[Closed] Buy to let- would you right now?

this isnt just capitalism you know. He's now standing tall in the world of [i]parasitic[/i] capitalism.

We're all [i]rentiers[/i] now George...

draftcapitals, what I want to know is what did you expect us to do?

I know: you expected that we all would say oh no I'm not going to do this because it will drive up prices for everyone else, I'm going to sit back and let the rest of the UK make hay and I'll get left behind and be financially bereft compared to my peers in 2010 just in case there is a risk of some social injustice?

You don't understand, we had no choice, and we had no idea what the effects would be. Blaming us in hindsite is an easy thing for you to do.

I know quite a few people who live in council houses who have been offered the chance to buy them at a knock down rate.

They haven't, because you know, they have principles.

With respect GG, principles don't put food on the table before or during retirement. I'm no fan of BTL but you cannot blame people for trying to protect their investments, which (IMO) is why a lot of folks got into it in the first place.

Of course there are bad and greedy folk at the margins speculating and taking risks (banks included), and the government has introduced huge moral hazard by protecting them with the current fiscal policy.

As for blaming the boomers, how can you blame someone for being born at the right time? I'm sure draftcapitals would be extremely offended if he was called stupid and financially incompetent just for being unlucky enough to be born into his generation. I know plenty of boomers who have not benefitted in any way from this bubble or the one before that (my dad for one).

It is what it is, creating animosity between generations isn't the way to solve it - that's just getting sucked into the shell game put on as a distraction by the powers that be.

By the way, I like the tag on the thread: TJ=SLUM LORD!

You don't understand, we had no choice

yes you did. Keeping up with the Jones is not compulsory.

Interesting figures in your previous post Toys. Is there a type of housing break down? I'd say 1 in 5 houses being BTL at it's peak is a pretty high share. Look at this by type of housing and you may well see that this share is higher for those properties first time buyers generally wish to buy (it might not that's why I ask).

> we had no choice

What utter guff. Plenty didn't get into BTL in the late 90s, some because they weren't especially financially savvy, some because they didn't have the money but a good deal because they knew damn well the consequences of the bottom rung of the housing "ladder" (ie first time buyers) being replaced by property speculators. And that is what has happened. You may say that BTL accounts for only 20 odd % of the housing market at its peak but that 20% was almost entirely in the sort of properties that first time buyers typically purchase - small starter homes, flats etc. And you could out gun the FTB crowd with your tax advantages and equity from your existing houses. Add the huge influx of cheap credit and deregulation and you have the mess we're in today, where the prudent are being punished with high taxation and low interest rates (4+% below inflation) on their savings, while the profligate are bailed out again and again.

And you think a cheap flat screen TV made in China will make me feel better when I'm childless in my 40s paying someone else's mortgage? Think again.

Keeping up with the Jones is not compulsory

That's really not what it's about at all.

You don't buy a house because other people have one, you buy a house because it's a sound investment and your ability to invest is rapidly diminishing.

I know quite a few people who live in council houses who have been offered the chance to buy them at a knock down rate.

They haven't, because you know, they have principles.

Yeah anecdotes don't make science. Most people did actually, you know, ditch their principles and bought their council houses.

yes you did. Keeping up with the Jones is not compulsory.

Thats like saying, don't get a better job just because everyone else is doing it, I didn't do it to keep up witht the joneses, I did it to make sure I was going to have as much buying power as my peers as my life moved on otherwise all I would be impoverished right now, this argument is bunkum.

All the properties I bought were 3-4 bed houses. Not yer typical FTB.
In fact I think most FTB house prices went up because people were cashing in on the rises and trading up.

You haterz actaully see yourselves as some kind of Warren Buffet types, as if you would have been able to predict the market and how it was going to effect the next generation. What a load of crap.

As for blaming the boomers, how can you blame someone for being born at the right time? I'm sure draftcapitals would be extremely offended if he was called stupid and financially incompetent just for being unlucky enough to be born into his generation. I know plenty of boomers who have not benefitted in any way from this bubble or the one before that (my dad for one).

