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Horseradish

Is BTL just a convenient scapegoat?

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I, too, think that BTL has had a negative effect on the housing market in Britain, and there are many threads on here full of invective to that end (or sport-trolling Mumsnet & Property118 to that end). However, is BTL just a convenient (albeit extremely pleasing to bash) scapegoat? If you look at the number of cash transactions (e.g. here), presumably a large proportion made by foreign investors, they seem to dwarf the amounts taken by the BTL sector. Further, if we step back a bit and look at property markets across the world, we see similar property bubbles in many other countries - Canada, Australia, Sweden, Hong Kong, Norway... And those countries do not have BTL. Now, I'm far (far!) from the first to point out the link between an easy  and low-interest supply of credit and asset appreciation, but given the numbers does it not seem that this, rather then BTL, is the larger driving factor in the unaffordability of housing? Again (to be clear) I think that BTL has skewed the housing market in the UK and am glad of the recent regulatory changes which have, essentially, strangled it. But is it really a win if foreign direct investment capital flows are still pushing the demand side?

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I don't think anyone is saying they are the whole problem but they enjoyed tax advantages which enabled them to overbid at the margins where prices are set.  We will see to what extent BTLs have distorted the market when they all run for the exit.

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There is something in this. I think mostly it's part of the psychology of ownership, investment, monetisation of everyday existence. Happily the psychology is starting to change - see the number of negative articles about BTL recently. It's only the torygraph who are still banging on about its plus sides.

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Aren't properties bought with "cash" often just bought by non-residents with a mortgage from abroad? There was a thread on that recently I believe.

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It's not just a scapegoat.

Yes, there are quite a few cash buyers, many of them from abroad....BUT, those properties are then rented out (most of the time). True, the "landlord" doesn't really care about the rent in some cases (they're just using the houses to stash money and maybe to even make a bit of profit), but that doesn't change the fact that that particular property can no longer be bought by a "first time buyer".

One of my colleagues lives in a flat in fairly new block. Most of the flats have been bought off plan by Asian (Chinese mostly) investors. Cash transactions, as it were. However, they're also rented out to other people then. So...

Ironically, I'm "for" BTL (meaning I plan to buy another property and rent it out once I've paid this one off), but that doesn't change the facts.

Edit: some BTL landlords are trying to get out of it these days. Example: http://www.rightmove.co.uk/property-for-sale/property-64407991.html

Edited by flb

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Massive creation/inflation of new money all over the world has been directed into buying up land and buildings via the debt used to create the new money by buying up securities......buy/borrow to live in to one day eventually own is quite different to buy/borrow to rent out as an investment.......many have no intention of renting out, they buy or borrow to buy as a store of value, it is an investment...... houses are no longer homes for some, they are bank accounts or a place to store wealth, that pay a higher return than cash, in places where the law protects land, security is safe and strong. 😉

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1 minute ago, winkie said:

houses are no longer homes for some, they are bank accounts or a place to store wealth, that pay a higher return than cash, in places where the law protects land, security is safe and strong. 😉

Well, can you blame them?

Say you had 500k - would you rather keep them in a bank account and watch them devalue monthly (what's the base IR now, like 0.5%?) or would you rather buy a house? What do you trust more - Carney or bricks?

As a note, I bought my house last year (mortgage). I'm now looking at selling it (not necessarily, but I might). According to the EA (not that I trust her too much), its value has increased by 38k (50k, but 12k out of that went to renovating the place). Now, it's not sold until it's sold, but ... even if it only increased by 10k, I wouldn't have received 10k in interest if I kept my money in the bank anyway. (of course, if I had invested the money in something else - perhaps some crypto or whatever - I may have made a huge profit etc etc; but it's not as safe, obviously)

I'd rather trust bricks and mortar than the BoE and its minions. It's that simple, really.

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6 minutes ago, flb said:

Well, can you blame them?

Say you had 500k - would you rather keep them in a bank account and watch them devalue monthly (what's the base IR now, like 0.5%?) or would you rather buy a house? What do you trust more - Carney or bricks?

As a note, I bought my house last year (mortgage). I'm now looking at selling it (not necessarily, but I might). According to the EA (not that I trust her too much), its value has increased by 38k (50k, but 12k out of that went to renovating the place). Now, it's not sold until it's sold, but ... even if it only increased by 10k, I wouldn't have received 10k in interest if I kept my money in the bank anyway. (of course, if I had invested the money in something else - perhaps some crypto or whatever - I may have made a huge profit etc etc; but it's not as safe, obviously)

I'd rather trust bricks and mortar than the BoE and its minions. It's that simple, really.

Buy a home to live in no problem.......so your home has increased by £10k, not made yourself £10k wealthier if buying something else, the cost of moving would eat into that very easily...... yours goes up so does everything else unless moving to a place where prices have fallen or moving to a new place more for less far away......you have not got richer, it is others that have got poorer......their home deposit savings have been wipped away from under their feet....working hard for the gap to grow greater, running hard but not getting anywhere.😉

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10 minutes ago, flb said:

Well, can you blame them?

Say you had 500k - would you rather keep them in a bank account and watch them devalue monthly (what's the base IR now, like 0.5%?) or would you rather buy a house? What do you trust more - Carney or bricks?

As a note, I bought my house last year (mortgage). I'm now looking at selling it (not necessarily, but I might). According to the EA (not that I trust her too much), its value has increased by 38k (50k, but 12k out of that went to renovating the place). Now, it's not sold until it's sold, but ... even if it only increased by 10k, I wouldn't have received 10k in interest if I kept my money in the bank anyway. (of course, if I had invested the money in something else - perhaps some crypto or whatever - I may have made a huge profit etc etc; but it's not as safe, obviously)

I'd rather trust bricks and mortar than the BoE and its minions. It's that simple, really.

