Buy to let unethical ?
Discussion
rxe said:
Kermit power said:
That's not necessarily true, is it?
If a landlord has had a property for a long time, it's perfectly feasible that he could be renting it out to you for less than it would cost you to get a mortgage on the place now, but still be making a tidy profit himself.
Renting would only need to be more expensive than buying in all cases if the landlord was having to pay a mortgage forever as well as you paying rent forever, surely?
I'm an example of this. We have a place 200 yards from Maidenhead station, Mrs rxe's old house. Bought in 1994, mortgage was paid off years ago. We rent it out at probably 25% under the going rate - the going rate seems to climb every minute, we're probably 30% under now. If a landlord has had a property for a long time, it's perfectly feasible that he could be renting it out to you for less than it would cost you to get a mortgage on the place now, but still be making a tidy profit himself.
Renting would only need to be more expensive than buying in all cases if the landlord was having to pay a mortgage forever as well as you paying rent forever, surely?
Why do we do it?
1) Long term tenants - they've been there 6 years, hopefully they'll stay another 6. Rent on time, no voids.
2) No agency churn.
3) They're sensible tenants, they know they've got a good deal, we don't get requests to fix dripping taps or any other trivia.
It's making about 25% return based on purchase price, and about 2.5% based on current price. Yes, we could sell it, pay CGT and then invest it in <something> to give a better return then 2.5%. I'm not sure what that <something> is, particularly as the house continues to appreciate in capital terms, so the 2.5 is probably closer to 5% all in.
fblm said:
rxe said:
Kermit power said:
That's not necessarily true, is it?
If a landlord has had a property for a long time, it's perfectly feasible that he could be renting it out to you for less than it would cost you to get a mortgage on the place now, but still be making a tidy profit himself.
Renting would only need to be more expensive than buying in all cases if the landlord was having to pay a mortgage forever as well as you paying rent forever, surely?
I'm an example of this. We have a place 200 yards from Maidenhead station, Mrs rxe's old house. Bought in 1994, mortgage was paid off years ago. We rent it out at probably 25% under the going rate - the going rate seems to climb every minute, we're probably 30% under now. If a landlord has had a property for a long time, it's perfectly feasible that he could be renting it out to you for less than it would cost you to get a mortgage on the place now, but still be making a tidy profit himself.
Renting would only need to be more expensive than buying in all cases if the landlord was having to pay a mortgage forever as well as you paying rent forever, surely?
Why do we do it?
1) Long term tenants - they've been there 6 years, hopefully they'll stay another 6. Rent on time, no voids.
2) No agency churn.
3) They're sensible tenants, they know they've got a good deal, we don't get requests to fix dripping taps or any other trivia.
It's making about 25% return based on purchase price, and about 2.5% based on current price. Yes, we could sell it, pay CGT and then invest it in <something> to give a better return then 2.5%. I'm not sure what that <something> is, particularly as the house continues to appreciate in capital terms, so the 2.5 is probably closer to 5% all in.
I have SIPP and ISA stock market investments so having some property a sensible way to diversify my investments.
rxe said:
I'm an example of this. We have a place 200 yards from Maidenhead station, Mrs rxe's old house. Bought in 1994, mortgage was paid off years ago. We rent it out at probably 25% under the going rate - the going rate seems to climb every minute, we're probably 30% under now.
Why do we do it?
1) Long term tenants - they've been there 6 years, hopefully they'll stay another 6. Rent on time, no voids.
2) No agency churn.
3) They're sensible tenants, they know they've got a good deal, we don't get requests to fix dripping taps or any other trivia.
It's making about 25% return based on purchase price, and about 2.5% based on current price. Yes, we could sell it, pay CGT and then invest it in <something> to give a better return then 2.5%. I'm not sure what that <something> is, particularly as the house continues to appreciate in capital terms, so the 2.5 is probably closer to 5% all in.
Our tenants were in for 7 years. Agent suggested a rent increase, but I declined:Why do we do it?
