FAO Big Hitters: How are you solving the housing crisis?

Brownfield – long story but I had a large Victorian mill that I was going to make into 8 nice sized town houses. Good location, no issues – could never get it passed planning. The whole valley is ‘owned’ by two big development companies and as a small fish I got eaten up. I flipped the buildings to a large nationwide builder who are based locally – he hasn’t been able to do anything with it either.

Its stuff like that needs sorting – big local developers with Planning in their pocket.

As an aside, I am 53 with 2 BTL’s (was 3). It was never the plan but we rolled with opportunities. We are the opposite to slum landlords, like TJ we charge way too little and are just happy to have nice tenants. We also chose not to buy a holiday home so as not to be part of the problem. Instead we visit these places in our tatty old campervan.

We will roll with whatever comes next, if that means more CGT then so be it, we will have had plenty of rent over the years.

You might try to kid yourselves but unfortunately you are still very much part of the problem.

And I think a little bit of honesty is needed, nobody has a BTL either acquired by purchase, inherited or won in a raffle without the “profit motive“.

Let’s not forget the important bit of every episode of ‘homes under the hammer‘ where Dave and Julie find out from three little oiks what the valuation and rental potential is.

If you’re not doing BTL in order to be able to ride that equity wave, have someone else cover the mortgage or provide you a bit of passive income, so you can ultimately cash out and retire a decade or so early then why are you doing it?

The lack of housing stock, the demand driven price rises, the locals unable to buy where they grew up… That’s your* fault I’m afraid.

Don’t get me wrong, the way things are configured, if I had the spare cash I’m greedy enough that I would do the same probably, which is why I think we should have a fundamental change that makes landlording difficult to actually make meaningful profits from and places pressure on excess property owners to sell up. 

*The “Asset owning class”

And I think a little bit of honesty is needed, nobody has a BTL either acquired by purchase, inherited or won in a raffle without the “<em style=”box-sizing: border-box; –tw-border-spacing-x: 0; –tw-border-spacing-y: 0; –tw-translate-x: 0; –tw-translate-y: 0; –tw-rotate: 0; –tw-skew-x: 0; –tw-skew-y: 0; –tw-scale-x: 1; –tw-scale-y: 1; –tw-scroll-snap-strictness: proximity; –tw-ring-offset-width: 0px; –tw-ring-offset-color: #fff; –tw-ring-color: rgb(59 130 246/0.5); –tw-ring-offset-shadow: 0 0 #0000; –tw-ring-shadow: 0 0 #0000; –tw-shadow: 0 0 #0000; –tw-shadow-colored: 0 0 #0000; font-family: Roboto, ‘Helvetica Neue’, Arial, ‘Noto Sans’, sans-serif, -apple-system, BlinkMacSystemFont, ‘Segoe UI’, ‘Apple Color Emoji’, ‘Segoe UI Emoji’, ‘Segoe UI Symbol’, ‘Noto Color Emoji’; font-size: 16px;”>profit motive“.

Can’t sell mine, it has a non-standard construction so can’t be mortgaged on. Shall I give it away, do you think?

Shall I give it away, do you think?

If you’re past the point of breaking even why not?

Let’s not forget the important bit of every episode of ‘homes under the hammer‘ where Dave and Julie find out from three little oiks what the valuation and rental potential is.

HutH is a crap show. These are people spending £200,000 on a property, spending £30,000 doing it up over 9 months, selling it for £255,000 and then reckoning they’re geniuses.

The lack of housing stock, the demand driven price rises, the locals unable to buy where they grew up… That’s your* fault I’m afraid.

Landlords don’t affect the supply of housing stock and they certainly don’t affect demand for housing! If there was massive oversupply you’d be able to rent for €400 like in rural Italy or France.

in our city is older larger family homes get turned into crappy bedsits and student lets (though it has got better as the uni has started building dedicated blocks to cash in on student rent)

Worth pointing out that a big chunk of student housing demand is driven by foreign students. They’ve gone from 12% to 25% of student numbers in the last 20 years, and in recent years there’s been a large growth in the number of dependents brought with them (which also increases housing demand, obviously).

