UKC

If you were renting a house in the private sector and you lost your job or the landlord put the rent up so you couldn't afford it then you'd move to a place you could afford. Simple really.

Yet if your a council tenant there are people that think that the taxpayer should step in a subsidise the bit you can't afford. Others think that its perfectly O.K for people earning £100k to have a taxpayer subsidised council house over a poor person that genuinely needs it.

What a f*cked up world we live in.

http://www.bbc.co.uk/news/uk-politics-35515993

In reply to Indy:


I agree, but I think we might disagree about why it is f*cked up.

In reply to Indy:


Has the meaning of "subsidising" changed while i was having a nap?

I mean


Is the taxpayer actualy paying the difference between the rent paid and the market going rent? Or is it just that is not benefiting from the outrageous profiteering going on of late with regards housing?

In reply to Indy:

True, but the really f*cked up thing is that house prices and rents are a completely rigged market with the state intervening to ensure that prices never fall and therefore stupidly large loans against property are safe for both the borrower and the lender. The result is a disconnect between the price of housing and rents which keep rising and salaries and the prices of other goods and services which are kept in check by market forces.

If the state hadn't manipulated interest rates and bailed out the banks chances are the hypothetical landlord would have been bankrupted and the person who now can't afford the rent could afford to buy the house.

In reply to Mr Lopez:


So you agree?..the private tenant can go jump off a cliff yet the £100k council house tenant can shrug knowing that they can get away with paying way under market rent coz of socalist dogma.

In reply to Indy:

I agree with your sentiment, but there are a few problems:

If you are a not so well paid family living in a council house with reduced rent and the security of not getting thrown out if the landlord wants to sell or just turf you out to put up the rent, what is the incentive to that family to work really hard and get promotions/second jobs etc to earn another couple of hundred a month if the result is they have to pay a market rate rent and that couple of hundred disappears again.

On the other hand there are clearly examples of medium to high earners in council accommodation that should be reserved for those with real need.

One thing that has always eluded me is what do you do to qualify for council housing anyway?

In reply to Indy:
But council houses are for the poor and low paid, aren't they?

In reply to balmybaldwin:

http://www.theguardian.com/tv-and-radio/2015/jul/06/how-to-get-a-council-ho...

More poverty porn from the illuminati who make programmes for the baying masses in order to reinforce the Tory vote.

In reply to Big Ger:


He was just sticking to his principles. He didn't believe in privately owned houses.

He risked becoming one of those rich landowners that everyone (who doesn't own a house) despises.

In reply to cuppatea:



Not quite.

It's aimed at the Mail buying, UK Indepedance voters.

In reply to tom_in_edinburgh:




Yes.

Many across western Europe are in civilised rented accommodation costing half of the cost of a British council house. They think we are completely bonkers being seduced by the house price religion. This is a religious cult that is way more damaging than ISIS will ever be. Led by the Americans, the Brits and the Irish sleep-walked head-on into the 2008 crash and have yet to pay the full price. When the value of a small British house drops to about a fiver then we will see some suffering in some quarters and bankers throwing themselves off high buildings but it would put us on the road to being a civilised country. It might also force us to think about developing a properly functioning economy instead of pretending that the impossibility of perpetually rising house prices can provide that. Hope for this to happen soon because the longer we leave it the more it will hurt. It IS coming.

In reply to Indy:

Agree with what? That social housing landlords should ramp up the rents on people's homes to exorbitant unaffordable levels just because private landlords are doing so? No i don't agree with that. Homes should be places to live, not commodities to make a quick buck from at the expense of families who can't afford to buy.

In reply to Mr Lopez:

As a landlord myself, I don't charge at "exorbitant unaffordable levels", as to do so would mean that I wouldn't get tenants.

In reply to Big Ger:


Not originally, no. They were built to deal with a post war housing crisis and slum clearances. The intent was to form stable communities with good quality housing. Teachers, nurses, policemen and skilled workers were all strongly represented on council estates.

In reply to Big Ger:

How does the rent you are charging compare with the rent for the same house 10 years ago, and how does the rent compare with the going market rate?

In reply to Ridge:


Long time since that was the case though.

In reply to Mr Lopez:

It's near the going market rate, although we have taken a slightly lower rent from the current tenants as they are known to us, and are long term stayers.

10 years ago I was having to top up the rental income to pay the mortgage on the place.

In reply to Big Ger:

Bob Crow is dead. And yet you're still alive.

In reply to Big Ger:

>10 years ago I was having to top up the rental income to pay the mortgage on the place.

But isn't that how it should be? After all, when the mortgage is paid off, you end up with the house. Your tenants end up with nothing.

Presumably now the tenants are paying more than the mortgage. So they could actually afford to buy the place off you and pay less than they currently do? It's a strange world.

Martin

In reply to Big Ger:


We do the same, but maths wise it makes sense too. We charge perhaps 10% below the market rate, but in 5 years have had only one week empty. Even losing a months rent, paying an agency admin / finders fee, the council tax, heating etc... is far more costly than a modest reduction in monthly rent. Every one is a winner this way, apart from the agency who are on a percentage, but that's tough as they do very little for the money.

In reply to Indy:


Not wishing to speak for MrLopez but it occurs to me there is at least one other option: we could act to control the overheating private rental market through the provision of adequate social housing. Obviously it's not going to happen in today's toxic political climate and very thought of it probably brings you out in hives but there you go, another option to consider.
jk

In reply to jkarran:



Means tested social housing? Perhaps if circumstances improve a person who has been in the higher tax bracket for several years no longer needs the housing, it can go to someone on a much lower wage who is currently pay much more renting privately.

In reply to summo:


Why means tested? If there was an adequate supply of social housing then the demand for 'much more expensive' privately rented property would reduce, leading to more realistic private rents.

Plus you avoid the idea that social housing should equate to 'sink estates', rather than being desirable areas to live.

In reply to Ridge:


Only if it becomes available, if people earning above average wages don't move on, do you wait 30 or 40 years for them and their family to die? It will take a very long time to improve things. Unless of course you build say a million extra social housing, so perhaps a 1 or 2% tax increase at all levels to fund this?


There will always be that element, due to the fact that you can't modify or personalise a house, people with the means and desire to add a conservatory etc.. won't live in one.

In reply to Mr Lopez:




You do realise that it's a market don't you? Private rents are set at what tenants can afford to pay, if landlords want to charge more then they can but they'll struggle to find tenants and having a house empty costs money. Equally many charge a little less to insure they keep the place occupied, it's a self balancing system based on what a tenant can afford to spend.

My tenants are paying just below market rate and as such I've only had 1 empty month in the last 2 and a half years so far so I consider it a good trade off. And yes they are paying more than the cost of my mortgage to live in it so they can in theory afford to own a home similar to what they are renting.

The difference is, I lived below my means in my youth to save up enough for the deposit and renovation costs of that first property, they could live somewhere far cheaper if they wanted and grind away for a few years and buy a house for themselves if they really wanted to. Why haven't they? I've no idea, it could be they are simply not that committed nor prepared to put in the effort to get on the ladder, or maybe they simply aren't ready to settle down in one place yet. Many people rent because they only plan to live somewhere for a couple of years so it's not worth laying down routes.

Either way, they need somewhere nice to live without the commitment or upfront costs of buying a house and I provide that service for them on 6 month basis.

