Well… France bang on the same as us, as you say, and Sweden and Denmark pretty close. Germany the outlier in terms of home ownership, as you said…
https://www.statista.com/statistics/246355/home-ownership-rate-in-europe/
How do landlords get away with doing nothing and just taking in rental cash.
Pathetic isn't it, maybe Doctors should stick to their day jobs, for which they are paid very well to do.
You are describing the problem – house prices need to fall.
I think the problem is that wages need to rise, and, vitally rents need to fall. You can’t save up a deposit while you are paying more in rent for your home than you would be if paying for the mortgage if you “owned” it.
All the alternatives would make buy to let unfeasible*, so I doubt you genuinely want to hear about them.
... I really don't have a dog in this race, but rather
And landlords really aren’t the problem here… the system is.
... is exactly the point I was trying to make.
If the farmer was renting me a chicken for £1, while selling to others for 25p, yeah I would have a problem with it.
Yeah, but for the analogy to work your 25p buyers would first have to sign up to the chicken-buying scheme for £500 in order to be eligible to buy (or at least, be able to prove the means to). Still grossly unfair now?
the analogy does not work.
At the risk of repeating myself, that was my point, your analogy doesn't work.
In your scenario if a farmer is selling chickens for 25p and renting them for £1, nothing is stopping you from buying one rather than renting it.
OK, let's try a different tack.
Hypothetically, I have a house on the market. I will offer to rent it to you for £500/month, or I will sell it to you for £500/month until it's paid off if you can give me a £35,000 lump sum up front.
Which do you choose? And if you don't like either of those options, well, do I need to ask a seventh time?
Why is one of these two scenarios problematic to you? Seven pages in and the best you've managed so far is "someone is making a profit." You're going to soil yourself when you find out that new builds don't sell at cost.
I will offer to rent it to you for £500/ month, or I will sell it to you for £500/month
Where are (private) rents equivalent to mortgage payments in that way in the UK?
“someone is making a profit.”
Did you read that Guardian article I posted? Who’s complaining about profit? We are complaining about a system where more people than ever can no longer own their one home, and are trapped in the rental system where they are inadequately protected.
Of course there can be a profit, but there is far too much profit. As was mentioned a few posts back mortgage costs have gone down, while rents have gone up, how is that not exploitative?
Of course there can be a profit, but there is far too much profit
I’d love to know how much is ‘too much’ profit?
Where are (private) rents equivalent to mortgage payments in that way in the UK?
It was a hypothetical scenario. Not that it matters, every question I've asked so far has been ignored.
Did you read that Guardian article I posted?
I didn't but I shall, thanks for the nudge.
Who’s complaining about profit?
See the post directly after you asked that question.
There is of course another side to the coin re: BTL. It's easy to fall down the rabbit hole of believing all BTL landlords are cash hungry monsters with huge portfolios - certainly all the ones I know have one, two maximum. Why did they guy them? Not to get rich or give up work, rather to offset the fact that pensions aren't worth Jack shit these days compared to previous generations, so they're building a little financial security for the future in the absence of a decent pension income that previous generations enjoyed.
That doesn't sound so unreasonable, exploitative or evil does it? But of course, it's not as emotionally loaded a story....
And the counterpoint to that,
I wouldn’t risk being a landlord after i’ve seen some of the devastation caused by some people to rented properties.
Next door to my mum is a BTL rental property. Regular readers may remember a previous thread about Paddy.
The previous owners were Tom and Susan. Lovely couple. Susan was fastidiously clean to the point of OCD. They had a couple of dogs, before the dogs were allowed back into the house after being outside she'd wash their paws and, eh, unmentionables. Then Susan sadly passed away suddenly and Tom sold up. It sold to let.
Fast forward to today, maybe what, five years on? They've wrecked the place. All the interior doors are in the back yard after Paddy's smashed them off in pissed-up rages. Paddy's chain-smoked inside sufficiently that you can smell it from the street as you walk past, with doors and windows shut and a four-foot high garden in the way. He lives with his bedridden mum who spends her entire waking hours smoking weed (whilst suffering from COPD and permanently on oxygen). They have a dog that routinely craps in the house (as evidenced by Paddy roaring "you dirty bastard" in the small hours several times a week) because it never gets to go outside.
Meanwhile, the landlord does nothing and sits there raking in the "profits."
Horrible cougar.
Been there on the 5 month journey to get court order to allow Sherrif's Men (Scottish bailiff) to kick them out. I felt for the neighbours and own losses.
