BTL as a pension fund - why not?
Discussion
ITP said:
I sense a 'London' house prices/rent increases slant here. I am not including London as that's pretty much like a different country to the rest of the uk with insane prices and rents where no young person has chance unless they are an investment banker. You need to move out to move on if you live there, you really do.
I digress, how do you propose capping rents? What if I do up my rental with a new kitchen/bathroom, it will command a higher rent, some streets are nicer than others. There are so many variables. You wouldn't want to have rents liked to mortgage rates at the moment either as the only way is up, as they say in the song.
Yes, there are lots of ins and outs. But where there is a will there is a way and all that.I digress, how do you propose capping rents? What if I do up my rental with a new kitchen/bathroom, it will command a higher rent, some streets are nicer than others. There are so many variables. You wouldn't want to have rents liked to mortgage rates at the moment either as the only way is up, as they say in the song.
Germany seems to have done some thinking of these in their inner city rent cap implementation so I will be lazy and point you there
http://www.theguardian.com/world/2014/sep/23/germa...LucreLout said:
I completely agree. Its not the governments job to blow its wad all over the greenbelt and build so many houses it wrecks the market either.
Lets just leave the system alone and let it do what it does. It works just fine without further meddling.
The young have unrealistic expectations, and frankly, I'm not in the mood to pay for them.
The pleading of special interest groups in this area is ridiculous. The system is clearly not working fine as not enough homes are being built for our growing population. I agree the problem is government meddling, in the shape of planning constraints. Lets just leave the system alone and let it do what it does. It works just fine without further meddling.
The young have unrealistic expectations, and frankly, I'm not in the mood to pay for them.
We clearly cannot simply remove all planning constraints but a system needs to be achieved whereby enough land is released for housing at a low enough price. An element of the "planning gain" to be shared with the local community via lower council tax not affordable housing which doesn't benefit them.
JagLover said:
LucreLout said:
I completely agree. Its not the governments job to blow its wad all over the greenbelt and build so many houses it wrecks the market either.
Lets just leave the system alone and let it do what it does. It works just fine without further meddling.
The young have unrealistic expectations, and frankly, I'm not in the mood to pay for them.
The pleading of special interest groups in this area is ridiculous. The system is clearly not working fine as not enough homes are being built for our growing population. I agree the problem is government meddling, in the shape of planning constraints. Lets just leave the system alone and let it do what it does. It works just fine without further meddling.
The young have unrealistic expectations, and frankly, I'm not in the mood to pay for them.
We clearly cannot simply remove all planning constraints but a system needs to be achieved whereby enough land is released for housing at a low enough price. An element of the "planning gain" to be shared with the local community via lower council tax not affordable housing which doesn't benefit them.
For all the right wing free marketeers - LVT was Milton Friedman's favourite tax - he described it as the "least worst tax".
NomduJour said:
JagLover said:
I agree the problem is government meddling, in the shape of planning constraints
Government meddling surely has more to do with interest rates lower than inflation. 1. The long term constraint on supply meaning that house building has been below new household formation for many years. Someone posted the increase in population over the last couple of decades but even that is not the whole story as due to divorce etc the number of households is rising regardless of population.
2. Massive intervention following the financial crash to keep the housing bubble inflated. Justified on the grounds of providing credit to businesses but it had very little to do with them.
wolves_wanderer said:
You talk disparigingly about Generation mememe and then threaten to throw your toys out of the pram if "too many" houses are built and it affects the value of yours? What a selfish baby you are, "I'm alright Jack and f everyone else"Having had one retirement option removed by the government, I simply can't afford to lose the second without taking drastic steps to recover my position.
As my biggest cost by far is taxes, taxes are where those cuts will have to fall. Its not my preference, but it is plan c.
There is no plan d.
I see no reason to work until I die to fund the early retirement of baby boomers and the over inflated demands of gen y.
We are where we are. Right now I can afford to pay taxes and later downsize for retirement. I'd have preferred plan a, but that ship has sailed - no way to recover from 20 years of divs taxed away.
The labour government created the btl and housing bubbles. Too late to cry over spilled milk now. Had they left pensions well alone as literally every advisor was telling them, ordinary people would have been able to stick to conventional retirement plans. Baby boomers and state workers have their solid gold final salary schemes. Gen y have time on their side. Gen X are screwed without property to help cover the short fall.
Rovinghawk said:
JagLover said:
not enough homes are being built for our growing population.
We have the space, but everyone wants to be in London rather than Northumberland. Fix that issue & affordable housing will be a lot easier.Yazar said:
Appreciate any system won't please everyone The alternative however is to keep it as is, so those on low incomes but doing essential jobs either buy and commute 2 hours each way or rent..
