Buy to Let - Immoral?
Discussion
A good chunk of people could afford a mortgage if they saved more and spent less. I include myself in that. I could have been on the ladder a damn sight sooner but thankfully the missus got my spending under habits and now I'm on the ladder.
Whilst I was dreaming of a house but buying stuff I didn't need I had to rent. Either way there is a roof over my head so I don't see BTL as immoral.
Whilst I was dreaming of a house but buying stuff I didn't need I had to rent. Either way there is a roof over my head so I don't see BTL as immoral.
Only recently joined the property ladder myself due to the ridiculous prices that just keep climbing, lived with my parents until 29, saved solid for 5 years prior to be able to afford a small 2 bed apartment.
2/3 bedroom houses are snapped up quickly by landlords due to the excessive demand for student rentals (large university with lots of foreign students) making it hard to get anything remotely decent in a good area at a sensible price.
Don't blame landlords for doing so, it's a profitable business and they are providing a service high in demand.
Does leave first time buyers in a tough position, so as an investment that will hopefully benefit your son in future if you're in a position to do so it's a cracking idea!
The only concern I have is how stretched many landlords will be if/when interest rates rise - rather than defaulting I can see them passing the cost onto tenants who'll be pressed further making it even more difficult for them to ever get on the property ladder - it's not like the tenants can say no as they'll be homeless with all rentals being bumped up to maximise income.
2/3 bedroom houses are snapped up quickly by landlords due to the excessive demand for student rentals (large university with lots of foreign students) making it hard to get anything remotely decent in a good area at a sensible price.
Don't blame landlords for doing so, it's a profitable business and they are providing a service high in demand.
Does leave first time buyers in a tough position, so as an investment that will hopefully benefit your son in future if you're in a position to do so it's a cracking idea!
The only concern I have is how stretched many landlords will be if/when interest rates rise - rather than defaulting I can see them passing the cost onto tenants who'll be pressed further making it even more difficult for them to ever get on the property ladder - it's not like the tenants can say no as they'll be homeless with all rentals being bumped up to maximise income.
StevoCally said:
The only concern I have is how stretched many landlords will be if/when interest rates rise - rather than defaulting I can see them passing the cost onto tenants who'll be pressed further making it even more difficult for them to ever get on the property ladder - it's not like the tenants can say no as they'll be homeless with all rentals being bumped up to maximise income.
It isn't the BTL landlords that are at fault, it is the nonsense planning rules that are largely to blame + low interest rates.Personally I am more than happy to see another 10% of the countryside plastered with housing if that what it takes to see a fall in rental income and house prices.
I have a perfect case in point close to me, someone has purchased a 2 bed end of terrace near to me. Price paid was £187,000, initially offered for £850 now down to £750 with two months rent already voided. Take off 20% tax and they are probably looking at less than 3% return.
Yealds are stupidly low but people are still buying on the expectation that houses prices simply have to rise and there will always be a supply of people prepared to pay over the odds to get on the housing ladder (or that they cant afford to buy and have to rent instead).
Nothing immoral about it. Just a consequence of the planning rules + low interest rates + increased demand.
Yes, totally immoral.
Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
budfox said:
Yes, totally immoral.
Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
Do you feel the same way about banks who profit from mortgages? What about people who sell you clean water for profit, or the food retailers?Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
Of course "we" could build loads of council houses, and of course all the materials and labour would be free because its wrong to profit from a basic human need.
Private renting is just a business like any other. Its there because there is a need. If we had a good supply of affordable housing, would you still feel it was immoral that some people wanted to rent, and some people were prepared to purchase a property and rent it to that person?
budfox said:
Yes, totally immoral.
Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to work, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
You missed a word out Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to work, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
A basic human need is for shelter yes. Owning that shelter is not.
budfox said:
Yes, totally immoral.
Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
Communist, much?Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
budfox said:
Yes, totally immoral.
Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
Not sure if you're serious - but if so, how on earth is it immoral to provide a basic need, and without a profit/surplus/margin, how is to be funded?Attempting to profit from the most basic human need for shelter is wrong. Pure and simple.
We need the state to build houses, millions of them. We could call them 'council houses' and use them to accommodate people who don't wish to, or can't afford to purchase, a home of their own.
Of course, those at the upper echelons of society are landlords, and as such they love renting out homes to those less fortunate.
Back to the OP.
You need to want to be a landlord, as it's not always easy. If you get a bad tenant, they can make your life very difficult, very quickly.
You should understand that the law is almost entirely tenant weighted, and that if things go wrong you could be looking a months of hard work/angst to get your property back.
Additionally, property is very illiquid, should you need to access your capital quickly for any reason.
Having said that, having an appreciating asset, paid for by another is good business.
Just make sure you go in "eyes wide open".
Regarding immoral - people come to me through choice, and I like to think I provide a good service - both parties are happy - what's not to like?
You need to want to be a landlord, as it's not always easy. If you get a bad tenant, they can make your life very difficult, very quickly.
You should understand that the law is almost entirely tenant weighted, and that if things go wrong you could be looking a months of hard work/angst to get your property back.
Additionally, property is very illiquid, should you need to access your capital quickly for any reason.
Having said that, having an appreciating asset, paid for by another is good business.
Just make sure you go in "eyes wide open".
Regarding immoral - people come to me through choice, and I like to think I provide a good service - both parties are happy - what's not to like?
Edited by developer on Tuesday 13th May 08:35
In its current form, yes it is immoral, sadly it looks like an awful lot of MPs are doing it so don’t expect them to voluntarily change rules that make them richer.