In reply to Big Ger:


I'm no Bob Crow fan, but i'm interested to know if would you have applauded him, or critizised him, if he rejected his roots, and the type of people who pay his salary, and moved into the leafy suburbs?

No win situation for him.

In reply to Lord_ash2000:
Would you be in favour of the Tories giving your tenants the right to buy for private tennants (as they did for council, and now Housing association homes) , if they then got a mortgage and wanted to buy you out at the market rate?

In reply to Jim C:

Or he could just have easily bought a house where he lived all of his life.You can buy houses in areas other than leafy suburbs.......

In reply to summo:

I'd say not so much means tested but maybe reserved for essential workers. Although, maybe that would result in stagnation in the wages of these people as the employers think they can take advantage of the situation.

The real answer as eluded to above is to build more social housing.

In reply to Martin Hore:



But, a house costs far more to keep than just a mortgage.
What happens when the boiler breaks or when the roof leaks or when the carpets wear out? the tenant calls the landlord and they have to either shell out for repair or sort the insurance which they've been paying for.
And then you have to build a contingency just in case your tenant decides to mess you about on rent, or if they tenant moves out and you have a vacant building.

In reply to Lord_ash2000:


It is a captive market. If all landlords in unison raise the rents by 20% a year (as it's been happening), then tenants have the options of A) Find the money and cough up. B) Move into a tent in Hyde Park


blah, blah, blah blah... Yes, sure... Whatever

In reply to Big Ger:


So not affordable by anyone's definition, and you have raised it steadily year on year many times above inflation and increase in wages with no relation to costs to you, for no other reason than "because i can" or "because everyone is doing it". That is an exorbitant increase.

In reply to Mr Lopez:

To be fair, you seem to be looking at things from a London perspective. I suspect most people on here who are landlords, are not landlords in London.

I am a landlord of last resort, when my girlfriend moved in with me, we decided to rent out her house rather than sell it straightaway. We have a reliable tenant and charge a bit less than the going rate, because we don't use an agent and pass most of that saving on the the tenant. It's a cheap house, but the rent doesn't cover all the mortgage. We certainly are not exploiting anyone, I guess a similar property in London would be 4 or 5 times the rent.

I agree with people saying we need much more social housing particularly in high rent areas. I think it is much less of an issue in some parts of the country though.

In reply to The New NickB:


I suppose i am...

There has however been a trend lately that having tenants is not any more a way of helping pay the costs of mortgages, but more an expectation that the tenants should be paying off those mortgages on behalf of the owners, effectively using tenants as cashcows and houses as the product through which making money.

It has happened that in the last few years when more and more people have been priced out of being able to buy, the rents have also shot up to the point that buying a house is now considerably cheaper than renting. The reasons for those raises are not due to incurred costs or more expensive mortgages, but purely a matter of greed. Landlords are charging much more on a 'product' that is the most basic and fundamental to people's lifes just because they can.

Of course there will be landlords in all sides of the fence and not everyone are doing so, but the trend is not looking pretty.

In reply to Mr Lopez:


How do you define "outrageous profiteering". Net yield on a London properties is probably only about 2-3%. After mortgage costs it's probably zero. What is outrageous about this return?

In reply to Postmanpat:

Net yield includes mortgage costs, and London average yields are over the 4% mark. Net yield on London properties with a 10/15 year old mortgage are massive, and the net yields on the properties this thread is about, if rented out at market rates, would be astronomical. Hell, even a 0% yield is outrageous profiteering.

But the most outrageous thing is seeing the property as in investment and expecting a return.

In reply to Mr Lopez:
>
I'm using the term net meaning net after agent's fees ie. for a cash buyer etc. If you include mortgage costs (which I agree is perfectly normal) there is no way that average yields are 4%. They nearer to zero.

Here are average rental yields for different areas. Fewer are much above 5% in London. Assume a percentage point in costs and a 4% mortgage that gives a net yield of zero even in higher yielding areas.

http://www.londonpropertywatch.co.uk/average_rental_yield.html

Calculating yields off original values as opposed to current values is completely mad, not to say financially illiterate.

Let is say you put £10000 savings in a high yield account generating 3.5% for your retirement. In 20 years these saving will be worth £20000 and generating £700 per annum for you. Are you going to ring up the bank and demand that they only pay you £350 (3.5% on the original value) because otherwise you are profiteering?


Why?

In reply to gethin_allen:

>But, a house costs far more to keep than just a mortgage.

Fair enough of course. I do understand that. I did let a flat for a few years a while ago, and yes, the roof did leak!

However, I don't think I expected to recoup in rent all the outgoings including the mortgage repayments. There ought to be some recognition that as you pay off the mortgage your share in the equity is increasing until eventually you own the house outright - quite a gain - especially as it is now likely to be worth considerably more than when you bought it. I certainly noticed that when I eventually sold the flat I was letting. I think in current market conditions the landlord generally gets a better deal than the tenant, and that's likely to continue to be the case while we have a shortage of housing.

Martin

In reply to The New NickB:


Spot on. I'm a landlord in Glasgow and receive the same rent now as I did in 2003...from the same tenant. "A bird in the hand...", and all that. It's probably a bit below the market rate I could achieve, but as it is I have a steady, reliable tenant who pays the rent and lets me know directly if anything's amiss. No need to go through an agent, so I save 12%-ish straight off.

In reply to Mr Lopez:


Why so? It is same business model as buying cars to rent out. Juts like any car rental company does.

In reply to Postmanpat:


That 4% mortgage would be included to calculate yields...


Massive difference. If you put those £10000 savings into a (£100000) house deposit on a BTL which covers the mortgage payments and related costs your profit will have been £90000 in those 20 years, or £4500 per annum taking into account the asset and ignoring the house value increase. That is a return to investment of nearly 50% a year. That IS outrageous.

If you then increase the rent year on year by lets say 10% or more on top of cost related increases, then the profit is off the scale, and you are making that profit at the expense of people who can't afford to buy but have no other choice than to submit to the extortion, that IS outrageous profiteering.

In reply to nutme:

Why so? Because a roof over your head and food on the table are the most basic and fundamental needs for a human being.

Would you be happy if all energy companies suddenly all at the same time double up the price of gas and electrics year on year? And if food retailers started doing the same again? Or water suppliers? And all that not because of increased production costs, but simply because the consumer will have not other choice but to pay?

Why then it's ok for that to happen with housing?

In reply to Mr Lopez:

Where is capital gains tax factored into your numbers?

In reply to neilh:

It was included in the rent charged to the tenants or factored in by renting the house for a few extra months at the end of mortgage repayment

In reply to Mr Lopez:

No, the table was "rental yields" which are the gross yields before running or mortgage costs.


Can you clarify a) the rental income, b) the mortgage interest rate c) the type of mortgage (interest only or repayment) you are using in your example and then show me your calculation.
Incidentally, most buy to let mortgages demand a 25% deposit so in reality your £10k would allow you to buy only a £40k property.

In reply to Jim C:


Well they are welcome to make me an offer and I'll decide if I'll accept it or not. However if they are going ot pay market rate they can buy any house they want which is for sale at that price. However no one should be able to demand the right to purchase another individuals private asserts.

In reply to Mr Lopez:

That is nonsense,. I'm aware property prices and rents are going a bit crazy in central London but rents will only keep rising for as long as there are people who can pay them. And for the rest of the UK, partially this magical place known as "the north" house prices are pretty much flat and have been for a while.

