Is there money to be made in renting?

[Deleted User]

SpiderLegs said:

[Deleted User] said:

SpiderLegs said:

[Deleted User] said:

You can make money, but you take on a lot of responsibility owning someone else's home.

It's also immoral as someone else could buy your house and pay much less on a mortgage than they will pay you in rent. There is a shortage of housing to live in and letting property makes it worse.

It’s a strange one this, I’ve also been hearing a lot of people complaining about how immoral it is for people to buy their own home and sit on years of unearned wealth through rampant HPI.

I wonder what your view on that is. Perhaps there are nasty landlords and nasty unencumbered homeowners and nasty lenders requesting massive deposits and probably lots of other nasty people who have things too.


perhaps we should just ban all private ownership of property? 

That really is a strange one. Not sure where you got those ideas from, they seem very odd.

The issue is that housing is unaffordable for many who want it. Worse still pensions are poor and many people are relying on the value of their homes going up to fund their retirement.

There are many reasons for this. Buy to let is a big one, so is not building enough houses and building low quality houses. I already mentioned the pensions crisis. Many people were only able to get on the ladder because their parent or grandparents helped them, which just forced prices up even more and make it even harder for the next generation who couldn't rely on that assistance.

The reason lenders want deposits is to protect themselves from losses. If the buyer defaults on the mortgage they will need to sell the house at auction and the deposit helps offset the difference in what the house will sell for and what is owned. As house prices continue to rise the deposits needed get bigger and bigger. Increasing rent means it gets harder and harder to save up. We are now looking at the highest tax burden in peace time, high inflation and huge increases to energy bills too.

All I'm saying is that people should think twice about contributing to these problems, and about taking on the responsibility of owning someone else's home.

Well it sounds like the dystopian nightmare has finally arrived.

im not sure what your suggestion is for making this any better as you’ve omitted it.

Maybe the OP reads the recommendations and runs the numbers properly. Then if they decide to go ahead and put the considerable effort in that’s required to be a successful LL I hope they earn an absolute boat load of cash to spend on whatever the hell they want. 

Local councils build loads us good houses and sell them cheap. There is too much green belt.

Put a massive tax on buy to let. Use that to fund the building programme, although it would quickly become self sustaining.

rexmedorum

[Deleted User] said:

There is too much green belt.

   

SpiderLegs

[Deleted User] said:

SpiderLegs said:

[Deleted User] said:

SpiderLegs said:

[Deleted User] said:

You can make money, but you take on a lot of responsibility owning someone else's home.

It's also immoral as someone else could buy your house and pay much less on a mortgage than they will pay you in rent. There is a shortage of housing to live in and letting property makes it worse.

It’s a strange one this, I’ve also been hearing a lot of people complaining about how immoral it is for people to buy their own home and sit on years of unearned wealth through rampant HPI.

I wonder what your view on that is. Perhaps there are nasty landlords and nasty unencumbered homeowners and nasty lenders requesting massive deposits and probably lots of other nasty people who have things too.


perhaps we should just ban all private ownership of property? 

That really is a strange one. Not sure where you got those ideas from, they seem very odd.

The issue is that housing is unaffordable for many who want it. Worse still pensions are poor and many people are relying on the value of their homes going up to fund their retirement.

There are many reasons for this. Buy to let is a big one, so is not building enough houses and building low quality houses. I already mentioned the pensions crisis. Many people were only able to get on the ladder because their parent or grandparents helped them, which just forced prices up even more and make it even harder for the next generation who couldn't rely on that assistance.

The reason lenders want deposits is to protect themselves from losses. If the buyer defaults on the mortgage they will need to sell the house at auction and the deposit helps offset the difference in what the house will sell for and what is owned. As house prices continue to rise the deposits needed get bigger and bigger. Increasing rent means it gets harder and harder to save up. We are now looking at the highest tax burden in peace time, high inflation and huge increases to energy bills too.

All I'm saying is that people should think twice about contributing to these problems, and about taking on the responsibility of owning someone else's home.

Well it sounds like the dystopian nightmare has finally arrived.

im not sure what your suggestion is for making this any better as you’ve omitted it.

Maybe the OP reads the recommendations and runs the numbers properly. Then if they decide to go ahead and put the considerable effort in that’s required to be a successful LL I hope they earn an absolute boat load of cash to spend on whatever the hell they want. 

Local councils build loads us good houses and sell them cheap. There is too much green belt.

