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Does The Housing Market Actually Need Ftb?

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Recent article suggesting FTB fallen to 7.8%

http://firstrung.co.uk/articles.asp?pageid...articlekey=2082

Just a thought does the market actually need ftb? why? can't BTL's can soak up all the properties? in effect home ownership could become the privalleg of the few and renting could become the norm as in some european countries?

No, because there is only a certain amount of money is the nations wages to pay a certain amount of rent. Therefore more BTLers means rents will fall and the idea will become unprofitable. Young people can remain with their parents for longer, others live in shared houses. Typically, four or five people can live in a shared house, but I've never heard of four or five people buying a room in a shared house.

Edited by FollowTheBear

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No, because there is only a certain amount of money is the nations wages to pay a certain amount of rent. Therefore more BTLers means rents will fall and the idea will become unprofitable. Young people can remain with their parents for longer, others live in shared houses. Typically, four or five people can live in a shared house, but I've never heard of four or five people buying a room in a shared house.

Sorry, I don't understand your point there.

To extend what the OP is saying...

We all know that home ownership has shot up over the past 25 years. So what happened before then? Presumably fewer people owned more property, renting out their properties to people who preferred to rent, or had to rent.

Why not simply reverse the recent trend? If people stopped wanting to own or were increasingly unable to own, then they would just get used to renting the same as they always did.

Meantime, fewer people would own more of the housing stock again, happily renting out their properties the way they used to.

This idea is feasible as long as rental income could cover the cost of the mortgage. If BTL-ers were getting 100% mortgages then it would be difficult to make a profit, but if they could put up a reasonable deposit, they could certainly cover costs. Over a period the properties would be paid off and ALL rental income would be profit, allowing them to invest in further properties, and so on.

Seems like a reasonable point to make.

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Guest The_Oldie

We all know that home ownership has shot up over the past 25 years. So what happened before then? Presumably fewer people owned more property, renting out their properties to people who preferred to rent, or had to rent.

Why not simply reverse the recent trend? If people stopped wanting to own or were increasingly unable to own, then they would just get used to renting the same as they always did.

25 Years ago, local councils owned a very significant proportion of the housing stock <_<.

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25 Years ago, local councils owned a very significant proportion of the housing stock <_<.

I was listening to a radio 4 debate yesterday that touched on the subject of council housing, one of the panel members suggested the radical new idea of actually building council houses :o He received the biggest cheer on the show from the audience.

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I disagree. Credit was harder to come by in the past which precluded some people from buying. My point about shared houses is best illustrated with an example. Suppose someone in a one-bed flat can't afford to keep living there, they could move into a shared house. Therefore the amount of rent they would be paying would be lower thus reducing their contribution to the property-owning classes. You have this idea that there is a straight-line correlation between people buying and people renting. I don't believe this is true because there are options - like continuing to live with parents - that mean people are not forced into renting off a landlord.

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We all know that home ownership has shot up over the past 25 years. So what happened before then? Presumably fewer people owned more property, renting out their properties to people who preferred to rent, or had to rent.

Errrrrrrrr 25 years ago the private rented sector was on it's last legs, very few, most rented property belonged to councils and Housing associations

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Errrrrrrrr 25 years ago the private rented sector was on it's last legs, very few, most rented property belonged to councils and Housing associations

With the IMF warning about the economy and housing market.. Strong warnings..

With more areas ahowing falls then rises.. and only small rises... (Land registry)

with BTL not covering costs anywhere but london..

and with IR's set to rise...

the market needs something..

oh.. we have more houses per head of capita now then we have ever had..

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Errrrrrrrr 25 years ago the private rented sector was on it's last legs, very few, most rented property belonged to councils and Housing associations

Rubbish.

I was renting throughout most of the 70s and right up to the mid-80s. It was impossible to get on a council renting list unless you were a family and on a low income. Housing associations? I'd never even heard of them. It's absolutely wrong to suggest that they owned a majority of rental properties.

I don't know what you mean by the rental sector being on its last legs. It was the norm to rent unless you got married and wanted to start a family, when it was seen as the done thing.

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Recent article suggesting FTB fallen to 7.8%

http://firstrung.co.uk/articles.asp?pageid...articlekey=2082

Just a thought does the market actually need ftb? why?

All ponzi schemes require an influx of new participants in order to sustain themselves, the housing market is no different, if both FTB'ers and their BTL substitutes dry up due to poor yields then the whole thing grinds to a halt save for people who move up the ladder and retain two houses/mortgages. Also, the BTL market doesn't stand alone, if a FTB can't afford a mortgage of their own there's no way he can support a BTL'ers mortgage and overheads too, not unless the kind landlord subsidizes the mortgage.