If those living in London find it's too expensive they are more than welcome to spread out a bit, that'll dampen the demand in London and maybe even up prices a little in the rest of the UK.

In reply to Lord_ash2000:


If you don't like it, 'on yer bike'. Now where have I heard that before? Ah yes, Norman Tebbit in Thatcher's compassionate Britain. Funny how things come back around given time for people to forget how awful they were the last time.

In reply to Mr Lopez:

Yes, but in reality that doesn't happen.

Edit: or should I say, it doesn't happen outside London.

In reply to Mr Lopez:



Being as you are such an expert in the field can you advise me how to go about raising the rent on the property that I rent out by 20% per year and still keep a tennant in it. I started renting it out 8 years ago for £400 a month and 2 years ago when my tenants moved I put it back on the market at £450 a month (after spending 5k on it)
By your 20% per annum increase I should be charging £1433.00 per month.
I can't see anyone aging that when the market rate is £500 to £550 for this house in this area.
Any advice you can give me that will net me an extra 1k per month would be greatly appreciated.

In reply to Postmanpat:


Sure


Value of mortgage repayments + maintenance/other costs


Whichever the bank offers you


Repayment


Monthly Rent = (Mortgage repayment + interest + maintenance + other costs) / (20*12)


Ah, but our trump wannabe got the mortgage back when Northen Rock was giving them like candy. He had to work hard and live well below his means to save those £10000 for the deposit, but luckily for him his house is now worth £600000 and he now passes the days wondering why the youth of today complain about having to save the £150000 deposit necesary to buy his £600000 house. I mean, he did it, so it must be easy, no?

In reply to john arran:


Not sure if you are deliberately misremembering but the 'bike reference' was nothing to do with this, it was in relation to unemployment: "I grew up in the 30s with an unemployed father. He didn't riot; he got on his bike and looked for work and he kept looking 'til he found it."

In reply to Mr Lopez:



But you can't assume that. As noted above, you'll be very lucky to get 5% rental yield in London.


So, lets say 5%


Very rare for buy to let mortgages, partly because the rental income won't cover the mortgage payments.

A 20 year repayment mortgage is gong to cost you £200 per month. Your 5% rental income, after agent's fees will be about £150pm.
So, in reality, people have an interest only mortgage.


No, I mean your actual numbers.

Let us assume the £40k property has a 5% gross yield ie. £2k pa. Let us assume an interest only (which is normal) mortgage of 4.5% =£1.35k pa. Of that £650 annual profit probably £200 will be swallowed up in agents fees and another £100 by outgoings. So actually the annual net income is £350 at best, or a 3.5% yield. This excludes periods without tenants, prompt payments, and excludes all mortgage fees etc. ie.it is and extremely generous estimate. Income tax would have to be paid on this of course so in reality, at basic rate, the net return is about 2.8%.

In 20 years time, assuming no capital gain, the owners sells the property and pays back the £30k mortgage having made 2.8% pa for 20 years.
There is, of course, the potential for capital gains, but these are uncertain and will attract tax.

In reply to Mr Lopez:
If at the end of our mortgage I make some money from the tenants, then I think I deserve it. I've carried the risk for decades, I've always had to have a cash buffer saved in case of repairs etc.. which means I have to go without occasionally, we spent £6k on a new roof last year, two years before a new boiler, these aren't free and have no impact on the rent I can charge. I have gas and leckie testing done, which would not be done had we lived in it so often.

I've modified my lifestyle for two decades now to make sure I can always pay the mortgage and maintain the property, having first committed to buy a house to rent out with my brother when I was 25, it meant I pissed less money up the wall and has served me well in the long run. A tenant can up sticks and go with a month's notice, which means I have to be financially able to service the loan myself, plus the council tax. Any profit I make in the long term is my reward for this commitment.

ps. our rent/payment means I top up the mortgage by about £150 a month, plus insurance, tax and maintenance. The house isn't cheap as it's in a national park, but also like most parks the wages are very low and rent's are similar, which is fine, I'm just happy it's lived in 365 by a decent clean living person/s.

In reply to lummox:


I prefer it that way.

In reply to Martin Hore:


True, but I took the risk of keeping the property going when I emigrated, and paying the mortgage so that they could live there at the market rate.

In reply to Mr Lopez:


You forget something in your desperate attempt to criticise; the fall in interest rates, to now record lows, which have made a far greater difference to the mortgage/rent ratio than increases the letting agents have made.

But lets cut to the chase here, seeing as you think I'm a bad person for the choices I've made, (hopefully in the best interest of my family,) if you found yourself in my position, emigrating for a period, and having a house that you'd paid 20 years of mortgage on, what would you have done with it?

In reply to Martin Hore:



Well they have had a roof over their head for 10 years. Should they also be compensated, (by me?) for any food they've eaten that they now have nothing to show for?


I cannot see your logic there? To "buy the place off me" they would need to take out a mortgage, (I doubt they could do this, knowing their work situation, ) and raise a deposit. It' not just a case of being able to cover payments.

In reply to Indy:

I see everyone is, as is usual on such threads, ignoring the elephant in the room here. If you want to know why rents and property prices keep on rising in this country then here's your answer
http://www.tradingeconomics.com/charts/og.png?url=/united-kingdom/populatio...

In reply to pec:

Wonderful example of graphic misrepresentation there. Graph looks like the figures have increased hugely - about 8-fold, whereas the scales show about a 6 percent change, which would be barely noticeable if represented impartially.

In reply to john arran:
You can always read the numbers. Draw the graph however you like, the population has still increased by half a million every year since 2006, not exactly "barely noticeable".
Or you can carry on ignoring the elephant in the room if you prefer.

In reply to Big Ger:

>I cannot see your logic there? To "buy the place off me" they would need to take out a mortgage, (I doubt they could do this, knowing their work situation, ) and raise a deposit. It' not just a case of being able to cover payments.


Well, I'm not really able to put myself in their situation. I'm lucky enough to own my house with the mortgage fully paid off, and it's a long time since I needed to rent myself.

But I think this just illustrates one of the unfairnesses in our society. Because they can't get a mortgage, for the reasons you suggest, they end up paying more for their accommodation than if they could get a mortgage. A simplification, I know, because as owner-occupiers they would be facing some costs that currently fall to you. However, I do feel that our economy is very much biased in favour of those who are in a lucky enough position to buy. And for young people today, that very much depends on how much money is in the "bank of mum and dad".

In reply to john arran:


Absolutely. One of the most appalling graphical miss-representations I've seen. No doubt linked to a story about immigrants.

Martin

In reply to john arran:


Well, it's about the equivalent of adding Greater Manchester (or the West Midlands) , Greater Glasgow, and Cardiff, in just ten years.

In reply to Martin Hore:

Martin, fair and reasonable points, I'd only take issue with; " those who are in a lucky enough position to buy." For most, luck has little to do with it, and bloody hard work, scrimping and saving, has far more.

In reply to john arran:

4 million people needing somewhere to live is "barely noticeable"? You must have a lot of spare rooms.

In reply to pec:

There wouldn't be a problem if house building had kept up with the increase in population.

In reply to Andy Hardy:

ad infinitum?

In reply to Andy Hardy:


But it hasn't.

In reply to Andy Hardy:


Indeed but it hasn't, which explains why rates and propery values keep increasing rather than, as some on here would have you believe, because of the moral depravity of evil profiteering landlords and suchlike. Its simply a question of supply and demand.

