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Buy-to-let Properties - Are They Ever Ethical Article!


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HOLA441

Yes you can blame people for doing that if it is adversely affecting someone else. We don't have rights and freedoms without responsibility. Housing is different from 'products'. Here's another scenario - I could make money by being a pimp or selling arms or drugs. You can't blame me for this. I'm only trying to achieve financial freedom! Some activities are socially acceptable. Some aren't.

I don't accept the Housing market problems are caused by B2L. Also, the examples you have quoted are crazy off the scale ones. Also you may as well argue it's wrong to take a job as there are unemployed people!

You also can't ignore the fact that the investment and home buyer sectors can't co-exist with an effect on each other. The problem is the sheer scale of BTL activity has distorted the market against home buyers.

From our article...

PricedOut_PercentageBTLOfNewMortgages.PNG

Do we want that to continue, speculation on a required human need isn't necessarily desirable.

I accept B2L may be a factor but is not the main cause. The graph only shows that B2L is a growing sector and we know that already. Obviously the number of FTB's is dropping as prices rise. As I already stated not enough properties have been built to cope with the demand along with the smaller size of households hence greater demand.

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HOLA442

I accept B2L may be a factor but is not the main cause. The graph only shows that B2L is a growing sector and we know that already. Obviously the number of FTB's is dropping as prices rise. As I already stated not enough properties have been built to cope with the demand along with the smaller size of households hence greater demand.

Well I never said those points weren't valid you just used them as an argument for BTL being ethical. That I would disagree with.

I would also ask you if you have considered the path of prices if BTL hadn't stepped in just as FTB's were priced out. In my opinion affordability would not have been stretched as far as it has if they had not as prices would have moderated as FTB became unable to afford.

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HOLA443

Well I never said those points weren't valid you just used them as an argument for BTL being ethical. That I would disagree with.

I would also ask you if you have considered the path of prices if BTL hadn't stepped in just as FTB's were priced out. In my opinion affordability would not have been stretched as far as it has if they had not as prices would have moderated as FTB became unable to afford.

I'm arguing that B2L is not the main reason for price increases but are sometimes used as a scapegoat and seen as unethical. I don't see B2L generally as un-ethical - The landlords are taking on risk where property is in short supply. I do however agree that it seems selfish where the same person is buying up dozens of properties and if they know they are competing with FTB's. But a further key point is that most B2L's only own between 1 to 5 rented properties. Also many of them bought several years ago before the shortage so it was not unethical.
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HOLA444

I'm arguing that B2L is not the main reason for price increases but are sometimes used as a scapegoat and seen as unethical. I don't see B2L generally as un-ethical - The landlords are taking on risk where property is in short supply. I do however agree that it seems selfish where the same person is buying up dozens of properties and if they know they are competing with FTB's. But a further key point is that most B2L's only own between 1 to 5 rented properties. Also many of them bought several years ago before the shortage so it was not unethical.

What exactly are BTL's being used as a scapegoat for?

"only own between 1 to 5....!"

One is bad enough but to be snapping up loads of them is a problem to me.

According to RICS on average BTL landlords own 5.5 properties each. That's a lot of homes.

Despite the shortage and prices more and more people keep buying them, it is a big problem.

Edited by DoubleBubbleTrouble
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HOLA445

I don't accept the Housing market problems are caused by B2L. Also, the examples you have quoted are crazy off the scale ones. Also you may as well argue it's wrong to take a job as there are unemployed people!

I accept B2L may be a factor but is not the main cause. The graph only shows that B2L is a growing sector and we know that already. Obviously the number of FTB's is dropping as prices rise. As I already stated not enough properties have been built to cope with the demand along with the smaller size of households hence greater demand.

The examples aren't crazy at all. They are ways of making money that I don't choose because of ethical considerations, just like I choose not to buy to let, even though I could afford it, for ethical considerations.

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HOLA446

Sorry, but I'm not clear on why so many of you think buy to let is a bad thing.

Surely the problem is supply, and the lack of that is caused by the Labour party. The buy-to-letters are unlikely to be socialists, so how exactly are they the problem?

Just curious,

Tharg.