The massive drive for foreign students is great in the short term for people that sell education, because they get to keep the fees. How are the costs distributed across society? (I should say that I personally have gained massively from a similar policy).

https://migrationobservatory.ox.ac.uk/resources/briefings/student-migration-to-the-uk/

I’m sure it would sell, just not at a price you are comfortable with!  unless its a massive liability and costing you thousands for some reason, in which case, yes you’d be better off giving it away….

The thing with BTL landlords is for them it is an investment, to yield a return, and to date has been a pretty easy investment to make significant amounts on.  Its why my stepfather retired at 59 and I have friends that will be in the same position in their 50s.  These aren’t people with property empires, they are normal people who have or had 1 – 3 starter home properties mostly bought through releasing equity in their first home

The impact of so many people jumping on the BTL bandwagon has meant starter homes are hard to find / unaffordable and rents are so high.

There are obviously a few charitable landlords out there not squeezing the maximum they can from their tenants, but, you are still making a fair amount of passive income and part of the overall problem

The whole market and approach is broken.  I do think massive council housing (whether its blocks of flats or whatever) with rent control, not allowing councils to rinse tenants either, is what is needed.  Bring that in and make it a much harder decision to become an BTL landlord

Cookeaa

Rental properties are needed.

The flat was never bought with being a rental in mind.  Mrs TJ lived in it for years – indeed the two flats are next door ( yes I know its weird) and for a decade we had them knocked together into one flat.  We started renting it at cost to friends who needed somewhere to live and found we no longer needed the space.  the mortgage has NOT been paid in total by the rentals indeed on some of them we made a loss.

Now its mortgage free of course its good money for me.  without it I would be reliant on benefits

I am indeed going to sell it in the next year or two and I have asked the tenant if she wants to buy it.  ~She is looking to see if she can afford it given owning it will cost her around £500 a month more than renting it.  I will NOT sell it so long as she wants to rent it

We bought it from the landlord – and he said “make it worth my while so we paid over the odds and meeting the two mortgages we had pushed us close to the financial edge at times

So here is the moral dilemma.  Its obviously cheaper and easier to sell to the tenant particularly as I would NEV ER evict her to sell.  so do I sell it on the same deal as I bought it?  ie 5% over value or at value or do I give her a discount for the rental I have had from her?

I’m inclined to the 3rd 🙂

The impact of so many people jumping on the BTL bandwagon has meant starter homes are hard to find / unaffordable and rents are so high.

Rents would fall if everyone was piling in on BTL and everything else stayed the same. It’s 20 years of cheap interest rates, constraints on new construction, and massive increase in demand that are the problem, not BTL.

(I only own the house I live in, and with a huge mortgage. I seem to be the only dickhead in my generation that hasn’t made a squillion quid by buying 4 BTLs.

Before I bought my current place, I rented from a BTL landlord who was a really nice guy and kept the property in immaculate condition. The landlord before that was renting out the house he grew up in. The landlord before that was renting out the house while he worked overseas.)

Here’s what the think tanks are going for:

https://ukdayone.org/briefings/fast-wins-on-planning-for-housing

PCA – BTL acts as a mechanism to transfer money from poor to rich.

PCA – BTL acts as a mechanism to transfer money from poor to rich

Which in a lot of ways is public money (via housing benefit) being transferred to the rich.

We need more social housing, which keeps the money in the Governments pocket

My tuppance;

1. 100% inheritance tax, you want the house your parents own? Then buy it on the open market. I may relax this to a couple of generations if the hoi polio revolt too much, but generationally hoarded wealth is never useful.

2. Build higher density in cities, go to any European city and there are endless rows or good looking large apartment blocks of 4-5 stories, make them cheap and attractive with large rooms and plenty of folks will get over their need for a house as opposed to a flat. Covenant the mortgages on them to make them owner occupier only.

3. Revitalise the council owned sector.

4. Build more houses where there is work to support them. Everyone turns into a NIMBY when housing estates are being built near them, but pretty much every suburb that’s existed post-war was one at some point and now those houses are often the most desirable.