Now whether its actually possible to build enough houses to keep up with that kind of population growth in what is already the most densely populated country in Europe (England anyway), during a period of serious economic crisis/restraint with all the incompatible competing demands for land use, not to mention all the schools, hospitals and transport infrastructure etc that need to go with the increasing population is another matter and one that I personally, shall leave for another thread.

In reply to Martin Hore:


Appalling? Seriously? A graph which shows the UK population growth since 2006 with the actual numbers written above it with no mention of immigrants anywhere, just a simple graphic representation and you call that appalling? You really need to get a sense of perspective.

I actually picked that one because it was a simple clear graph with no other information to distract from the simple numbers involved. Its actually very hard to find a graph of population growth which goes down to zero on the Y axis, try it yourself. Here's what you get if you simply google "UK population"
http://tinyurl.com/gms8z4l
There are plenty of way more lurid graphs come up I could have chosen telling us what the population projection is etc. But whatever graph you choose, the facts remain the same.
The fact that you and others would rather pick fault with a graph than address the issue of how housing costs are a function of population growth simply confirms my point about ignoring the elephant in the room.

In reply to Postmanpat:

But you are talking about an hypothetical buyer trying to buy a house today. We all know there's no chance in hell for a first time buyer to enter the market with £10k. There lays part of the problem...

In reply to Lord_ash2000:



Your tenants would not be demanding anything. They would HAVE the right, if the government legislated to allow that.

What will happen then is ,what happened with council houses, the best properties would snapped up cheap, and the council's were left with the dross, with no income from the other rents( or indeed the proceeds from the sale of the homes) to help them bring up the standard of the low standard housing the were left with.

There are already rights for ex council tenants ( who were transferred out to a HS ) to buy their now HS property, and plans to extend this right to all Housing Association tenants.

The very obvious obvious next step for the Tory policy of extending home ownership to individual families, would be to give YOUR tenants the RIGHT to buy from you.( whether you agree with it or not)
You would have no choice. You would decide nothing in the transaction.

"Housing association tenants
There are other schemes available to housing association tenants. The Government also has plans to extend Right to Buy so if you are a housing association tenant and not currently eligible, click here for more information."
https://righttobuy.communities.gov.uk/am-i-eligible/

In reply to Mr Lopez:


You're talking about London again aren't you? There are other places to live.

In reply to Mr Lopez:

This house is for sale, three doors away from my mother's house. It has easy access to the town, beach and countryside;


I notice you haven't answered my question above, (though I didn't expect you to.)

In reply to Mr Lopez:

There are plenty of places where £10K will be the deposit on a decent house in a decent area within commuting distance of major cities like Manchester, Liverpool, Leeds etc, just not near London but then, most people don't live or work in London.

In reply to neilh:


Not sure that was Labour Party policy, were they not arguing that all the best council houses were being bought up cheap, and those who bought them profited from that. Would he not have been condemned for doing that too?

In effect, whatever he did there were people that were determined to find fault.

In reply to Mr Lopez:



How about this one?

3 bedroom end of terrace house for sale
Magnolia Close, Merthyr Tydfil
£45,000

http://www.rightmove.co.uk/property-for-sale/property-46871623.html

In reply to Jim C:

He was getting £145,000 a year Jim, he didn't need a council house.

In reply to Mr Lopez:


Christ, the numbers are just simple examples to make a point. Quadruple them all (or more) and the return remains the same. The returns on buy to let are not great and could be negative.

As I tried to get over to you above but you seem not to have grasped, nobody seriously looks at the rental return based on a purchase price twenty years ago any more than you would ring up your bank asking them to cut your interest rate paid on pension savings (as per my question to you) or anybody would sell their property at half the current market value because they bought it twenty years ago.

No doubt there are dodgy landlords just as their are dodgy everything, but the idea that your average landlord is "profiteering" in any commonly understood meaning to the term is just fantasy not backed up by the figures.

In reply to Big Ger:


My apologies, i skimmed through the thread but i didn't pay much attention to what you wrote, so missed there was a question there.

Is this the questiin you mean?

> if you found yourself in my position, emigrating for a period, and having a house that you'd paid 20 years of mortgage on, what would you have done with it?

If so then the anwer is that very much it would depend on many variables. Renting it for a token rent to family or a friend would probably be my go-to choice seeing that i'm planning to go back to live on it at the end of the period.

In reply to Postmanpat:


Profiteering

verb (used without object)
2.
to act as a profiteer.


profiteer
[prof-i-teer]

noun
1.
a person who seeks or exacts exorbitant profits, especially through the sale of scarce or rationed goods.?

I dare say the commonly understood meaning matches perfectly to the activities of property investors

In reply to Sir Chasm:

I know how much he earned, but there is no law that says as soon as a tenants salary goes beyond a certain number, that they have to give up their tenancy .

As long as they paid full rent, their local taxes etc. what is the drive to make a tenant give up their home, near neighbour's , friends and possibly even a family home with sentimental attachments memories or whatever ?

I really don't get what the problem is here.

Edit
.. "I was born in a council house, as far as I'm concerned I will die in one."
Although he was entitled to buy his house at a discount as a result of changes introduced by Margaret Thatcher's government, he refused, asserting his belief that "social housing stock should remain available for future generations".
Bob Crowe .

In reply to Mr Lopez:

So, what do you mean by "token rent"?

I wasn't, and still am not, in a position to rent at below mortgage rental, (plus insurances,) you must be enviably well off.

How would you cover for periods, as I have had, when there's been no tenants for 4 months? The mortgage still has to be paid, as well as the rental on my home here.

How would you cover for say, the £7,000 to have a new soakaway installed, when the last one failed due to flooding? Or the £6000 I had to cover for dry rot? Or the £2000 for redecoration between tenants?

Or for the costs letting agent, maintenance person, inspections and new regulations , (just cost me to have a Legionella test,) as I cannot really look after the property from here?

How will this be done on a "token rent"?

In reply to Big Ger:

Looks good. Surprised it's been on the market since 2014.

If you happen to be unemployed and live in Merthyr Tydfil, you face the worst chances of finding work locally in Britain. (...) in Merthyr Tydfil, the GMB calculates there is a ratio of 32.7 claimants for every live unfilled vacancy

http://www.theguardian.com/money/work-blog/2011/jun/08/merthyr-tydfil-jobse...

In reply to Mr Lopez:

Sorry, I assumed you were employed if you had £10,000 to put down.

No one sane would move to Merthyr I agree.

In reply to Big Ger:

Did you miss the "family or friends" part? No redecoration, agency fees, inspections, etc, etc... I'd let the house to people close to me for a token rent that covers the basics and maintenance, and in exchange the house is kept nice and warm and in habitable condition for when finishing the period of migration.

In reply to Big Ger:

I am employed but nowhere close to Merthyr! All said it looks like a sweet location for someone living around the Swansea/Cardiff area though. Still i don't have £10000 in savings anyway...

In reply to Mr Lopez:

Right, I was not in the situation where I could do that. My house is in deepest Cornwall, my family live in South Wales, I did not have friends in need of house renting.

How would you cover for periods, as I have had, when there's been no tenants for 4 months? The mortgage still has to be paid, as well as the rental on my home here.

How would you cover for say, the £7,000 to have a new soakaway installed, when the last one failed due to flooding? Or the £6000 I had to cover for dry rot? Or the £2000 for redecoration between tenants?