I commute nearly 2 hours each way. The guy one desk over does the full two already. Its not common, but not unusual either. Do I qualify for special assistance in your scheme then? 
edh said:
I suspect there's plenty of available land out there. All the noise from the "supply side" is just self interest. As it's finite, it makes no sense for housebuilders to indulge in massive building programmes. Understandably they want to maximise their return on each plot. That means keeping supply tight. I'll keep saying it, LVT fixes this along with lots of other beneficial effects. It becomes "use it or lose it" (well sell it..)
For all the right wing free marketeers - LVT was Milton Friedman's favourite tax - he described it as the "least worst tax".
I suggest you do some further research into the issue. For all the right wing free marketeers - LVT was Milton Friedman's favourite tax - he described it as the "least worst tax".
http://blogs.channel4.com/factcheck/factcheck-buil...
Given the length of the planning process, and the negotiation of S106 agreements, I would expect prudent builders to hold 3 years supply of land.
It is tempting to find some capitalist company "profiterring" as a scapegoat but this is a market failure caused by government regulation.
JagLover said:
The pleading of special interest groups in this area is ridiculous. The system is clearly not working fine as not enough homes are being built for our growing population. I agree the problem is government meddling, in the shape of planning constraints.
We clearly cannot simply remove all planning constraints but a system needs to be achieved whereby enough land is released for housing at a low enough price. An element of the "planning gain" to be shared with the local community via lower council tax not affordable housing which doesn't benefit them.
I don't mind them building more houses, with two carefully chosen caveats.We clearly cannot simply remove all planning constraints but a system needs to be achieved whereby enough land is released for housing at a low enough price. An element of the "planning gain" to be shared with the local community via lower council tax not affordable housing which doesn't benefit them.
1) Infrastructure improvements take place prior to any building. The cost of these is funded by those buying the houses rather than those who already live there. Trains, good schools, doctors.... All are at capacity where I live. There is no more room for all these people.
2) Any drop in real terms in the value of my property is funded by the government. I see no reason why I should be forced by the government planning restrictions to buy high prices housing from the preceding generation only for the same government to f
k with the rule book to reduce the cost for the following generation. Quite why anyone would think it reasonable to expect me to want to fund that is a mystery.The problem all this brings, of course, is that the prospective FTB can't afford to pay for the infrastructure that would need upgrading due to their houses, and the government can't afford to pay for the loss of equity they'd cause. Neither can I - Gordon stole my pension you see, and there simply isn't time before retirement for a credible plan c if the government steal housing gains.
JagLover said:
edh said:
I suspect there's plenty of available land out there. All the noise from the "supply side" is just self interest. As it's finite, it makes no sense for housebuilders to indulge in massive building programmes. Understandably they want to maximise their return on each plot. That means keeping supply tight. I'll keep saying it, LVT fixes this along with lots of other beneficial effects. It becomes "use it or lose it" (well sell it..)
For all the right wing free marketeers - LVT was Milton Friedman's favourite tax - he described it as the "least worst tax".
I suggest you do some further research into the issue. For all the right wing free marketeers - LVT was Milton Friedman's favourite tax - he described it as the "least worst tax".
http://blogs.channel4.com/factcheck/factcheck-buil...
Given the length of the planning process, and the negotiation of S106 agreements, I would expect prudent builders to hold 3 years supply of land.
It is tempting to find some capitalist company "profiterring" as a scapegoat but this is a market failure caused by government regulation.
"Some 45 per cent of land where planning permission had been granted was owned by investment funds, owner-occupiers, historic landowners and the government. In other words, people who had no intention of building on it.
Matt Griffith from the Institute for Public Policy Research has commented: “This is a shockingly high number, and suggests that speculation is significantly hampering housing development, not just in not bringing forward new homes that should be being built but also in pushing up the price of land for all market participants.”
He lets the developers off the hook, saying: “Labour therefore needs to target not landbanks themselves, which are usually a legitimate tool of the mainstream building industry, but the factors that cause land-hoarding by other speculators.”"
Looks like "capitalist profiteering" to me...
LucreLout said:
I don't mind them building more houses, with two carefully chosen caveats.
1) Infrastructure improvements take place prior to any building. The cost of these is funded by those buying the houses rather than those who already live there. Trains, good schools, doctors.... All are at capacity where I live. There is no more room for all these people.
2) Any drop in real terms in the value of my property is funded by the government. I see no reason why I should be forced by the government planning restrictions to buy high prices housing from the preceding generation only for the same government to fk with the rule book to reduce the cost for the following generation. Quite why anyone would think it reasonable to expect me to want to fund that is a mystery.