Interestingly under Scottish process any other pressing debts can mean a hold on eviction - Perth and Kinross council were at the (open) court session over about 6 houses. 5 of the houses had the whole process paused for 6 months for the tenant to 'try and make good' other debts. So P&K council would have had a full year of no rent, some of the tenants trashing the place and they still had to maintain to Repairing Standards.
Thankfully my tenant was such a c*ck he started on the Sherrif and lied, so winding up the Sherrif and court advisor, and in doing so was just ordered to pay up and get out. Not that he paid up or left until the morning of the eviction, so costing a further £350 in bailiff fees.
To summarize:
- no problem with high house prices and rents
- it's totally fine to make as much money as you can get away with, despite doing no actual work or contributing anything useful to the world
- if you can't afford to live where you work, move hundreds of miles away.
- renters will just smash things up anyway (if only you could insure against this) yet somehow it's still worth doing.
It seems the people that want the prices to crash are happy for families to be screwed over, the same people hope to gain.
We have a lot of equity sitting in our family home, money that would be hard earned to come by again.
if you have a lot of equity, why is it a problem that house prices fall a bit ? Did you really do anything to earn the increase in value of your home?
if you have a lot of equity, why is it a problem that house prices fall a bit ? Did you really do anything to earn the increase in value of your home?
Because not everyone bought their current home in the 80s.
Lots of people would very quickly fall into negative equity on any fall in house value.
Which would mean a lot of people defaulting on mortgages.
Which would basically be the subprime mortgage crisis all over again.
So sure, you've got lots of cheap property now because demand has fallen. Demand has fallen because the banks don't dare lend any money whilst house prices are falling. The only buyers are now cash buyers (!!!!) who can afford to weather the storm and come out the other side.
Not exactly the outcome you're looking for, eh.
if you have a lot of equity, why is it a problem that house prices fall a bit ? Did you really do anything to earn the increase in value of your home?
Given we've only been in this house 5 years I doubt it's worth much more than we paid for it, even with doing a lot of work to it when we moved in.
And it's a problem just giving money away to me, which if the prices drop that's what your doing.
It's a family home but also part of the pension pot when we downsize.
You are describing the symptom of high house prices and the commodification of homes - we need house prices to keep raising to stop people getting into negative equity. Can't see how this is going to end well.
Interesting how it's a problem for homeowners costs to increase, but not a problem for renters / those looking to save a deposit.
Given we’ve only been in this house 5 years I doubt it’s worth much more than we paid for it, even with doing a lot of work to it when we moved in.
Is it a home or an investment vehicle? Are you not enjoying the improvements you made to your home?
Is it a home or an investment vehicle?
No reason it shouldn't be both a home and a self funded part of a retirement pot. As per my previous post, pensions are worth sweet FA now (I remember my old man getting caught up in a pension collapse and hundreds of thousands disappearing, and him having to work to 70 just to stay afloat). So unless there's done other sort of provision made to financially support people in retirement, BTL is probably the safest bet.
It falls into a much, much bigger conversation that goes beyond house prices, and into our longer more active life spans, and the challenges that creates both in terms of funding longer lives but also accommodating and servicing an increasing population.
Interesting how it’s a problem for homeowners costs to increase, but not a problem for renters / those looking to save a deposit.
But interestingly, the solve of 'lowering house prices' still doesn't get those without homes on the property ladder, because now you've got no lenders willing to lend on a depreciating, high-risk, low yield asset.
Sorry havent read the whole thread, i am waiting to buy a house and anything that isnt a bungalow in the area i want, is not selling. Every day more are added for sale so a bigger pool to choose from.
Next step, price reductions, some are empty so will start attracting council tax, some are probate, the ones that have to sell are going to have to start listening to offers. Once the market stutters why buy, i ll just wait as prices are going down.
I am a landlord, 1 tenant has been in situ over 12 years and clearly treats it as his home, the other I will sell as the tenants have taken the pi.. over the years. I have been awarded nice damages but I am not interested in that, just someone who treats it as their home. Now someone is in there who does.
Cheers all
But interestingly, the solve of ‘lowering house prices’ still doesn’t get those without homes on the property ladder, because now you’ve got no lenders willing to lend on a depreciating, high-risk, low yield asset.
And that, in turn, is another problem with free markets for essential commodities.
Lots of people would very quickly fall into negative equity on any fall in house value.
Which would mean a lot of people defaulting on mortgages.
Would it? Do you default when you have negative equity?
Some people might default on purpose. Get themselves declared bankrupt, write off the negative equity debt and start again.
No reason it shouldn’t be both a home and a self funded part of a retirement pot. As per my previous post, pensions are worth sweet FA
Same applies to non homeowners.