A closed housing market is akin to a perpetual motion machine or a game of monopoly, especially so in terms of money.

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My point about shared houses is best illustrated with an example. Suppose someone in a one-bed flat can't afford to keep living there, they could move into a shared house. Therefore the amount of rent they would be paying would be lower thus reducing their contribution to the property-owning classes. You have this idea that there is a straight-line correlation between people buying and people renting. I don't believe this is true because there are options - like continuing to live with parents - that mean people are not forced into renting off a landlord.

I still don't understand that.

If someone decided to move from a 1 bed flat to a shared house, what's the problem? If I'm the LL of the house I don't care that the new tenant used to live in a 1 bed flat. He's paying his rent, that's all I care about.

If I'm the LL of the 1 bed flat, I get a new tenant in to pay my mortgage for me. I don't care where the previous tenant has gone.

What's this about a straight line correlation? That's not a part of my thinking at all.

Yes it's true that people can stay with parents just as they do now and always have done. But we can safely assume that there will always be individuals, couples and families who will want to rent rather than live with their families.

Unless the number of rental properties exceeded the number of people/couples wanting to rent then it should always be possible to rent a property.

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Consider this, I have £200 spare a month, I cant afford a (second repayment) mortgage of say £1000 per month but suppose I get one, I can then use that £200 to put into the mortgage provided the rest of it is covered by the people who rent the property from me say for £800 a month.

I avoid voids becuase its cheaper than similar property and provided the costs like maintainence are managed properly lets say an avg of £100 pm on that (generous), why cant I get £700 back for that £200 I put in?

Effectively I end up with a property worth X which is a better return than the banks pay and better than any investment Dr Bubb has mentioned so far?

It could work if nothing ever changed in the economic climate and you were the only person doing it. Lets imagine there are loads of people doing it that have never thought it through but they think its a good cash generator. Imagine some of them get a slightly better deal than you and can rent out thier property for £900 pcm now what you going to do? Your way of avoiding voids doesnt exist anymore, how long could you service your extra £1000 a month mortgage for on your spare £200, you would bite the bullet and lower the rent so it becomes competative. Guess what so will other people until they are paying substantially more than thier initial £200, then they will be forced to sell.

Lets imagine that house prices dont crash and they just fall 5% - 8% no big deal really for the people that are in it for the long run, no big deal for the people who are using the place as thier pension or is it? The next person buys an identical house as yours and rents it out. They paid less for it so to get the same return they can lower the rent beneath yours, then what you going to do? Lower your rent and take the hit, you'll soon see that the long run is a f*cking long way away.

The whole mess only works when prices are rising and it feeds on itself when prices fall.

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I still don't understand that.

If someone decided to move from a 1 bed flat to a shared house, what's the problem? If I'm the LL of the house I don't care that the new tenant used to live in a 1 bed flat. He's paying his rent, that's all I care about.

If I'm the LL of the 1 bed flat, I get a new tenant in to pay my mortgage for me. I don't care where the previous tenant has gone.

What's this about a straight line correlation? That's not a part of my thinking at all.

Yes it's true that people can stay with parents just as they do now and always have done. But we can safely assume that there will always be individuals, couples and families who will want to rent rather than live with their families.

Unless the number of rental properties exceeded the number of people/couples wanting to rent then it should always be possible to rent a property.

Guy has just moved out of the house I live in. He earns £32k. He moved out of a house paying £325 per month including all bills and council tax and has moved to one with a rent of £280 per month. He lives cheaply and saves.

House I lived in a couple of years ago - woman there earned £26k. She chose to live in a room in a shared house paying £340 a month all in.

These people aren't in a position to buy anything worth buying and would rather live cheaply and save than pay £600 a month for your one-bedder. Once the steam goes out of the miracle economy you get more and more people taking in lodgers to pay their mortgages. This leads to a downward cycle. The evidence round where I live is that there are more rentals than would-be renters, and economic trends suggest this will accelerate over the next few years - until FTBs are priced back into homes.

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Guy has just moved out of the house I live in. He earns £32k. He moved out of a house paying £325 per month including all bills and council tax and has moved to one with a rent of £280 per month. He lives cheaply and saves.

House I lived in a couple of years ago - woman there earned £26k. She chose to live in a room in a shared house paying £340 a month all in.

These people aren't in a position to buy anything worth buying and would rather live cheaply and save than pay £600 a month for your one-bedder. Once the steam goes out of the miracle economy you get more and more people taking in lodgers to pay their mortgages. This leads to a downward cycle. The evidence round where I live is that there are more rentals than would-be renters, and economic trends suggest this will accelerate over the next few years - until FTBs are priced back into homes.

