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Bland Unsight

Thoughts On The End Of Buy To Let

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I think BTL is dreadful. I think the way that it allows mug investors to channel debt into the housing sector so that we can all pay more interest to the banks for the same crap houses is appalling. I think that if we really had politicians that gave a damn about people then the rights of the moneyed to speculate on houses would be better balanced against the need to provide affordable housing to working people so that they can set about building up some modest financial security. There are so many things that you could do - you could apply a LVT against what people owned with a tax free allowance that would take a family in a family house out of the tax. Markets are dependent on rules and the rules that we choose determine, to some extent, the markets we get. We have a market that encourages leveraged speculation in houses, so that is what we get.

That political position set out, I still think that it's worth thinking about how BTL actually works today. How nefarious is its influence? One of the things that I think is that regardless of what happened in the past, late-entrant BTL (i.e. post-2008) is just a mugging of mug investors by the financial sector, and the regulatory authorities are turning a blind eye to it, basically because they can. The political class always keep silent on the matter (largely because they are up to their necks in it). The press seem to favour ramping it (I'm looking at you Daily Telegraph), presumably because stories about weirdo self-made millionaires make better copy than a nuanced treatment of the redistributive effects of allowing leveraged speculation in residential homes.

I've been working on the assumption that in the South East, and I presume in London and elsewhere, the bottom end of the market is anchored to what a BTLer will pay. I am assuming that if you took out the BTLers you'd have fewer buyers chasing the properties and on the balance of probability, more discounting by sellers and thus lower prices. Most importantly prices would reflect what people with deposits saved from earnings could afford to pay on a repayment basis. BTL is the last bastion of interest-only mortgages for crap houses. Demonstrating that the a larger loan can be serviced with the same monthly payment on an interest only basis than a repayment basis is left as an exercise to the reader. The idea that you can pay a larger price with a larger loan is taken to be self-evident! :P

It seems to me that people who invest in property, regardless of whether or not they say they do it for the income, are wedded to the idea that house prices don't fall, or certainly not over a long enough time scale for it to matter to the would be 'investor'.

The thinking that is IMO usually implicit is that the mug investor's options are shares, cash or houses. The adventures of the stock market have convinced people that share prices can go down and stay down (take the UK banks for an example), the low returns on cash rule out that option leaving good old bricks and mortar.

I'm going to totally set aside the leverage effects on the size of gains/losses that result from movements in the asset price, which is of course key to BTL when it works for the BTLer, and is of course its Achillles heel, (quite a big heel IMO, especially presently - Achilles head and trunk? Achilles arm? We'll see), not because it's not crucial - it is - but just because I want to think about something else - what I want to consider is how the leverage affects the much ignored income-expense side of BTL

The mechanics of BTL depend on the ability of renters' earnings to cover the rent and the ability of the BTLer to pay the mortgage interest with that same rent. The leverage on BTL means that if mortgage interest rates tick up then incomes will have to tick up much more to make the rent affordable - for example if you're a BTLer with a £100k mortgage, a 0.5% hike on your interest rate is an extra £500 pa - i.e. about £40 pcm on the rent. However if your tenant's net income is £20k that same £500 is 2.5% of their net income. Essentially, I need a 2.5% pay rise to offset a 0.5% interest rate hike passed on to me by my landlord.

When the effect of rising interest rates on BTL is mooted the standard response you get from BTLers is the idea that they'll simply pass on the difference to the tenants. Doubtless in some cases this will happen. But I think I can sell the working assumption that market rents are not set by negotiations between existing landlords and tenants but by the prices advertised by letting agents.

Crucially, whilst BTL purchase prices are going to be set by the most leveraged BTLers, market clearing rents are going to be set by the least leveraged BTLers. If you have two identical empty properties, one highly leveraged and needing £600/month to pay the BTL mortgage and one only needing £450/pcm to pay the mortgage, which landlord will drop a £700 pcm rent first to avoid the property being empty?

I think that the mechanics of rising mortgage rates (and they are rising) might be much more problematic for the more leveraged BTLer than they perhaps anticipate. I'd argue that falling prices are not the only way that BTL can end badly. Anaemic earnings growth (check) and gently rising mortgage rates (check) might do the same job in terms of souring the investment. If that happens, some speculators will seek to quit whilst they are ahead and if that occurs in a market where prices are already weakening, that could be interesting.

