Right to buy on privately rented homes

Cakeguts

Green_Bear wrote: »

I'm not sure I follow your argument.
If the houses that no one wants to buy are good enough to rent now, then why would the tenants of those properties be unhappy with a chance to buy the house they live in?

Tenants will not be forced into houses that are already occupied by tenants.
That makes no sense.

Depends on your definition of "good enough to rent." Our tenants wouldn't rent them they prefer to pay for something better. Most first time buyers won't buy them either they can afford something better.


Something like this perhaps? https://www.rightmove.co.uk/property-for-sale/property-79701119.html

Green_Bear

I think this is a very interesting proposal.

But there are a few points I think people on both sides of the debate have missed:

1. The aims of this policy can be achieved by other means. Granting secure (pre-AST 1970's style) tenancies to all existing tenants, whilst also capping rents would effectively put tenants in a good position to buy the house from the LL. If the LL can only sell to other LLs and his rent is reduced , then why not sell to the tenant?

2. Labour don't need to win to affect the BTL market. By suggesting these policies, they push the political 'centre of gravity' in an anti BTL direction. They force the Tories to become more ant LL in their policies. Effects of this seen already.

What I do find interesting is how Labour would approach this with regards to mortgaged properties.
Would they just expect the banks to take a haircut (in addition to the BTL being effectively wiped out)?

BTL landlords are of no value to Labour. Very few would probably vote for them anyway.
But the balance sheets of the UK banks are a different matter.
I expect the answer lies in recent history - ie the pre-BTL days of the 1970s. ie No BTL mortgages are available to the public. Anyone crazy enough to want to become a residential LL must own the property outright.

Green_Bear

Cakeguts wrote: »

Depends on your definition of "good enough to rent." Our tenants wouldn't rent them they prefer to pay for something better. Most first time buyers won't buy them either they can afford something better.

So are you saying that properties that are currently vacant and uninhabitable will suddenly become the only option for would be tenants to live in?
But who would they rent these houses from, unless a landlord bought such a house?

My prediction would be that such houses would fall in value to a level that most people could afford to buy them to occupy themselves.
Failing that, housing associations would probably buy them.

At the end of the day, someone will buy a house if the price falls low enough. And if it isn't a private LL then it can only be an owner occupier or a HA type organisation.

Green_Bear

MobileSaver wrote: »

And that's your problem, you and your sock puppets can only see end of the world extremes one way or the other.

For the rest of us we envisage house prices will bob along, sometimes a bit higher, sometimes a bit lower but over the long term staying higher due to the fundamental supply and demand issue that we as a nation are not creating anywhere near enough homes for the growing number of people who want them.

I'm not sure how long that will be true for.
H2B has led to quite a lot of house building.
Immigration will probably slow in the coming years.
Interest rates can't go any lower.

The govt is often saying that demographics are a problem for pensions. If so, then demographics should also be reducing housing demand.

I don't see how this supposed shortage of young workers (for pension payments) is also causing increased housing demand.

Cakeguts

Green_Bear wrote: »

So are you saying that properties that are currently vacant and uninhabitable will suddenly become the only option for would be tenants to live in?
But who would they rent these houses from, unless a landlord bought such a house?

My prediction would be that such houses would fall in value to a level that most people could afford to buy them to occupy themselves.
Failing that, housing associations would probably buy them.

At the end of the day, someone will buy a house if the price falls low enough. And if it isn't a private LL then it can only be an owner occupier or a HA type organisation.

That is the type of house that would be all there was available to rent. The better ones would all be sold off. The point about the houses in that auction is that they are in areas where no one wants to buy houses. If those houses had been in better areas they would already have been bought by first time buyers. A first time buyer could already afford to buy a similar house in better condition but they don't want them because they can afford something better. The only market those houses have is as rentals. They are in areas where people try to avoid living. They are already affordable and no one wants them. The tenants who could get a mortgage won't want to buy them either and the others won't get a mortgage and won't have any savings.



Housing associations don't want them because it is cheaper to manage a block of newer flats rather than individual houses build in the late 1800s and early 1900s. They would have been built with outside toilets and no bathrooms so often the 2nd bedroom is a strange shape and size depending on where the bathroom has been squeezed in.



In the area where we have most of our rental property, properties like this are the future for anyone wanting to rent if the Right to Buy private rented properties becomes law. The choice of rental property will consist of two bed terraces in areas where no one wants to buy or live. All private tenants will have to settle for a property like that in an area where people try to avoid living.



https://www.rightmove.co.uk/property-to-rent/property-73871368.html Here you go it says refurbished to a high standard. That is not what I would call a high standard.