So what would you have done in MY situation?

In reply to Jim C:



C'mon, don't be silly. There's plenty of non-council housing that isn't 'leafy suburbs'.

But anyway, be that as it may, let's go with applauding. The man was a hypocrite, sticking with his legal entitlement regardless of need like any MP claiming expenses.

jcm

In reply to balmybaldwin:



Over here the government puts up your rent the more you earn if you're living in a council house until it gets to a point where you simply earn too much and they kick you out. There were problems with this in that at that point you still couldn't afford market rents, so what they're doing now is partial ownership where you can build up equity to get a deposit for a mortgage or whatever. You can only sell your equity back to the government when you move on for a market rate. Seems to be working well so far. To everyone else, if you think it's bad in the UK you should try living here (Guernsey) - Average house price is ~£450k and that gets you a 3 bed semi with a small garden and parking for 2 cars. Legal fees to buy and stamp duty would be ~£20k. To rent that sort of property you're looking at £1500 a month. Many people are trapped in rental accommodation - the rent is so high they cannot save for a deposit & legal fees to buy a place even though they could afford the mortgage payments.

In reply to Toerag:

I live in the south east. Prices aren't much different to be honest!

Sounds like a reasonable system there

In reply to Mr Lopez:


A fluffy ideal that will change once you are in that position. You won't be able to afford to be so generous as you will also have to fund the house you live in. Plus, business and friendship don't always mix well, I would never do what you suggest without a contract.

In reply to Mr Lopez:


You've completely failed to address the points I have made: that the yields being achieved are in no way unusual compared to returns on other investments. All you have done is replace the word "profiteering" with the word "exorbitant" but not justified why a zero to 4% yield is "exceeding the bounds of custom, propriety, or reason".
Given they are roughly commensurate with returns on other equivalent assets, they are absolutely within the bounds of custom and reason.

The nub of your argument, as far as I can tell,is that you think rental prices should be based on a purchase prices that may be 20 years ago, despite the fact that this would be a highly unusual way of setting any price.

I'll repeat my questions: would ring up your bank asking them to cut your interest rate paid on pension savings because the savings have accumulated in value?

Should people sell their property at half the current market value because they bought it twenty years ago?

In reply to Jim C:





I'll try and help. There is a limited amount of council housing. If Bob, who earned a healthy salary, continued to occupy a council house when he could afford to buy or rent around the corner (nobody is suggesting banishment, silly Jim) then there is one less council house for people who actually need one - rather than occupying it to make some warped political point.

In reply to Big Ger:


As there won't ever be an infinite number of people anywhere, I'll ignore that. There's plenty of room to build the accomodation we need for the population we have now. What's missing is the will.

Of more interest to me is why has "the market" not worked to correct this shortage? Can it be that it's not in the interest of the suppliers to meet the needs of the consumers? Or is the whole thing politically engineered?

In reply to Andy Hardy:

Planning rules, green belt, no desire to build loads of high rise in london, politicians not keeping up, builders who say we are not being allowed to build enough houses, shortage of skills amongst builders, banks not willing to loan money to builders, nimbyism.

There are many reasons.

In reply to Mr Lopez:


Hmmm, my son rents a flat in an area of London that's been undergoing "gentrification" for a while. He's been there 6 years, from before the tarting up in his particular area got going, and his rent's been quite affordable. He's had his first rent rise in that whole period just now, and it was well under 10%. It's a decent flat, and the landlord considers him a decent tenant, so has kept the rent reasonable. In fact very reasonable. Nearby flats of a similar standard are renting for over twice what he's paying.

The landlord isn't a friend or relative, nor do they have any other connection beyond the landlord/ tenant relationship.

So this idea that landlords are a homogeneous cartel who decide to do things in unison is just a bit exaggerated, IMO.

In reply to Postmanpat:





Well this residential landlord's survey:
http://www.arla.co.uk/media/952162/ARLA-Landlords-Q414.pdf
shows that the average time a landlord has held a property is 14 to 15 years. Just over one in ten have had their properties over 20 years. Very slightly more (about 14%) have had their properties less than three years.

So it would seem perfectly reasonable to both take those figures into account if we're trying to work out how profitable being a landlord is, and to include capital gains as part of your calculations. Note this is a way of working out how much money you make as a landlord, rather than using it to set the current price - although it might shed some light on whether they're making outrageous profits out of their fellow citizens.

After all, your figures would suggest that huge swathes of property-owning middle England are financial dolts...

In reply to Jim C:


Anyone would have the right to do anything if the government legislated to allow it.


You're confusing private individuals being able to buy up state owned asserts to live independently of the state (Thing Tory's like) with an overbearing government allowing people take landlords private properties off them.

No one is going to give normal private employed tenants the right to to buy their landlords private house from them without consent, and if you think they are then you are living in a fantasy world.

If they did landlords would be turfing them out as quickly as possible and selling them off. What incentive is there for a landlord to pay the deposit on a house, rent it someone, keep the place maintained for x number of years, take all the risks of bad tenants not paying or wrecking the place, covering the mortgage while it's empty when people move out etc etc. Just to then be forced to give it up as and when the tenants decide they'd like to buy it? Not much a secure pension plan is it?

The result of that is that those who want / need to rent won't have anywhere available because no one will be renting out houses anymore, and the few that still do will be charging as a high a rent as possible. Yes, there would be more houses available to buy and that might reduce the average price a bit but it's not going to make much difference for most people.

Even if houses dropped 20% or more that only represents a few grand difference is deposit money and maybe £100 a month in mortgage repayments. The vast majority of people can either afford a house or will never be able to have a house, it's as simple as that. There is only a very small band who can very nearly afford a house but not quite for whom a slight price drop is going to make the difference.

In reply to Big Ger:


If the rent was set a a truly affordable level and commensurate with the property it wouldn't be empty for months, as people would fight to rent it and/or make it a stable long tenancy home. That is assuming it is not in Merthyr or somesuch.


Those are the maintenance issues the rent applied should cover. If you however get more than your share of expensive problems in the house because you bought a lemon i can't see why a tenant should be penalised by being charged more for the pleasure of leaving in a house with dry rot and failing soakaways. However if you look in the long term those costs end up bring covered anyway.

In reply to seankenny:





No it wouldn't. It would suggest that they invested in the hope that they would make a capital gain on the value of their property (as opposed to by charging ultra high or unreasonable rents). Obviously at the end of the day one would include the capital gain in looking at the total return, but Mr.Lopez is arguing that the income, not the capital gain, is "exorbitant".
Many of them have been right in that making that decision. Essentially waht is being suggested is that owners, in return for their luck or good judgment in making a capital gain (which may be temporary) should charge below market rents, and that not to do so is "exorbitant" and "profiteering". I am trying to think of another commercial activity where this would be considered the case.

I'll ask you the same questions as I asked Mr.Lopez:

Would ring up your bank asking them to cut your interest rate paid on pension savings because the savings have accumulated in value?

Should people sell their property at half the current market value because they bought it twenty years ago?

In reply to summo:


Ha but i have done it. Several times, and not with a mortgage but rent, so effectively while i was away for several months at a time friends of mine have been sub-letting in my room from me at 50% rent, and while i was away i have been paying the other %50. So unlike the OP i was indeed subsidising friend's rents. And people have also done it for me. I have rented people's properties again for months while i was only charged token rents or just covering the service charges for the properties. Isn't it nice and fluffy?


