UKC

Are we heading towards neo-feudalism?

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 Alpenglow 11 Jun 2021

Blackrock is buying up family homes whilst paying 20-50% over market value, driving the price up for ordinary home-buyers

https://www.wsj.com/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801

Rumours are that Amazon is looking to get a foothold in the rental market - it soon could be your landlord.

 wintertree 11 Jun 2021
In reply to Alpenglow:

The new business model: “Life as a service”.

I don’t like it. 

 V1k 11 Jun 2021
In reply to Alpenglow:

I hope the legislature catches up with this before it's too late...

Shelter (homes), food, drinking water, air: basic things we need for living, should never be in the hand of greedy investors.

 65 11 Jun 2021
In reply to V1k:

> I hope the legislature catches up with this before it's too late...

I'm not optimistic.

> Shelter (homes), food, drinking water, air: basic things we need for living, should never be in the hand of greedy investors.

That's guaranteed to trigger howls of protest and accusations of being a socialist.

 geckoboy 12 Jun 2021
In reply to V1k:

> I hope the legislature catches up with this before it's too late...

It already is too late, it's happening. More and more property is now in the hands of investors while fewer and fewer own the homes they live in.

 mrphilipoldham 12 Jun 2021
In reply to Alpenglow:

‘You will own nothing and be happy’

 jimtitt 12 Jun 2021
In reply to geckoboy:

Owner-occupation levels are only correcting after a blip that has occured in my lifetime and artificially driven by mainly Conservative government policies. Historically we know it wasn't sustainable.

 redjerry 12 Jun 2021
In reply to Alpenglow:

Yes, it's been clear that something new has been going on in the housing market worldwide for a long time now, since not long after the 2008 crash probably. House prices have far outstripped the metrics that had previously been used to determine market value. 
The big investor/houseowner model has probably created a pretty colossal asset bubble in this space, but it strikes me that it's going to be a lot more resilient than the bubble that caused the 2008 crash. Seems like it would take another 2008-style financial meltdown to force such deep pockets to sell into a dropping market. Even then they can (and do I'm sure) expect to be bailed out from potential loses.
All in all, not a great picture for a younger generation of people aspiring to own their own home.

 David Riley 12 Jun 2021

But it's all down to population ever increasing.

 Cobra_Head 12 Jun 2021
In reply to David Riley:

> But it's all down to population ever increasing.


Of course it isn't, it's entirely feasible to have housing in the hands of individuals, rather than large companies and have a large population.

 Wainers44 12 Jun 2021
In reply to geckoboy:

> It already is too late, it's happening. More and more property is now in the hands of investors while fewer and fewer own the homes they live in.

Interesting to consider this in the context of the thread about no inheritance being permitted,  ie that death duty "tax" is 100%.

Logic says that the British desire for home ownership would change, rapidly,  as the trick will be renting the best you can as the end game is handing it back.

UK property market is pretty bust all in all. However bad it seemed when we were 25ish and looking to buy something,  now it's downright impossible for many.

That said, if the culture suddenly flipped to renting,  who would buy up the property? Big companies and the mega rich of course, neither of whom would be doing it for the greater good and altruistic reasons. 

 Offwidth 13 Jun 2021
In reply to Wainers44:

Exploitation didn't stop Rachman claiming altruism.

https://en.wikipedia.org/wiki/Peter_Rachman

One of the more affordable types of ownership, leasehold flats, has of course turned into a debt trap, due to freehold owners cutting corners on H&S in high rise buildings. A situation that has spiralled out of control following the Grenfell cladding disaster. Of course our government still has fingers firmly in ears with respect to fair distribution of the costs of rectifying the wider safety issues that occurred due to lax regulation.

https://en.wikipedia.org/wiki/United_Kingdom_cladding_crisis

In reply to Wainers44:

> Logic says that the British desire for home ownership would change, rapidly,  as the trick will be renting the best you can as the end game is handing it back.

 It's unlikely you can rent for 50 or 60 years and save money compared to a 25 year mortgage. Even when you factor in maintenence etc. Otherwise landlords wouldn't be making any money and the sector would have crashed long ago. 

The uk problem is a lack of construction, combined with unrealistic aspirations (the holy grail of a 3 or 4 bed brick detached house). 