It is what it is, creating animosity between generations isn't the way to solve it - that's just getting sucked into the shell game put on as a distraction by the powers that be.

Exactly. ^

was almost entirely in the sort of properties that first time buyers typically purchase - small starter homes, flats etc.

This bollocks, prove it, because it isnt true, flats and 1 bed houses don't make sense as BTL's. Anyone who bought them was just being sucked in by greed hoping for price rises. If you think its the case show us the figures, you've been reading the daily mail too much.

Typical new build 1 bad flats were selling in the boom for 180k with an optimistic rental yield of 700 a month, (4.6% yield but going down to more like 4) whereas a typical BTL is a student house for 250k with a realistic rental yield of 1500 a month (7.2%yield increasing now at 8 or more) the yields are much stronger on these, nearly double. FTB and 1 bed flats are the last place lenders wanted to loan, it was and still is much harder to get credit on these types of properties for BTL. Get your facts straight.

"Yeah anecdotes don't make science. Most people did actually, you know, ditch their principles and bought their council houses."

So what? It gives me a bit of hope that some people didn't, that their principles stand for more than making a bit of money for doing nothing.

There are a few things in life that I would never even consider.

Becoming a landlord is one of them.

Yeah anecdotes don't make science. Most people did actually, you know, ditch their principles and bought their council houses.

Were these the ones Thatcher sold cheaply to stop people striking?

You don't buy a house because other people have one, you buy a house because it's a sound investment and your ability to invest is rapidly diminishing

buying one house, yes I agree with that. Moving up the property ladder I have no problem with.

Buying a whole load of houses doesn't sit easily with me though. I am not saying you were wrong for doing it. I say the mechanisms that allowed for it to happen (particularly tax breaks etc) were wrong.

There are a few things in life that I would never even consider.

Becoming a landlord is one of them

I'd be inclined to feel the same way, however - people need rental properties, and you could improve the world a little bit by being a nice landlord. They are in short supply.

There are a few things in life that I would never even consider.

Becoming a landlord is one of them.

This is almost as dumb as the "neither a lender nor a borrower be" .
I think both sentiments are probably pushed by land and property owners so that their tenants don't see the light, get soem credit and leverage their way into the good times and create less tenants and more competion for the landlord.

I say the mechanisms that allowed for it to happen (particularly tax breaks etc) were wrong.

there are no tax breaks, landlords pay tax on rental like you pay tax on your income. Show me the tax breaks?

toys - I think he means the tax relief on interest costs other than your domestic mortgage. i.e. tax on rent net of interest. No MIR anymore.

there are no tax breaks, landlords pay tax on rental like you pay tax on your income. Show me the tax breaks?

I think it's important to distinguish between traditional landlords and the more recent BTL phenomenon. When people talk of BTL'ers I think of amateur speculators buying off plan 'executive city centre apartments' with a plan to either flip them or fleece their tenants for a few years before cashing in and retiring to the caribbean. I doubt many of those will actually achieve their goals, with the unfortunate exception of the Wilsons (Ashford) who appear to be too big to fail (if you owe the bank £1000 you have a problem, if you owe them a million the bank has a problem)

Being able to offset your mortgage interest payments is quite a large one I'd say. It's just this type of thing that makes a BTL type property more affordable for a BTL'er than a FTB. If it's more affordable you can potentially leverage higher than a FTB and offer a higher purchase price, driving prices up and out of reach of most FTBs

yeah I know, but people don't realise it is a legitimate business expense. If you were a plumber and borrowed money to buy a car or tools, you can claim the interest on your loan as an expense. My business is buying houses and letting them, so I can claim the interest on my mortgage as a legitimate expense.

The plumber also doesn't have to pay vat and because he can claim the interest back it is quite a bit cheaper than me or you buying a van. So what, that's business.

If I were a plumber, I'd be doing something constructive, actually creating something.

Landlords simply make money out of owning things.

