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ScaredEitherWay

Mse: Btl Fixed Coming To An End....

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Is simply earning interest on money for doing nothing and taking (effectively) no risk 'better' or somehow more deserving than borrowing money from a bank, buying a house and letting it out in the hope of making some money for not doing much (other than finding tenants, doing repairs, taking the risk the price will go down, getting tenants that trash the place etc.)?

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Is simply earning interest on money for doing nothing and taking (effectively) no risk 'better' or somehow more deserving than borrowing money from a bank, buying a house and letting it out in the hope of making some money for not doing much (other than finding tenants, doing repairs, taking the risk the price will go down, getting tenants that trash the place etc.)?

In many of the above examples, you have conflated the risk to the enterprise with providing some service to somebody.

Presently, the act of buying a house to release to tenants creates a net disservice to others rather than a net service. The fact that it might be risky and expensive to create this dissservice is irrelevant. At least money in bank accounts doesn't inflict costs on others.

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In many of the above examples, you have conflated the risk to the enterprise with providing some service to somebody.

Presently, the act of buying a house to release to tenants creates a net disservice to others rather than a net service. The fact that it might be risky and expensive to create this dissservice is irrelevant. At least money in bank accounts doesn't inflict costs on others.

I am interested in how you work that out....

If your tenant has no wish to buy a property, and you buy one to rent to him, how are you not providing a service?

On a separate issue:

I would argue that depositing money in the bank in a fractional reserve system could potentially inflict costs on others (as well as giving benefits)

Edited by Hip to be bear

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I am interested in how you work that out....

If your tenant has no wish to buy a property, and you buy one to rent to him, how are you not providing a service?

You could ask yourself about the magnitude of the actual service provided, considering the house would still be there if you did not interveen a buy it. You aren't providing much and in the uk this tiny slice of service provided by landlords is easily overshadowed by the costs they inflict on tenants and society at large. The disservice is that by buying the property you make it incrementally more difficult for people to be anything but tenants and enter an economically near useless tenant-landlord relationship (a relationship which has the tenant paying way over the odds for very small amounts of service by the landlord (see above)). Even if a tenant presently wants to be a tenant the closing of his options reduces his bargaining position with you and falls on him as a cost.

On a separate issue:

I would argue that depositing money in the bank in a fractional reserve system could potentially inflict costs on others (as well as giving benefits)

Sure, but only potentially - say if a landlord uses deposited / loaned funds to buy real estate.

Edited by Stars

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You could ask yourself about the magnitude of the actual service provided, considering the house would still be there if you did not interveen a buy it. You aren't providing much and in the uk this tiny slice of service provided by landlords is easily overshadowed by the costs they inflict on tenants and society at large. The disservice is that by buying the property you make it incrementally more difficult for people to be anything but tenants and enter an economically near useless tenant-landlord relationship (a relationship which has the tenant paying way over the odds for very small amounts of service by the landlord (see above)). Even if a tenant presently wants to be a tenant the closing of his options reduces his bargaining position with you and falls on him as a cost.

Sure, but only potentially - say if a landlord uses deposited / loaned funds to buy real estate.

Much of the development in recent years has been city centre flats aimed at the rental market. In order for them to be built, there needed to be demand from landlords. In order for landlords to see the opportunity there needs to be a demand for rental properties.

So we had a need for new rental properties which was met by new development. Properties were purchased by private owners and rented to the waiting tenants, meeting there needs.

Arguably oversupply of these properties has led to falling rents and falling prices....further benefits to renters and purchasers. More needs being met and service provided.

I am currently renting and as I am setting up a new business, I have no access to mortgage funding at the moment.........as a result I rely heavily on the rental sector to provide me with the property that I want to rent. I am very grateful for the fantastic service provided to me. Without it I and my young family would be homeless. How do you classify that as a benefit?