That's because you are seeing business where we were seeing roofs over our heads

In reply to Mr Lopez:
But you haven't done it, you sub let a property you rented. That's a world apart from a property you own. Your only risk was your deposit, not potentially several hundred thousand pounds.

As I said, wait until you 'own' then see if you want to rent it out in a manner you imagine.

Ps. If you sublet a property of mine, you'd would find yourself with one months notice.

In reply to Postmanpat:

That's because you are obfuscating with your economics 101 to try to make a point you believe in but doesn't exist in real life.

That yield you are calculating is with today's house prices at today's rents. The problem we have is due to raising house prices and raising rents. So yes, if the rents never ever went up, and house prices never ever went up, then the profit is comparable with other investments. But that doesn't happen.

What happens is that a house bought 10 years ago will be easily today be generating a + yield on a repayment mortgage, and hence we come back to the 50% RTI per annum which is, as per the definition of profiteering, an exorbitant profit in a scarce product. Add to that massive capital gains and exorbitant sounds like chicken feed.


My argument is that rents should be based on the previous years plus inflation.

In reply to summo:


Ha, ha! Of course it's a World apart. If it was my property i was just making less profit instead of a loss. If it was my own property i would have charged much less.


Luckily my landlord isn't an ashole and he apreciated the fact that i wanted to remain renting his property but understood that it would be ridiculous for me to pay rent for months for a property that lays empty. He also apreciated the fact he didn't have to find and sort out new tenants, so it was a win win situation for him.

In reply to Postmanpat:


Well, the income is very much dependent upon when the property was bought.



Well the problem is that plenty of voters - not just landlords, clearly - have a vested interest in seeing a continual rise in houseprices and can vote for governments that will try to deliver this. The same property owners can also back politicians who refuse to relax restrictions on building new properties, and who refuse to take advantage of cheap money to build more houses, or who don't want to impose financial restrictions on people who sit on empty properties for years. All of these of course affect "market rates" and so it's not quite the perfect punt on the market you describe...

But then you know all this. The show, however, must go on.

In reply to Mr Lopez:




Jesus wept. Every yield on an asset is calculated on today's asset value, not the asset value 20 years ago. For example, the dividend yield on a share is is in the newspaper every day based on today's price, not some random price from history. Do you think companies should pay different dividends to each person on the basis of when they bought their shares. Do you think depositors should be paid different interest rates according to how much their savings having accumulated?

That's how the real world works, not like your imaginary world.. There a lot of pretty obvious and functional reasons why but I won't bore you with them.


As established, BTLs seldom use repayment mortgages so it's not what is actually happening.

Now, why won't you answer my questions?

In reply to Postmanpat:


Jesus wept indeed! What you don't get is that i and the totality of the UK population don't give a damn how you calculate yield. You can go all day about how if you follow x rules and y rules it gives you a number that if you put it sideways it looks like a monkey smoking a cigar.

The current value of an asset IS NOT what you paid for that asset. If you are looking at profits you do not look at what your asset is worth, you look at what you paid for it.

Maybe inside an Economics debate group you could go about the quantum properties of the asset's fluidity meaning that if you put that asset in Mars during a full moon the gravitational pull would make the asset loose a macroenvironmental fundamental property of its mass which has the result of yielding a percentage worth per gram 3 times that of unobtanium during the third period of the reign of Tut-ank-amons Junior. But where the janitor outside is concerned, you got that asset for £3, you made £300 out of it, your profit is £297


Which question is that?

In reply to Mr Lopez:

Most landlords, asholes or not, will know that their insurance would be invalid if they knowingly let an inverted tenant sub let a property.

Again, these are responsibilities you will only feel once you 'own' a property and have to service a mortgage. All the fluffy love in world between friends, doesn't pay bills or satisfy insurance companies clauses. Once you've saved your deposit, paid a mortgage for a number years, invested more time and money improving or maintaining a property, the notion of bring so charity drifts away due to hard economics.

I appreciate your ideal, I want my property occupied 365, but I wouldn't take a risk. I know people who have and it doesn't always end well.

In reply to Mr Lopez:


I think most people do, either directly or indirectly! Hence the use of ISAs, pensions, high interest savings etc.

In reply to Mr Lopez:

They may not think of it as "yield" but they know perfectly well that they will charge around the going rate for a product or a service regardless of what they paid for it twenty years ago and they want want the going rate for their savings regardless of what their savings were worth 20years ago.

Anyone who has ever looked at the choice of renting or buying has implicitly made this calculation.


We're not looking at overall return. (profit+income) We are looking at the rent ie.income. The income from any asset, whether it's the shopkeeper and his store, the taxi driver and his car of the gardener and his lawnmower is based not on the purchase price of the asset but the current value of the asset and the going market rate. None of these people lower their prices because their asset went up in value of they paid off the loan. This is not some arcane financial theory as you seem to think. It's how the world works.


The ones I've posed you at least twice now:

Would ring up your bank asking them to cut your interest rate paid on pension savings because the savings have accumulated in value?

Should people sell their property at half the current market value because they bought it twenty years ago?

In reply to Postmanpat:

Or, if there is a house price crash, should rents be maintained at an historic high level?

In reply to Rob Naylor:


No, but some lettings agents are pretty close: http://www.theguardian.com/money/2015/apr/10/bristol-tenants-plan-demo-lett...

Add to that buy-to-let landlords buying up swathes of housing that would be perfect for first-time buyers and, at least in many cities, the situation is pretty dire. Whilst we were looking to buy just last Autumn our 10% deposit was being laughed out, property after property, whilst those with 60%, 70% or straight cash, were snapping everything up, even if they hadn't made the highest offer. The building surveyor we used told us that he was aware of an overseas businessman who had bought in excess of 30 properties, 2-3 bedroom terraces, £250k-£300k, i.e. 1st or 2nd time buyer's typical houses, over a few-month period, nearly always with cash. I've no doubt we would have lost out to him at least once over that time.

The game is rigged.

In reply to MonkeyPuzzle:




Somebody with more money than me can buy the Aston Martin I rather like. Does that mean the game is rigged?

In reply to Postmanpat:

Perhaps we view a place in which to live slightly differently.

In reply to MonkeyPuzzle:


Obviously, but you seem to be arguing that because someone with more ready money is considered a better buyer so the system is somehow "rigged".

In reply to Sir Chasm:


Ok what we need is the salary cut off that you want to impose on everyone in a council house , at which point they will be obliged (forced) to move out.

There cannot be just pressure on individuals to give up their council house , because we don't like them for their political views, we need to apply this across the board.

So what is the salary limit that you would set where everyone has to move out and rent (privately) or buy?

In reply to Jim C:

Less than £145,000. But it shouldn't really have to be stipulated, a healthy conscience should suffice.

In reply to Lord_ash2000:

No one is going to give normal private employed tenants the right to to buy their landlords private house from them without consent, and if you think they are then you are living in a fantasy world.

I'm sure at one time Councils thought that would never happen to them, and now that HAS happened, The Housing Associations probably thought that would never happen to them (but it is happening) .

So, at the moment,(despite what has happened so far) you are secure in your belief that no future government is ever going to legislate to give tenants buying rights to homes that they rent privately , we will just have to wait and see what happens.

You say No and I say, its a possibility,

In reply to Sir Chasm:


An interesting figure.