GG

1) I've never seen a plumber do anything constructive. 😆 The plumber makes money simply out of owning things, knowledge, tools, membership of corgi or whatever its called now. Ok he does do some work too, but lots of what you pay has to cover his ownership of things. Lots of what the rent my tenants pay covers the ownership of things, but also I do work renovations, running around buying stuff cleaning, contracts etc.
2) are you saying that if you put money in the bank you return the interest to the bank on principle?

logically bang on toys...but....

the problem is that housing is not only a capital asset of business but also peoples homes. Hence the emotive stuff. Im not sure there's many other capital assets that exist in both the corporate and domestic worlds.

I do think MIR should be brought back to level the playing field again.

EDIT: and as I mentioned above I dont have any interest to offset against my rental income on the flat. Very inefficient corporate finance by me...

I do think MIR should be brought back to level the playing field again.

Agreed, it would make me better off!

Toys - I wish I had enough money to make interest from the bank.

As it is at the moment I am paying them, and they are giving you my interest.

😉

molgrips - Member
I'd be inclined to feel the same way, however - people need rental properties, and you could improve the world a little bit by being a nice landlord. They are in short supply.

Not at all. There are many more good Landlords than bad ones. There are also more bad tenants then there are Landlords (bad or good).

Personally, in the situation TJ described I wouldn't bother as the figures don't add up. Rent is a there to cover mortgage payments it's there to pay for the property maintenance, insurances and mortgage.

Landlords simply make money out of owning things.

Do you have a pension? If it's all or part invested in equities did you ever look to see which ones? Pension funds have been heavy investors in property over the last decade. By investing in a pension you may actually be helping to price yourself out of the market!

stoner hit the nail on the head their with the emotive issue. Personally I just want a house to live in, not as an investment as such.

Anyway, we are living in a service economy and toys et al are providing that service. Rather you than me.

I don't have a pension either tonyd. 😳

Pension funds have been heavy investors in property over the last decade.

commercial property only. there's almost no institutional investment in residential property. Ive recently done some analysis on the numbers for a client and the problem is that the rental yields are very weak for residential property compared to the costs of managing the asset because the capital value on which the yield is based is driven primarily by the owner occupier market. Again, its very rare to have an asset exposed to two fundamentally different markets and the almost inevitable effect is that the asset is mis-priced in one of the markets.

commercial property is a better bet as it is leased on institutionally acceptable longer leases (10-25yrs) with full repairing and insuring obligations on the tenant. The owner occupier market in commercial property is also not willing to pay so much more to buy the asset when compared to what they can rent it for (due to corporate costs of capital and accounting issues), unlike the domestic market where people are willing to pay "more" (in economic terms) for their home than they would to rent it.

Interesting, thanks Stoner

[Why don't we have a thankyou button like those nice bubbly folks over at MSE?!]

Edit to add: Second thoughts, maybe a **** you button would be more appropriate 🙂 <HUGZ>

no probs (Assuming you werent envisaging using the the "f***you" button on me? 🙂 )

One thing my client was seriously considering was going into the residential lettings market in a big way (by buying multiple blocks of new build flats in one go) and making the yields work for them by selling more and different products to the captive audience on their estate and of course doing their own agency work. Think "room service", furniture rentals, utilities, car parking etc etc. They were also insistent that it would only work if they could create a community, so would be aligned with the tenants to make it a pleasant place to live. I think its got a long way to go on the drawing board first, but has potential.

Personally I just want a house to live in, not as an investment as such

But it'd be nice if that house became free to live in when you retired, wouldn't it? Or if it magically turned into a big pile of money for your kids when you died?

"But it'd be nice if that house became free to live in when you retired, wouldn't it? Or if it magically turned into a big pile of money for your kids when you died?"

No.

hence the 'as such'. I wouldn't want to lose money on it and I would like to pay off a mortgage (in fact I'd like never to have a mortgage). And yes, the moon on a golden stick would also be nice. But, primarily I would like a home.

Toys - I wish I had enough money to make interest from the bank.

As it is at the moment I am paying them, and they are giving you my interest.

Not me, I haven't got anything in the bank either.

Stoner did hit the nail on the head, I understand what the real issue is I was just waiting for draftcapitals to admit the base of his grievance, which is basically that he feels he has a right to own a house.