Anything desirable like this https://www.rightmove.co.uk/property-to-rent/property-64601880.html or this would have been sold off and not replaced. https://www.rightmove.co.uk/property-to-rent/property-74002624.html

DannyGold

Green_Bear wrote: »

I think this is a very interesting proposal.


What I do find interesting is how Labour would approach this with regards to mortgaged properties.
Would they just expect the banks to take a haircut (in addition to the BTL being effectively wiped out)?.

As long as the LL had at least 25% equity then it will be fine he will just lose that.

If the tenant has a legal right to buy the place at 75% market value and the LL didn’t even have 25% equity in it, then the sale would go through and the previous owner would be on the hook to the bank for the loss.

DannyGold

Green_Bear wrote: »

2. Labour don't need to win to affect the BTL market. By suggesting these policies, they push the political 'centre of gravity' in an anti BTL direction. They force the Tories to become more ant LL in their policies. Effects of this seen already.

Yes the effects are being seen already, and it’s only really been a few days.

Wait until all the financial newsletters start scaremongering and using the story for click bait to grab attention.

Effects of foreign property investments pulling out of the UK purely on the mere mention of this proposal haven’t even filtered down the pike yet

Cakeguts

DannyGold wrote: »

Yes the effects are being seen already, and it’s only really been a few days.

Wait until all the financial newsletters start scaremongering and using the story for click bait to grab attention.

Effects of foreign property investments pulling out of the UK purely on the mere mention of this proposal haven’t even filtered down the pike yet

Not to mention the funds being used for build to rent projects.

Green_Bear

Cakeguts wrote: »

That is the type of house that would be all there was available to rent. The better ones would all be sold off. The point about the houses in that auction is that they are in areas where no one wants to buy houses. If those houses had been in better areas they would already have been bought by first time buyers. A first time buyer could already afford to buy a similar house in better condition but they don't want them because they can afford something better. The only market those houses have is as rentals. They are in areas where people try to avoid living. They are already affordable and no one wants them. The tenants who could get a mortgage won't want to buy them either and the others won't get a mortgage and won't have any savings.



Housing associations don't want them because it is cheaper to manage a block of newer flats rather than individual houses build in the late 1800s and early 1900s. They would have been built with outside toilets and no bathrooms so often the 2nd bedroom is a strange shape and size depending on where the bathroom has been squeezed in.



In the area where we have most of our rental property, properties like this are the future for anyone wanting to rent if the Right to Buy private rented properties becomes law. The choice of rental property will consist of two bed terraces in areas where no one wants to buy or live. All private tenants will have to settle for a property like that in an area where people try to avoid living.



Here you go it says refurbished to a high standard. That is not what I would call a high standard.


Anything desirable like this or this would have been sold off and not replaced.

I appreciate what you're saying. But I would like to make a few points:

1. Who would the 'better houses' be sold to? Presumably those who are now renting those 'better houses'? If so, those houses are not currently empty and will not be empty. So their use to 'new tenants' is nil.

2. If no one wanted to buy a house, then the price of that house would be zero. It is not zero in any areas of the UK. Hence, there cannot be any area of the UK where 'no one wants to live'.

3. A FTB is not a fixed entity. You say a FTB can afford to buy a 'better house'. But you don't consider those who are not currently wealthy enough to be classed as a potential FTB. If houses were cheap enough, those poorer people who cannot now become FTBs would become FTBs.

4. There cannot be tenants living in an area where 'no one wants to live'. Those tenants may prefer somewhere else, but by definition, they are willing to live there (as it is not a prison) and as such the house they rent has a value. If you turned up with the deeds and offered those tenants in poor housing the deeds to the house for £1, I'd be surprised if any turned you down.

5. At such low values, mortgages would become irrelevant. You don't need a mortgage for a house that costs £100 and you wouldn't get one.

If there were no landlords (including councils etc), then the only logical outcome would be everyone living in houses they own. Those houses may be in a poor condition, but that's the only logical outcome*.

Obviously, this wouldn't happen - because in reality, the price would hit a floor.
I think if rent controls come in, then property would start becoming priced like bonds. And as we've seen, you can get negative bond yields, so these houses would also hit a price floor - if based on nothing more than speculation (rather than yield).

*see Romania as an example of something similar.

Green_Bear

Cakeguts wrote: »

Not to mention the funds being used for build to rent projects.

BTR is an interesting point. Up until recently investment funds have mostly steered clear of residential property in the UK, presumably due to this kind of political risk.
In other countries (eg Germany) institutional money has been more involved, but in the UK REITs / property funds have mostly stuck to commercial property.

Most investments have some kind of political risk, which should be reflected in the return offered.
But BTL landlords do seem to react differently (ie more vocally) to political risk, compared to other investors.

Certainly, you don't see this level of comment with regards to govt threats towards investors (such as myself) in mining and oil companies etc.