The current situation means that BTL are increasing competition at the bottom of the property ladder, hence first time buyers are not just competing against each other, but also against people who can easily out-bid them, come under different mortgage rules and get some rather generous tax advantages. So it just pushes prices up (or keeps them higher than they should be).
If you dislike this make sure you vote accordingly or nothing will change.
The real problem is the cheap and very easy credit not to mention Government interference.
The current situation means that BTL are increasing competition at the bottom of the property ladder, hence first time buyers are not just competing against each other, but also against people who can easily out-bid them, come under different mortgage rules and get some rather generous tax advantages. So it just pushes prices up (or keeps them higher than they should be).
If you dislike this make sure you vote accordingly or nothing will change.
The real problem is the cheap and very easy credit not to mention Government interference.
Edited by GrizzlyBear on Friday 16th May 12:03
BTL is undoubtedly squeezing out first time buyers. When I was a FTB in the late 90's you could get a three-bed terrace in a nice area of my town for £80k, a £5k deposit would see you in there on an affordable mortgage. That kind of thing is nowhere near possible for an average earner these days.
So, immoral with a small 'i', but because of that squeeze. On the plus side you are doing what is best in terms of future provision for your family in a housing market that is already highly inflated by a shortage of supply. The simplest of simple answers is for us as a country to build more affordable housing to meet demand, but any Government sanctioning something that hits house prices hard will put themselves into a difficult-to-elect corner. I can feel the Daily Wail frothing at the mouth as I type.
The Treasury will also relieve you of a significant proportion of any profit from a sale in Capital Gains Tax come sale time, a contribution to the coffers that keeps other taxes down - something the many critics of BTL often overlook.
So, immoral with a small 'i', but because of that squeeze. On the plus side you are doing what is best in terms of future provision for your family in a housing market that is already highly inflated by a shortage of supply. The simplest of simple answers is for us as a country to build more affordable housing to meet demand, but any Government sanctioning something that hits house prices hard will put themselves into a difficult-to-elect corner. I can feel the Daily Wail frothing at the mouth as I type.
The Treasury will also relieve you of a significant proportion of any profit from a sale in Capital Gains Tax come sale time, a contribution to the coffers that keeps other taxes down - something the many critics of BTL often overlook.
PurpleTurtle said:
The simplest of simple answers is for us as a country to build more affordable housing to meet demand, but any Government sanctioning something that hits house prices hard will put themselves into a difficult-to-elect corner. I can feel the Daily Wail frothing at the mouth as I type.
Have to agree, housebuilding should be up at levels of at least the last 90s, and since it has been controlled by nimbys for so long probably more, especially as it would provide the needed jobs plus education and training for the young (i.e. things that will aid a real recovery, not a relapse).I am not so sure about the rest; if you believe the DailyWail then the chances are you think the average brit is a foaming at the mouth housing speculator (I am not sure but I seem to remember that the dailymail and others own several property websites, so I am not surprised they appear to be talking up prices continuously for the last few years).
I think the grey vote is getting rather annoyed at the ultra low base rate on their savings and the fact their Children/GrandChildren cannot afford a home, but of course the ultra low base rate is one of the biggest prop to the current very high prices. What is the point in having a valuable house (I can't spend that money; try and knock out a brick and try and spend it in Tesco - they won't accept it) also my savings earn nothing and I might have to give a massive chunk of money to the kids as a deposit on a house that could be bought for a third or quarter of the amount 15 years ago, much better for houses to be far more reasonably priced so the young can afford them on their own and I get to keep my savings to buy cars
What first time buyers really need to do is learn from their elders and start voting in elections; voting against parties that push up prices with silly schemes and small build numbers etc.
If you don't vote, they won't care. If you vote against them, they might start to listen.
Edited by GrizzlyBear on Friday 16th May 12:54
Whilst Buy-To-Let is not usually a philanthropic pasttime, it's certainly better than operating a payday loan business or Cash Converters-style pawnbroker that specifically targets the underclass.
With BTL, i think it depends who your tenant is. If you're renting out a 4 bed house to a family who chooses to rent because of flexibility & convenience, then you'll probably be ok in most people's mind.
I think each case needs to be judged on it's own merit.
With BTL, i think it depends who your tenant is. If you're renting out a 4 bed house to a family who chooses to rent because of flexibility & convenience, then you'll probably be ok in most people's mind.
I think each case needs to be judged on it's own merit.
GrizzlyBear said:
In its current form, yes it is immoral, sadly it looks like an awful lot of MPs are doing it so don’t expect them to voluntarily change rules that make them richer.
The current situation means that BTL are increasing competition at the bottom of the property ladder, hence first time buyers are not just competing against each other, but also against people who can easily out-bid them, come under different mortgage rules and get some rather generous tax advantages. So it just pushes prices up (or keeps them higher than they should be).
If you dislike this make sure you vote accordingly or nothing will change.
The real problem is the cheap and very easy credit not to mention Government interference.
I assume by "generous tax advantages" you mean that you can deduct costs. That's just normal business practice, not a tax advantage. There are no special tax arrangements for BTL, you pay tax on all your profit.The current situation means that BTL are increasing competition at the bottom of the property ladder, hence first time buyers are not just competing against each other, but also against people who can easily out-bid them, come under different mortgage rules and get some rather generous tax advantages. So it just pushes prices up (or keeps them higher than they should be).
If you dislike this make sure you vote accordingly or nothing will change.
The real problem is the cheap and very easy credit not to mention Government interference.
Edited by GrizzlyBear on Friday 16th May 12:03
Gassing Station | Finance | Top of Page | What's New | My Stuff