1) Long term tenants - they've been there 6 years, hopefully they'll stay another 6. Rent on time, no voids.
2) No agency churn.
3) They're sensible tenants, they know they've got a good deal, we don't get requests to fix dripping taps or any other trivia.
It's making about 25% return based on purchase price, and about 2.5% based on current price. Yes, we could sell it, pay CGT and then invest it in <something> to give a better return then 2.5%. I'm not sure what that <something> is, particularly as the house continues to appreciate in capital terms, so the 2.5 is probably closer to 5% all in.
They installed new carpets throughout.
They insulated the party walls to keep neighbours screaming kid noise down.
They installed a downstairs toilet.
They installed an extractor fan in the kitchen.
They fixed some broken roof tiles.
They built a small extension wooden on the back of my workshop.
They insulated both my big and small garages, roofs and doors.
And several other things.
What is not to like?
King Herald said:
Our tenants were in for 7 years. Agent suggested a rent increase, but I declined:
They installed new carpets throughout.
They insulated the party walls to keep neighbours screaming kid noise down.
They installed a downstairs toilet.
They installed an extractor fan in the kitchen.
They fixed some broken roof tiles.
They built a small extension wooden on the back of my workshop.
They insulated both my big and small garages, roofs and doors.
And several other things.
What is not to like?
Gold dust these sort of tenants. I've got a carpenter in one of mine and he has created some brilliant additions to the house, for each bit he had done I've knocked a months rent off, built in wardrobes in both bedrooms, a bay window seating /storage type thing complete with custom made cushions. Ripped out laminate worktops and installed granite.They installed new carpets throughout.
They insulated the party walls to keep neighbours screaming kid noise down.
They installed a downstairs toilet.
They installed an extractor fan in the kitchen.
They fixed some broken roof tiles.
They built a small extension wooden on the back of my workshop.
They insulated both my big and small garages, roofs and doors.
And several other things.
What is not to like?
He loves the house, victorian terraced and has been in 4 years without a hint of a missed payment and I've only been in twice to rectify problems.
You can find unethical parts of most Induatries, wether it being imports from war torn dictatorships, clothing from slave factories in China yadda yadda but I don't think there is anything unethical about BTL. For those who see it as a day to day business it isn't.
Bit more wary of the external investors who were buying up large swathes of London and leaving them empty. That doesn't sit right with me.
Edited by dazwalsh on Tuesday 26th September 12:38
I'm a bit confused by this thread. (Easily done)
Are we conflating buying to let through taking out a mortgage with buying to let with money already in the bank and ready to go? Or just renting property in the first place.
The tax relief changes are aimed at the former option. Income tax rules could change to hamper the second, but have they yet?
As for the third option, I supposed nobody is predisposed to like a landlord, but renting does seem to suit some people and while admitting it is not illegal are we debating if it is immoral?
Are we conflating buying to let through taking out a mortgage with buying to let with money already in the bank and ready to go? Or just renting property in the first place.
The tax relief changes are aimed at the former option. Income tax rules could change to hamper the second, but have they yet?
As for the third option, I supposed nobody is predisposed to like a landlord, but renting does seem to suit some people and while admitting it is not illegal are we debating if it is immoral?
Roofless Toothless said:
are we debating if it is immoral?
We are debating whether it is unethical.My tenants are happy, I'm happy. IMO that's ethical.
To all those who believe that LLs rapaciously screw rents up to the maximum, I'll echo the comments above where keeping the peace with good tenants is more important than getting top dollar.
Renting is part of modern society,the majority of my tenants rent either because they are on contracts for say 2-3 years and they have no wish to buy a property,or they have retired and sold their home,want an easy life with no responsibility and somewhere decent to live until they die.
Then you have young couples who want to try out living together before they plunge themselves into a lifetime of debt with a mortgage.
I do have those who cannot afford to start on property ladder but often after 3 or 4 years they manage to save up enough to get a mortgage.
