How far will house prices fall [volume 4]
Discussion
skwdenyer said:
In the days of sanity and security of tenure, tenanted properties ...........were not purchasable with 95/100/whatever % mortgages.
Please show me anywhere that a BTL mortgage is available with less than a 25% deposit. They don't really exist.skwdenyer said:
BTL offers such ridiculous lender security that it absolutely *must* be regulated to stop it getting silly... oh, wait, too late... 
There are about 100 laws and 400 regulations- please don't regurgitate corbyn's crap that it's unregulated.Rovinghawk said:
skwdenyer said:
In the days of sanity and security of tenure, tenanted properties ...........were not purchasable with 95/100/whatever % mortgages.
Please show me anywhere that a BTL mortgage is available with less than a 25% deposit. They don't really exist.Rovinghawk said:
skwdenyer said:
BTL offers such ridiculous lender security that it absolutely *must* be regulated to stop it getting silly... oh, wait, too late...
There are about 100 laws and 400 regulations- please don't regurgitate corbyn's crap that it's unregulated.An AST offers no more security than the term, in extremis is not binding upon the lender (unlike a an actual lease), and BTL mortgages are not subject to the same degree of compulsory attempts to help borrowers.
Yes it is all better than it was. It had to be; it was a free for all previously. But unless we reintroduce security of tenure then we will never get the market sorted out IMHO.
That a number of BTL landlords would take a bath if we did is not of my primary concern
skwdenyer said:
But unless we reintroduce security of tenure then we will never get the market sorted out IMHO.
So the tenant can stay as long as they want? What about the ones who don't pay the rent? It's hard enough getting the sods out now without additional difficulties being introduced.Or do LLs not matter, only tenants?
Rovinghawk said:
skwdenyer said:
But unless we reintroduce security of tenure then we will never get the market sorted out IMHO.
So the tenant can stay as long as they want? What about the ones who don't pay the rent? It's hard enough getting the sods out now without additional difficulties being introduced.Or do LLs not matter, only tenants?
I happen to believe that the interests of society outweigh the interests of any particular group. I'm happy for others to hold different views; I think the debate is valuable.
Society in my view needs homes, not houses, in communities, not dormitories.
skwdenyer said:
With respect, I mean but did not feel it necessary to explicitly say that security of tenure should be available to those who pay the rent. I've not suggested making any change there.
Fair enough but consider this: a 3-year AST.The LL will be bound by it. Will the tenant? Will they hell as like. When they choose to move out they'll just stop paying the rent & the LL won't have a cat in Hell's chance of getting what was contracted for.
skwdenyer said:
I happen to believe that the interests of society outweigh the interests of any particular group. I'm happy for others to hold different views; I think the debate is valuable.
The interests of society are all very well but I don't see why a specific group has to pay for what another group thinks important.skwdenyer said:
Society in my view needs homes, not houses, in communities, not dormitories.
Then society can pay for it rather than squeezing me for it. I actually have very happy tenants plus a waiting list of their friends for when I have properties vacant. I don't see any advantage to interference.skwdenyer said:
...
Yes it is all better than it was. It had to be; it was a free for all previously. But unless we reintroduce security of tenure then we will never get the market sorted out IMHO.
...
I get the impression that the George Osborne changes of stamp duty surcharge and capping interest relief at 20% have sort of killed the BTL market already.Yes it is all better than it was. It had to be; it was a free for all previously. But unless we reintroduce security of tenure then we will never get the market sorted out IMHO.
...
My sister is selling a 2 bed flat in London and all the agents said the buyers would almost certainly be 'professional sharers' rather than landlords.
My mother in law is currently buying a 2 bed flat in Manchester off a landlord, she's paying £157.5k they paid £170k for it in 2006, it had a new build premium, but inflation adjusted that's a big difference.
As long as the housing supply doesn't slow down too much I can't see it being too bad a thing, I am in favour of home ownership as a route to building personal wealth, giving people a stake in their community and turning them into Conservative voters.
The current 6 month AST system doesn't seem to suit either side, rogue tenants and rogue landlords both seem to get away with too much.
All valuable points. But regulation isn't usually needed for the good cases, only the bad.
3 year ASTs are something I have never seen offered in London, and very seldom elsewhere. The usual routine of 6/12 month ASTs is not IMHO conducive to community building. And cannot be sold, bequeathed, etc. ASTs are not any sort of asset, unlike real leases.
If there's a waiting list then a tenant leaving won't matter...
We all pay when society deems we should - higher taxes, restrictions of one sort or another. Energy performance is the latest - landlords must pay to upgrade properties.
I'm in the interesting situation of right now being both a landlord and a tenant FWIW.