So leaders of councils are generally around that figure (depending on where they live) According to recent reports.
On that basis, a council leader in one region earning £150,000 would be expected NOT to rent a council house, and in another region if the leader earned just under £145,000 you would be happy for THAT council leader to have one of their own council houses?

In reply to Mr Lopez:

That is why other people run rings around those who do not understand finances.

You are still not getting the difference between capital gain and profit.

It is why other people lose money on btl deals.

In reply to Jim C:
I've a suspicion that was a late Mr Crow's salary, and an example of someone taking the piss with a council house. Salary or household income are both a bit crude, but increasingly big incentives to move as tenants' situations improve would seem sensible given the shortage of council housing and numbers who really need support.

In reply to Postmanpat:


If we were talking about Aston Martins then I would agree with you, but everyone needs somewhere to sleep. With some landlords buying more and more properties, the rental market, especially locally, becomes easier and easier for them (with the eager assistance of lettings agents) to control. At the same time, every house that ends up in the ownership of one of these landlords is effectively a shrinking of the market for those wishing to buy a place in which to live, which helps push the price ever further upwards.

It feels rigged from down here.

In reply to MG:

I might agree with that, but I have just been probing the difficulties where to start with any such 'incentives'

I can clearly see that Mr Crowe was singled out as he was easy to dislike, but that is not a good basis for a housing policy.
Crowe is now dead, so I'm proposing fat cat Council leaders as the next group (some may dislike) to target.

Next step would be to ask A FOI for how many Council leaders rent properties from their own council, and try and find out how much they earn.

In reply to MonkeyPuzzle:


There are lots of things wrong with the housing market but that doesn't make it "rigged". Most BLTs are individuals or small companies with a handful or less of properties. Thy are not some sort of cartel

In reply to Jim C:

I'm not interested in what job the occupants have (Bob Crow was brought up by lummox, read the thread) and I don't know what you've got against council employees. It's quite simple and I'm surprised you're struggling, council housing is limited and should be for those that need it. From each according to their means and to each according to their needs. Not "ooh, cheap housing, I'll have some of that". No social conscience some people.

In reply to Postmanpat:

And that's not who I was discussing. However, with actions like those of the lettings agents in my first post, it looks like even the landlords are being encouraged to raise rents with no respect to interest rates or wages - of course with due respect to the landlords who blew the whistle on that letter in the first place

In reply to MG:


Crowe (and others) would be seen as taking the piss in Germany where they HAVE legislated and set a salary level below which you can rent from a local authority.
(Nothing said about kicking you out though if your salary WAS lower, then it rises above their limit .)

"A Wohnberechtigungsschein (WBS) is a certificate required to live in apartments that have been built using state subsidies.
A Wohnberechtigungsschein is only available to people below a certain income level. "

In reply to Mr Lopez:


>
Your calculation is actually wrong. If you bought a £40k BTL in 1995 on a 90% repayment mortgage (unlikely) at 7% this would have cost you £67k over 20 years. Your rental income net of agents fees would have been £45k. So it would have cost you £22k to made £36k (40-36), so your net return over 20 years is £14k, or about 6.5% a year.

You could have put the £4k in a high interest deposit or a government bond and got something similar.

In reply to MG:


they follow the market, when you hire a car or power tools, plant etc.. the hire cost doesn't just reflect the cost of the individual item, but demand for it, wear and tear, insurance, ease of fixing, the number in existance etc.. it's replacement cost is only one of many factors.

If the housing market crashed, might there be more tenants, more demand for an initial period?

In reply to summo:

Yes I know, it was a rhetorical question! Some are arguing rents should reflect price paid for a house, ignoring increases in value. If they really believe that, presumably they believe the oppoiste too

In reply to MonkeyPuzzle:

Well, you're talking about it being "controlled" and "rigged". An agent pointing out to clients that they could put up rents may be very annoying but it doesn't mean it's "rigged". Any landowner can go on the internet any day of the week to see if he is charging the market rate or not, and react if he wants to.

In reply to Postmanpat:

You keep responding to my issues with buying and renting in isolation, but my point is that together the combination is toxic.


A large lettings agent encouraging all their landlords to simultaneously up their prices is an attempt at price fixing.

In reply to Postmanpat:


Who is "we"? Fenton the economist or Steve the gardener?

If Steve the gardener buys a lawnmower for £100, and through mowing lawns makes £1000 out of that lawnmower, what's the profit he's making from that lawnmower?

Is the answer?

A) "Well, if that lawnmower is now worth £2000 he actualy makes a loss of £900 and should be charging £2000 to mow the lawns"

or

B) "He made £900 profit plus the value of the asset if he can liquidate it"

We are talking Steve the gardener here, or at least i'm talking about your Steve the gardeners, Joe Bloggs homewoners, and Little Jhonny tenants.

Sure, I can see how an investment savy person (or a lettings agent...) can play to the greed and say "dude, those lawnmowers are worth a fortune now, you could be making £3000 out of it easily". But that still doesn't change that Steve the Gardener was already making a sizeable profit, only that would he want to he could make an even bigger profit.


If i set up a pension to an estimated rate of, lets say, 3%, and then suddenly the bank starts paying out 30% because they found this amazing investment opportunitites in child sweat shops in Pakistan then yes, most likely i would close my account with them and look for a different provider even if they 'only' offer me 3%.

I guess if you compare apples wiith oranges you get pears for answers


Are we moving into talking about selling houses now? Well, if you are asking if i agree with people putting asking prices for homes 3 times what they paid for them adjusting for inflation then no, i don't think it's right.

In reply to neilh:




I think if you read back you'll find out in my post i intentionally mentioned several times "ignoring capital gains" or somesuch.

In reply to Postmanpat:


Who the hell is talking about a £40k house?

I give up...

In reply to Jim C:


You surprised me with this statement. Council Leaders are elected Councillor who receive allowances, rather than a salary. The leader of my own Council gets allowances of £27k, Richard Leese the leader of Manchester City Council and probably the most high profile Council leader in the country gets about twice that.

The Chief Executive of my Council earns about £150k and I would expect Council Chief Executive pay to range between £100k and £300k. I would be surprised if you could find a Council Chief Executive living in a Council house.

In reply to Mr Lopez:



We were. It doesn't matter the actual price. As I explained earlier but you have chosen to ignore, the arithmetic is the same whether it's a £4k house or a £4 million house. I have continued to use the same simple examplar for the sake of consistency.

I'm sure you understand that-so show me how your calculation is correct and mine is wrong.

In reply to Mr Lopez:
However there is a national shortage of mowers and they cost more, But what if he bought the lawnmower on credit over 10 years, he has fuel and transportation costs, spares and repairs, advertising, plus his time. Turnover and profit aren't the same thing. Or one Is vanity, the other sanity, as the saying goes.

Besides, you are comparing apples and oranges.

In reply to Mr Lopez:



Assuming he pays off the loan to buy the mortgage in year 1 then he is making just under 900% net (of interest and repayment costs.
In year 2, because he has paid off the loan he is making the full 1000%. Should he therefore lower his price because he no longer has any asset cost? Should he therefore lower his prices below the market rate?






You are confusing two issues (again). and have changed the subject by adding in a capital gain. He has made a capital gain of £900 and he can realise that.