I feel proud that I provide good quality at reasonable prices for those who for whatever reason do not want to or cannot afford to buy.
On the other hand there are some landlords who are utter nobs and who give the entire industry a bad name.
.
Then you have young couples who want to try out living together before they plunge themselves into a lifetime of debt with a mortgage.
I do have those who cannot afford to start on property ladder but often after 3 or 4 years they manage to save up enough to get a mortgage.
I feel proud that I provide good quality at reasonable prices for those who for whatever reason do not want to or cannot afford to buy.
On the other hand there are some landlords who are utter nobs and who give the entire industry a bad name.
.
dazwalsh said:
King Herald said:
Our tenants were in for 7 years. Agent suggested a rent increase, but I declined:
They installed new carpets throughout.
They insulated the party walls to keep neighbours screaming kid noise down.
They installed a downstairs toilet.
They installed an extractor fan in the kitchen.
They fixed some broken roof tiles.
They built a small extension wooden on the back of my workshop.
They insulated both my big and small garages, roofs and doors.
And several other things.
What is not to like?
Gold dust these sort of tenants. I've got a carpenter in one of mine and he has created some brilliant additions to the house, for each bit he had done I've knocked a months rent off, built in wardrobes in both bedrooms, a bay window seating /storage type thing complete with custom made cushions. Ripped out laminate worktops and installed granite.They installed new carpets throughout.
They insulated the party walls to keep neighbours screaming kid noise down.
They installed a downstairs toilet.
They installed an extractor fan in the kitchen.
They fixed some broken roof tiles.
They built a small extension wooden on the back of my workshop.
They insulated both my big and small garages, roofs and doors.
And several other things.
What is not to like?
He loves the house, victorian terraced and has been in 4 years without a hint of a missed payment and I've only been in twice to rectify problems.
You can find unethical parts of most Induatries, wether it being imports from war torn dictatorships, clothing from slave factories in China yadda yadda but I don't think there is anything unethical about BTL. For those who see it as a day to day business it isn't.
Bit more wary of the external investors who were buying up large swathes of London and leaving them empty. That doesn't sit right with me.
Edited by dazwalsh on Tuesday 26th September 12:38
It would be great if we could wind back ASTs, restore security of tenure, and encourage tenants to treat properties as their own. But otherwise...
Mortgated AST BTLs (that provide less security to occupants than an owner-occupier's mortgage) are what created the bubble, along with allowing "no money down schemes" (I know someone with >1000 such properties "bought" during the "good times"), and permitting every nation on earth to compete against owner-occupiers to buy properties.
There was always a market for rentals, and a stock of them, under rules that actually met social objectives.
In answer to the OP, IMHO there's nothign immoral about doing what is legal; there may have been something immoral about making it legal in the first place...
Whats immoral is the Govt trying the screw over private landlords by changing the goal posts. Much like they did with Pensions which is why a large number of people went into BTL.
It not immoral to make a profit from investing in a property and then renting it out. Much like any other type of business/utility.
Prices will remain high to match demand in that area. More supply less demand. Whats immoral/outragous is the slowness of the approval or not of planning applications and consents which slows down the building of new properties.
It not immoral to make a profit from investing in a property and then renting it out. Much like any other type of business/utility.
Prices will remain high to match demand in that area. More supply less demand. Whats immoral/outragous is the slowness of the approval or not of planning applications and consents which slows down the building of new properties.
Edited by superlightr on Tuesday 26th September 15:08
Kermit power said:
The really unethical thing is Housing Benefit.
It distorts the housing market more than just about anything, and traps people into never being able to buy the sort of house they can rent.
The view from the Left is that Housing Benefit is necessary because without it normal people wouldn't be able to put a roof over their heads, but that's completely arse about face!
The view from the Left is that if you take away Housing Benefit, normal people would be thrown out of their homes. How's that going to work, though? Are all those private landlords going to find heretofore undetected swathes of people with enough money to pay the previous rent levels, or would they then be forced to drop rents to meet the market demand without Housing Benefit propping it up?
