Watch out: Buy-to-let is back....

Jeeze! How we are all entitled to such a quality standard of living!! I think a few of you need to get out more, travel the world, and see how 99% of the world's population live, then try justifying how you should have a house, high paid job for life and a fat pension at the end of it, and oh how terrible our lives are in the UK. Wise up!

TwoFlowers post perfectly describes the problems facing many in his/her peer group. I have thought for quite a while this will lead to a "brain drain" in this country where the best and most mobile will clear off out of this country. Let's face fact's for those who want to remain, regardless of what the likes of Cliff (I have my own agenda) D'Arcy say, property has become a form of "bullion" in this country ! And to face facts even more there is no way back regardless of what the property bears say, because it would bankrupt millions and bankrupt the banks.... And looking at the shambles that is the pensions industry(thanks Gordon and thanks useless fund managers) in this country, personally I'd rather trust something tangible and I suspect I'm not alone ! Perhaps we ain't seen nothing yet especially when you add buy to let to the mix !

Hello matchmade. I gave you a few responses on a [url=/news/the-property-ladder/house-prices-wont-fall-again-for-years-4180.aspx?source=1000417]previous article[/url] but you didn't respond to my reply. Let's see if you do with this article. [b]matchmade said:[/b] [b]"Yet again buy-to-let landlords are being blamed for "high" house prices and for squeezing out FTBs, all without a shred of evidence"[/b] I heard on BBC News the other day that the number of first time buyers had been collapsing for a least a decade. The Guardian also has [url=http://www.guardian.co.uk/money/2009/nov/13/house-price-fall-double-dip]the story[/url] and I quote: [b]Guardian:[/b] [b]"In a written answer to a question from the Conservatives published yesterday, the Communities and Local Government department confirmed that the number of first-time buyers last year had fallen to an all-time low. The figures show that in 1999 there were nearly 600,000 first time buyers. This fell to below 400,000 when prices peaked in 2007 and were down even further last year – to just 193,600."[/b] So how can a market - which relies on purchasing chains - be supported if no one buys at the bottom end of the market? Who is it who is both taking up the slack and able to afford the high prices charged? I wonder if the Council of Mortgage Lenders (CML) can [url=http://www.housepricecrash.co.uk/graphs-buy-to-let.php]give us a clue[/url]. [b]"the British public's frankly weird hostility to private renting."[/b] Private renting is paying a private individual money for the privilege of living (but not owning) a particular peice of land. Land is a social asset and should be treated like one. What BTL'ers do is take land which they cannot afford and then deprive someone else of it's exclusive utility while at the same time using renters' productivity to pay or it, all the while doing little or no work themselves. To put it another way, BTL'ers are social-economic parasites. [b]"House prices are higher for a host of reasons, not least dual-earner couples"[/b] I agree with this point but: [b]"greater overall capital wealth and real incomes"[/b] I do hope you're not going to point to the GDP figure and use that as evidence of increasing wealth. After all, GDP includes a modifier so that inflation isn't mistaken for real growth. But it fails because the inflation figure has been manipulated for years and is in fact [url=http://ftalphaville.ft.com/blog/2009/11/06/81731/gilty-opportunism/?source=rss]still happening.[/url] There are also lots of other reasons why that statement is false such as rising taxes which, according to the Adam Smith Institue [b]"If the government deficit is factored in, Tax Freedom Day does not come until 25 June (the worst figure since 1984).[/b][b]"[/b] In fact, excepting for some mild deflation in food (which was running at >12% YoY) the ony thing that's got cheaper has been morgage rates. Notice I used the past tense there. [b]"a lack of new housing supply"[/b] The supply and demand argument has been killed off so many times now. Don't you think it's getting a bit long in the tooth? Housing in this country is (obviously) limited by space but certinaly isn't helped by this country's astonishingly poor land management, with [url=http://www.mortgagestrategy.co.uk/distribution/-number-of-empty-private-homes-rises-above-300000/1002606.article]hundereds of thousands of properties sitting empty[/url] while speculators reap huge capital gains. I would also say that given this "shortage", shouldn't BTL and land speculation at least be regulated to ensure that profits aren't being made from unproductive work? Or am I being too progressive? [b]"and a tax system that gives completely unfair advantages to homeowners (i.e. all capital gains on rises in house prices are tax free)."[/b] We agree again! I would add to that by also taxing BTL'ers' capital gains (currently 18% - less that the basic rate of tax) as well as all the rent they receive. [b]"Compared to all this, landlords have had a tiny effect on the market"[/b] I would argue that while BTL's impact tends to vary by region(*), their overall effect is to substantially increase house prices by denying FTB'ers access the the market. (*) For example, [url=http://en.wikipedia.org/wiki/Fergus_and_Judith_Wilson]let's take the Wilsons[/url]. They are a pair of retired maths teachers who like many if not most BTL pro's spotted an opening in the market when BTL deregulation was finally completed by Labour. They are now multi-milionaires and own significant numbers of new build houses in Asford, Kent. To me they represent the pinicle of the 'money for nothing' culture that New Labour (and to some extent the Tories) have fostered. [b]"How do you balance the social harm and benefit where a landlord buys a house in competition with a young couple"[/b] The young couple would buy the house to live in. To them it's a home. By being able to buy it they can then put their money into more productive uses and you would have to find somthing else to invest in, such as yourself. By using your existing equity, which you no doubt obtained from the time when BTL was much more restrictive (and therefore housing was cheaper), you not only deprive them of a home and a place of their own in this country but you also make significant amounts of money for very little work. To me, this is harm. [b]"and then rents the house out to a group of 4-5 single people who need somewhere to live"[/b] 4-5 single people who are so unproductive that they can only afford to rent a 2 or 3 bed house by clubbing together? I think that answers itself. [b]"or to a single mother on benefit who would otherwise be in bed-and-breakfast accommodation?"[/b] People who are 'social cases' should be supported by the state. It is far cheaper to house such people in local-authority run accomadation than it is to rent from BTL. Once again, seriously bad land management is to blame and now everyone (except BTL and other social parasites) pays for it. [b]"Landlords have dramatically improved the amount, variety and quality of rented property since the appalling position in the 1970s and 1980s, when the rental market had been killed off by rent controls."[/b] I would say that rent controls were far from being the best strategy of land management but at least prevented some of the parasitical behaviour which now occours in this unregulated market. My strategy would be to manage land though county council run housing banks, which in good times would by law supply cheap rental properties to the public. In bad economic times when such properties become vacant they can be used to house the resulting homeless. I would also introduce a [url=http://en.wikipedia.org/wiki/Land_value_tax]land value tax[/url] (LVT) to prevent house prices from getting out of control and would tax non-resident owners more than resident owers in order to discourgage foreign speculation. [b]"Why do people think that big business rarely invests in rental property"[/b] One big source of contention for me is the intrerest shown by big commercial companies in agricultrial land. They buy the land, do nothing to it and then rent it to farmers who acutally make productive use of it. The farmer creates the wealth, we pay the farmer the subsidies and the investors make profit for no work. A bit like BTL. [b]"It's because the potential profits are so poor relative to the risks"[/b] That migh be true now that the market has begun to correct but it certinly wasn't true previously. Otherwise property investment companies like Land Securities wouldn't exist. [b]"and because the tax system is biased towards homeowners."[/b] No tax on the interest of your mortgage, 18% capital gains tax, council tax paid for by the tennant, no tax on second home ownership, no Land Value Tax. Biased towards homeowners?