It has to be said that this self perpetuating logic is what keeps prices high. "Can't go wrong with bricks n mortar" you could say the same of any valuable globally traded commodity though - until confidence falls.

Make it prohibitively expensive for foreign buyers to buy property here. Any that do, should get taxed heavily which benefits the natives. A trade war on property if you will. Why should citizens have to compete on a global market for a domestic (in every sense of the word) asset.

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1 minute ago, winkie said:

you have not got richer, it is others that have got poorer......their home deposit savings have been wipped away from under their feet....working hard for the gap to grow greater, running hard but not getting anywhere.😉

Sure, it's all relative. But if affects the market, so when other people get poorer, things become cheaper for me.

Yeah, it sounds selfish and it probably is. At the end of the day, I owe the best I can provide to my family, not to other people. So, well, good luck to them. It's little more than your typical sports race - at the end, you've got 3 winners and a number of losers. Nobody expects the winners to slow down or completely stop just so other people can catch up.

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4 minutes ago, flb said:

Sure, it's all relative. But if affects the market, so when other people get poorer, things become cheaper for me.

Yeah, it sounds selfish and it probably is. At the end of the day, I owe the best I can provide to my family, not to other people. So, well, good luck to them. It's little more than your typical sports race - at the end, you've got 3 winners and a number of losers. Nobody expects the winners to slow down or completely stop just so other people can catch up.

....but nobody is a winner always......life is full of both ups and downs.😉

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8 minutes ago, awkwardturtle said:

"Can't go wrong with bricks n mortar" you could say the same of any valuable globally traded commodity though - until confidence falls.

I'm not suggesting that. Of course things could go wrong (I expect a crash to happen at some point in the future; no, I don't know when) You could invest 500k into a house only to find out it's worth 150k one year later. Tough luck. It's pretty much the same with every other commodity you could name. It's a calculated risk and you either take it or you don't. I'm not saying houses are "safe". I'm saying I trust bricks and mortar more than I trust Mr Carney. I believe we can agree on that one.

8 minutes ago, awkwardturtle said:

Make it prohibitively expensive for foreign buyers to buy property here.

Sounds good, doesn't work. I'm (still) a foreigner, by the way.

8 minutes ago, awkwardturtle said:

Why should citizens have to compete on a global market for a domestic (in every sense of the word) asset.

I have a better question: why not?

This "citizenship" illusion needs to go away. The only difference between a resident and a citizen is that citizens that can vote, whereas  residents can't (GE). Other than that, it means nothing. You were born here, I get it. That doesn't make you special. I'm guessing 500 other people were born here yesterday - a lot of them to foreign parents. Whatever you think you deserve or are owed because you were born here...is an illusion.

An American (or Asian) company can buy a block of flats and rent them out. You - a citizen - might rent one. If you fail to pay your rent (or if they get sick of you), they'll simply evict you. Would you complain? (seeing how you're a citizen and all that).

2 minutes ago, winkie said:

....but nobody is a winner always......life is full of both ups and downs.

Of course. You win some, you lose some. That's just life. At the end of the day, you can only do your best to win as often as possible, as much as possible.

Edited by flb

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2 minutes ago, Lavalas said:

Just so you know... I really hope it does.

Well, so do I - and probably 90% of this forum. It's always cheaper to buy after a crash - plus, they'd likely get rid of a bunch of taxes then to "stimulate the economy".

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2 minutes ago, flb said:

This "citizenship" illusion needs to go away. The only difference between a resident and a citizen is that citizens that can vote, whereas  residents can't (GE). Other than that, it means nothing. You were born here, I get it. That doesn't make you special. I'm guessing 500 other people were born here yesterday - a lot of them to foreign parents. Whatever you think you deserve or are owed because you were born here...is an illusion.

An American (or Asian) company can buy a block of flats and rent them out. You - a citizen - might rent one. If you fail to pay your rent (or if they get sick of you), they'll simply evict you. Would you complain? (seeing how you're a citizen and all that).

 

This is hopefully just semantics, I probably should've used resident rather than citizen. My suggestion (although unclear) was that foreign investors should be discouraged. I have no problem with forgien born residents buying houses here. In other words I disagree with the Thailand model.

I don't see why Londoners (I'm not one) looking for a place to live, should have to compete on a global market with Chinese investment firms when new high rises go up in the city. Incidentally, prices pushed up in London obviously ripple out which is where my bitterness arises from.

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3 minutes ago, flb said:

Well, so do I - and probably 90% of this forum. It's always cheaper to buy after a crash - plus, they'd likely get rid of a bunch of taxes then to "stimulate the economy".

I meant your 'investment'. I really hope that goes wrong. 

Edited by Lavalas

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2 minutes ago, awkwardturtle said:

I don't see why Londoners (I'm not one) looking for a place to live, should have to compete on a global market with Chinese investment firms when new high rises go up in the city.

I can tell you why: because the treasury needs money and it doesn't really matter whether it's Asian, American or European money. Whatever, wherever - as long as the wheels keep turning. They don't care about you. Or me (I used to live in London, I might move back there). If a Chinese hedge fund shows up with billions, they're not going to say no. Don't like it? Come up with those billions yourself. Can't? Well...so much for being a citizen or a resident.

2 minutes ago, Lavalas said:

I meant your 'investment'. I really hope that goes wrong. 

Have you tried praying?

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Easy debt and a lack of measures to dissuade people from using property as a speculative investment are the main drivers. BTL is a very visible part of the problem and so an easy target. Killing BTL is an important step but ideally only as part of a wider policy.

 

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  • 301 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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