Without Housing Benefit, house prices could never have accelerated as absurdly as they have done over the last few decades, and those normal people that the Left purports to support might still be able to get on the ladder, because the taxpayer subsidised BTL market wouldn't have warped everything.
^^^^^^^ This ! Having working in housing/homelessness/ delivered private rental stock and I'm a private landlord too- all of the above.It distorts the housing market more than just about anything, and traps people into never being able to buy the sort of house they can rent.
The view from the Left is that Housing Benefit is necessary because without it normal people wouldn't be able to put a roof over their heads, but that's completely arse about face!
The view from the Left is that if you take away Housing Benefit, normal people would be thrown out of their homes. How's that going to work, though? Are all those private landlords going to find heretofore undetected swathes of people with enough money to pay the previous rent levels, or would they then be forced to drop rents to meet the market demand without Housing Benefit propping it up?
Without Housing Benefit, house prices could never have accelerated as absurdly as they have done over the last few decades, and those normal people that the Left purports to support might still be able to get on the ladder, because the taxpayer subsidised BTL market wouldn't have warped everything.
Stop chucking public money about to enable people to live in areas they can't afford. We all cut our cloth accordingly.
London is the worst for it. At least there is a cap on benefits and some efforts have been made to reign it in. I spend my life meeting people who live very well in the benefits system- so well in fact they'd need fabulous professional salaries to match their income.
fblm said:
oyster said:
What are the actual numbers?
I'll debate with you when you remove the emotion and bring some facts.
I'll debate with you when you remove the emotion and bring some facts.
According to the 2011 Census, there were 2.3 people per household.
Again according to the ONS, the population in 2015 was 65.1 million people.
Just off the back of a fag packet, this would, indeed, suggest that there is a shortfall of some 150,000 homes to house the population.
How is it, then, that there are whole swathes of places like Liverpool, to say nothing of entire ex-mining villages and the like which stand completely empty and boarded up?
Would it really be beyond the wit of councils to give them away on condition that the recipient renovates them and lets them as social housing? I'm sure there would be profit to be made for a Housing Association or similar doing that with some of the boarded up but seemingly perfectly structurally sound streets I used to walk past on the way to Uni?
Kermit power said:
fblm said:
oyster said:
What are the actual numbers?
I'll debate with you when you remove the emotion and bring some facts.
I'll debate with you when you remove the emotion and bring some facts.
According to the 2011 Census, there were 2.3 people per household.
Again according to the ONS, the population in 2015 was 65.1 million people.
Just off the back of a fag packet, this would, indeed, suggest that there is a shortfall of some 150,000 homes to house the population.
How is it, then, that there are whole swathes of places like Liverpool, to say nothing of entire ex-mining villages and the like which stand completely empty and boarded up?
Would it really be beyond the wit of councils to give them away on condition that the recipient renovates them and lets them as social housing? I'm sure there would be profit to be made for a Housing Association or similar doing that with some of the boarded up but seemingly perfectly structurally sound streets I used to walk past on the way to Uni?
but that's the thing - no one wants to live there. So despite there being empty properties they are not in the 'right' location. Whereas in lovely SE where its all roses and sunshine there is a highdemand.skwdenyer said:
It would be great if we could wind back ASTs, restore security of tenure
It's bad enough that they can fail to pay the rent for 6 months before the LL can even start court proceedings. Only bad tenants tend to get evicted; good tenants are encouraged to stay.skwdenyer said:
There was always a market for rentals, and a stock of them, under rules that actually met social objectives.
Whose social objectives? Yours?My BTL is a business, not a social enterprise.
superlightr said:
but that's the thing - no one wants to live there. So despite there being empty properties they are not in the 'right' location. Whereas in lovely SE where its all roses and sunshine there is a high demand.http://www.mirror.co.uk/news/uk-news/slum-conditio...
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