98k, Joint income £51.4k so = 1.9 x joint income

GreatApe

economic wrote: »

but why would the couple buy your property that large? surely if they were renting you place sharing with 3 others, they cant afford to buy let alone buy your property fit for 5 people? maybe a more sensible example is if you had a 2 bed flat with 2 people sharing. you sell the flat to one of them. that leaves another person needing to find another rental. but then maybe the person who bought the flat decides to flat share and let out the room to the homeless guy. so we are back to square one.

its not as easy as it sounds. lots of moving parts. hard to see what the overall affect would be if all rentals were sold.

one example is of course irrelevant however if it holds true that renters live more dense given the same size/type of property then moving people from renters to owners means less efficent allocation of housing thus the price will go up for the remaining renters or even for force the fucntion in that direction

LydiaJ

GreatApe wrote: »

one example is of course irrelevant however if it holds true that renters live more dense given the same size/type of property then moving people from renters to owners means less efficent allocation of housing thus the price will go up for the remaining renters or even for force the fucntion in that direction

You are confusing a correlation with a cause.

The kind of people who rent are also the kind of people who live densely. If there were changes in the market that enabled some of these people to buy, it does not necessarily follow that they would also stop living densely. They might, but they might not. There mere fact that there is a correlation doesn't tell you that.

An analogy:
If you measured the heights of the population of this country, you would find that those who have not yet left school are on average quite a lot shorter than those who have left school. Nevertheless, if you were to lower the school leaving age so that more people left school at a younger age, neither the average height of the population nor the height of any particular person would change.

ukcarper

LydiaJ wrote: »

I don't agree. A house that ceases to be let by a private landlord doesn't cease to exist. It usually gets lived in by owner occupiers. Then there is one fewer house available for rent, but one fewer family renting, because now they own. Think again about the example I cited of my friend selling her house to the tenant who was already occupying it.

The argument about renters living more densely isn't really relevant either. Young adults at the "house share" stage of their lives will always live densely. It doesn't matter whether they're all renting from some landlord, or they club together to afford to buy, or one of them buys a place and has mates renting rooms. But having young adults at that stage of life renting is not particularly a societal problem. The more significant problem is families stuck in private renting on ASTs for the long term. If there was for any reason a decrease in the number of houses owned by BTL LLs, the market would adjust until the houses thus released were bought by the households currently just below the level of being able to buy. These "only just able to buy" households would only be able to afford smaller properties where they would doubtless live as densely as they are currently living in rented houses. They might even buy somewhere a little smaller than their current rented house because they might feel that the security of owning was worth the sacrifice of a little living space. There would be no change in how many households have housing, but more families would have the security of knowing they're not going to be given notice to leave, etc. This would be beneficial to society.

BTL is something that people do as an investment, because it makes financial sense for the LL. It's no coincidence that the number of BTL LLs rose hugely at around the time DB pensions stopped being available to most private sector workers. Many of these LLs treat their tenants decently, and I am certainly grateful to the conscientious LLs whose houses I rented at various stages of my life. But let's be realistic, buying a BTL is not something that people decide to do in response to a passion to make the world a better place, is it?

You are right that the country needs to have some LLs. The problem is not that there are LLs. The problem is that too high a proportion of the housing stock is owned by them.

So if the number of private landlords reduced the difference to house prices would be marginal as there is no increase in supply.

HAMISH_MCTAVISH

LydiaJ wrote: »

If there was for any reason a decrease in the number of houses owned by BTL LLs, the market would adjust until the houses thus released were bought by the households currently just below the level of being able to buy. .

I disagree.

Lets say you penalise 100 investors and they then transfer 100 rented houses to owner occupied.

So far so good.....

But there has been no change to the balance of supply and demand in either the rental pool or the O/O pool.

You have decreased the stock of rented houses by 100, and increased the stock of owner occupied houses by 100.

And you've decreased the pool of renters by 100, and increased the pool of buyers by 100.

Therefore house prices and rents haven't changed at all - the balance of supply and demand has remained the same - and it's supply and demand which set prices and rents.

And we still have a stonking great shortage of housing that shuffling existing housing around between tenures has done nothing to address - the only way to cure a housing shortage is to build more houses - there is no other solution.

There are really only two constraints to building more in the UK.

-Prior to 2007 it was primarily planning restrictions.

-Post 2008 it's been primarily a lack of mortgage and development finance.

Cure those two problems and there is no reason we can't build more than enough houses for the needs of FTB-s, whilst keeping a dynamic and responsive private rental sector in place for those who simply don't want to buy.

I'd be happy to see more social housing built as well. The more the merrier really.

We need 3 million new houses in the next 10 years.

It'll take the combined efforts of owner occupiers, landlords, social housing providers, and government, if we're to stand any chance of delivering them.