3 year ASTs are something I have never seen offered in London, and very seldom elsewhere. The usual routine of 6/12 month ASTs is not IMHO conducive to community building. And cannot be sold, bequeathed, etc. ASTs are not any sort of asset, unlike real leases.
If there's a waiting list then a tenant leaving won't matter...
We all pay when society deems we should - higher taxes, restrictions of one sort or another. Energy performance is the latest - landlords must pay to upgrade properties.
I'm in the interesting situation of right now being both a landlord and a tenant FWIW.
skwdenyer said:
ASTs ...........cannot be sold, bequeathed, etc. ASTs are not any sort of asset, unlike real leases.
You have to pay for a lease, not for ASTs.An AST is a contract between individuals. Why the hell should I make a deal to accommodate somewhen & them then be able to sell the place on to someone I haven't vetted & don't want? I want the deal kept to, not changed unilaterally.
skwdenyer said:
If there's a waiting list then a tenant leaving won't matter...
Do you genuinely think there's no exra work or extra cost? In give you inventory/inspection in & out, brief void period, reference check and deposit registration just for a start.skwdenyer said:
We all pay when society deems we should - higher taxes, restrictions of one sort or another.
I'm pretty sure that's government not society. They often get it horribly wrong, too.skwdenyer said:
Energy performance is the latest - landlords must pay to upgrade properties.
And tenants then pay higher rents to cover additional costs & obligations. LLs leave the market causing shortages & consequent hardship.There's a shortage of rental housing in my neck of the woods and others ;it's predominantly diven by government interference far in excess of what is necessary and which seems to do little but provide employment for multitudes of inspectors & other parasites.
skwdenyer said:
Perhaps they are there to make money, but the question is whether they should be able to make money by buying at market price with VP and then earning a margin from renters.
In the days of sanity and security of tenure, tenanted properties traded at a discount to market value, and were not purchasable with 95/100/whatever % mortgages. That kept the market from overheating.
BTL offers such ridiculous lender security that it absolutely *must* be regulated to stop it getting silly... oh, wait, too late...
Hmmmm - not sure that logic works.In the days of sanity and security of tenure, tenanted properties traded at a discount to market value, and were not purchasable with 95/100/whatever % mortgages. That kept the market from overheating.
BTL offers such ridiculous lender security that it absolutely *must* be regulated to stop it getting silly... oh, wait, too late...
If rents are capped / fixed with long term security for tenants .... which could decrease LL returns and increase LL risk ... supply will drop and it will end up like Sweden with sitting tenants and a locked up market with no supply.
The real issue is not so much BTL per se but rather availability of credit and close to zero interest rates.
If rates were say 5-10% like in the 90s capital values would be way lower.
And if legislation came in to actually reduce rents ... LLs may sell up ... wouldn’t mean renters could afford to buy though
A lease is an agreement founded upon land. It is assignable by the tenant. It persists if the landlord sells.
Most commercial properties are let on leases, not on licences (the closest analogue to the AST).
Many leases are not sold (a premium), but are merely rent-paying.
Assignment of a lease is usually subject to landlord's permission, which can be withheld if the tenant is not acceptable.
I understand you wouldn't want any of these things. To hold that view is your right.
But we've been here before; those views are why we had acts of parliament to create proper terms for renters. That they were then swept away in the 1980s and 1990s is what laid the groundwork for the BTL boom of the early 2000s.
The "I want to choose" approach is what leaves us with "no dss" and "no pets" where once we had "no blacks" and "no Irish".
For too many people, the experience of renting is that they must pay the landlord's costs of being in business (fees etc), that they have no security of tenure, that their rent can be arbitrarily increased on renewal (at which time they have to pay more fees for the privilege of staying where they are), and so on.
The pendulum has swung a long way in favour of landlords' interest and desire for flexibility; it is IMHO it swung the other way a little in the interests of society.
As regards a shortage of rental accommodation, that would suggest there's a market opportunity. But at what cost?
Where my business is, studio flats are now £325 per week (up 43% in 4 years, or 9.5% pa), 3-bed flats are letting at £2800+ pcm and most are occupied by 8 people sharing (no living room any longer). "Agents" frequently take ASTs on flats and then rent out per room.
Other parts of the country are of course different.
In the 1980s/1990s, rents used to bear a resemblence to the likely affordability. Now the starting point is for rents to cost as much as a 100% mortgage (since the trad BTL model relies upon rents paying the mortgage).
To me, at least, there are structural problems in this market and society's interests require a correction. Quite what that will be I'm not sure. But renters who cannot get mortgages paying landlords' mortgages is almost the epitome of a broken market!
Most commercial properties are let on leases, not on licences (the closest analogue to the AST).
Many leases are not sold (a premium), but are merely rent-paying.