We will have to build on the Greenbelt.  Most areas (especially outside cities) do not have sufficient brown field sites (or even greybelt).  We won’t like it, but there will be no option.  Means huge changes to the planning system to power through the NIMBYs

We must not build on greenbelt. It’s land that  keeps down pollution, home to wildlife, insects, flora and trees, reduces flooding, provides places for leisure and well being. It’s not just about pretty fields. It stops cities and towns converging into one big sprawling concrete area (look at LA). Greybelt is  new to me. A Labour spokes person was saying it’s land that doesn’t have purpose and isn’t attractive and should be built on, mmm that’s green belt in my book and as for building on Moorland (mentioned above), that is land that catches carbon, is full of wildlife, fauna and flora and definitely isn’t suitable for building on.

Rules on brownfield sites need to be changed. Also more affordable housing on these smaller brownfield sites.

A local ‘canal marina’ site near us (brownfield) has recently been built on, providing 5 houses, these are outrageously priced for a North West small town. The developers should have built  6/7  smaller properties that were affordable.

Mentioned somewhere above is the fact that many people are still living in their (sometimes large) family homes on their own, without a chance to downsize. Also there are too many empty properties.

Signed:  A not really BIG HITTER 🙂

Unfortunately Labour have borrowed a tune from the Tory playbook, blame the planners. Planning, the proper sort that takes in the whole picture is vital and should include infrastructure (hospitals, schools, doctors, shops, sewage), transport – including proximity to work – and also the type of housing being built, including the carbon/climate change footprint. Unfortunately as there’s very little money for the treasury to spend this attack on planners is a diversion, there are permissions for thousands of houses around the country but unfortunately the Government doesn’t control the supply. The control for this is in the hands of the Tory contributing house builders who at the moment have cut back on supply as they can’t make as much profit at the moment. They managed to delay some of the sensible regulations (heat pumps, insulation, sewerage) and have been very much in control.

One answer is to take that control off the builders, borrow money and start building council housing again. These could be for rent or on joint purchase schemes. Scrap the help to buy scheme as all that did was help builders keep prices high whilst we all paid for every fourth house.

MY tenant pays £500 a month LESS than it would cost her if she bought it from me

TJ – I think you know that you are the exception though? Any legislation will always have some unintended consequences – I’m not sure the 1:10000 landlords who rent at far below market rates is a useful thing to worry about v the others.

presumably your statement above is only actually true if you sold it to her at market value – if you are willing to rent at 1/3rd below market, why not sell at the equivalent…

(not that I think you are doing anything wrong).

There is a certain amount of crap and NIMBYism about building on the green belt. Brown field sites sometime have greater biodiversity than lots of the farm land in the green belt. In Manchester there is some contoversy about Ryebank Fields which the “lovely” MMU are selling for housing. It’s area of really nice wild space with really interesting plants and critters and would knock spots of much of the monculture farm land surounding Manchester. It will also be missed by the local residents who value it as green space which can be in short supply is cities.

One of the sites in Didsbury had an amazing range of plants which is currently being turned into crappy flats.

It seems to me that owning several houses is quite wrong when people are homeless, and we could start with a certain Charles Windsor who has lots of houses which he can’t live in all year round.

“buying again in a devalued property market means they can still do so as the house they want to buy would be equally devalued.”

No, if they have a mortgage that’s more than the property is worth, it will bankrupt them, or at the very least, lock them into that house permanently, regardless of changed circumstances (job etc).

That’s the problem with a property price crash. Most people aren’t directly affected, but a minority get bankrupted.

(Those who aren’t directly affected by the drop in house prices may then be hit by the general economic problems arising.)

Nick – I assume you don’t actually mean 100% inheritance tax? But rather abolish the “threshold” for IHT?   Presumably not expecting couples to pay?  I think there’s probably arguments for an exemption for adult children who have always lived with the parents (often for disability type reasons) and perhaps even if a child has been a live in carer for a (long) period.

Personally I’d treat inheritance the same as any other income – that would be an incentive for people to be “tax efficient” by distributing it more widely.