That pretty much sums up my point, thanks. People can choose to rent cheaply, thus pumping less money into this ridiculous pyramid scheme.

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Guy has just moved out of the house I live in. He earns £32k. He moved out of a house paying £325 per month including all bills and council tax and has moved to one with a rent of £280 per month. He lives cheaply and saves.

House I lived in a couple of years ago - woman there earned £26k. She chose to live in a room in a shared house paying £340 a month all in.

These people aren't in a position to buy anything worth buying and would rather live cheaply and save than pay £600 a month for your one-bedder. Once the steam goes out of the miracle economy you get more and more people taking in lodgers to pay their mortgages. This leads to a downward cycle. The evidence round where I live is that there are more rentals than would-be renters, and economic trends suggest this will accelerate over the next few years - until FTBs are priced back into homes.

Fair enough Munro, but all you're saying is that different people will want/be able to pay differing amounts for rent.

If you're making a broader point that there is a glut of expensive rental property, well OK, but I've not seen any hard evidence of that.

If that's the case then the property owners will have to lower their expectations, till at some point an economic price will be arrived at, as always.

As I said earlier, it's only those owners who have overstretched themselves who are at risk. Over a period of time, as repayments chip away at the mortgage outstanding, the owners will have a cushion to protect themselves, and allow them to drop the rents in difficult times.

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Fair enough Munro, but all you're saying is that different people will want/be able to pay differing amounts for rent.

If you're making a broader point that there is a glut of expensive rental property, well OK, but I've not seen any hard evidence of that.

If that's the case then the property owners will have to lower their expectations, till at some point an economic price will be arrived at, as always.

Don't forget risk. Landlords typically want to rent their properties to people who are solvent and have reliable jobs. If the economy experiences a downturn, then even if the number of rental properties remained constant and the number of people wanting to rent remained constant, the number of people to whom landlords would want to rent their property to will go down.

If landlords lower their expectations to fill their rental properties to, then the risk that the tenant will be unable to pay the went will go up, taking down the average return from properties even if nominal rents stay the same. It's a difficult and expensive process evicting non-paying tenants.

Billy Shears

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I was listening to a radio 4 debate yesterday that touched on the subject of council housing, one of the panel members suggested the radical new idea of actually building council houses :o He received the biggest cheer on the show from the audience.

Did you listen to the phone-in afterwards? The total lack of comment by the panel on the insane general house price inflation fed by irresponsible lending and unregulated credit was very notable. One of the callers, an "original" inhabitant of a seaside village (can't remember the name) taken over by second home owning sailing types, mentioned that a 1 bedroom flat there was £350K and at least he had the courage to condemn the hpi exploiting BTL/investors who had turned local people into economic outcasts.

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Recent article suggesting FTB fallen to 7.8%

http://firstrung.co.uk/articles.asp?pageid...articlekey=2082

Just a thought does the market actually need ftb? why? can't BTL's can soak up all the properties? in effect home ownership could become the privalleg of the few and renting could become the norm as in some european countries?

BTLs who look to buy houses at the bottom rung won't be looking to trade up in a few years time. So if the whole of the bottom rung it taken up by BTL when the next rung up comes to want to trade up they won't have anyone to sell to and so on up the ladder.

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Did you listen to the phone-in afterwards? The total lack of comment by the panel on the insane general house price inflation fed by irresponsible lending and unregulated credit was very notable. One of the callers, an "original" inhabitant of a seaside village (can't remember the name) taken over by second home owning sailing types, mentioned that a 1 bedroom flat there was £350K and at least he had the courage to condemn the hpi exploiting BTL/investors who had turned local people into economic outcasts.

I was half listening to this "original" chap. I applauded him in my car as he told the presenter, about the loss of even the tourism industry in his village because of second home owners. When the presenter suggested that the young people had moved out of the village because of the lack of jobs. I was also pleased that this chap put him straight, on how they couldn't afford to live there. I am glad i don't live in one of these villages. He even slated the woman before who thought her village was much better because of all the second home owners. Who cares if there aren't any young people living in the village anymore?! I didn't catch all of it unfortunately.

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Effectively I end up with a property worth X which is a better return than the banks pay and better than any investment Dr Bubb has mentioned so far?

In that case why not get 10! However, if you cannot quantify X how can you compare returns to the banks or the mighty Dr Bubb?

If prices fall you lose out in two ways, you're in negative equity so your deposit and repayments are wiped out, also, people will not pay Y amount in rent to you if they can buy a house for themselves with a mortgage that costs less than your required rent. So that leaves you having to increase your subsidy or bankrupt.

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  • 302 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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