BTL as a pension fund - why not?

BTL as a pension fund - why not?

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Justayellowbadge

37,057 posts

241 months

Friday 28th November 2014
quotequote all
98elise said:
One thing I think a lot of people miss is that BTL doesn't create demand, its simply an alternate ownership model.

If a family need a home, they only occupy one home regardless of if they rent a BTL or buy. The number of available properties, and the number of people looking, is no different. Its simply two different ways in which to put that roof over your head.

The rises in prices are driven by a lack of housing stock to meet demand, and thats in both the rental and owner occupier markets. There are simply not enough properties in the country to meet the housing needs of everyone.
I know of a Georgian townhouse in West London, sympathetically modernised, with a market value of around a mil.

Current tenants are 4 teachers in their first year post qualifying.

Rent is approx 2.5k. Lousy yield, I know.

Even if all the evil landlords were driven out and prices halved, there is no way they would be able to purchase the place.

Not everyone can buy, and I'm not claiming all lls are driven by social responsibility, but there are plenty of 'essential workers' housed because btl landlords exist.

Eleven

26,271 posts

221 months

Friday 28th November 2014
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s1962a said:
economicpygmy said:
fblm said:
The % of renters is far higher in the rest of Europe and yet (current economic woes aside) they have always had relatively much lower house prices. How can this be if houses bought to let drive the price up?
Becuase its not the only contributing factor.
Rent controls, long term rents, and the govt being basically on the side of the renters.

Some more controls proposed in germany

http://www.out-law.com/en/articles/2014/october/ge...
Yeah, because rent controls will really work. Just like last time.

98elise

26,381 posts

160 months

Friday 28th November 2014
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aizvara said:
LucreLout said:
Were I a landlord I'd happily sign a contract granting all of that, with two provisos.

First, that repairs can be inspected and must be of equal quality or better than I'd buy - stops the house getting slowly wrecked by cheap tenants who have a mate in the trade.

Second that rent reviews were covered within the contract - happy to let you stay very long term but at market price plus or minus a bit depending on who is funding the trades in point number one.

Why would a landlord not want a tenant to stay for years? Saves on voids and agency fees. Landlords, what am I missing? I'm guessing inspections could be defrayed by having a guarantor for any damage you do that exceeds the bind paid.
Sounds reasonable to me. So you agree then that there can be other forces behind gen. y's desire for housing, than seizing other's gains through spite and envy?

I don't know exactly why your scenario doesn't happen more. Here are some guesses:

The six months start followed by normal AST rolling contract with two month notice is pretty standard everywhere I've looked. So far I've not found any landlord, or agent more to the point, who is interested in giving up that two month notice or even altering the agreement. The terms read nearly identically everywhere. When first trying to rent a property, I've never managed to actually talk directly a landlord. So reason one is: the agent, and the AST, or The Way Things Are Done.

Then there's the really very amateur landlord. Often seems to be couples who have moved in together and can't sell one house at the value they want, so rent through an agency instead. Or inherited property - that's common too. They love the short notice as they can quickly sell or let a family member move in instead. They see this as a quick way to temporarily make some money/cover a mortgage, not as a business. Sometimes they become a proper landlord in it for the long term, but it is impossible to know what sort of landlord you are (indirectly) dealing with (due to reason one) when signing up.

Right now in my situation I don't want to rock the boat by asking for any changes (as I think there's little chance for success), and I'm even a bit worried about persisting with continued requests for a properly working boiler (it is very old). Our current landlord is of the above category - we've since learnt that they tried unsuccessfully to sell the house for years. Since renting they've taken little interest in the upkeep of the place beyond the bare minimum and may well just evict and/or sell if we become too much of a hassle. I've heard of a lot of evictions for this type of thing.

As an aside about your comment on rent increases: For some reason these are just not happening, at least where I've lived recently (last ten years or so). I think there's a fairly strong tendency not to put up rents on sitting tenants, alongside a big increase in BTL meaning there's a fairly good supply in most areas.
Try renting through gumtree. I let direct through gumtree and I meet every tenant.

As far as I'm concerned my tenants can stay as long as they want. If they want a long AST they can have it. I also don't inspect the properties, its their home so I don't like to intrude. I see them when any repairs are needed, and thats good enough for me. I also make it clear that after a couple of years I count things like carpets as disposable, I am not going to go over the house with a fine tooth comb looking for ways to steal their deposit.

As to boiler repairs, every one of my BTL's has a brand new good quality boiler, which are fully serviced every year. They wait no more than 24hrs for any essential repair.

My tenants homes get preference over my own for repairs!