From a housing crisis perspective – offer “bonus” to councils who meet certain brownfield, social housing etc targets and they’ll find ways to overcome barriers!

one thing I don’t think (but I did just skim read) anyone else has mentioned is that there’s actually (at least round here) a fair amount of land around that’s zoned for housing – the issue is the landowners want to release this slowly to maximise value.  If this is a national emergency – compulsory purchase; potentially with value based on its non housing use for anything that’s been sitting unused for a decades and could have been developed previously.

But I 100% would support the need for CGT on own residence.  I know that pre-election they said they wouldn’t but it’s crazy that the comfortably off make money on property booms whilst the poorest are increasingly trapped.

these both amount to the same thing – taxation on unearned wealth.

presumably your statement above is only actually true if you sold it to her at market value – if you are willing to rent at 1/3rd below market, why not sell at the equivalent…

Its an interesting point and I do not know what to do.  1/3 below market value would be 70 000 discount.  More than the total rent I have had in the entire time I have been renting it I think.  4 times what she has paid me in rent.

I have 3 options –

sell on the same deal I bought it for – make it worth my while” ie 5% over value

~Sell it at an agreed market value

Sell it to her at a discount because it will be an easy sale, I retain my good neighbour and its a nice thing to do.  I was thinking 5% below market value.  £10 000 discount. which would be half the rent I have had from her approximately.

Mrs TJ did a lot of work in housing.  I think she would want me to go for option 3.

would anyone else give away £10 000 like that?  If its any help the tenant earns more than I ever did by quite a lot

TJ – would you consider selling it at current market rate, minus the money she has paid you to date in rent?

you’d be no worse off than if you’d just sold up X years ago, tenant would clearly benefit in having a lower mortgage from having saved up more deposit via the bank of TJ.

edit – I typed that before your most recent reply

PCA – BTL acts as a mechanism to transfer money from poor to rich.

Yes, in the general sense that wealth in a capitalist society flows towards those with capital. But I need hardly lecture the Czar of a real estate empire about that 😉

What’s weirder is the government taking tax from the middle class to pay for housing for the working class but filtering that money through the pockets of a million private landlords instead of owning the housing itself.

But I 100% would support the need for CGT on own residence.  I know that pre-election they said they wouldn’t but it’s crazy that the comfortably off make money on property booms whilst the poorest are increasingly trapped.

You’d completely break the housing market by doing this, as it puts a penalty on moving home.

Given the example on a previous page, it would make zero financial sense of an elderly person downsizing, which would free up housing stock, due to a potential high tax bill

My dad bought his house in 1964 for £6,000, it’s now worth several hundred thousand (about 450 fwiw, albeit he has extended twice and of course invested in it over the years, plus remortgaged to finance a business so he is a long way from 444k in profit) I’m assuming if he was to sell he wouldn’t pay tax on 444k?

it’s crazy that the comfortably off make money on property booms

if you buy a house for £100, sell it for £200, and buy a replacement house for £200…you haven’t actually made money. You have to downsize, move somewhere cheaper or die to make money. We don’t want to make downsizing or moving less attractive because that locks up supply.

if you buy a house for £100, sell it for £200, and buy a replacement house for £200…you haven’t actually made money. You have to downsize, move somewhere cheaper or die to make money. We don’t want to make downsizing or moving less attractive because that locks up supply.

if its your sole residence, yes. If its the 4th property in your slumlord empire, you’ve just made a bucket load of cash

TJ it does sound like you are the genuine edge case perhaps with atypical circumstances, being willing to hold out on a sale unless and until it becomes affordable for the tenant to buy is not the norm.
I don’t disagree that rental properties are needed, does the whole sector need to be serviced by private landlords and investments funds though?

Rents would fall if everyone was piling in on BTL and everything else stayed the same. It’s 20 years of cheap interest rates, constraints on new construction, and massive increase in demand that are the problem, not BTL.

Can’t there be more than one factor?