One of the big things that is different between the fall out from the late 1980s bubble (tiddler though it indeed was compared to our present monster) was that the banks did repossess, releasing supply in to a falling market. We haven't yet had a whole class of market participants disposed by circumstance to play the same role as bank disposals of repossessed houses presumably played in the 1980s - I wonder if BTLers as a class of investors might get spooked by falling prices and a compression in the margin between the mortgage interest payments and the rents? There are lots and lots of BTL mortgages (about 15% of roughly 11 million CML mortgages), we don't need all of them to get spooked - even if only the weakest exit to stop their income/expense losses and a modest share of the rest exit to lock in their gains you could quickly run into tens of thousands of disposals. How is Fergus getting along with his disposal project by the way?

Edited by bland unsight

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The best thing the government can do to cut rents is to cut housing benefit. If housing benefit didn't exist then landlords would have no choice but to cut rents because their tenants wouldn't be able to afford it. All housing benefit does is inflate rents which in turn inflates house prices. Like all government interventions in the economy, the effect is the opposite of what was originally intended.

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I really want to reply but as first responder I don't want to ****** it up.

So it's a bump.

Edit: ******ing 'ell I can't even get that right.

Edited by 8 year itch

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BTL as an investment only works if the value of the house go up. The only other way to operate is to have a large portfolio to cover voids. The profit from rent minus interest costs and maintenance is minisicule. All of those not declaring to the taxman are idiots as the cost of hiring an accountant to declare the income from 1 or 2 properties would ensure you would pay either zero tax a near zero tax and no risk of the taxman fining you at a later date.

At current prices any correction will wipe out any investor, the only way I'd be in the letting game is if I inherited property as you don't have to cover the mortgage payments meaning you can stay competitive with rents and charge the market rate up and down.

If wages keep stagnating and the BoE increase the base rate it's going to cause carnage on the housing front and I would guess a large number of amateur landlords would be faced with the choice of selling up or covering the increase in mortgage costs themselves either by smaller profits or out of their own pockets. Plus you then have to hope you don't need to do any major property repairs.

There are too many people now "property" wealthy however a house is very illiquid and the yields aren't great from the rent, it's the increase in the properties value that have really driven this ponzi scheme.

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Trouble is, whilst we all know the government loves it for personal reasons, I honestly believe the authorities in the names of the BoE, FCA etc. have persuaded themselves it is much better for financial stability - because you then have stronger borrowers standing between the payer of the rent and the bank. It is therefore another layer or recourse. Of course, just as with making the rich richer thru loose monetary policy, the BoE et al are extremely reticent to make the distributional effects of their policies public.

And of course from a total financial system perspective you both end up with higher prices (as stronger borrowers can borrow and pay more for sh*tty little properties) and you end up with far higher overall payments that essentially have to be found by those who formerly have bought (both to pay from the landlord's cut and the fact the houses are now more expensive).

I wouldn't argue with any of that, but my argument is that what the Bank of England are getting in terms of financial stability because the financial institutions are lending to stronger borrowers (BTLers) may have consequences for the stability of house prices because those borrowers are more inclined to dump the asset and quit whilst they are ahead than owner-occupiers. What I'm speculating about is how the BTL sector will behave if the space between rents and mortgage payments gets ground down.

I think that there is the potential for us to see something new here. We've got about 10% of purchases as BTL, purchases made at peaky prices using what will be basically teaser rate mortgages, and those same cheap rates will not be available when the fixes end in due course. How are the income/expense numbers going to look at that point? The BTL sector didn't exist in the late 1980s. By the end of the pre-2008 boom it certainly did exist, but it was quite heterogeneous - some early entrants would be on very low-LTV with lots of bubble equity and would have been able to re-mortgage at comedy low rates. They would have been laughing all the way to the bank. Others would be sitting on precariously high-LTV or negative equity, and hence unable to re-mortgage. Not so much laughing from them, (but plenty of threads on property118 bemoaning their treatment at the hands of the UKAR employees trying to run down the Mortgage Express loan book).

What the post 2008 phase has given us is a big cohort of mug investors who are much more homogeneous. They will all have staked relatively large deposits of about 25% so they'll be a gap between when they start seeing falling house prices nibbling away at their equity and when all the equity is gone. How many will look to quit whilst they are behind on the capital appreciation game before it gets any worse? They will have initially financed at low rates and be refinancing at higher rates, and they will have told themselves that it's going to be their pension - i.e. they are in it for the income. How will they respond if all they get is chump change or losses on the income/expense side as a side salad to the capital depreciation?