Go to Europe and you'll find fantastic apartment or flat complexes, surrounded by green spaces, parks,  cycle paths, lakes. They have bike and buggy storage in basements, sauna room, laundry room, some have a spare apartment that all the residents can rent for a week or two if they have extra guests visiting. Fibre, communal heating etc.  are a given. Whilst it might sound futuristic, many of these were built 50 years ago and only the fibre is a retro fit. 

Uk planning regulations have been letting the population down in all respects for decades. 

Post edited at 08:33
 SFM 13 Jun 2021
In reply to summo:

Thinking specifically about Germany- there is strong rent control on social grounds and, unless it’s changed, taxation policies towards ownership are less favourable than here. From recent conversations with friends moving to Southern Europe things appear to be more akin to here. Am sure there is wide disparity across Europe though and driven largely by National and local government policies. 
 
The Barbican is the closest thing I can think of in the U.K. that you are describing. Am sure there are other examples outside of London though. 

 

 Offwidth 13 Jun 2021
In reply to summo:

It's almost like there are no slum areas in your imagined Europe. Plenty of EU countries have let their people down.

 VictorM 13 Jun 2021
In reply to summo:

> Go to Europe and you'll find fantastic apartment or flat complexes, surrounded by green spaces, parks,  cycle paths, lakes. They have bike and buggy storage in basements, sauna room, laundry room, some have a spare apartment that all the residents can rent for a week or two if they have extra guests visiting. Fibre, communal heating etc.  are a given. Whilst it might sound futuristic, many of these were built 50 years ago and only the fibre is a retro fit. 

Not everywhere though. The Dutch housing market suffers from a lot of the same problems. It's a perfect storm really.

-Low to negative interest rate

-Investment and accumulated capital value through the roof looking for a sure bet

-Sparse space for housing

-Little to no government planning and regulation as to building, valuing and pricing

-The few government plans to intervene have "unforeseen" negative aftereffects 

It's come to the point that a lot of municipalities are discussing 'habitation obligation' (if that's a good translation), which would oblige home buyers to live in their purchase for a minimum of three years before they are allowed to rent/re-sell. 

Or something else: home sellers (well, at least some of them) are now saying they don't want investors to buy their properties and are opting to sell to young families, even if they are not the highest bidder. 

None of this is a proper solution though, with capital flooding the market, low to nonexistent capital (gains) tax and negative interest rates something like this will always happen, whether it's with houses or something else.

A large part of my generation (currently 25-35) is renting private property at exorbitant prices because they cannot obtain a mortgage for similar property and even if they can they will loose out to investors who don't even bat an eyelash while they overbid by 100k. 

Post edited at 09:19
In reply to SFM:

The uk has an ownership culture, everyone wants to own something marginal passable, instead of share something far better amongst all the residents of a complex, they'll play with their inflatable jacuzzi on a few metres of decking, whilst many towns across Europe have very cheap state run heated open air pool complexes etc... 

 jimtitt 13 Jun 2021
In reply to SFM:

> Thinking specifically about Germany- there is strong rent control on social grounds and, unless it’s changed, taxation policies towards ownership are less favourable than here.

>  

You mean feeble rent control in some places that has had the curious effect that rents have increased faster in those areas than outside.

In reply to jimtitt:

But who could have predicted that!?

 David Riley 13 Jun 2021
In reply to Alpenglow:

It might seem as though legally forcing rents to be low and increasing costs for landlords would kill the demand for houses and prices would fall, so everyone could afford them.
But that's not the case.  Prices are high because there's more people than houses.  It's getting worse, so prices will go up and buying houses makes money.  Any reduction of average rents will decrease rental accomodation much more than it increases homes to buy.  The ratio of people to homes will increase further, causing prices to go up again.

 jimtitt 13 Jun 2021
In reply to Dr.S at work:

> But who could have predicted that!?

Any economist that involved themselves in long-term property investment, the immediate consequence of limiting rent rises was that existing stock was modernised which meant they were no longer held to the previous rent level. Even raising the bar (the modernisation cost must now be 45% of the equivelant new-build) achieved nothing, the stock value has immediately increased and the long-term benefits clear. Property companies as with many other businesses work both on short-term and long term investment, the popular UKC concept of businesses just optimising for immediate shareholder return is far from reality.

 Offwidth 13 Jun 2021
In reply to David Riley:

Prices are high in the UK because the supply doesn't meet the demand. However much of that demand is controlled artificially.... I've already discussed the scandal in high rise flat safety that adds extra demand elsewhere but also.....developers are sitting on huge amounts of land to keep new sale prices high..... people can afford to live in houses way too big for them as property taxes are a bit too low...... empty property is too hard to recycle into the system..... taxation and regulation on second homes and Air BnB is below where it should be.... government gave an unnecessary break on stamp duty, further benefitting the haves over the have nots.