Assignment of a lease is usually subject to landlord's permission, which can be withheld if the tenant is not acceptable.
I understand you wouldn't want any of these things. To hold that view is your right.
But we've been here before; those views are why we had acts of parliament to create proper terms for renters. That they were then swept away in the 1980s and 1990s is what laid the groundwork for the BTL boom of the early 2000s.
The "I want to choose" approach is what leaves us with "no dss" and "no pets" where once we had "no blacks" and "no Irish".
For too many people, the experience of renting is that they must pay the landlord's costs of being in business (fees etc), that they have no security of tenure, that their rent can be arbitrarily increased on renewal (at which time they have to pay more fees for the privilege of staying where they are), and so on.
The pendulum has swung a long way in favour of landlords' interest and desire for flexibility; it is IMHO it swung the other way a little in the interests of society.
As regards a shortage of rental accommodation, that would suggest there's a market opportunity. But at what cost?
Where my business is, studio flats are now £325 per week (up 43% in 4 years, or 9.5% pa), 3-bed flats are letting at £2800+ pcm and most are occupied by 8 people sharing (no living room any longer). "Agents" frequently take ASTs on flats and then rent out per room.
Other parts of the country are of course different.
In the 1980s/1990s, rents used to bear a resemblence to the likely affordability. Now the starting point is for rents to cost as much as a 100% mortgage (since the trad BTL model relies upon rents paying the mortgage).
To me, at least, there are structural problems in this market and society's interests require a correction. Quite what that will be I'm not sure. But renters who cannot get mortgages paying landlords' mortgages is almost the epitome of a broken market!
skwdenyer said:
The "I want to choose" approach is what leaves us with "no dss" and "no pets" where once we had "no blacks" and "no Irish".
DSS basically means dealing with both a tenant who doesn't want to work plus government bureaucracy. Not a good mix. Pets means an animal which might or might not be housetrained & risks damaging the property.skwdenyer said:
the experience of renting is that they must pay the landlord's costs of being in business (fees etc), that they have no security of tenure, that their rent can be arbitrarily increased on renewal (at which time they have to pay more fees for the privilege of staying where they are), and so on.[/quote Fees are no longer able to be charged. Security of tenure exists to the extent that the LL has to give twice as much notice as the tenant plus section 21 is unfit for purpose. Rent rises are subject to regulation.
The pendulum has indeed swung but it massively favours tenants.
You're arguing from the POV of a socialist rather than an economist.
skwdenyer said:
The pendulum has swung a long way in favour of landlords' interest and desire for flexibility
The pendulum has indeed swung but it massively favours tenants.
skwdenyer said:
As regards a shortage of rental accommodation, that would suggest there's a market opportunity. But at what cost?
3% extra stamp duty, section 24 taxation rules plus a huge amount of paperwork & licensing fees.skwdenyer said:
Where my business is, studio flats are now £325 per week (up 43% in 4 years, or 9.5% pa),
This bears out my comments about additional costs being passed on to tenants.skwdenyer said:
3-bed flats are letting at £2800+ pcm and most are occupied by 8 people sharing (no living room any longer). "Agents" frequently take ASTs on flats and then rent out per room.
HMO regulations make that sound somewhere between unlikely & illegal.skwdenyer said:
In the 1980s/1990s, rents used to bear a resemblence to the likely affordability. Now the starting point is for rents to cost as much as a 100% mortgage (since the trad BTL model relies upon rents paying the mortgage).
Read the earlier statement about increased costs to the LL being passed to the tenant because it's the only place that money enters the system.skwdenyer said:
To me, at least, there are structural problems in this market and society's interests require a correction.
I'd like to agree with you but we'd then both be wrong.skwdenyer said:
renters who cannot get mortgages paying landlords' mortgages is almost the epitome of a broken market!
It's the model that seems to have been in place for the last few hundred years at least, both in UK and Europe. If it was genuinely broken I think it would have been fixed in that time.You're arguing from the POV of a socialist rather than an economist.
Rovinghawk said:
skwdenyer said:
renters who cannot get mortgages paying landlords' mortgages is almost the epitome of a broken market!
It's the model that seems to have been in place for the last few hundred years at least, both in UK and Europe. If it was genuinely broken I think it would have been fixed in that time.You're arguing from the POV of a socialist rather than an economist.
In the old days, landlords were ‘build to let’ on leases or rents. I.e estate villages, or rows of back to backs. You would build out an estate, get cash back quickly where you could by selling leases, then rent the rest.
You still see this in London with Peabody Estate, De Walden estate etc. But last century this ‘industrial’ scale build to let was supplanted by council housing programmes.