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HOLA447

Of course BTL is one of the main causes of HPI. Speculation backed by greedy bankers is pretty much the only cause of HPI. There's no doubt that in Watford between 1999 and the present swaithes of owner-occupied flats and small houses were sucked out of circulation and bidded up to dizzying heights.

In 1999 you could buy a flat with a mortgage for less than it costs to rent a bedsit now.

The socially devestating process was obvious years back and should have been checked but those in power knew that all that freshly-created debt-money hitting the economy was stuffing shopping bags on the highstreet even as manufacturing and quality jobs continued to be lost through lack of investment and globalisation. The essence of the miracle economy.

90% of everyone I know who rents does so because they are priced out. If they had been five years older they would have all bought. So saying BTL is providing some sort of service is like, as I've said before, a Doctor breaking your arm just so he can help you by putting it in plaster.

Edited by CrashedOutAndBurned
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HOLA448

Some intresting points here, but I would like to see some numbers to back some of these points up.

Anyone know a source for a graph of how the percentage of the housing stock that is non "private owner/occupier" has changed. ie the number of properties on the market that are rented out by council/housing asscociation / private landlord.

With all the council houses being purchased by the occupiers, perhaps the BTL crowd are just picking up the slack, with the acctual percentage of the housing stock that is "off the market" relativley unchanged?

Maybe the poorer parts of society that cannot afford to buy, who would in previous generation lived in a council house, now rent instead from the private sector. Either way, these people have never been able to afford to own, so what difference does it make who they rent from?

Disclaimer: Im a renter myself.

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HOLA449

With respect guys. Some people on this board might think it's un-ethical to BTL. I would think they're in a very small minority. Of all the thing people think are un-ethical, the UK population would not list BTL in their top 100, if at all. It just isn't an issue for most people - 99% of people in this country would love to be able to own more than one property, as a source of income and, even, status. Whether it's right or wrong, in your/my/their eyes we live in a democratic country with a capitalist economy where owning multiple properties is not frowned upon, I'd say it's actually encouraged.

Doesn't solve HPI but there you go.

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HOLA4410

Yeah and most people in this country continue to buy clothes made by child, bonded (/slave) and other sweatshop labour - big deal. I guess that the media shape the ethical agenda and we all know where their interests lie. Having said that, the fact that we're discussing buy to let, journalists and commentators like George Monbiot and Zoe Williams have raised the issue and Ethical Consumer is carrying an article on the issue (a very influential magazine indeed - ethical issues are often raised in ethical consumer before they hit the mainstream - I use ethical consumer when I'm offering ethical procurement advice to retailers, for example) is great.

G

Edited by gruffydd
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HOLA4411

99% of people in this country would love to be able to own more than one property, as a source of income and, even, status.

I disagree. Some people I know who have done this regret doing so because of the enormous hassles attached to looking after more than one property. I know many people, too, who do not aspire to owning more than one property. All they want is a home. They have better imaginations than thinking that owning more than one property is something to aspire to.

HPI has been incredibly destructive. At the moment people think it only affects those who are priced out. If those people are priced out forever, it affects everyone. Rents will have to be paid to private landlords for an enormous percentage of 'pensioners'. The 'have nots' can't pay so who will? The readjustment is coming. In some areas, satisfactory falls have already started.

Is buy-to-let ethical? No. I haven't seen one argument on this thread that has convinced me otherwise.

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HOLA4412

I disagree. Some people I know who have done this regret doing so because of the enormous hassles attached to looking after more than one property. I know many people, too, who do not aspire to owning more than one property. All they want is a home. They have better imaginations than thinking that owning more than one property is something to aspire to.

HPI has been incredibly destructive. At the moment people think it only affects those who are priced out. If those people are priced out forever, it affects everyone. Rents will have to be paid to private landlords for an enormous percentage of 'pensioners'. The 'have nots' can't pay so who will? The readjustment is coming. In some areas, satisfactory falls have already started.

Is buy-to-let ethical? No. I haven't seen one argument on this thread that has convinced me otherwise.

So, those who regret owning more than one property. They used to want several properties before it became hard work for them. They didn't think it was unethical. By inference they only regret owning a second property because it's a hassle (without the monetary benefit to outweigh the hassle) not because they think it's unethical.