I'm just figuring that nothing ever works out as planned (not that anyone is planning anything!). Mugging BTLers may look like good times for the Bank of England's regulatory and prudential functions and goons like the board at the Nationwide might like all the Mortgage Works fees, but what about unintended consequences? You invite all these speculators in, you end up with prices set by speculators, which are apt to go down sharply if sentiment changes. I'm just trying to make the case that BTL might in the right circumstances move prices down with the same potency that it has helped move them up.

There is a limit to the rents that people can pay - nobody is going to lend you five times your income so you can pay more rent than you can afford, and renters can go for HMO, lodging with friends or family. Will BTLers have the same flexibility trying to convince their friendly lender that they shouldn't really have to move from paying 2% to 4% on the mortgage?

Edited by bland unsight

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I wouldn't argue with any of that, but my argument is that what the Bank of England are getting in terms of financial stability because the financial institutions are lending to stronger borrowers (BTLers) may have consequences for the stability of house prices because those borrowers are more inclined to dump the asset and quit whilst they are ahead than owner-occupiers. What I'm speculating about is how the BTL sector will behave if the space between rents and mortgage payments gets ground down.

I think that there is the potential for us to see something new here. We've got about 10% of purchases as BTL, purchases made at peaky prices using what will be basically teaser rate mortgages, and those same cheap rates will not be available when the fixes end in due course. How are the income/expense numbers going to look at that point? The BTL sector didn't exist in the late 1980s. By the end of the pre-2008 boom it certainly did exist, but it was quite heterogeneous - some early entrants would be on very low-LTV with lots of bubble equity and would have been able to re-mortgage at comedy low rates. They would have been laughing all the way to the bank. Others would be sitting on precariously high-LTV or negative equity, and hence unable to re-mortgage. Not so much laughing from them, (but plenty of thread on property118 bemoaning their treatment at the hands of the UKAR employees trying to run down the Mortgage Express loan book).

What the post 2008 phase has given us is a big cohort of mug investors who are much more homogeneous. They will all have staked relatively large deposits of about 25% so they'll be a gap between when they start seeing falling house prices nibbling away at their equity and when all the equity is gone. How many will look to quit whilst they are behind on the capital appreciation game before it gets any worse? They will have initially financed at low rates and be refinancing at higher rates, and they will have told themselves that it's going to be their pension - i.e. they are in it for the income. How will they respond if all they get is chump change on losses on the income/expense side as a side salad to the capital depreciation?

I'm just figuring that nothing ever works out as planned (not that anyone is planning anything!). Mugging BTLers may look like good times for the Bank of England's regulatory and prudential functions and goons like the board at the Nationwide might like all the Mortgage Works fees, but what about unintended consequences? You invite all these speculators in, you end up with prices set by speculators, which are apt to go down sharply if sentiment changes. I'm just trying to make the case that BTL might in the right circumstances move prices down with the same potency that it has helped move them up.

There is a limit to the rents that people can pay - nobody is going to lend you five times your income so you can pay more rent than you can afford, and renters can go for HMO, lodging with friends or family. Will BTLers have the same flexibility trying to convince their friendly lender that they shouldn't really have to move from paying 2% to 4% on the mortgage?

I wouldn't argue with any of that, but my argument is that what the Bank of England are getting in terms of financial stability because the financial institutions are lending to stronger borrowers (BTLers) may have consequences for the stability of house prices because those borrowers are more inclined to dump the asset and quit whilst they are ahead than owner-occupiers. What I'm speculating about is how the BTL sector will behave if the space between rents and mortgage payments gets ground down.

I think that there is the potential for us to see something new here. We've got about 10% of purchases as BTL, purchases made at peaky prices using what will be basically teaser rate mortgages, and those same cheap rates will not be available when the fixes end in due course. How are the income/expense numbers going to look at that point? The BTL sector didn't exist in the late 1980s. By the end of the pre-2008 boom it certainly did exist, but it was quite heterogeneous - some early entrants would be on very low-LTV with lots of bubble equity and would have been able to re-mortgage at comedy low rates. They would have been laughing all the way to the bank. Others would be sitting on precariously high-LTV or negative equity, and hence unable to re-mortgage. Not so much laughing from them, (but plenty of thread on property118 bemoaning their treatment at the hands of the UKAR employees trying to run down the Mortgage Express loan book).