However, in practical terms for Joe the gardener if he wants to remain has a gardener he will at some stage have to buy a new lawnmower so he needs to raise his rates to the market rate in order to enable him to pay for a new lawnmower when the time comes.
For Fenton his accountant this means that he has to revalue his lawnmower in order to truly reflect reflect Joe's business and the replacement cost.





Rolls eyes. It's nothing to do with the bank changing the rate it pays. Read the original question. If you put in £10,000 at 3% then in 20 years that £10,000 grand will be about £20,000. The 3% you are paid will therefore be 6% on your original investment.
Given you are receiving twice the going rate for a new investor you are "profiteering" (on your definition). Will you therefore ask the bank to pay you less?




So, just to be clear, if you owned a property and it's value rose 100% and inflation had been 75% you would sell it 25% below the price that your neighbour sold his?

In reply to Indy:

I'd be really interested in trying to understand why 11 people have disliked this post.

The current system is an obscenity....

As has already been mentioned the late Bob Crow who earned over £100,000/year was living in a taxpayer subsidised council house. The tenancy was for life not only that if the kids moved out he'd have been allowed to sub-let rooms at a full commercial rent and pocket every penny of it. Now that Bob has gone one of his kids can inherit that council home again for life..... it's how Bob got his hands on it i.e from his parents.

How can anyone justify this?

In reply to Big Ger:


Just got back to this thread. I see it's developed quite a momentum. I agree with your point here except perhaps the words "for most".

I think there are three underlying things that determine how wealthy you become in today's UK. There's the effort and hard work you are prepared to put in, both as an adult and while you are developing your talents at school and further/higher education. Then there's the innate talents and the ability to learn that you were born with. And finally the privileges that derive largely from your parents' own wealth and position in society.

It could be argued that society should be structured so that only the first of these should determine the outcome, but of course that isn't the case. I have to admit that the second and third have both played a part in my own life.

Martin

In reply to pec:

>Appalling? Seriously? A graph which shows the UK population growth since 2006 with the actual numbers written above it with no mention of immigrants anywhere, just a simple graphic representation and you call that appalling? You really need to get a sense of perspective.

Just back to this after a day gainfully employed.

Any graph that depicts an increase with a y axis that doesn't start at zero is potentially misleading as to the steepness of the increase. Whether or not a particular reader is misled depends on how savvy they are about graphs. Not knowing which publication this particular graph was in I can't of course tell what proportion of the readership was likely to be misled.

A long time ago I used to teach O Level and CSE maths (so it was a very long time ago!). I would ask students to bring in graphs from newspapers and the like and we would discuss how they were presented and why. This one would have scored low for accuracy of representation but high on exaggerating a message. As of course would many, as you point out.

>The fact that you and others would rather pick fault with a graph than address the issue of how housing costs are a function of population growth simply confirms my point about ignoring the elephant in the room.

There is no necessary correlation between housing costs and population growth. It only arises if we fail to build enough new homes to accommodate the new members of the population. Which of course we have signally failed to do.

Martin

In reply to Sir Chasm:
. It's quite simple and I'm surprised you're struggling, council housing is limited and should be for those that need it.

So why was this limited resource allowed to be sold off to people who HAD the money to buy them?

( not struggling with the concept of subsidised homes only being available for rent by people on low salaries. I'm just examining if people who already had a council house before they earned a large salary, should be allowed to keep them, or be forced to give them up?

Or should we legislate(as the the German's have done ) to stop people a good salary from renting?
Although I have not ,as yet ,found out what that salary level is in Germany )

Nothing against ordinary people who work from the council, my wife worked for the council, one of my two future son-in-laws , and one of my daughters currently work for the council.

In reply to Martin Hore:

There is not a correlation but there is a pretty obvious relationship. All other things being equal (credit availability, household formation rates, income etc) then increasing population will increase demand for housing so it will increase costs. Thus population growth is a key factor in analysing the costs of housing.

This can be offset by increasing the number of homes but that in itself will have all sorts of knock implications for the environment,infrastructure etc etc.

In reply to Mr

Then you are back to the 3-5% yield / return argument if you ignore capital.

In reply to The New NickB:



You are quite right, just a incorrect use of the title on my behalf.

I too would be surprised if someone on £150,000 was renting a council house( whether they work for the council or not. )
That, is not really the point , people wanted Crowe to give up his council house, I suspect that that was based on personal dislike or political bias, rather than just his level of salary.

I say to limit the access to subsidised accommodation is fine , but it has to apply across the board , and it has to be done fairly, and probably a salary upper limit set to qualify you to be eligible to rent local authority housing.

And then you need to address the more difficult issue of, if your low salary rises above a certain level, must those incumbent tenants then give up their local authority home? The suggestion was that limit should be set at £145,000, and I simply pointed out that , that salary would qualify people- like Council leaders- ( or as you pointed out, more correctly ) some Council Chief Executives, to have subsidised housing ( should they wish to have it) .

In reply to Martin Hore:


Yes, its potentially misleading, though the fact that it has the actual numbers written above the bars means only an illiterate fool would be misled for more than a few seconds. But "potentially a bit misleading" is a world apart from "apalling".


Obviously I understand this, I used to be a science teacher and we drew a lot of graphs. However as I said, its very hard to find a graph that does start at zero, but with the numbers written above it this one was one of the less misleading examples.
I tend to assume that the average poster on UKC discussions such as these has the intellectual capacity to deal with these things, I wasn't trying to pull the wool over anybody's eyes but population growth of half a million per year over nearly a decade is not insignificant, indeed its historically unprecedented.


Well there's not necessarily a correlation, but only if we build houses fast enough. Now, as you point out, we haven't so there very much is a correlation and one which everybody seemed to be ignoring (and after a short flurry of posts are continuing to ignore). Meanwhile we have people making wild claims about evil profiteering landlords and suchlike whilst the biggest driver of prices is ignored.
Now whether we can actually build enough houses is, as I alluded to above, a thread in its own right.

In reply to Mr Lopez:


So any house that's has gaps in the tenancy is due to the rent level? You REALLY haven't a clue about the rental market have you?

The house has had tenants in it for over ten years, so much for the rent being, and I quote; "not affordable by anyone's definition".



Oh, so I should charge more than just the mortgage rate, insurance, letting agents fees, coupled with inflation, then? HOW MUCH?

Maybe you should think before making such banal accusation as; "So not affordable by anyone's definition, and you have raised it steadily year on year many times above inflation and increase in wages with no relation to costs to you, for no other reason than "because i can" or "because everyone is doing it". That is an exorbitant increase."

In reply to Martin Hore:



Agreed again, it's getting a habit.

In reply to Jim C:


Well if was going to be done it was silly that the councils couldn't use the receipts to replace properties they sold. But the fact remains that there now isn't sufficient social housing and they should go to the people who need them.


I actually suggested that people could show a social conscience and decide that if they earn a very good wage (£145,000 for instance) they could let the council house go to someone who needed it.


How about a sliding scale? The more you earn the more you pay for your council house, until you get to, say, £50,000 (do try not to get fixated on that figure), at which point you're paying a commercial rent.


That's fascinating, but you brought the council into it.

In reply to Sir Chasm:

It was a conversation about renting Council houses, to a well paid man employed as union leader.
I then made the crazy off the wall digression away to talking about renting Council houses to well paid council employees .

I can't imagine why I would suddenly decide to bring the council into it.

In reply to Sir Chasm


If you're going to rely on individuals' 'social conscience' to sort out things like this, then why bother with government-provided social housing?