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TTID

I Have Fixed Buy To Let

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The problem of OOs having to compete with LLs in the housing market, combined with the low rate of building new homes can both be fixed with a very simple measure.

All homes (not student or other short term accommodation) in the PRS would be under a licencing system. No new licences would be issued, except for new build homes.

Done.

Investment funds for residential homes go entirely to fund new build, generating increased build rates. OOs don't have to compete with LLs for non new-build homes, increasing owner occupation, with more reasonable prices.

Another result, if LLs want to cash in capital gains, they can't sell to other LLs, as these homes are no longer new build, so the licences expire. This would dampen capital gains, as they would be selling into a more saturated market, thereby cooling the attraction, and therefore the volatility, of the investment side of the housing market.

Some tinkering would be needed on the details and what-ifs, but basically...

Ta-dah!

:-)

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The problem of OOs having to compete with LLs in the housing market, combined with the low rate of building new homes can both be fixed with a very simple measure.

All homes (not student or other short term accommodation) in the PRS would be under a licencing system. No new licences would be issued, except for new build homes.

Done.

Investment funds for residential homes go entirely to fund new build, generating increased build rates. OOs don't have to compete with LLs for non new-build homes, increasing owner occupation, with more reasonable prices.

Another result, if LLs want to cash in capital gains, they can't sell to other LLs, as these homes are no longer new build, so the licences expire. This would dampen capital gains, as they would be selling into a more saturated market, thereby cooling the attraction, and therefore the volatility, of the investment side of the housing market.

Some tinkering would be needed on the details and what-ifs, but basically...

Ta-dah!

:-)

Good idea. Send it to the genius Osborne. He needs some help with new ideas.

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Yeah, go on, more red tape to penalise people who get seconded to work somewhere distant. Professional classes with a year or two in, say, Munich or Singapore or Boston. Or equally construction workers moving to a big new infrastructure project. Those who for very good non-parasitic reasons rent out their own normal homes, thus increasing supply.

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Yeah, go on, more red tape to penalise people who get seconded to work somewhere distant. Professional classes with a year or two in, say, Munich or Singapore or Boston. Or equally construction workers moving to a big new infrastructure project. Those who for very good non-parasitic reasons rent out their own normal homes, thus increasing supply.

What's the difference between someone who holds onto and rents out their flat or house when moving in with a partner or buying a larger home and a secondee or construction worker holding on his flat or house when moving elsewhere for a job, or quite likely a series of jobs?

Both may be keeping their former home as a fall-back (moving back because of income reduction or relationship breaking up / moving back between jobs). Equally, both may be banking on HPI and an eventual pay-out.

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What's the difference between someone who holds onto and rents out their flat or house when moving in with a partner or buying a larger home and a secondee or construction worker holding on his flat or house when moving elsewhere for a job, or quite likely a series of jobs?

Both may be keeping their former home as a fall-back (moving back because of income reduction or relationship breaking up / moving back between jobs). Equally, both may be banking on HPI and an eventual pay-out.

Well they could be. But a lot of such people have every intention of moving back themselves at the end of a period of secondment. Like my friend who let her house while she was two years out teaching in a primary school in Asia before moving back to it.

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Are you really sure that the way to deal with market distortion caused by state intervention is more state intervention?

We are in this pickle because the state controls the supply of housing through a planning system designed for a different age. It then compounds the damage caused by this artificial scarcity by encouraging reckless and limitless lending against a finite recourse and protecting both lenders and borrowers from the consequences when they get too excited.

If the state did the same thing with bread there would be politicians hanging from lamp posts.

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The problem of OOs having to compete with LLs in the housing market, combined with the low rate of building new homes can both be fixed with a very simple measure.

All homes (not student or other short term accommodation) in the PRS would be under a licencing system. No new licences would be issued, except for new build homes.

Done.

So your essentially gifting regulatory capture to existing LLs.

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The problem of OOs having to compete with LLs in the housing market, combined with the low rate of building new homes can both be fixed with a very simple measure.

All homes (not student or other short term accommodation) in the PRS would be under a licencing system. No new licences would be issued, except for new build homes.

Done.

Investment funds for residential homes go entirely to fund new build, generating increased build rates. OOs don't have to compete with LLs for non new-build homes, increasing owner occupation, with more reasonable prices.

Another result, if LLs want to cash in capital gains, they can't sell to other LLs, as these homes are no longer new build, so the licences expire. This would dampen capital gains, as they would be selling into a more saturated market, thereby cooling the attraction, and therefore the volatility, of the investment side of the housing market.

Some tinkering would be needed on the details and what-ifs, but basically...

Ta-dah!

:-)

Another consequence; LLs who want to sell only exit to other landlords because licensed properties would trade at a premium to OO homes.

Consequence; housing market becomes even less liquid and more fragmented.

Consequence; even less real price discovery.

Mods can you erase this thread before someone with any power/influence reads this crazy policy.

Edited by bankstersparadise

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How about removing props as well as tackling the consequences of said props...?

Edit: I don't seem to be able to quote.

Edited by TTID

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goldbug9999 and bankstersparadise:

Paragraph 4 of the OP, first sentence.

Licences are not transferrable. LLs who want to stay LLs have to hold on to their licenced homes. If they sell, they're not licenced homes any more, so other LLs can't buy them.

Edit: Arguably paragraph 5.