In reply to Offwidth:

> It's almost like there are no slum areas in your imagined Europe. Plenty of EU countries have let their people down.

Of course, no where is perfect. But no one will look at the uk model and aspire to it. Oh let's build on every scrap of green in every town, leave no space for parks, garden, footpaths, cycle lane..  don't consider parking. Let's keep building out of brick it was OK in victorian times, minimum insulation, rooms so small they are barely liveable, let's measure a wheelie bin and use as a measure to separate detached houses. Best build as far from schools, work places and services as possible.... there's not many or any pluses to uk planning I can think of.  

 ianstevens 09:01 Mon
In reply to summo:

> The uk has an ownership culture, everyone wants to own something marginal passable, instead of share something far better amongst all the residents of a complex, they'll play with their inflatable jacuzzi on a few metres of decking, whilst many towns across Europe have very cheap state run heated open air pool complexes etc... 

Couple of issues here: the UK hasn’t got state run anything, just pseudo-state run privatised barely functional facilities. Anything communal tends to be abused by the minority, ruining it for everyone (see litter and dog shit everywhere for example). There is a lack of communal mentality in the UK, partly thanks the Thatcherism and the ongoing narrative that socialism is bad.

Secondly is that as a tennant you have a lack of control of your living space, and lack of security. I rent a house, which is quite nice all in - I’d happily live in it for a long time. However there are a few modifications I’d make, some minor - for example I would quite like to screw a hangboard into the wall. But I can’t, because landlord says no. I’d quite like to have a veg patch - can’t, because landlord says no. And so on. This is despite either offering an increase in liveability (I’d guess a veg patch would appeal to a future tennant) or offering to “put right” any changes that don’t suit the general market (such as hangboard holes). On top of all of this, I could make these modifications and have my landlord decide to sell up at any point - effectively wasting my time, effort and money as I’d need to move and do it all again. Hence the desire to own. This could of course be resolved with better legislation - but having next to no power to change the latter, the thought of owning is far more appealing.

 neilh 09:06 Mon
In reply to summo:

Yep 50 years ago.  Are there any more recent examples????

 neilh 09:08 Mon
In reply to jimtitt:

I have rad that there are real issues in Berlin etc which shows rent control does not work.   Is that right?

In reply to ianstevens:

Thatcher left office 31 years ago, can't blame her for everything and anything. Life in the 70s before her wasn't exactly going very well for the uk either.

Tenancies; whilst in your head it's just two holes and you might do a decent job. Some tenants DIY ambitions might exceed their ability and before you know it there'll be holes everywhere, or through an electric cable etc. So can I understand the need for caution. 

A veg plot is just pettiness, if they weren't happy at the end of the tenancy, just grass seed it back over. 

 ianstevens 09:19 Mon
In reply to summo:

> Thatcher left office 31 years ago, can't blame her for everything and anything. Life in the 70s before her wasn't exactly going very well for the uk either.

Im not blaming her ideology entirely, my perception (note I was alive for just under 2 months of her leadership) from second hand sources is that the period she was PM aligned with a societal switch to a less communal mentality.

> Tenancies; whilst in your head it's just two holes and you might do a decent job. Some tenants DIY ambitions might exceed their ability and before you know it there'll be holes everywhere, or through an electric cable etc. So can I understand the need for caution. 

My landlord is a builder. I offered to pay him to do it, at both ends.

> A veg plot is just pettiness, if they weren't happy at the end of the tenancy, just grass seed it back over. 

I agree, and that’s my point. Tenancies do not give tenants control over such things - hence the desire to own. I’d happily rent for life if I could find a landlord that would let me modify the house in such ways to suit my wants.

In reply to neilh:

> Yep 50 years ago.  Are there any more recent examples????

Alt-Erlaa, Vienna? Granted it's an extreme example, but there are masses of normal apartments, that are arguably far more liveable than the average uk new build 3 bed semi. 

 ianstevens 09:30 Mon
In reply to neilh:

> I have rad that there are real issues in Berlin etc which shows rent control does not work.   Is that right?

Pretty sure 99% of these claims are from landlords.