Of all the people you know who just want a home. If you offered them a BTL which gave them a garanteed 5% per year (with an agent doing the donkey work for them), you don't think most of them would take it? Maybe your friends think like you (they might think its unethical too), but, again, I'd say they form a minority.

I agree HPI has been destructive. We live in a country where 'owning' property isn't limited to Dachas.

In your mind BTL's aren't ethical. But that's a strange argument. To most people BTL's aren't unethical, it doesn't mean they have to ethical not to be unethical. I drive to work, it's not unethical (in my view) of me to do so, but that doesn't make it ethical by default. Something doesn't have to be ethical or unethical.

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HOLA4413

So, those who regret owning more than one property. They used to want several properties before it became hard work for them. They didn't think it was unethical. By inference they only regret owning a second property because it's a hassle (without the monetary benefit to outweigh the hassle) not because they think it's unethical.

I think you're asking a lot to get people to admit that. Look at how people squirm when it's suggested they car share or, God forbid, get the bus! It's a big ask to get people to say 'I did this but I now think it's unethical'. People often find other excuses to change their behaviour.

Of all the people you know who just want a home. If you offered them a BTL which gave them a garanteed 5% per year (with an agent doing the donkey work for them), you don't think most of them would take it? Maybe your friends think like you (they might think its unethical too), but, again, I'd say they form a minority.

Don't be so sure. When you have experienced something first hand and found it to be destructive, it takes a kind of masochist to want to put someone else who is innocent through that pain too. There are plenty of ways to make money. It doesn't have to be through depriving someone of a home.

I agree HPI has been destructive. We live in a country where 'owning' property isn't limited to Dachas.

In your mind BTL's aren't ethical. But that's a strange argument. To most people BTL's aren't unethical, it doesn't mean they have to ethical not to be unethical. I drive to work, it's not unethical (in my view) of me to do so, but that doesn't make it ethical by default. Something doesn't have to be ethical or unethical.

Why not? If there is a less destructive way of you getting to work (driving a hybrid car, car sharing, taking public transport, cycling, walking etc etc) maybe your chosen mode is unethical. I believe it is increasingly possible to assign those labels to many of our activities. But often we resist doing so because it will mean that we may feel obliged to change our behaviour, and that's something that many only do when forced into it.

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HOLA4414

That's it - ring up the Co-Op! That will solve the problems.

Argue, debate, come up with red herrings about other ethical issues, obfuscate, distort, twist, turn and .... ring the bloody Co-Op!

BTL is the big issue.

It is the only thing about this housing market that could easily be affected by legislation / taxation.

If BTL became uneconomic because of new taxation - the market would drop to 'normal' affordability levels for First Time Buyers and some semblance of sanity might return - without the long hoped for but not coming higher interest rates and, most importantly, without a recession.

So, stop arguing the toss here and get together and disrupt an Inside Track seminar - get a load of publicity and make everyone in the country realise what a negative effect BTL is having on our society.

People like Inside Track are driving BTL - it's time to fight back.

Inside Track are the enemy.

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HOLA4415

Ok, we're getting a little offtrack in the specifics of ethics. Situations change over time as does our ethicial outlook. But, I'll restate what I first said, most people in this country really don't see an ethical quandry in the issue of owning BTL's.

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HOLA4416

Ok, we're getting a little offtrack in the specifics of ethics. Situations change over time as does our ethicial outlook. But, I'll restate what I first said, most people in this country really don't see an ethical quandry in the issue of owning BTL's.

Because they have never thought about it and never had the facts explained to them.

Inside Track are the enemy. They must be discredited.

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HOLA4417

That's it - ring up the Co-Op! That will solve the problems.

Argue, debate, come up with red herrings about other ethical issues, obfuscate, distort, twist, turn and .... ring the bloody Co-Op!

BTL is the big issue.

It is the only thing about this housing market that could easily be affected by legislation / taxation.

If BTL became uneconomic because of new taxation - the market would drop to 'normal' affordability levels for First Time Buyers and some semblance of sanity might return - without the long hoped for but not coming higher interest rates and, most importantly, without a recession.