Edited by TTID

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Yeah, go on, more red tape to penalise people who get seconded to work somewhere distant. Professional classes with a year or two in, say, Munich or Singapore or Boston. Or equally construction workers moving to a big new infrastructure project. Those who for very good non-parasitic reasons rent out their own normal homes, thus increasing supply.

and have you tried to rent a place in munich???

it's just as silly as london prices.

cheapest is €1000pcm, typically double that.

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Yeah, go on, more red tape to penalise people who get seconded to work somewhere distant. Professional classes with a year or two in, say, Munich or Singapore or Boston. Or equally construction workers moving to a big new infrastructure project. Those who for very good non-parasitic reasons rent out their own normal homes, thus increasing supply.

Bit pedantic perhaps, but surely that would not be a buy-to-let, it would be an owner-occupier mortgage with a (possibly limited term) consent to let. Chalk and cheese really; in the case of the BTL you aren't able to live in it without broaching the mortgage T&Cs and in the case of the consent to let, you'd be in no position to let it out except for the fact that you had lived in it and intended to live in it again.

I realise that buy-to-let is a poorly defined concept, but I can't see how the situations you are describing could ever fall under even the broadest interpretation of buy-to-let.

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How about removing props rather than tackling consequences of the said props with more regulation on how ppl are allowed to behave?

Except the housing market is nothing but a regulation of how people are allowed to behave.

"Keep Out - By order of the government"

Aribtrary lines on the map that mark where your freedom ends, and someone else gets to decide the rules that you must obey.

Your idea only sounds plausible if you think certain specific government interventions, particularly the biggest intervention of all time, don't count.

In other words your belief in limited government means limited to those things you want. Which is exactly what all politicians think the state should be doing.

As it happens, the housing (land) market is exactly a government licensing scheme determining who can do what and where, just as described in the OP, only with landlords as the feudal administrators of the scheme.

Removing landlords isn't extra government interference, it's the final stage in moving from a feudal government to a democratic government, and therefore a reduction in state intervention.

In particular rents are undemocratic taxes, and so it represents a massive reduction in the tax burden of government.

Edited by BuyToLeech

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goldbug9999 and bankstersparadise:

Paragraph 4 of the OP, first sentence.

Licences are not transferrable. LLs who want to stay LLs have to hold on to their licenced homes. If they sell, they're not licenced homes any more, so other LLs can't buy them.

Edit: Arguably paragraph 5.

Apologies, I'm allergic to over-regulation so I guess I blacked out.

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The problem of OOs having to compete with LLs in the housing market, combined with the low rate of building new homes can both be fixed with a very simple measure.

All homes (not student or other short term accommodation) in the PRS would be under a licencing system. No new licences would be issued, except for new build homes.

Done.

Investment funds for residential homes go entirely to fund new build, generating increased build rates. OOs don't have to compete with LLs for non new-build homes, increasing owner occupation, with more reasonable prices.

Another result, if LLs want to cash in capital gains, they can't sell to other LLs, as these homes are no longer new build, so the licences expire. This would dampen capital gains, as they would be selling into a more saturated market, thereby cooling the attraction, and therefore the volatility, of the investment side of the housing market.

Some tinkering would be needed on the details and what-ifs, but basically...

Ta-dah!

:-)

There are a few problems with this, although your intentions are obviously good.

Firstly, adding additional layers of complication to something that is fundamentally going wrong is unlikely to make it go right.

Secondly, BTLers being the main target market of builders, as they already are now, causes the wrong kind of properties to get built. BTLers tend to not be overly concerned with the quality of life of their tenants if there is a profit margin at stake and they tend to buy flats. Families tend to want to live in houses with gardens. If BTLers were removed from the equation builders would still have to turn a profit and so they would start targeting the owner occupier market and build more of the right kind of properties that are actually pleasant to live in, because that would be what the market demanded.

Thirdly, your proposal assumes that BTL will continue to exist in a recognisable form. Currently BTLers are facing reductions in their tax reliefs, increasing regulation of their letting activities, Bank of England regulation of their financing, and Basel III risk weight changes that look set to tripel or even quadrupel their borrowing costs. Once all of these measures come into effect BTLers will be at a disadvantage to MMR-constrained first time buyers and will be unlikely to be able to bid as much as them for the same properties (because as well as having to cover tax and licensing liabilities that owner occupiers don't face in relation to their housing costs, they are also likely to be required to finance on a repayment basis by the Bank of England and they will, courtesy of Basel III, have to pay much high interest rates than owner occupiers). Those that already own BTL properties are likely to find themselves increasingly unable to remortgage and stuck on incredibly high BTL SVRs or forced to sell, either through choice or repossession.

It's over, they just don't know it yet.

Edited by Neverwhere

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I so hope you are right neverwhere

Me too! I'm making an educated guess on the nature of Bank of England regulation - given their previous treatment of owner occupier mortgages and concerns over financial stability - but the fact of Bank of England regulation, Basel III risk weight changes, BTL tax relief changes, and increases in landlord licensing and regulation are becoming increasingly certain. Cumulatively I don't see how BTL as it currently stands can survive these changes, but they will take a while (several years in all likelihood) to filter through.

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Neverwhere: I agree with all that you have written. I'm not expecting BTL to continue in its existing form. By 'fixed Buy to Let' I meant 'made Buy to Let go away, from the point of view of the priced out.'

If LLs prompt the builders to produce poor quality homes for rental purposes, they'll get stung when they try to sell them on into the OO market. These new builds can only be rented out by their first owners. After that, their attractiveness to a LL is no longer an issue.

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