With regard to the potential damage of depositing cash in the bank. If you deposit your £50k in the bank, the Bank can then lend many multiples of that in whichever direction they choose, for example mortgage lending. We all know what the agressive lending and excess liquidity has done to the housing market in the last 15 years, don't we?

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Is simply earning interest on money for doing nothing and taking (effectively) no risk 'better' or somehow more deserving than borrowing money from a bank, buying a house and letting it out in the hope of making some money for not doing much (other than finding tenants, doing repairs, taking the risk the price will go down, getting tenants that trash the place etc.)?

When I deposit money in the bank, I do so with the understanding that others wanting to do the same won't be unable to because of my good fortune to have opened an account first. Furthermore i'm not then asking those unable to open an account to subsidise my interest.

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Much of the development in recent years has been city centre flats aimed at the rental market. In order for them to be built, there needed to be demand from landlords. In order for landlords to see the opportunity there needs to be a demand for rental properties.

LOL. Many of the new urban slave pods built in areas where I lived were still empty a year or more after they were completed.

Most of the demand came from people intending to flip them to a greater fool, not from renters.

Edited by MarkG

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LOL. Many of the new urban slave pods built in areas where I lived were still empty a year or more after they were completed.

Most of the demand came from people intending to flip them to a greater fool, not from renters.

As a result of which prices have dropped as have rents, with fantastic benefit to tenants and society in general!!!!!

Hurray! :D

Which suggests that it is supply and demand that is far more important than whether 1 btler buys a property.....ssshhhhh....don't tell Stars. He might get upset!

I have waited too long for his composition ...Off to bed!

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Much of the development in recent years has been city centre flats aimed at the rental market. In order for them to be built, there needed to be demand from landlords. In order for landlords to see the opportunity there needs to be a demand for rental properties.

So we had a need for new rental properties which was met by new development. Properties were purchased by private owners and rented to the waiting tenants, meeting there needs.

Arguably oversupply of these properties has led to falling rents and falling prices....further benefits to renters and purchasers. More needs being met and service provided.

The extra demand created by landlording opportunity (because of the way the economics of land works) also fed into a heightened price of land and largely robbed us of the benefits provided by builders (again, taking more from us than provided). The houses were built, but because they sat on landlord heightened land value became a massive malinvestment and a hole in the books of builders and banks and the broader economy. Again, just as in the example of buying a house, it is a double egded sword; you may argue that landlords created an incentive to create housing, but this is arguable because they also made it more expensive to build a house (again, inflictng a cost). So we have two economic forces here working in opposition to each other, which was the winner is easily inferred by the observation that there was no supply lead drop in house prices (the extra supply came at a higher price to the producer and so couldn't have an effect on price), the fall came as a result of the broader economy faltering.

I am currently renting and as I am setting up a new business, I have no access to mortgage funding at the moment.........as a result I rely heavily on the rental sector to provide me with the property that I want to rent. I am very grateful for the fantastic service provided to me. Without it I and my young family would be homeless. How do you classify that as a benefit?

You miss my point - i don't argue that no service at all is provided, but rather that the service is acompanied by a disservice which is larger and effects the amount you pay (inflicts an extra cost on you). The actual service provided by a landlord is the colection and counting of rents and the maintainance of houses. Most of this work is minimum wage labour, that is, if a landlord were fully occupied in his endeavours 8 hours a day five days a week (which virtually none but the largest are) he would clear a minimum wage. This is what landlords would clear if they could charge market rates for nothing but what they supply. If you have been renting for more than ten years it is likely that you have more than paid in rent the material and labour cost of constructing your dwelling and maintaining it and still you have no part of it. The question becomes, after you have fully paid for the services you are recieving from people, what service is the extra payment you are making now a payment for? The answer is, it is not for any service at all. You are paying extra to a landlord, beyond what he provides you because of the disservice (cost) inflicted on you by his occupation of real estate.

With regard to the potential damage of depositing cash in the bank. If you deposit your £50k in the bank, the Bank can then lend many multiples of that in whichever direction they choose, for example mortgage lending. We all know what the agressive lending and excess liquidity has done to the housing market in the last 15 years, don't we?

