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koala_bear

Legal & General Plans To Become Large-Scale Landlord

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BBC article:

Legal & General plans to become large-scale landlord

Many young people cannot afford adequate housing The insurer Legal & General is looking to become a major landlord in the UK's residential housing market.

Nigel Wilson told the BBC that there is "intergenerational injustice" towards young people, who can't get jobs, have to pay for very expensive education and can't afford housing.

Legal & General plans to invest £15bn in housing, education, energy and transport over the next ten years.

The company has £433bn under management, mostly in pension funds.

Mr Wilson said that while house price rises may be welcome news in some quarters, for many young people they exacerbated their problems.

"Instead of applauding ourselves when house prices go up, we should try to develop a system where house prices don't go up for the next few years and we increase the supply - instead of 120,000 house a year, up to 250,000 a year, a sizeable portion of which should be rented." he said.

Such an increase would invariably mean building on green belt land, something Mr Wilson said should be part of the solution.

Planning difficulties He identified the current planning process as a stumbling block, but did acknowledge that some positive progress had been made to the system in recent years.

"Planning in the UK is probably as difficult as it gets anywhere in the world," he said.

Legal & General made its first direct investment in the housing sector back in March, when it bought 46.5% stake in the housebuilder Cala.

At the time, Legal & General said that the deal was "part of a strategy to target socially useful projects (including housing, education, transport and energy sectors) that deliver high rates of return and fit Legal & General's financial and strategic criteria."

However, while Cala was an investment in the build-to-sell market, Mr Wilson told the BBC that Legal & General was now looking to enter the build-to-rent sector.

"How big we can be, we don't know," he said.

"It depends on the planning environment here in the UK, but certainly it's our economic intention to have a much bigger role in the private rented accommodation market."

This has been talked about for while.

£15bn would probably allow them to built 100k homes at 10k homes a year. If some of the other insurers follow then this could seriously dent small scale BTL. Target rent = young professional and no benefits?

Edited by koala_bear

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But won't this just suck more of the economy into the hands of rentiers?

Peter.

It could cause rents to fall somewhat. I have no problem with renting and if it was cheaper and more secure, it would be a welcome change. Of course all this extra money flooding into the housing market could offer more support or boost the current prices.....

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aren't they just going to build identikit starter homes?

I do foresee developments that looks something like an open prison

hope to be wrong, but probably not

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aren't they just going to build identikit starter homes?

I do foresee developments that looks something like an open prison

hope to be wrong, but probably not

Depends on what the planners permit.

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It's an obvious problem with an obvious solution to a company with deep enough pockets interested in the business, build decent housing and let them to the priced out under favourable and humane terms. This type of housing could be like hotels, furnished, serviced, good quality, but priced reasonably. Treat tenants like customers, now there's a thought. Can you imagine, paying out hundreds of pounds per month and NOT being treated like cr4p in return? A new paradigm.

No job is for life anymore, what sense is there in buying and tying yourself to one spot? Flit about the house hotels , come and go as you please, and be treated like a human being. Unfortunately dragons, due to the bubble, I need investment of 10 million for a 10% equity stake.

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When supermarkets first became common in the UK, they were heralded as a positive evolution of the grocery industry.

As the years have went on and companies swallowed others, only a few big hitters remain.

They set the prices in order to attempt to exceed last year's gross profit each year.

Until people can't feed themselves, making those who can still afford surplus buy for others, in some kind of way.

;)

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I would support this on the presumption that I would hope that these institutions would behave better than the current generation of BTL spivs and chancers. They are far less likely to ever want/need to sell.

However I think the key to this must be that it should be used as a chance to bring in a new generation of rentals and we pursue the European model of longer term secure tennancies (sp?) and remove the 'get rich quick' aspect that is currently endemic in the property market in the UK.

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Hmm, Nigel Wilson. Any relation to Fergus? :P

Actually I'm all for professional landlord businesses as long as they invest in new homes rather than competing with first time buyers and buying up existing ones.

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Hmm, Nigel Wilson. Any relation to Fergus? :P

Actually I'm all for professional landlord businesses as long as they invest in new homes rather than competing with first time buyers and buying up existing ones.

Quite a bit of exposure for this sort of news- it's the sort of headline which might make a potential BTLer think twice before getting involved. Good.

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But won't this just suck more of the economy into the hands of rentiers?

Peter.

No because in an ideal balanced world renting and buying would off-set each other naturally........renting is not bad, it has been intentionally fixed to made to look like only fools rent, dead money etc only because owning using leveraged debt has in the past made far too much unearned unproductive money for people who have done little else but to borrow it.

Renting for very many people could be made to be a great way of living, if only TPTB put as much effort into that as they have into creating property bubbles to only save themselves and those whose businesses rely on new and continuing debt being created. ;)

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No because in an ideal balanced world renting and buying would off-set each other naturally........renting is not bad, it has been intentionally fixed to made to look like only fools rent, dead money etc only because owning using leveraged debt has in the past made far too much unearned unproductive money for people who have done little else but to borrow it.

Renting for very many people could be made to be a great way of living, if only TPTB put as much effort into that as they have into creating property bubbles to only save themselves and those whose businesses rely on new and continuing debt being created. ;)

Hmmm, doesn't your "in an ideal balanced world" qualification rather undermine your 'no'? What's the answer in a non-ideal, badly skewed to rentier world?

L&G are looking at this because they have to fund large pension obligations in a world of low interest rates and low growth. Inserting themselves into an essential, government-supported (via housing benefit and planning regulations) part of the economy will allow them to extract significant wealth. Admittedly they will at least be building, and so doing something productive, but it's still basically a rent-extraction process rather than a wealth generation process.

It would be far better if this was done by publically owned entities, since at least the nation as a whole would benefit, from the rents extracted,

Peter.

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Hmmm, doesn't your "in an ideal balanced world" qualification rather undermine your 'no'? What's the answer in a non-ideal, badly skewed to rentier world?

L&G are looking at this because they have to fund large pension obligations in a world of low interest rates and low growth. Inserting themselves into an essential, government-supported (via housing benefit and planning regulations) part of the economy will allow them to extract significant wealth. Admittedly they will at least be building, and so doing something productive, but it's still basically a rent-extraction process rather than a wealth generation process.

It would be far better if this was done by publically owned entities, since at least the nation as a whole would benefit, from the rents extracted,

Peter.

.....either would be fine......if the rents were fair and protected no over and above inflation rent increases (like train tickets), secure for both tenants and landlords that kept to the contract they both signed. ;)

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