Germany still has industrial scale rental sector
Edited by wisbech on Monday 7th May 01:56
Olivera said:
I would be utterly ecstatic at the prospect of 15% interest rates for a few years, if it was then followed by capital (house price) appreciation of 400% within ~25 years (mimicking 89 to present day).
I think a lot of people would welcone that scenario now, but I can’t see how we’ll ever see a base rate higher than 1.5% again, let alone 15%.The rest of the economy won’t be able to live with higher rates, but the housing market would be utterly destroyed. A house down the road from me was valued at £180k in 1989, and went down to about £120k after the crash. It’s now over £1m and salaries haven’t really moved that much.
I’d guess that people would have been buying that type of house at about 3x their income back then. It would be much higher now and that is only possible with ultra-low rates.
kingston12 said:
I think a lot of people would welcone that scenario now, but I can’t see how we’ll ever see a base rate higher than 1.5% again, let alone 15%.
The rest of the economy won’t be able to live with higher rates, but the housing market would be utterly destroyed. A house down the road from me was valued at £180k in 1989, and went down to about £120k after the crash. It’s now over £1m and salaries haven’t really moved that much.
I’d guess that people would have been buying that type of house at about 3x their income back then. It would be much higher now and that is only possible with ultra-low rates.
My view is that once China stops producing excessive savings global interest rates will rise. As the Chinese population is starting to age, that inflection point will certainly be in the time scale of mortgagesThe rest of the economy won’t be able to live with higher rates, but the housing market would be utterly destroyed. A house down the road from me was valued at £180k in 1989, and went down to about £120k after the crash. It’s now over £1m and salaries haven’t really moved that much.
I’d guess that people would have been buying that type of house at about 3x their income back then. It would be much higher now and that is only possible with ultra-low rates.
Australia interest rates peaked at 17% in 1989 / 1990, so the Boomers will argue that rates of 4% make it much easier for those entering the market today.
If you actually crunch the numbers, the proportion of an income needed to pay for a house in 1989 is about the same as it is now, but interest rates are sitting at record lows rather than record highs. Then there's the fact that the deposit is three or four times as much...
Then there's the, "When we bought our first house, we couldn't afford to furnish it. So we had to do it room by room. Young people today expect everything at once."
Of course, they never acknowledge that they bought a house with multiple rooms, rather than a pokey one bedroom apartment!
My main annoyance is that this is inevitably framed as a moral argument, whereby Boomers portray themselves as hardworking and thrifty, compared to their spendthrift children. The fact that property has tripled in real terms in the last twenty years doesn't come into it.
If you actually crunch the numbers, the proportion of an income needed to pay for a house in 1989 is about the same as it is now, but interest rates are sitting at record lows rather than record highs. Then there's the fact that the deposit is three or four times as much...
Then there's the, "When we bought our first house, we couldn't afford to furnish it. So we had to do it room by room. Young people today expect everything at once."
Of course, they never acknowledge that they bought a house with multiple rooms, rather than a pokey one bedroom apartment!
My main annoyance is that this is inevitably framed as a moral argument, whereby Boomers portray themselves as hardworking and thrifty, compared to their spendthrift children. The fact that property has tripled in real terms in the last twenty years doesn't come into it.
Rovinghawk said:
The interests of society are all very well but I don't see why a specific group has to pay for what another group thinks important.
Rovinghawk said:
Then society can pay for it rather than squeezing me for it.
Nothing must interfere with the landlords "right" to his rents.... edh said:
Nothing must interfere with the landlords "right" to his rents....
It's a business contract. Nobody is forcing anyone into it. I provide a good service for a sensible price & have happy clients. Why does anyone feel the need to interfere for some alleged greater good? The only result of the interference & higher cost is higher rents & a shorter supply. Thanks to the additional rules & regulations I won't be buying/refurbing/letting any more houses & won't improve the shortage of decent places. If you think that's a good thing for society or anyone else then you're welcome to your delusions of social justice.
Rovinghawk said:
It's a business contract. Nobody is forcing anyone into it. I provide a good service for a sensible price & have happy clients. Why does anyone feel the need to interfere for some alleged greater good?
The only result of the interference & higher cost is higher rents & a shorter supply. Thanks to the additional rules & regulations I won't be buying/refurbing/letting any more houses & won't improve the shortage of decent places. If you think that's a good thing for society or anyone else then you're welcome to your delusions of social justice.
Not delusion, just perhaps not giving BTL landlords an advantage over owner occupiers thorough tax loopholes. The only result of the interference & higher cost is higher rents & a shorter supply. Thanks to the additional rules & regulations I won't be buying/refurbing/letting any more houses & won't improve the shortage of decent places. If you think that's a good thing for society or anyone else then you're welcome to your delusions of social justice.
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