What the post 2008 phase has given us is a big cohort of mug investors who are much more homogeneous. They will all have staked relatively large deposits of about 25% so they'll be a gap between when they start seeing falling house prices nibbling away at their equity and when all the equity is gone. How many will look to quit whilst they are behind on the capital appreciation game before it gets any worse? They will have initially financed at low rates and be refinancing at higher rates, and they will have told themselves that it's going to be their pension - i.e. they are in it for the income. How will they respond if all they get is chump change on losses on the income/expense side as a side salad to the capital depreciation?

I'm just figuring that nothing ever works out as planned (not that anyone is planning anything!). Mugging BTLers may look like good times for the Bank of England's regulatory and prudential functions and goons like the board at the Nationwide might like all the Mortgage Works fees, but what about unintended consequences? You invite all these speculators in, you end up with prices set by speculators, which are apt to go down sharply if sentiment changes. I'm just trying to make the case that BTL might in the right circumstances move prices down with the same potency that it has helped move them up.

There is a limit to the rents that people can pay - nobody is going to lend you five times your income so you can pay more rent than you can afford, and renters can go for HMO, lodging with friends or family. Will BTLers have the same flexibility trying to convince their friendly lender that they shouldn't really have to move from paying 2% to 4% on the mortgage?

With a primary residence at risk if they don't keep up with payments.

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...

With a primary residence at risk if they don't keep up with payments.

Aping Samuel Johnson - losing your home, like the thought of being hanged in the morning, should succeed in concentrating the mind.

Edited by bland unsight

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...

How much do the Banks lose in this scenario? They lent 120K - repossessed house and now sell again at 50 - 60K - to leveraged buyers. It's all very well saying they can chase the repossessed for the balance of the mortgage but you can't get blood out of a stone and they might not succeed.

That's the beauty of the present BTL game for the banks. Say it is £120k and it halves. The £30k deposit knocks out half the shortfall. For the remaining £30k you offer them a personal loan, secured on their home, paid for using earnings or pension. If they have no pension, maybe some equity release. It's all fees and no risk. Of course all of this is irrelevant because house prices never go down, ;) . What the bubble gives, the bubble can take away.

Edited by bland unsight

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The best thing the government can do to cut rents is to cut housing benefit. If housing benefit didn't exist then landlords would have no choice but to cut rents because their tenants wouldn't be able to afford it. All housing benefit does is inflate rents which in turn inflates house prices. Like all government interventions in the economy, the effect is the opposite of what was originally intended.

Correct, apart from the last bit.

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IN 2006 most were bought on 5% down and 95% mortgage - so 30k bought a lot of deposits -- how could you lose with rampant HPI? Only it wasn't rampant and they came too late to the party.

The whole thing barely makes sense - surely if what they were buying was the kind of house which has a price that can go down as well as up it looks different from the outside to the kind of house which has a price that only ever goes up? Why didn't they know better than to buy a house like that? I thought these people were canny investors?

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They were sucked in by media hype. Some property porn writers thought that the sky was the limit. It wasn't just ordinary people who were sucked in - lawyers, accountants, surveyors surgeons. The list goes on and on. HPI was seen to have worked in the R.O.I -- just until it didn't but it was too late for the ones caught up in the frenzy. I witnessed the frenzy first hand and saw a bubble on a bubble that would soon pop. Many other long term posters on the NI forum did the same. But loads were caught out and are now paying the penalty.

Thank God that could never happen here.

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...but what about unintended consequences? You invite all these speculators in, you end up with prices set by speculators, which are apt to go down sharply if sentiment changes. I'm just trying to make the case that BTL might in the right circumstances move prices down with the same potency that it has helped move them up.

There are no unintended consequences. Only consequences that you don;t care about.

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There are no unintended consequences. Only consequences that you don;t care about.

If you want to go heavy on the nihilism then I'll call you out on this trite aphorism. If it is not possible to understand the system because of its inherent complexity then the very notion of consequences won't past muster. We were there, you did that, this happened next. In a sufficiently complex system assigning causes to outcomes is a storytelling activity and not a sustainable discovery of meaning. Of course in a universe like that the act of storytelling is every bit as potent as other forms of action, including making leveraged bets - or making a living offering advice on investments. As Homer Simpson put it, "it's just a bunch of stuff that happened". Try selling that as investment advice whilst in reality trading on the vicarious mistress of survivorship bias. Hugs.