Put a massive tax on buy to let. Use that to fund the building programme, although it would quickly become self sustaining.

A few posts ago you were complaining about the highest tax burden in peace time and now you want to increase that even more.

And you want to either tax all the BTLs out of existence or push rents up even further. Guaranteed ways to reduce the supply of rental stock and at the same time make it even harder for renters to save their deposit.

And you seem to think that a relatively small amount of taxation on LLs is going to fund a National house building program. Sorry to break the news to you but you’re way off.

The £15bn per year Labour proposed to build 100k houses per year would need 3p on income tax. More likely is that that would hit nowhere near that number of properties given that
a. The public sector largely doesn’t have a clue about building houses.
b. Politicians always make unrealistically low cost estimates.

And 100k houses is nowhere near what we need, we really need 200k on top of what we currently build (which is already the highest it’s been for a long time).

So my conservative guess is that your social housing plan is going to cost us all at least 5p on income tax. That’s ALL of us, not just very rich people or all those immoral landlords.

Your underlying suggestion that we have to just build more houses is of course, the actual solution. But if you think the public sector is going to magic these houses out of thin air then prepare for long term disappointment.

better to reduce BTL taxation, reduce red tape, reduce barriers to letting property, encourage the upgrade of existing stock and stop all the nimbyism that stops private companies from actually building more properties.

[Deleted User]

They have the right idea in Germany. Just take the rental stock into public ownership.

At the very least rent controls are needed. We need a large proportion of landlords to sell.

Don't worry about the tax burden, it would only be on people who are wealthy enough to own more than one home. It can't be right that a worker is facing a huge drop in income and tax increases, while a landlord faces none.

SpiderLegs

[Deleted User] said:

They have the right idea in Germany. Just take the rental stock into public ownership.

At the very least rent controls are needed. We need a large proportion of landlords to sell.

Don't worry about the tax burden, it would only be on people who are wealthy enough to own more than one home. It can't be right that a worker is facing a huge drop in income and tax increases, while a landlord faces none.

As has been explained to you before. The Berlin rent cap idea was a disaster. And no political party is in any way going to implement an asset grab just because a load of angry renters vote for it in a referendum.

workers in general are not facing a huge drop in income and the tax increase are to support the additional burden on the NHS. Would you like that to be reversed?

finally, at risk of repeating myself if you think multiple home owners are going finance your fantasies you are beyond reasonable help.

[Deleted User]

SpiderLegs said:

[Deleted User] said:

They have the right idea in Germany. Just take the rental stock into public ownership.

At the very least rent controls are needed. We need a large proportion of landlords to sell.

Don't worry about the tax burden, it would only be on people who are wealthy enough to own more than one home. It can't be right that a worker is facing a huge drop in income and tax increases, while a landlord faces none.

As has been explained to you before. The Berlin rent cap idea was a disaster. And no political party is in any way going to implement an asset grab just because a load of angry renters vote for it in a referendum.

workers in general are not facing a huge drop in income and the tax increase are to support the additional burden on the NHS. Would you like that to be reversed?

finally, at risk of repeating myself if you think multiple home owners are going finance your fantasies you are beyond reasonable help.

As explained to you repeatedly, rent caps work all around the world. So does nationalising housing.

This year nurses are getting a pay cut in real terms. Bills are going up. You can try to pretend it's not happening but it's obvious to everyone else.

Norman_Castle

[Deleted User] said:

 We need a large proportion of landlords to sell.

Landlords provide homes. Is the assumption that people who are currently renting buy these homes? There are a lot of people who cannot finance a mortgage, lack of deposit is one of many reasons for this. Reducing the number of homes available to rent would increase homelessness.

Ditzy_Mitzy

[Deleted User] said:

They have the right idea in Germany. Just take the rental stock into public ownership.

At the very least rent controls are needed. We need a large proportion of landlords to sell.

Don't worry about the tax burden, it would only be on people who are wealthy enough to own more than one home. It can't be right that a worker is facing a huge drop in income and tax increases, while a landlord faces none.

I agree with you in principle, or rather I agree with the principles you have expressed thus far, however you keep torpedoing yourself by making statements which are factually incorrect.  