I'm not so sure he feels he has the right to own a house, seems to me he's started scratching the surface of the mess that is our economy and is realising the size of the imbalance.

Think about it, my dad worked on building sites earning a reasonable but working class wage. By the time he was 24 he had a wife and two kids and bought a nice 4 bed house that needed some work doing. My mum stayed at home til my sister and I went to school, then went back to work part time. They had nice cars, dad had a motorbike, and we went on nice holidays. Do you know any 24 year olds who could say the same today? I'm nearly 40 and I can't!

This is where the arguments start (excuse the generalisations) - my dad's generation are generally of the opinion that you're lazy and workshy if you can't get married and buy a house by your mid twenties, or you're too busy buying iPhones. The younger generation think the boomers had everything put on a plate for them and resent that. People generally look at the extremes and draw their conclusions, rightly or wrongly.

In my opinion there is currently a huge imbalance, with a wealth transfer from the young to the old. I think the younger generation have every right to be angry and am actually quite surprised more haven't taken to the streets over it. What I don't agree with is the type of generalisation and short sighted blame laying typical of the Daily Mail. The problems are structural, shouting at an old lady in the street because she owns her own home won't fix that.

I think the figures are a little tight given the current interest rates. Obviously capital growth depends massively on the area - my house has probably increased 15% since 2007 but one of my BTLs in what is a pretty decent part of London has probably seen no growth in the same period (but no drop more importantly!).

I started off with BTLs 9 years ago and the capital growth has made it very wortwhile, but without that it wouldn't have made much sense as although the rent generates a small income each month and we've had very few void periods (probably less than 4 weeks in 9 years), there is always something that needs doing and I could put the capital to better use today I think.

Although it's never easy to do fully detatch your emotions when it comes to a decision like this, I think the question about would you be interested if it was a similar deal but in a block where you didn't live, is the key consideration.

hughjayteens

ta

tonyd you make sense but the funny thing is the tale you tell isn't the same as my dads he didn't buy his first house until he was 36, and he's a vet on good money.

But and this is a big but, he financed his way through vet school by working part time as an airline pilot in the summer and then when he was medically unfit to fly because of hearing problem he worked as a labourer and made as much as he did flying!! Anyway he told me he saved an bought anew triumph bonneville in six months as well as paying his rent going drinking friday and sat night etc etc.

I think this is about exploitation of all of us, essentially the powers that be banks retailers etc know how much spare cash we have and they create opportunities for us to piss it away. In the 60's they weren't as good at it as they are now and there wasn't as much credit so some people had more disposable income and could save etc.. Unfortunately today's kids are suffering at the hands of a society committed to getting you to let go of all of your money. The market for house price increases was there because someone did some sums and said hang on we can get people to commit much more of their disposable for longer and make more money.

It's like fuel prices, why do the keep inexorably rising? Because the market stands it, people are so addicted/committed to cars that they will carry on paying, and it is essentially a legalised monopoly one oil company doesn't need to get their heads together with another, they just stick their prices up and the others follows suit (although I believe they do collude).

I went to University and have a good job but I have friends back home who went straight out at 16, into a trade, and bought a house as soon as they could. For the most part they're probably far better off than me merely because they happened to buy property when they did, same as my dad.

Question is - what prospects do you have now if leaving school at 16? Flipping burgers or similar. Every man and his dog wants to go to uni and take on a small mortgage in the process.

Agree with you on the exploitation thing too. The banks and politicians have encouraged the nation to not only spend what they've got but also to borrow more and more against the future, and not just our own future, but our childrens and grandchildrens. They're the ones that'll pay the most for all of this and for what? So they can inherit a house worth £50billion, give half to the tax man, and then fill the car up with what's left!

Let's have a revolution!

TJ - sorry about the ranting hijack, I tried not to. I'll be quiet for a while now (well, it is nearly tea time). In answer to your dilemma, no, I wouldn't. You're so emotionally attached to the place you're practically menstruating :-p

tony - no worries - I got a load of good thoughts and info before the various hijacks