Edited by bland unsight

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That's the beauty of the present BTL game for the banks. Say it is £120k and it halves. The £30k deposit knocks out half the shortfall. For the remaining £30k you offer them a personal loan, secured on their home, paid for using earnings or pension. If they have no pension, maybe some equity release. It's all fees and no risk. Of course all of this is irrelevant because house prices never go down, ;) . What the bubble gives, the bubble can take away.

And new mortages issued to new buyers on the crashed value houses at say 5% over 25 years are highly valueable for the banks/financial system as a whole. Suddenly got themselves solid value mortgage books.

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And new mortages issued to new buyers on the crashed value houses at say 5% over 25 years are highly valueable for the banks/financial system as a whole. Suddenly got themselves solid value mortgage books.

Win win..

There may be something in BTL actually bringing purchase prices down, eventually. At some stage rents will reach a ceiling that people just can’t afford any more. On hpc there is a standard that renting is cheaper than buying and that may be the case for many, however in NI now there are several places where it is cheaper to buy than rent. What stops people from buying is that they are so busy forking out all their money on rent that they cannot save a deposit, that and either the lack of job or lack of job security.

We had a crash in NI, plenty (not enough) of the BTL brigade went down but plenty were and still are receiving forbearance from the BTL lenders. There is no logical reason for this that I can see, we are not going back to the dizzy heights of 2006/7, the lenders are perfectly within their rights to easily take possession of the properties, there will little if any negative media or public reaction to LL’s losing their properties and there are no FCA ‘treating customers fairly’ guidelines to adhere to.

I must be getting paranoid in my old age as I am now wondering if the banks are planning for BTL to become such a large % of the housing stock that if they took possession of all the BTL properties that fell under margin call territory, or into arrears that the sheer amount of tenants affected would cause a public outcry. Are we being set up to bail out BTL too?

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I think BTL is dreadful.

I think BTL is fine. Renting should be encouraged and made less shit though. Let someone else own the property, what's this obsession with owning?! Ultimately rents will be whatever people can afford, from post-tax unlevered income.

Edited to chop long quote of OP which I thought was funnily-long.

Edited by JustYield

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Post #4 is correct in terms that BTL relies on HPI to be a wealth creator. However, I think - if you want to discuss the subject properly - you need to seperate out BTL that is leveraged from BTL as a straight capital investment. For example, if you inherit a house from a relative and rent it out the house provides a revenue stream as opposed to a capital lump sum. Such a person is unconcerned with interest rates going up as that will not affect their revenue stream. BTL as a pension, for example, is not a bad idea if you have paid for the properties in full. Hopefully a LL with a paid for house will value a decent long term tenant and not look to churn to get the rent up.

On the other hand those who have a leveraged portfolio are vulnerable to interest rate hikes. The double whammy of interest going up and house prices going down will wipe these folk out.

So what are the data for leveraged vs. paid for BTL? I don't know and no idea where to look for such data, if it even exists. I think (guess if you like) it's fair to say a majority of BTL is leveraged as it has been a big new get rich quick scheme upon which many people have jumped. Even so, many of those will have bought at a price point at which at least part of their portfolio will see capital gains even if prices drop 30% (my best guess of what's coming).

BTL is understandable whearas most other investments are not. People feel safe with property and vulnerable with shares. Price fluctuations in property are generally slower, you can't "lose it all overnight". This is it's attraction IMHO. It will always be the investment of choice to people who look at you as if you are talking Greek when you ask about opportunity cost. When interest rates go up a lot of people will probably subsidise their BTL from their job in the short term. The big question mark for me is if a change of sentiment will take place and see portfolios being liquidated. If so a lot of renters that want to buy will take advantage of the lower capital cost to buy but end up paying as much or more due to mortgages being more expensive. I don't therefore think people exiting BTL will have as profound an effect on house prices as some folk think.

IMPO it remains sentiment that will drive the HPC. Property owners wanting to sell up before losing money - whether the property is rented out or lived in or indeed a second home or flat for the kids University stay. Or - very much in London - overseas investors looking for a safe place for their cash. If you can figure out where the cash will go (gold maybe?) there is some big money to be made out of the HPC.

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I know BTLers who have been subsiding the mortgage from the start hoping to flip and make a lot on the capital gains. Well that didn't work out did it.

That has been the business model in the uk for the last 10 years.

For those that even gave the mechanism of profit any consideration at all, that is. In my experience those are in a minority. Most just do buy to let, thats just what you do. Yield? Opportunity cost? Wassat then?