Yes - buying real estate inflicts costs on people. The real estate market as it is presently arranged is abusive

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The extra demand created by landlording opportunity (because of the way the economics of land works) also fed into a heightened price of land and largely robbed us of the benefits provided by builders (again, taking more from us than provided). The houses were built, but because they sat on landlord heightened land value became a massive malinvestment and a hole in the books of builders and banks and the broader economy. Again, just as in the example of buying a house, it is a double egded sword; you may argue that landlords created an incentive to create housing, but this is arguable because they also made it more expensive to build a house (again, inflictng a cost). So we have two economic forces here working in opposition to each other, which was the winner is easily inferred by the observation that there was no supply lead drop in house prices (the extra supply came at a higher price to the producer and so couldn't have an effect on price), the fall came as a result of the broader economy faltering.

Rubbish...look at city centre flats....massive supply led drops

You miss my point - i don't argue that no service at all is provided, but rather that the service is acompanied by a disservice which is larger and effects the amount you pay (inflicts an extra cost on you). The actual service provided by a landlord is the colection and counting of rents and the maintainance of houses. Most of this work is minimum wage labour, that is, if a landlord were fully occupied in his endeavours 8 hours a day five days a week (which virtually none but the largest are) he would clear a minimum wage. This is what landlords would clear if they could charge market rates for nothing but what they supply. If you have been renting for more than ten years it is likely that you have more than paid in rent the material and labour cost of constructing your dwelling and maintaining it and still you have no part of it. The question becomes, after you have fully paid for the services you are recieving from people, what service is the extra payment you are making now a payment for? The answer is, it is not for any service at all. You are paying extra to a landlord, beyond what he provides you because of the disservice (cost) inflicted on you by his occupation of real estate.

Sure after 10 years renting, you have paid enough to cover the cost of building the house, but not of buy in the land, the maintenance by the landlord, the quiet enjoyment of the garden etc, so your argument is flawed. After 10 years you own nothing because you decided to enter that form of contract. You are also paying for the other costs that he has incurred (finance costs etc) and a profit margin for him (otherwise why would he do it?) You miss my point (or choose to ignore it) he is providing me a valuable service. Without it I would be homeless.

Yes - buying real estate inflicts costs on people. The real estate market as it is presently arranged is abusive

I couldn't agree more! All those poor house owners who are going to feel so abused when prices crash. They are suffering the high costs of mortgages for a soon to be worthless asset!!!!! ;)

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Hip to be bear wrote:

“Rubbish...look at city centre flats....massive supply led drops”

....as the economy folded and so it became clear there was no way the builders of these houses could recover the price they had paid for land. If the economy hadn’t folded the prices would not drop because the price any other builder would have to pay for land to compete with the flat would be just as high – forcing him to keep his prices high.

Hip to be bear wrote:

"Sure after 10 years renting, you have paid enough to cover the cost of building the house, but not of buy in the land, the maintenance by the landlord, the quiet enjoyment of the garden etc, so your argument is flawed. After 10 years you own nothing because you decided to enter that form of contract. You are also paying for the other costs that he has incurred (finance costs etc) and a profit margin for him (otherwise why would he do it?) You miss my point (or choose to ignore it) he is providing me a valuable service. Without it I would be homeless."

I suggested that you would have paid for the material and labour costs of construction and the maintainance, which i think is probably reasonable for ten years renting.

So lets look at what you claim i left out:

1) Land – this is not actually supplied by the landlord. In fact it isn't supplied by anyone except perhaps very arguably the uk government who ‘won’ it hundreds of years ago through subtle diplomacy and mass murder. If you are paying the landlord for this thing, then you are unarguably paying him for something he isn’t in reality supplying you.