In reply to ianstevens:

> Im not blaming her ideology entirely, my perception (note I was alive for just under 2 months of her leadership) from second hand sources is that the period she was PM aligned with a societal switch to a less communal mentality.

You could argue that because parties of both colours pretty much shat on the uk in the 70s (part of my school years), that folk lost faith in the state, politicians, unions, government... and decide to control as much as they could themselves. 

> My landlord is a builder. I offered to pay him to do it, at both ends.

Sounds a jobs worth.

Post edited at 09:34
 jimtitt 10:30 Mon
In reply to ianstevens:

When you know nothing about the subject why do you comment?

In reply to summo:

> Thatcher left office 31 years ago, can't blame her for everything and anything. Life in the 70s before her wasn't exactly going very well for the uk either.

Fascinating to hear you talking 'knowledgeably' about life in the 70s, when i see from your profile that you are 38 years old.

 jimtitt 10:40 Mon
In reply to neilh:

> I have rad that there are real issues in Berlin etc which shows rent control does not work.   Is that right?

There are two rules, the first is the rent cap which is a German law which allows local authorities to restrict rent rises to 10% of the local average. This is applied in some parts of Germany and had been upheld by the constitutional court.

Berlin is run by a bunch of loonies and they brought in a state law (it's one of the länder) which prevents any rent rise and can force rent reduction to the area average. This is considered to be unconstitutional as only the federal government may interfere in trade and commerce. This will take years or decades to be finally decided by the courts so in the meantime no-one knows what to do. The Berlin Senate should have stuck to their airport, at least that was clear from the start it was going to be a complete disaster.

In reply to Gordon Stainforth:

> Fascinating to hear you talking 'knowledgeably' about life in the 70s, when i see from your profile that you are 38 years old.

I've not changed the age on my profile for over 12 years, why would anyone amend annually, it's hardly relevant? So to save your maths, I did primary/junior school in the 70s, a $hitty comp in Blairs constituency and a college in Sunderland in the 80s. 

In reply to Alpenglow:

The problem is that since the 2008 crash general investment performance has been relatively poor and deemed higher risk than it used to be. Thus lots of people moved their investment into BTL for perceived lower risk and perceived better returns.  There are loads of babyboomers saying 'this flat is my pension, I don't want my money in a pension that can get raided' to their mates these days even if it's untrue. Because they invariably have a big pot of cash to buy with and consequently have a cheap low loan-to-value mortgage rate, their affordability is higher than your average person wanting to live in such a property. Thus they've driven the market, and in certain places (like where I live) they've created a 'rental trap' - people renting can't afford to save up a deposit due to high rents. High rents & zero capital gains tax make for attractive investment vehicles (4-7% yield), meaning more people piling into BTL, thus reducing the stock available to buy, thus increasing purchase prices, thus increasing deposit requirements, making it more unaffordable to renters, who are forced to pay higher rents, making BTL returns higher......

Add to that the ability for anyone anywhere in the world being able to buy either personally or through property investment funds and you have massive amounts of wealth from overseas piling into the market.  People in town X aren't just competing with other people wanting to live in town X, they're competing with babyboomers from town X and the surrounding villages and millionaire investors from all over the world.

Post edited at 11:30
 Offwidth 11:35 Mon
In reply to summo:

You must live in a parallel universe. The loss of UK urban green spaces in recent decades, aside from overgrown  brownfield sites, seems mainly for infrastructure (except for the political encouraged sale of school playing grounds for housing). The main problem I see is huge growth out into countryside on the edges of urban areas and villages, despite plenty of more suitable land owned by developers that sits unused. A good number of fields I played in as a kid are now housing estates or warehousing convenient for the nearly motorway junction.

Post edited at 11:37
 ianstevens 17:43 Mon
In reply to jimtitt:

I’m a renter, commenting on my personal experience of renting and why that means I’d rather buy a house if possible. With some perceptions (correct or otherwise) on the British psyche which contribute to why I think my renting experience is the way it is. 
 

Unless you mean my landlord comment, which is just a common millennial joke - that anything pairing landlords as struggling or in a good light was probably written by a landlord. No harm meant by it.

 ianstevens 17:45 Mon
In reply to jimtitt:

Sounds to me like renters get predictable rent for a while, without landlords putting it up ridiculous amounts on a whim (as per the UK). Kind of like, I dunno, a mortgage generally is - relatively stable.

 jimtitt 18:19 Mon
In reply to ianstevens:

So what? The question was why rent control in Berlin is a problem and as I've explained it's a constitutional matter and nothing to do with your renting experiences.