So unless there’s done other sort of provision made to financially support people in retirement, BTL is probably the safest bet.
How about we invest in things that are not peoples homes, but actually create something of value. We have been brainwashed into thinking BTL is the only way to secure our futures and the hell to the next generation coming up behind us.
The housing market is not good for the economy it dampens the economic activity of the young - the people we need to start up new businesses.
Would it? Do you default when you have negative equity?
No you don't and why is it always the extreme example. It rarely that precarious for home owners. They can wait it out or downsize.
Who said prices need to crash anyway, they just need to stop raising and wages will catch up.
It rarely that precarious for home owners. They can wait it out or downsize.
Becomes a default when you find the svr climbing and you can't get off the svr because your in negative equity ..... It's easy to see how it would correlate to the other if it gets to 12% on svr
you can fix your mortgage for 5 or even 10 years (for very little extra now) to reduce this risk. Once again this sort of thing happens to renters all the time, you get a letter one day and your rent has jumped 10%.
How about we invest in things that are not peoples homes, but actually create something of value.
What like? I'm just in the process of transferring my old corporate pension (just moved jobs) into Pension Bee with my others so I can manage it myself. It was heavily into commercial property like many pensions, and has gone down in value this year. If commercial property goes down further, what other good options are there for people to create retirement funds? As we've seen, the stock market is volatile too so that's less appealing.
That's the challenge - the old safe bets are gone, hence the growth of things like BTL as a retirement strategy. What other options are there - diamond mines in Africa or investment in arms dealing are probably the best alternative but morally far worse.
Once again this sort of thing happens to renters all the time, you get a letter one day and your rent has jumped 10%.
Wife lets her old house, every year the agency just up the rent value without asking and every year she makes them put it back down to its original value!
What like? I’m just in the process of transferring my old corporate pension (just moved jobs) into Pension Bee with my others so I can manage it myself.
Almost anything else - how about a green investment fund?
It's all connected, we would not have plan for our retirements in this manor if housing was not such a drain on our resources.
Wife lets her old house, every year the agency just up the rent value without asking and every year she makes them put it back down to its original value!
Commendable in this day and age.
you can fix your mortgage for 5 or even 10 years (for very little extra now) to reduce this risk. Once again this sort of thing happens to renters all the time, you get a letter one day and your rent has jumped 10%.
You said that but at some point you will be exposed to the svr or a high fix rate....say in 5 or 10 years time when your fix ends. Your just kicking your can down the road.
With rent and they bump it up this 10% you are free to look at market rate. Or you need to move for your job ....you can . Or need a bigger house for your family ...you can. -the downside is you are paying money for that privaledge.....no different to PCP on a car really...and significant numbers here think that owning a car is a silly idea ....
If you own a house in negative equity that is not an easy process especially if it's worth is less than the outstanding loan value.
Owning isn't the right solution for all....but it is for many.
It’s easy to see how it would correlate to the other if it gets to 12% on svr
When would that be though? average SVR hasn't been above 9% for 25 years, hasn't been above 5% since 2008.
Owning isn’t the right solution for all….but it is for many.
Let's talk about why renting is such a bad option in this country.
- It much more expensive then a mortgage.
- The quality of houses is by and large appalling - never met anyone who has not rented a damp house.
- Rentals are simply not maintained properly by amateur landlords only interested in monthly yields.
- Rents rise year on year despite lending cost dropping to the bottom.
- You can not get a contract longer than 12 months
- You can be evicted through no fault of your own, with 2 months notice - think of the mental stress this causes and the waste of resources moving someone who does not want to.
- You are treated like a second class citizen by the estate agent despite you paying their wages - I am the customer, not the joker who is 300 hundred miles away who has managed to take out a intrest only loan.
- Despite paying for someone else home, the home owner still thinks the home is theirs and will lock the shed or board up the loft or pop round with his own set of keys to check how he can convert it into a flatshare.
no different to PCP on a car really
I don't live in my car, I don't need a car that is near my job, kids school and friends. I don't need a car at all in fact. It does not wreak my life when the car reaches a point I can no longer afford.
At least with PCP you are getting a brand new car that is maintained. The house equivalent would be a 20 year old banger with blown windows, faint smell of damp and a locked boot the owner uses to store his old golf clubs in.
When would that be though? average SVR hasn’t been above 9% for 25 years, hasn’t been above 5% since 2008.
Given what has happened this year I cannot see it happening again in many of our lifetimes. We still haven't fully recovered from the banking crash (hence the record low SVRs worldwide) and the combined Governments of the world will need to do lots to encourage firstly recovery, then growth.
g5604 - you are clearly bitter and unwilling to accept any views contrary to yours.