Firstly, the Germans didn't take private lets into public ownership.  What they actually did, only in Berlin mind, was to enforce a rent freeze upon the majority of existing lets.  That was good for existing tenants, but less so for prospective ones.  The claim made is that there was a drive amongst landlords to sell vacant flats, rather than re-letting them at the frozen rate; the frozen rate being deemed uneconomic.  The freeze was effective 2019, in essence meaning that no increases could be applied in 2020 and subsequent years. 

One might advance the argument that landlords should not be unduly affected by holding rent at the previous year's level, but then one must also accept that the sector is full of incompetent no-hopes who cannot absorb the economic shock of the rent freeze.  One also has to accept that most landlords enforce annual increases as a point of principle, often ignorant of the fact that increases often do more harm than good; economics calls itself a science, but it's actually a religion.  

The net effect was that the chancers, the gougers, the Weberians and the terminally useless gave up being landlords and dumped a load of flats onto the market.  That led to a shortage of properties available to let.  The prospective tenants, apparently, didn't take up the slack by buying them.  Why would they?  Most will be 'millennial nomads' or whatever they call themselves these days, who claim to want to live unencumbered by something as mundane as owning a flat.  You can't have it both ways.  

There was still demand for new lets, which pushed rent costs up in other German cities.  That, in turn, caught the eye of the speculators, leading to an increase in house prices in those places and greater numbers of properties being bought to let.  Recently the whole thing has been overturned by the German federal court, who have deemed the Berlin rent cap to illegal.  That has caused something of a letting bonanza in the city, with frozen rents now thawed, and has opened the door for landlords to apply retrospective rent increases to previously rent controlled tenancies.  Attempting to do that is rank idiocy, in that it's likely to lead to evictions, dispiriting arrears claims gumming up the local courts and overall loss of rent for the sector; but being a landlord is not something one needs qualifications to carry out.  

The whole thing failed because short sighted bodies attempted to take a somewhat selfish sledgehammer to a small part of a failing structure.  It's quite likely that Solomon of Spandau was paying too much rent, but putting controls on in his favour hurts Dieter in Dusseldorf, Franziska in Frankfurt and Helen in Hamburg. 

Proper structural reform is needed, and in the UK context that means a return to council house building.  Housing associations need to be eliminated entirely, and the whole thing brought back into the local authority remit.  We could then carry out modern day slum clearances of that inadequate public-private partnership stock built in the Blair years and beyond.  A lot of it is rubbish.  What could go, too, is the need for authorities to use private sector stock for housing council tenants.  I've been in a few of those; some aren't fit for rats, let alone people.  Demand for private renting would still exist, but would lessen.  The Homes Under the Hammer brigade would be the first to go, and that would take some of the heat out of the sales market.  we need natural wastage in the sector, not an attempt to solve the problem overnight.  It will take a generation or so to unpick.  

The other problem is the possibility of millennial voter opposition to all of the above.  Plenty of them do now own houses, for one, and precious few have accumulated wealth elsewhere.  Pensions, too, what pensions?  Unfortunately, as I've said before, a real terms house price crash would be about the worst thing that could happen to the younger generation.  They may not see it, but the 'real economy' is gone.  There are no other real stores of value in this country.  If Mum and Dad's house, post inheritance, suddenly turns out to be worth £20,000, what do the kids do?  We've put everything on bricks and mortar.  Any price reduction needs to be gradual and to take that into account.  

Finally: tax.  Your statement that private landlords are not facing any increased tax burden is false.  The mortgage rate relief reforms affect all of us, see here Buy-to-let mortgage interest tax relief explained - Which?

funnyvideo

The sad reality is that the idea we can keep ourselves in employment until we're 65 and then get paid a pension we can live on for the rest of our lives doesn't really exist.

The pension age has already gone up and will probably go up even further for people of my age (40). We don't know whether the state pension will even exist by then. We're being encouraged to put our spare cash into a private pension without really knowing what happens to the money or whether we'll ever see it again.

At the same time job security doesn't exist for many people and we don't know if ill health will prevent us from working in the future. 

Therefore some of us do what we can to reach the point in our lives where working becomes a choice rather than a necessity. Buying a property is a logical first step in the knowledge once the mortgage is paid off that's our largest outgoing taken care of. Buying a 2nd property is another step to future proofing yourself. It's a gamble, but what's the alternative?

For the record I don't own a second property but I know people who do or have done in the past. The ones who appear to do best from it is those who moved out of London but kept their London property to rent out. I know of one person it was a disaster for, it was a flat in a cheap part of the country so rental income was low and they had to pay service charge on top of everything else and ended up selling the property for less than they bought it for.