The problem all this brings, of course, is that the prospective FTB can't afford to pay for the infrastructure that would need upgrading due to their houses, and the government can't afford to pay for the loss of equity they'd cause. Neither can I - Gordon stole my pension you see, and there simply isn't time before retirement for a credible plan c if the government steal housing gains.
in the south east agricultural land is valued at under £10K an acre, I would suggest the value of that with planning permission would be at least that times 100. That would pay for allot of infrastructure and local council tax rebate whilst still being relatively cheap land.1) Infrastructure improvements take place prior to any building. The cost of these is funded by those buying the houses rather than those who already live there. Trains, good schools, doctors.... All are at capacity where I live. There is no more room for all these people.
2) Any drop in real terms in the value of my property is funded by the government. I see no reason why I should be forced by the government planning restrictions to buy high prices housing from the preceding generation only for the same government to f
k with the rule book to reduce the cost for the following generation. Quite why anyone would think it reasonable to expect me to want to fund that is a mystery.The problem all this brings, of course, is that the prospective FTB can't afford to pay for the infrastructure that would need upgrading due to their houses, and the government can't afford to pay for the loss of equity they'd cause. Neither can I - Gordon stole my pension you see, and there simply isn't time before retirement for a credible plan c if the government steal housing gains.
LucreLout said:
Labour wrecked my pension. I increased contributions as much as I could, but dividend taxes coupled with falling annuity rates mean it won't be enough. To say nothing of the ever increasing age at which I can access it. Downsizing my property to make up the shortfall is plan b.
Having had one retirement option removed by the government, I simply can't afford to lose the second without taking drastic steps to recover my position.
As my biggest cost by far is taxes, taxes are where those cuts will have to fall. Its not my preference, but it is plan c.
There is no plan d.
I see no reason to work until I die to fund the early retirement of baby boomers and the over inflated demands of gen y.
The labour government created the btl and housing bubbles. Too late to cry over spilled milk now. Had they left pensions well alone as literally every advisor was telling them, ordinary people would have been able to stick to conventional retirement plans. Baby boomers and state workers have their solid gold final salary schemes. Gen y have time on their side. Gen X are screwed without property to help cover the short fall.
Baby boomers have funded their own pensions (except public sector retirees of course). Labour's opendoor immigration policy has created much of the housing demand (and obviously downward pressure on wages, pressure on the NHS etc). Plus Labour's tax credits and public sector jobs creation has created immense pressure on the deficit.Having had one retirement option removed by the government, I simply can't afford to lose the second without taking drastic steps to recover my position.
As my biggest cost by far is taxes, taxes are where those cuts will have to fall. Its not my preference, but it is plan c.
There is no plan d.
I see no reason to work until I die to fund the early retirement of baby boomers and the over inflated demands of gen y.
The labour government created the btl and housing bubbles. Too late to cry over spilled milk now. Had they left pensions well alone as literally every advisor was telling them, ordinary people would have been able to stick to conventional retirement plans. Baby boomers and state workers have their solid gold final salary schemes. Gen y have time on their side. Gen X are screwed without property to help cover the short fall.
JagLover said:
in the south east agricultural land is valued at under £10K an acre, I would suggest the value of that with planning permission would be at least that times 100. That would pay for allot of infrastructure and local council tax rebate whilst still being relatively cheap land.
The value gain would accrue to the landowner selling it, the developer building the flats, the council via planning gain, and the buyers via reduced prices in the area.The value drop would accrue to existing home owners.
Surely you see the imbalance there? Council tax reductions don't quite make up for having 30% of your property value going up in smoke. And that's the best case, assuming the planning gain was invested in infrastructure rather than the more typical council investment in still more paper shuffling.
Its far easier, safer economically, and fairer to all, simply to moderate the excessive expectations of gen y, slow down immigration and the birth rate, and build houses to match that need (at say 22% of the net rate of population increase to reflect the 4.5 person family unit).
edh said:
Interesting, thanks
"Some 45 per cent of land where planning permission had been granted was owned by investment funds, owner-occupiers, historic landowners and the government. In other words, people who had no intention of building on it.
Matt Griffith from the Institute for Public Policy Research has commented: “This is a shockingly high number, and suggests that speculation is significantly hampering housing development, not just in not bringing forward new homes that should be being built but also in pushing up the price of land for all market participants.”
He lets the developers off the hook, saying: “Labour therefore needs to target not landbanks themselves, which are usually a legitimate tool of the mainstream building industry, but the factors that cause land-hoarding by other speculators.”"