GT03ROB

13,210 posts

220 months

Friday 28th November 2014
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s1962a said:
Fair point. Would you have the same views around privitisation of the NHS, where there may even be an improvement in service / reduced waiting times if private companies took over running certain operations. Obviously they would be in it for a profit, but as an end consumer get equivalent or better treatment, would you care?
You asked me the same question earlier so I'll answer. No I would not care. I would have no issue with privatisation of any service where it will result in a better service or an equal service at lower cost, irrespective of if a profit was being made or not.

LucreLout

908 posts

117 months

Friday 28th November 2014
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s1962a said:
Still a profit though right? smile and then there is long term capital appreciation
In profit terms you'd have to deduct the cost of capital from any equity in the property - the interest it would have earned as cash at bank.

Probably still a profit, but probably still smaller than people think.

LucreLout

908 posts

117 months

Friday 28th November 2014
quotequote all
aizvara said:
Sounds reasonable to me. So you agree then that there can be other forces behind gen. y's desire for housing, than seizing other's gains through spite and envy?
Behind their desire for housing yes, but behind their desire to scupper the price of housing, no.

Your letting agency sounds similar to my last one I rented through. Awful. Regulation aimed here would, I suspect, produce a healthier rental market than curbs on btl.

Best of luck with your decisions folks. Barring any queries directed at me, I'd better jog on and stfu so someone else can get a post in. I hope you all make prosperous and happy choices, just not at my expense wink

anonymous-user

53 months

Friday 28th November 2014
quotequote all
economicpygmy said:
fblm said:
The % of renters is far higher in the rest of Europe and yet (current economic woes aside) they have always had relatively much lower house prices. How can this be if houses bought to let drive the price up?
Becuase its not the only contributing factor.
Obviously. And if these other contributing factors can completely reverse the effect of BTL 'driving prices up' and actually drive prices down, relatively, you'd have to conclude BTL is not much of a determinant in house prices no?

98elise

26,381 posts

160 months

Friday 28th November 2014
quotequote all
s1962a said:
98elise said:
One thing I think a lot of people miss is that BTL doesn't create demand, its simply an alternate ownership model.

If a family need a home, they only occupy one home regardless of if they rent a BTL or buy. The number of available properties, and the number of people looking, is no different. Its simply two different ways in which to put that roof over your head.

The rises in prices are driven by a lack of housing stock to meet demand, and thats in both the rental and owner occupier markets. There are simply not enough properties in the country to meet the housing needs of everyone.
Fair point. Would you have the same views around privitisation of the NHS, where there may even be an improvement in service / reduced waiting times if private companies took over running certain operations. Obviously they would be in it for a profit, but as an end consumer get equivalent or better treatment, would you care?
No it wouldn't bother me in the slightest.

s1962a

5,291 posts

161 months

Friday 28th November 2014
quotequote all
LucreLout said:
s1962a said:
Still a profit though right? smile and then there is long term capital appreciation
In profit terms you'd have to deduct the cost of capital from any equity in the property - the interest it would have earned as cash at bank.

Probably still a profit, but probably still smaller than people think.
Yes, true. With the BTL speculation of the 2000's, and the surge in prices in London last couple of years I think prices are going beyond ridiculous. Saying that, someone downsizing from a nice house in Chelsea would find a £2m house in Wandsworth quite affordable so it's all relative I suppose.

economicpygmy

387 posts

122 months

Friday 28th November 2014
quotequote all
98elise said:
Fair comment, however I know that none of the families I rent to could have bought (I manage the properties myself) and they certainly could not have invested 10k in the first month of ownership. They would also all still need rental properties.
Other families might have been able to but they have been removed from supply.

I agree that we need rental properties but I don't the agree with the trend (IIRC last time I looked it was 40% and rising ONS/CML) and more importantly I don't *believe* its cost effective for the tax payer where HB is concerned.

This isn't to say that I don't understand why people are increasingly turning to BTL, I just dont want to live in a debt ridden plutocracy and this is one of many issues that has the UK heading that way (first part is unfortunately true!).

anonymous-user

53 months

Friday 28th November 2014
quotequote all
economicpygmy said:
...more importantly I don't *believe* its cost effective for the tax payer where HB is concerned.
Completely agree on that point. As I said before you joined the dicussion the provision of housing at tax payer expense is one thing but using the taxpayers own damn money to compete against them in the private rental market is taking the pi55!

gibbon

2,182 posts

206 months

Friday 28th November 2014
quotequote all
s1962a said:
Nope. What a person does on a home they are living in is up to them. A home they have bought as an investment - thats what I think should have additional barriers of entry so that it's not a level playing field between owner occupiers and investors.
Define an investment home?

What about if I am deliberately living in a home I have purchased that is too large for me which I am planning on selling in the near future in order to benefit from the increased notional value and then purchase a smaller house with a lower debt ratio?

