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BorrowToLeech

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About BorrowToLeech

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  1. BorrowToLeech

    Does interest rate really matter?

    I just made the numbers up to illustrate the idea, they weren’t supposed to be taken literally.
  2. BorrowToLeech

    Does interest rate really matter?

    So exactly the same as a landlord then.
  3. BorrowToLeech

    Does interest rate really matter?

    Yes, I’d broadly agree with that. Costs of maybe 10% on average, more in some cases (much more in some), less in others. I think the difference of opinion is over what counts as negligible. To a leveraged landlord who is paying out most of the rent as a mortgage, this is not negligible at all. It’s significant, although maybe not as significant as voids. To me, trying to estimate the relationship between rent, interest and up-front cost, it’s negligible because the calculation itself isn’t precise enough to worry about those details. It remains a fact that the landlord business model isn’t to earn a profit on these services, and that very little of the rent goes towards paying for them, except in cases which we probably wouldn’t call landlords at all - hotels, for example.
  4. BorrowToLeech

    Does interest rate really matter?

    You certainly can get insurance for older boilers, it just probably isn’t worth it. Point is that £10/month is the market price of the service that’s being provided. It’s not about whether landlords can provide that service at this cost, because someone clearly can.
  5. BorrowToLeech

    Does interest rate really matter?

    Boiler insurance is less than £10 per month. Full landlord insurance is around £200/year. Landlords are people who charge for access to land, and gamble on the value of that access. Any service provided is just a front, and the costs involved are pretty close to negligible, in most cases.
  6. I have heard this claim made, yes, but it’s mostly not true. In fact, a similar thing has happened in the Conservative party, but it preceded Cameron. It’s just that Tories, who traditionally are less ideological anyway, do not like to acknowledge the issue. In their case, of course, it was Thatcher who was not really a conservative. This certainly was pointed out at the time, but memories have faded along with genuine conservatism and genuine socialism.
  7. https://www.theguardian.com/politics/2002/jun/10/labour.uk1 Plenty of labour members did notice. Much of Blair’s support was from floating voters rather than traditional Labour voters, certainly post 1997. Sure, if you’re only concern in politics is blind tribalism, then not voting Labour because of Blair might make some kind of sense, although tribal politics itself is irrational. But criticising people voting for Corbyn because of the failures of Blair means you simply do not understand modern British politics. If you hated Blair’s politics, and that’s your main motivation in voting, then Corbyn is really the only person to vote for, at the moment.
  8. BorrowToLeech

    Does interest rate really matter?

    Who sets the price in an auction? Is it just the winner? No, it’s all the other people who bid. More generally, it’s the people who would have bid, but didn’t because they knew from the start their bid wouldn’t be high enough. So you have to take into account all the people wanting to buy, and the amount they can pay. For housing, there’s a set of people always willing to buy at a certain price - landlords. For these people, the calculation is pretty simple - is this house a good investment at this price? You can estimate the landlords price. Imagine someone with 100k to spend. If rates are 1%, they can get 1k/year at low risk by lending it. So they need rents to be 1k/year to pay 100k assuming rents are risk free and ignoring capital gains. If rents are £500/year, or rates are 2%, they’ll only pay £50k. All in all, you’d expect the price to be the rent divided by the interest rate. Rents aren’t fixed, and house price inflation is a factor, so the calculation isn’t exact. The risk of voids will decrease prices, the promise of HPI might increase them. Also interest rates are different in reality from the BOE base rate, so a maybe more accurate calculation is the rent divided by a mortgage rate, or something like that. Another way of looking at it is that anyone can borrow money and buy a house as long as the interest payments are less than the rent. So rents should be roughly equal to mortgage payments. It’s essentially the same calculation. Whilst the numbers may not be so precise, this argument gives a rough idea of how prices work, and why rates do matter. Basically the rent on a house divided by the cost, the yield, should be the same as a similarly risky investment, interest rates - particularly mortgage rates - give the yield on a similar but slightly less risky investment.
  9. So less than inflation than. Or, in other words, rents are expected to fall in real terms.
  10. BorrowToLeech

    Design the EU

    The purpose of the EU was to embed neoliberalism in international treaties where it was protected from national governments.
  11. BorrowToLeech

    Land Registry Dec 2018 (Press Release)

    Index is due out in February I think, this is just a data release.
  12. Yes, let’s all pretend that renting produced goods and services, from the people who produce them, is similar to renting the ground we stand on from someone on a special government list.
  13. If demand rises for those other things, more will be produced. Competition reduces the impact, although not to zero. If rents rise, then this doesn’t happen. Anyone who wants to collect the increased rents has to buy existing land, they can’t add to the amount of land available, they can only compete with people looking for houses over the finite resource on which they sit. As for the difference between recurring rents and intermittent fees, I fully acknowledge that there may be some differences. This is exactly the sort of psychological effect economics tends to ignore. In this case, the level of money is just too small, and economics isn’t nearly precise enough to talk about the differences involved, in my opinion. So, in theory rents will rise due to this measure. In practice, I expect the true impact to be unobservable.
  14. BorrowToLeech

    Help to Buy an TOTAL SCANDAL

    Almost everyone could house themselves, they did it for thousands of years and that was before the invention of modern mass production and power tools. The problem is that people are prevented from doing so by people who govern the land - landowners. No-one should have the right to stop someone building a home, where there is space. Where there is conflict over the use of land the two conflicting parties need to come to an agreement between themselves that doesn’t involve threats of violence.
  15. Not really, whatever and however people are paying now, not paying fees means they can (and are willing to) give that money to the landlord. It’s part of what they currently pay for accommodation. That said, I don’t think any theory is really precise enough to make meaningful predictions about this, because other factors are likely to make more of a difference. I just think it’s important to be consistent. If rents are set by ability and willingness to pay, then this will increase rents. Tenants won’t be any worse off overall and I still think it’s a good policy.
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