2)The quiet enjoyment of the garden – Again, isn’t actually provided by the landlord, unless he physically stands guard and deters intruders for you. This is a security service provided by the uk government which you pay your landlord for....(you also pay taxes for this service, so you are paying twice for the same service)

As for being homeless, one can only marvell at how people managed to provide themselves with shelter before landlords were invented

Edited by Stars

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Hip to be bear wrote:

“Rubbish...look at city centre flats....massive supply led drops”

....as the economy folded and so it became clear there was no way the builders of these houses could recover the price they had paid for land. If the economy hadn’t folded the prices would not drop because the price any other builder would have to pay for land to compete with the flat would be just as high – forcing him to keep his prices high.

SO the flats don't sell and the builder goes bust and the flats are sold at market price. Their lenders suffer. I have no problem with that.

Hip to be bear wrote:

"Sure after 10 years renting, you have paid enough to cover the cost of building the house, but not of buy in the land, the maintenance by the landlord, the quiet enjoyment of the garden etc, so your argument is flawed. After 10 years you own nothing because you decided to enter that form of contract. You are also paying for the other costs that he has incurred (finance costs etc) and a profit margin for him (otherwise why would he do it?) You miss my point (or choose to ignore it) he is providing me a valuable service. Without it I would be homeless."

I suggested that you would have paid for the material and labour costs of construction and the maintainance, which i think is probably reasonable for ten years renting.

So lets look at what you claim i left out:

1) Land – this is not actually supplied by the landlord. In fact it isn't supplied by anyone except perhaps very arguably the uk government who ‘won’ it hundreds of years ago through subtle diplomacy and mass murder. If you are paying the landlord for this thing, then you are unarguably paying him for something he isn’t in reality supplying you.

Under our current system you are paying him for a leasehold interest for a fixed period. Under other arrangements he might be granting you a licence (eg University Hall of Residence). This gives you a security of tenure and a legal right to the use of the land under UK law. It has a value. You say that he isn't in reality supplying it to you. You may not like the system, but it is there. It exists and a freeholder can grant a lease to another. He may not be supplying you with the land itself, but he is providing you with secure tenure of and use of the land for a period of time. This has a massive benefit over for example a tenancy at will, where he can chuck you off at any time.

So it is land ownership that you have an issue with. Please explain your preferred alternative form of tenure / alternative to tenure. If you are going to criticise the current system, you need to have a reasoned alternative. Otherwise your criticisms are empty words.

2)The quiet enjoyment of the garden – Again, isn’t actually provided by the landlord, unless he physically stands guard and deters intruders for you. This is a security service provided by the uk government which you pay your landlord for....(you also pay taxes for this service, so you are paying twice for the same service)

By granting a leasehold interest the landlord transfers these rights to you, so that he does not have the right to come and have a party in your back garden. My point is that your leasehold interest in the property is about more than the cost of bricks and mortar and this renders your argument pointless and incomplete.

Take your argument to the extreme. say you rent 5 acres of land with a shed and a stables on it. Your argument is that once you have paid enough to cover the cost of the building of the shed and stables, then you are paying for no benefit....that is totally ridiculous. You are getting the use of the land to exercise and feed your horses, you have room for your chickens and pigs, you have a fantastic and productive veg garden etc etc.

The right to quiet enjoyment is conferred by the tenancy agreement and protected in law. Your security service argument is not worth answering.

As for being homeless, one can only marvell at how people managed to provide themselves with shelter before landlords were invented

tents? Caves? Maybe by building shelters on land to which they had no legally enforceable right? Fortunately we have moved to more secure forms of protection of peoples' legal rights since then. Fortunately there was probably less likelyhood of conflict due to a UK human population or a few hundred thousand rather than our current 65 million. Apologies for bringing practical realities into your blinkered, theoretical fantasy world.

Please if you have an alternative system to the current one, let us know.

It seems to me your main issue is with the price of land, which is effected by supply and demand and the availability of finance. Wouldn't the increase in supply of development land and the restriction of finance for mortgages (caps and multiples) solve most of the issues that you have?

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  • 246 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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