[Deleted User]

Ditzy_Mitzy said:

[Deleted User] said:

They have the right idea in Germany. Just take the rental stock into public ownership.

At the very least rent controls are needed. We need a large proportion of landlords to sell.

Don't worry about the tax burden, it would only be on people who are wealthy enough to own more than one home. It can't be right that a worker is facing a huge drop in income and tax increases, while a landlord faces none.

I agree with you in principle, or rather I agree with the principles you have expressed thus far, however you keep torpedoing yourself by making statements which are factually incorrect.  

Firstly, the Germans didn't take private lets into public ownership.  What they actually did, only in Berlin mind, was to enforce a rent freeze upon the majority of existing lets.  That was good for existing tenants, but less so for prospective ones.  The claim made is that there was a drive amongst landlords to sell vacant flats, rather than re-letting them at the frozen rate; the frozen rate being deemed uneconomic.  The freeze was effective 2019, in essence meaning that no increases could be applied in 2020 and subsequent years. 

One might advance the argument that landlords should not be unduly affected by holding rent at the previous year's level, but then one must also accept that the sector is full of incompetent no-hopes who cannot absorb the economic shock of the rent freeze.  One also has to accept that most landlords enforce annual increases as a point of principle, often ignorant of the fact that increases often do more harm than good; economics calls itself a science, but it's actually a religion.  

The net effect was that the chancers, the gougers, the Weberians and the terminally useless gave up being landlords and dumped a load of flats onto the market.  That led to a shortage of properties available to let.  The prospective tenants, apparently, didn't take up the slack by buying them.  Why would they?  Most will be 'millennial nomads' or whatever they call themselves these days, who claim to want to live unencumbered by something as mundane as owning a flat.  You can't have it both ways.  

There was still demand for new lets, which pushed rent costs up in other German cities.  That, in turn, caught the eye of the speculators, leading to an increase in house prices in those places and greater numbers of properties being bought to let.  Recently the whole thing has been overturned by the German federal court, who have deemed the Berlin rent cap to illegal.  That has caused something of a letting bonanza in the city, with frozen rents now thawed, and has opened the door for landlords to apply retrospective rent increases to previously rent controlled tenancies.  Attempting to do that is rank idiocy, in that it's likely to lead to evictions, dispiriting arrears claims gumming up the local courts and overall loss of rent for the sector; but being a landlord is not something one needs qualifications to carry out.  

The whole thing failed because short sighted bodies attempted to take a somewhat selfish sledgehammer to a small part of a failing structure.  It's quite likely that Solomon of Spandau was paying too much rent, but putting controls on in his favour hurts Dieter in Dusseldorf, Franziska in Frankfurt and Helen in Hamburg. 

Proper structural reform is needed, and in the UK context that means a return to council house building.  Housing associations need to be eliminated entirely, and the whole thing brought back into the local authority remit.  We could then carry out modern day slum clearances of that inadequate public-private partnership stock built in the Blair years and beyond.  A lot of it is rubbish.  What could go, too, is the need for authorities to use private sector stock for housing council tenants.  I've been in a few of those; some aren't fit for rats, let alone people.  Demand for private renting would still exist, but would lessen.  The Homes Under the Hammer brigade would be the first to go, and that would take some of the heat out of the sales market.  we need natural wastage in the sector, not an attempt to solve the problem overnight.  It will take a generation or so to unpick.  

The other problem is the possibility of millennial voter opposition to all of the above.  Plenty of them do now own houses, for one, and precious few have accumulated wealth elsewhere.  Pensions, too, what pensions?  Unfortunately, as I've said before, a real terms house price crash would be about the worst thing that could happen to the younger generation.  They may not see it, but the 'real economy' is gone.  There are no other real stores of value in this country.  If Mum and Dad's house, post inheritance, suddenly turns out to be worth £20,000, what do the kids do?  We've put everything on bricks and mortar.  Any price reduction needs to be gradual and to take that into account.  

Finally: tax.  Your statement that private landlords are not facing any increased tax burden is false.  The mortgage rate relief reforms affect all of us, see here Buy-to-let mortgage interest tax relief explained - Which?

It's not legally binding, but let's see what happens.

https://www.google.com/amp/s/amp.theguardian.com/commentisfree/2021/sep/29/berlin-vote-landlords-referendum-corporate

Shame because that mistake undermines an otherwise decent post.