Buy to let unethical ?
Discussion
I have mixed feelings on this as I own a second home which I only use as a holiday destination. However, technically I guess I'm still depriving somebody of buying their own home.
I know some people with large portfolios of property who didn't do anything smart or work very hard: They simply starting buying about 15 years ago, rented and remortgaged every property again and again until they had loads of them.
At what point does it become unethical to build your fortune at the expense of others for no other reason than you joined the market at the right time?
I know some people with large portfolios of property who didn't do anything smart or work very hard: They simply starting buying about 15 years ago, rented and remortgaged every property again and again until they had loads of them.
At what point does it become unethical to build your fortune at the expense of others for no other reason than you joined the market at the right time?
voyds9 said:
And if a person can't raise a deposit or show enough income for a mortgage would you say you are providing a service and roof to a person who otherwise not easily get one.
But isn't one of the reasons they cannot afford it down to supply and demand? Those who already have the security of capital can afford it whilst those never got the chance to get on the ladder don't. Doesn't help the only sound investment is property so whilst I don't blame people for doing it, it doesn't mean it's right.
When I bought my first house back in '95, the decision was driven by the fact it was cheaper to buy than rent and I could get a 100%, no deposit mortgage.
Edited by anonymous-user on Friday 22 September 19:04
I think we should prohibit foreign investors from buying property only to keep it empty.
My brother lives in San Francisco. One day last year a Chinese businessman knocked on his front door. His house is worth $1.4m and the man offered him $1.6m including all the furniture on the spot. Sounds dodgy but my sister in law is a realtor and dealt with the transaction. All above board and the man transferred the money within the week. He then rented it back to my brother and his family whilst he looked for another house.
I know this to be true as my brother showed me his rather healthy bank balance!
My brother lives in San Francisco. One day last year a Chinese businessman knocked on his front door. His house is worth $1.4m and the man offered him $1.6m including all the furniture on the spot. Sounds dodgy but my sister in law is a realtor and dealt with the transaction. All above board and the man transferred the money within the week. He then rented it back to my brother and his family whilst he looked for another house.
I know this to be true as my brother showed me his rather healthy bank balance!
Edited by anonymous-user on Friday 22 September 20:10
Looked at from the perspective that a LL can still borrow IO and on higher multiples than an OO, who is limited to a repayment mortgage then yes: the LL can essentially leverage the tenant's wages more than the tenant can to borrow more to buy the same house
The new PRA and tax rules pretty much put paid to that now so, currently, I think the balance is shifting back towards OOs.
Will there ever be a perfect market for UK housing? No. The government interferes too much
The new PRA and tax rules pretty much put paid to that now so, currently, I think the balance is shifting back towards OOs.
Will there ever be a perfect market for UK housing? No. The government interferes too much
ATG said:
No, he'd be making a terrible return compared to what he'd achieve by realising the capital gain and reinvesting.
Many small landlords are in a situation where, despite the terrible return, they have a good rental income and a sizeable CGT liability. No one wants to bite that cgt bullet, unless you're already discounting it in the yield calc and who does that? s2art said:
ATG said:
No, he'd be making a terrible return compared to what he'd achieve by realising the capital gain and reinvesting.
That would depend on his perception of what capital growth he may achieve by not selling yet. 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.
Rovinghawk said:
skwdenyer said:
In my view, it is in society's interests
When society pays for it, society can have whatever it wants. It's not getting its way on my tab.skwdenyer said:
I have no doubt that such a change would collapse the value of some BTLs quite a lot.
So I can lose out for your ideals? No thanks.skwdenyer said:
there's little appetite to instead invest in businesses carrying risk and employing people.
So BTL has no risk? Get real.As for not employing people, I've employed electricians, plumbers, plasterers, brickies, labourers, roofers, IFAs, man-with-vans and many others. You either know little or think little.
skwdenyer said:
I'm well aware my views on this topic aren't widely-held or wildly popular 
Maybe they're incorrect?The point about risk vs reward is particularly relevant. You don't have to have a particularly good business brain to be a landlord or even work that hard. You just need capital to reinvest and expand, whilst collecting the rent. You can pretend you are some astute business mogul but you come across like a bit of an arrogant, dispassionate t
t to be honest.Edited by anonymous-user on Wednesday 27th September 08:10
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