Does that fit within your model of a home as an investment?

economicpygmy

387 posts

122 months

Friday 28th November 2014
quotequote all
fblm said:
Obviously. And if these other contributing factors can completely reverse the effect of BTL 'driving prices up' and actually drive prices down, relatively, you'd have to conclude BTL is not much of a determinant in house prices no?
Probably not that much but at some level it will be as those investing have access to more cash/credit; supply-demand/population are much more significant (TBH, Id have to go hunting for figures).

aizvara

2,050 posts

166 months

Friday 28th November 2014
quotequote all
LucreLout said:
Behind their desire for housing yes, but behind their desire to scupper the price of housing, no.

Your letting agency sounds similar to my last one I rented through. Awful. Regulation aimed here would, I suspect, produce a healthier rental market than curbs on btl.
Agreed 100% about agency regulation.

Not owning a house, I'd like house prices to be a bit lower, obviously. That doesn't seem likely, and it is tough to compete with BTL buyers. I must have misunderstood though - I thought your view was that we all want to own houses to benefit from HPI.




aizvara

2,050 posts

166 months

Friday 28th November 2014
quotequote all
98elise said:
Try renting through gumtree. I let direct through gumtree and I meet every tenant.

As far as I'm concerned my tenants can stay as long as they want. If they want a long AST they can have it. I also don't inspect the properties, its their home so I don't like to intrude. I see them when any repairs are needed, and thats good enough for me. I also make it clear that after a couple of years I count things like carpets as disposable, I am not going to go over the house with a fine tooth comb looking for ways to steal their deposit.

As to boiler repairs, every one of my BTL's has a brand new good quality boiler, which are fully serviced every year. They wait no more than 24hrs for any essential repair.

My tenants homes get preference over my own for repairs!
You sound like a great landlord. I've not directly met with a landlord prior to renting since my student days! The current situation is the combination of a very hands-off landlord combined with an agent who has the fine tooth comb approach, which doesn't appear to work both ways. Even so, we'd like to stay for as long as possible, as moving house costs a fair bit, and becomes more of a hassle each time.

I'll keep gumtree in mind, though next move will hopefully be to buy.

anonymous-user

53 months

Friday 28th November 2014
quotequote all
economicpygmy said:
fblm said:
Obviously. And if these other contributing factors can completely reverse the effect of BTL 'driving prices up' and actually drive prices down, relatively, you'd have to conclude BTL is not much of a determinant in house prices no?
Probably not that much but at some level it will be as those investing have access to more cash/credit; supply-demand/population are much more significant (TBH, Id have to go hunting for figures).
Thats what I've been saying all along. and then some idiot came along and blew my argument up by saying my population stats were wrong wink

economicpygmy

387 posts

122 months

Friday 28th November 2014
quotequote all
fblm said:
Completely agree on that point. As I said before you joined the dicussion the provision of housing at tax payer expense is one thing but using the taxpayers own damn money to compete against them in the private rental market is taking the pi55!
Yep and the trouble is because of political ideology (right to buy, no more council builds) no prizes for guessing who would foot the bill for the alternative in such an expensive market! I would assume that doesn't happen and investment groups/pension funds step in to take advantage but who knows... Its a mess.

LucreLout

908 posts

117 months

Friday 28th November 2014
quotequote all
aizvara said:
Agreed 100% about agency regulation.

Not owning a house, I'd like house prices to be a bit lower, obviously. That doesn't seem likely, and it is tough to compete with BTL buyers. I must have misunderstood though - I thought your view was that we all want to own houses to benefit from HPI.
Usually, yes. I would have misspoke if I had suggested it as the only reason to want to own, but it is a reason. Would you be happy if the day after you bought the government passed a tax taking 100% of ppr gains from that day forward? No, I wouldn't either.

Sorry, last post, as was responding to a fair question.

economicpygmy

387 posts

122 months

Friday 28th November 2014
quotequote all
fblm said:
Thats what I've been saying all along. and then some idiot came along and blew my argument up by saying my population stats were wrong wink
Was that me... hehe

Ah, but I believe they are significantly higher than the various estimates so I agree. Its just the ONS population statistics and I dont get along coffee

wolves_wanderer

12,356 posts

236 months

Friday 28th November 2014
quotequote all
LucreLout said:
Gen Y want to own houses rather than rent them so they can benefit from HPI. Whatever else they say is much noise and fury signifying nothing. They want to seize others capital gains so that they can take them for themselves - its just envy, spite, and jealousy. And its as pathetic as it is transparent. They'll just have to curb their expectations and dig deep and work harder for longer.

Put another way, when did anyone last step over a series of homeless gen y'ers freezing in the street? Yeah, me either.
Oddly I wanted to own a house so that I would have somewhere to live that I knew I couldn't be kicked out of with 2 months notice, was allowed to decorate and didn't have to have people coming in inspecting it every few months. Not to mention paying my own mortgage instead of someone else's. House price inflation doesn't help me if the next house up is more expensive as well.

Don't worry though , we aren't trying to steal your capital gains wink