Looks like "capitalist profiteering" to me...
and your proposed LVT might encourage a few tens of thousands of plots to be built on. But in the context of total housing need banks held for speculation are a tiny fraction of what is required. "Some 45 per cent of land where planning permission had been granted was owned by investment funds, owner-occupiers, historic landowners and the government. In other words, people who had no intention of building on it.
Matt Griffith from the Institute for Public Policy Research has commented: “This is a shockingly high number, and suggests that speculation is significantly hampering housing development, not just in not bringing forward new homes that should be being built but also in pushing up the price of land for all market participants.”
He lets the developers off the hook, saying: “Labour therefore needs to target not landbanks themselves, which are usually a legitimate tool of the mainstream building industry, but the factors that cause land-hoarding by other speculators.”"
Looks like "capitalist profiteering" to me...
If you think anyone is going to compensate you for an engineered devaluation of your house value, I'm afraid you're going to be disappointed. The government's best path out of the current mess is to try to steer the housing market down in real terms slowly for an extended period of time. The objective is to give people a long time to adjust so a sharp wealth effect shock is avoided and we don't get spun into a downward spiral in consumer spending and lender and borrower insolvency. Over the long term residential property looks like a pretty bad investment to me. With luck we'll avoid a crash, but I can't see any real upside. If I were long investment property, I'd be looking to diversify out of it over the medium term. In fact I've wired most of my savings to the solicitors today in the hope of completing on a house tomorrow. I expect to be carried out of the place in a coffin ... ideally no time soon, but with my DIY prowess ...
ATG said:
If you think anyone is going to compensate you for an engineered devaluation of your house value, I'm afraid you're going to be disappointed. The government's best path out of the current mess is to try to steer the housing market down in real terms slowly for an extended period of time. The objective is to give people a long time to adjust so a sharp wealth effect shock is avoided and we don't get spun into a downward spiral in consumer spending and lender and borrower insolvency. Over the long term residential property looks like a pretty bad investment to me. With luck we'll avoid a crash, but I can't see any real upside. If I were long investment property, I'd be looking to diversify out of it over the medium term. In fact I've wired most of my savings to the solicitors today in the hope of completing on a house tomorrow. I expect to be carried out of the place in a coffin ... ideally no time soon, but with my DIY prowess ...
Compensation for an engineered devaluation isn't optional. I'll just reorganise my taxes a little and live with the resulting inconvenience, but most assuredly, a slow decline will be compensated.Personally I'd prefer a rapid drop as that would be the kick up the arse I need to properly restructure my taxes (eliminating most of what I pay is possible but includes additional risks).
Either which way, I'm not paying, the government is, and by extension the national debt, and by extension, the young who are lobbying for it. Seems fair to me.
LucreLout said:
Surely you see the imbalance there? Council tax reductions don't quite make up for having 30% of your property value going up in smoke. And that's the best case, assuming the planning gain was invested in infrastructure rather than the more typical council investment in still more paper shuffling.
Its far easier, safer economically, and fairer to all, simply to moderate the excessive expectations of gen y, slow down immigration and the birth rate, and build houses to match that need (at say 22% of the net rate of population increase to reflect the 4.5 person family unit).
Where do you come up with numbers like 30% of property values going up in smoke?. All anyone is talking about is government managing the process to deliver the supply of land needed. It was constraints on supply that have built up these inflated values and it is something that has to be unwound gradually to avoid any damage to financial institutions and the builders themselves (given their existing land holdings).Its far easier, safer economically, and fairer to all, simply to moderate the excessive expectations of gen y, slow down immigration and the birth rate, and build houses to match that need (at say 22% of the net rate of population increase to reflect the 4.5 person family unit).
As ATG says above a more likely scenario is a decline in real terms, so that affordability will return to more normal levels over time.
LucreLout said:
Compensation for an engineered devaluation isn't optional. I'll just reorganise my taxes a little and live with the resulting inconvenience, but most assuredly, a slow decline will be compensated.
Personally I'd prefer a rapid drop as that would be the kick up the arse I need to properly restructure my taxes (eliminating most of what I pay is possible but includes additional risks).
Either which way, I'm not paying, the government is, and by extension the national debt, and by extension, the young who are lobbying for it. Seems fair to me.
Not quite sure why your personal tax avoidance or evasion strategies are dependent on property values. Personally I'd prefer a rapid drop as that would be the kick up the arse I need to properly restructure my taxes (eliminating most of what I pay is possible but includes additional risks).
Either which way, I'm not paying, the government is, and by extension the national debt, and by extension, the young who are lobbying for it. Seems fair to me.
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