I mean demand (both to buy and rent) has been pushed by a lack of supply, a lack of building limits that supply, BTLs soak up some more supply and then you add a growing population they’re all exacerbating factors, Oh and then someone spiked the interest rates in 2022…

But this has been an been taking place over most of the last 40 odd years.
You don’t honestly believe more Private landlords are the solution do you?
Their numbers have grown at the same time as our housing Crisis has formed, they are a contributing factor, yes along with a lack of investment in building both social and private housing…

Hence if we just build new homes for the older asset holding class to buy up and rent on to younger (poorer) generations we won’t actually improve much.

Social housing is needed to provide an affordable option and rebalance the housing sector, so that people can either afford to save for deposits, have disposable income to churn back into the economy or just ensure a minimum standard of living for the least fortunate/well off in our society.

The discussion is arse about face, why are we as a society accommodating (mostly) well off people, wanting a nice little nest egg to help trim a decade off their working life, leveraging an asset that could serve far more pressing social needs?

It does come back to the fundamental question, who is the country actually being run for the benefit of?

Nick – I assume you don’t actually mean 100% inheritance tax?

Yes, you assume correctly. Your phrase “taxation of unearned wealth” is much better.

who is the country actually being run for the benefit of?

Highly anecdotal, but from where I’m sitting, it seems to be my dog

With a shortage of brickies, labourers, plumbers, roofers, sparkies etc….who is going to build all these new houses……or if the local builder types all get ‘bought up’ by a few of the big housebuilders…how are the rest of the Uk going to get their bathrooms/kitchens, extentions, re-wires etc completed?

Rent controls / fair rents.

Secure tenancies.

Right to buy extended to private landlords and ended for social housing.

Cookea – for sure I am very atypical as a landlord

Highly anecdotal, but from where I’m sitting, it seems to be my dog

Get a cat and it’s not just the country, it thinks the world is theirs to do its bidding.

With a shortage of brickies, labourers, plumbers, roofers, sparkies etc….who is going to build all these new houses

Don’t say it too loudly, but immigrant workforce (who will ironically need somewhere to live while they are building houses)

Don’t say it too loudly, but immigrant workforce (who will ironically need somewhere to live while they are building houses)

Well wasn’t that the point of 2016?

They did actually run the Leave campaign on “taking back control” people seem to have heard “boot ’em all out“. But there’s arguably nothing more ‘Brexity‘ than issuing time limited Visas for foreign construction workers, and maybe a few more to bolster the training up of our native workforce.

They will not come on restricted visas when they can work elsewhere with FOM

Quite possibly, but as noted above we are rather hampered by a diminished construction industry and a skills gap.

Whatever carrots can be dangled to stimulate the sector and deliver the 1.5m houses promised within this parliament need to be considered. It’s a bold promise to make, they must have some idea how they’re going to deliver it, time is very much a factor and brickies don’t grow on trees….

With a shortage of brickies, labourers, plumbers, roofers, sparkies etc….who is going to build all these new houses……

Lord Timpson might have some suggestions?

Build higher density in cities, go to any European city and there are endless rows or good looking large apartment blocks of 4-5 stories, make them cheap and attractive with large rooms and plenty of folks will get over their need for a house as opposed to a flat. Covenant the mortgages on them to make them owner occupier only.

This. And build them near transport hubs so people have less need to drive. We used to do this (1930s mansion blocks) and if you compare the footprint of a British town with a similarly sized European one…

Massively increase the costs of having second homes and buy-to-let properties.

This.

Don’t say it too loudly, but immigrant workforce (who will ironically need somewhere to live while they are building houses)

Considering 90%-ish of new housing supply just goes to offsetting the additional housing demand caused by net migration, this sounds a bit like drinking salt water to cure your thirst…

They will not come on restricted visas when they can work elsewhere with FOM

Immigrants have come to the UK in increasing numbers since Brexit. They’re just not immigrants from the EU…if that matters to you.

demand (both to buy and rent) has been pushed by a lack of supply, a lack of building limits that supply, BTLs soak up some more supply

BTL doesn’t reduce the aggregate supply of housing in the UK. Not by a single unit. The flat or house still exists and people still live in it – it’s just on the rental market instead of being owner-occupied.

I also think one of our fundamental issues is poor quality and small size of new housing. There’s got to be a better trained workforce and higher standard of construction, perhaps not leave it to shareholder driven big developers.