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Agree with the main thrust, said similar myself. This is new. Buy to Let can exit very quickly, that hot money that flowed into london can flow out just as fast. With buy to let you don't have the historical norm of a delay where you have to find another house to live in first. You just get rid, and you do it with multiple properties.

Ive never known a buy to let do more than just about cover the cost of the loan (that being the interest only mortgage payment), in many cases (half?) the 'investment' is subsidised by the landlord in the hope of capital gains at some point in the future.

If the cost of borrowing rises at all on these 'products' there will be an exit by many, and a fast one at that.

Landlords cannot pass the cost on to tenants, only late entrants will find their 'business' more unsustainable than they can bear, those who got into the game more than a relatively short 10 years ago aren't as leveraged and can hold back a rent rise for longer. Newer entrants raising rents will find longer periods with no tenant, making it worse and accelerating their own need to sell.

When it turns, buy to let will be accelerate the movement down considerably in my opinion.

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I think BTL is fine. Renting should be encouraged and made less shit though. Let someone else own the property, what's this obsession with owning?! Ultimately rents will be whatever people can afford, from post-tax unlevered income.

Edited to chop long quote of OP which I thought was funnily-long.

Yes, renters should get many more rights and this, in turn, would make BTL less attractive. If we had decent tenancy laws, we wouldn't have such a bubble.

Apart from property speculators, who could argue against giving a tenant (often with a family) the right to live there for a decent stretch? Long enough to have their kids stay in the same school for their primary or secondary education.

I guess the problem is that the political class have skin in the BTL game.

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I think BTL is fine. Renting should be encouraged and made less shit though. Let someone else own the property, what's this obsession with owning?! Ultimately rents will be whatever people can afford, from post-tax unlevered income.

Edited to chop long quote of OP which I thought was funnily-long.

To be clear, by BTL I specifically mean the ARLA promotion to retail customers buying property with mortgages and using rents to cover the mortgage. Its present structure means that your landlord cannot provide you with 24 month AST even if they wanted to, because of the BTL mortgage terms and conditions. Further the idea that "rents will be whatever people can afford" seem a little simplistic to me. I know that paternalism is not everyone's cup of tea, but it seems clear to me that through self-cert IO we've allowed a large tranche of owner-occupiers to pay more than they can afford. What you can afford for your housing needs to reflect more than just whether you can meet the obligation from month to month. Take renting for life - it's fine provided you are accumulating the assets you'll need to produce an income stream to pay the rent when you are no longer working. But that is not what is happening in the UK with the private rental sector configured as it is. Lots of people are paying a huge chunk of their income as rent, they have no savings and any provision for pension that they are making is likely to be woefully inadequate. Finally, if the structure of the market was different rents could be lower. If you had stable, lower house prices you could more readily attract companies like life insurers into 'building to let'. Isn't BTL extinguishing yield, when we should be influencing the structure of the market so that there was yield on offer to those who would bring forward supply? There is nothing wrong with a healthy PRS offering decent rental property with some measure of tenure - but BTL is not giving us that. It doesn't seem right to me to offer a wisdom of markets explanation for price levels in a market that is demonstrating such conspicuous market failure that it's being described by the Bank of England as the main threat to financial stability in the medium term.

[Edit: can for cannot, oops - and then a bunch of other errors too.]

Edited by bland unsight

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Personally I think the banks are only showing forbearance just now because the market "appears" to be rising slightly in NI. If enough people believe in the rise then they may get a bit more for the houses when they re possess them. Let the BTL landlords subsidise the mortgages in the meantime. I know BTLers who have been subsiding the mortgage from the start hoping to flip and make a lot on the capital gains. Well that didn't work out did it.

That could explain the last 9 months or so, not the past 5 years.

Private, especially 'amateur' or 'accidental' BTL is not good. It extracts capital from improving the quantity and quality of the housing stock.

I would like to see a large mutual build-to-let sector. Perhaps the 'building' societies could fund savings interest by renting out homes they have had built. Give people a right-to-buy at market rates.

Exactly.

BTL in it's current form is morally repugnant. Housing is too important an issue for the supply of it to be left to casino gamblers who, in the main view their tenants as an inconvenience that they have to put up with in order to gain their final prize of capital growth.

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My sister is about to plough 125k into a BTL flat, despite me talking to her non stop about the long term risks and likely headwinds.

Is there a way for me to mark this post so when she phones me up in a few years time complaining that I never warned her and she is now facing financial disaster, I can update you?

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