What's your problem?
What's your proposed solution to the multiple inequities to see?
Do you have a problem accepting that profit is essential for a functioning economy?
My two word summary of this thread: OK Boomer!
@g5604 - you really like to use emotive language and generalise about all rented properties.
– It much more expensive then a mortgage.
See my post earlier, my tenants pay £20-50 a month more than if they owned the house, without having £12k tied up as a deposit (which in a bank might earn the same £20-50 per month). Not *always* true.
– The quality of houses is by and large appalling – never met anyone who has not rented a damp house.
*rolls eyes*
– Rentals are simply not maintained properly by amateur landlords only interested in monthly yields.
I have 'Repairing Standards' this is a three page document outlining how (and in what timescale) my property should be maintained it. It explains recourse if I don't, including using the deposit held independently to pay for repairs. This of course is Scotland, it is done differently elswhere. Again, your emotive phrasing and generalising is rude.
– Rents rise year on year despite lending cost dropping to the bottom.
My rents rarely go up - a good tenant stays, that is worth more than a rent rise. I put rents up when I market a place. The three other flats in my building do the same. Rules here are one rise per 12 months, at three months notice, and tenant can refer to the Rent Officer who will ask for justification if over the usual UK Inflation rate.
– You can not get a contract longer than 12 months
Yes you can. A *minimum* contract in Scotland is now 6 months.
– You can be evicted through no fault of your own, with 2 months notice – think of the mental stress this causes and the waste of resources moving someone who does not want to.
Now this is true, although again in a contract in Scotland you have to spell out the grounds for termination *before* the policy is signed. I will be selling my flat tenanted as I cannot evict on grounds of wanting to sell the property.
– You are treated like a second class citizen by the estate agent despite you paying their wages – I am the customer, not the joker who is 300 hundred miles away who has managed to take out a intrest only loan.
Only 48% of rental properties use an agent in the UK, and over half the agents are not estate agents but specific letting agency representatives. Again, it depends on your estate agent and your emotive and nasty language is not helpful.
– Despite paying for someone else home, the home owner still thinks the home is theirs and will lock the shed or board up the loft or pop round with his own set of keys to check how he can convert it into a flatshare.
In Scotland, I cannot legally do that. I have a usual notice period of 2-weeks, which I can vary from in an emergency such as leaking pipes. Again you apply a rumour and 'I once heard' to all and use emotive language to do so.
I agree with some of your concerns and points - but by being so emotive and over-generalist you do yourself a disservice and come across as a quite nasty person.
hels
Subscriber
My two word summary of this thread: OK Boomer!
Perfect.
Do you have a problem accepting that profit is essential for a functioning economy?
No, just less profit on housing.
What’s your proposed solution to the multiple inequities to see?
less profit on housing.
@matt_outandabout the key word in your post in Scotland.
you really like to use emotive language
This is because I am talking about homes and people, while you are talking about investments. It should be an emotive topic, we are keeping people trapped in unnecessary misery. I am very bitter about this.
Would it? Do you default when you have negative equity?
The problem is, is that it snowballs. That's exactly what happened during the 2008 Financial Crisis - the snowball effect from those who were sub-prime defaulting, thus causing the surrounding property to fall in value, which meant more defaulted, which caused more of the surrounding property to fall in value, which mean more ....
And it's easy to see why people would choose that. House falls £30k? Okay, thats a stinger but at least it means that other places have probably fallen by £30k too, and maybe in 5 years it's back roughly to where it was.
House falls by £100k? Why am I paying a mortgage for £100k more than its worth? How low can it go? How rapidly will it fall? How long will it take to recover?
It's basically the exact same situation as the 2008 crisis, but instead of subprime mortgages being the trigger it's whatever this thread is proposing devalues housing.
What that video misses out on is that lenders then no longer want to borrow on depreciating, high risk, low yield assets. We're already seeing a bit of this come into play - as the risk of borrowing has risen due to the potential aftermath coronavirus, banks are no longer willing to lend over 85% LTV.
Now imagine that the asset itself is risky due to depreciation, and you can get higher returns elsewhere for your investment. Boom - no mortgages for anyone, only cash buyers can purchase property.
tl;dr: It's much more nuanced than saying 'just make them cheaper lol'
For what it's worth - I too think houses are stupidly expensive and the housing crisis is very real in this country. It's even worse in many cities in the US and other countries. Something should be done. But it's such a delicate and complex economy that I don't dare claim i'm an expert and certainly understand that saying "houses need to be cheaper" is a gross oversimplification of the issue that borders on wishing for financial apocalypse.