 Xharlie 10:13 Wed
In reply to ianstevens:

> Secondly is that as a tennant you have a lack of control of your living space, and lack of security. [...]  have my landlord decide to sell up at any point - effectively wasting my time, effort and money as I’d need to move and do it all again. Hence the desire to own. This could of course be resolved with better legislation - but having next to no power to change the latter, the thought of owning is far more appealing.

Since Europe, and Germany, have been brought into this discussion, and considering your comment, I must point out from first-hand experience that, here in Germany, the rental scenario *is* indeed a lot more clement but it still isn't perfect. Specifically, your fear -- i.e. that your landlord sells up under you -- is actually exactly what happened to us.

In Germany, a lot of your security comes from the fact that your rental agreement has no termination date or period and your landlord is not allowed to evict you barring either a court's support -- for which you really would be required to be an exceptionally destructive tenant -- or a decision by the landlord to take personal residential occupancy of the property, requiring a long notice period. However, they still are allowed to sell up under you.

We were living in Nuremburg, leasing from a landlord with whom we were quite compatible and planning to stay for several more years but he sold up and the new landlord was a bastard and, worse, brought in an estate agent who was an estate agent.

When we took occupancy, we fixed up a bunch of stuff in the flat, plastering and painting walls, fixing holes, removing dead telephone wires and the like, and got a lot of lee-way from the landlord because he knew that we took the property in less than perfect conditions. The new landlord decided he wanted to move in to the property, personally, and told us to get out (which he is allowed to do, under law) and the new estate agent decided to turn vicious. End result: we were forced out and we had to paint, again, sacrifice some of our deposit.

Nothing we could do. Technically, we were at fault not because we had destroyed the place (we had not. In fact, we handed it over in better condition than we took it!) but because we stupidly decided to play fairly and have a little give-and-take with the original landlord who was also a nice guy. Lesson learned: the only way to win is to be a complete arsehole -- i.e. never play nice.

We've now bought an ancient place in Allgäu, near the Alps. Many things are sub-optimal, here, but it is ours and nobody can come and tell us that we can't plant veggies, drill holes, modify the place to our liking. We ARE now free.

Furthermore, any time or money spent on the place ultimately makes it better and, hopefully, more appealing should we sell up and move in the future. When and if we do, WE can choose the agent to work with or even sell without one, which would be my choice. We can also choose the timing of that move, without pressure of a deadline to get out based on someone else's life choices.

Then there are cost considerations. The cost of owning a mortgaged house is not the monthly mortgage payment. Mortgage payments are relevant to cash-flow, alone. The cost is the monthly accrued interest, minus asset appreciation, and may very well be negative in absolute terms! (Note that I do not consider property market inflation in this argument because I wish to calculate an effective cost one might compare to that of a tenant paying rent. The tenant pays rent for nothing -- no asset -- while inflation of the property market progresses. A home owner with a mortgage covers the loan interest and is still entitled to earn capital gains on their asset.)

The solution, as I see it, is to ban private landlords. Properties which are let to tenants should be owned by associations which are judicial entities and not natural persons and, logically, can therefore not decide to take residential occupation of their properties. Then, with unbounded, German-style leases and the also-German-style rules that you can make modifications (mostly) as long as you set them right again when you move out, rental could return to being viable. There is certainly a need for a rental system because, unlike me, some people do not wish to commit to a decade (minimum) in the same home.

The key would be to ensure that these associations aren't for-profit corporations. Regulation and oversight would be mandatory. This, of course, closes the circle, bringing us back to the start of this very thread.

 neilh 10:52 Wed
In reply to Xharlie:

Still does nothing to solve a house building shortage and that is the issue whichever way you spin it. U.K. is just not building enough houses to meet demand and is now only starting to catch up.

The downside of course is loads of new housing popping up everywhere. But that is the price if you need more houses. 

 wercat 11:05 Wed
In reply to Gordon Stainforth:

1970s

Fair Rent Tribunals

 jimtitt 12:03 Wed
In reply to Xharlie:

There are already millions of houses in housing associations and their equivalents in Germany.

If you prevent private renting then you remove most of the rentable housing stock and the capital to build more. You also remove the flexibility to move for limited periods of time.

Banning private rental is anyway unconstitutional and therefore not worth discussing.


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