So, stop arguing the toss here and get together and disrupt an Inside Track seminar - get a load of publicity and make everyone in the country realise what a negative effect BTL is having on our society.

People like Inside Track are driving BTL - it's time to fight back.

Inside Track are the enemy.

You're a funny one! You moan that younger people don't do what you think they should, and when they do something, anything, to raise questions and get policies changed, it's not right! My gripe at the moment is with the Co-op so I'm doing something about it, as are many others. Your gripe is with Inside Track. What are you doing about it?

Ok, we're getting a little offtrack in the specifics of ethics. Situations change over time as does our ethicial outlook. But, I'll restate what I first said, most people in this country really don't see an ethical quandry in the issue of owning BTL's.

I disagree. And I think that those who once thought it was a good idea are now starting to see that not only are they unlikely to get back anything like what they thought they would, they are also having to live with the thoroughly unpleasant feeling of having priced someone out of a home. In addition, they are seeing their own neighbourhoods go rapidly downhill because so many properties that once were owned and cared for are now being rented.

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HOLA4418
Guest donall

There's nothing wrong with BTL.

Buildings don't build themselves - at the end of the day it is a risk to take ownership and responsibility for anything and with that comes reward.

What isn't desirable is that the presence of BTLers in the market pushes up prices out of reach of the aspiring FTB. Since FTBs are more limited in where they live and what they can buy (a BTL is more likely to be able to update an old building and more willing) they are at a disadvantage to the footloose property developer.

If you look at the financial situation of a BTL - they receive rent and pay out for mortgages, insurance, repairs etc...

If the rent is higher than the expenses they make a profit. good for them.

If they buy at a low price and sell at a high price they make a profit. Good for them - but they are no longer BTLers.

The price they pay now is related to the original cost of the mortgage and interest rates. So.

If they buy when prices are high and IR are low they risk losing out when IR rise and prices drop.

Bear in mind that rents have generally increased gently in the last 10 years - and rents for some types of property (e.g. 1 bed flats in Leeds) are low due to poor demand. Anyone getting into BTL now is running the risk of negative equity.

The people who are getting into BTL now are making no profit margin and seem to believe in house price inflation making them rich. There fingers will be burnt in the event of a downturn or higher IRs.

While there is still money to be made in bringing properties to the market - most BTLers i know are renovating properties and selling them on, while 2 years ago they were holding on to them.

The people who don't know what they are doing will suffer most - especially those who are running now to jump on the bandwagon.

Out of interest - I don't BTL and I wouldn't consider it as an option for investment at the moment.

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HOLA4419

There's nothing wrong with BTL.

What's wrong with going into supermarkets and spending £200,000 on food creating a shortage, setting up a stall somewhere and saying to people you can still buy food but you have to buy it from me at a vastly inflated price than the market would once have dictated in this area? I fail to understand why you think it's acceptable to do that with houses/homes and not with water, air, food etc etc. It's the biggest flaw in BTL's already pitifully weak justifications for what is a thoroughly anti-social activity. As someone else already said, it's like doctors breaking arms to create a need for their services, or dentists pulling teeth to create a need for implants. BTL landlords are providing a service that would not be needed if BTL landlords did not exist.

And not one of you pro BTL folks has addressed this in any way at all.

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HOLA4420

What's wrong with going into supermarkets and spending £200,000 on food creating a shortage, setting up a stall somewhere and saying to people you can still buy food but you have to buy it from me at a vastly inflated price than the market would once have dictated in this area? I fail to understand why you think it's acceptable to do that with houses/homes and not with water, air, food etc etc. It's the biggest flaw in BTL's already pitifully weak justifications for what is a thoroughly anti-social activity. As someone else already said, it's like doctors breaking arms to create a need for their services, or dentists pulling teeth to create a need for implants. BTL landlords are providing a service that would not be needed if BTL landlords did not exist.

And not one of you pro BTL folks has addressed this in any way at all.

There's nothing wrong with it. If you want to set up business by buying in bulk from a supermarket and then selling the produce on a stall somewhere you ar eperfectly entitled to do it!

It is not unethical, it is not illegal. It might not make financial sense but it's not wrong! In fact it's pretty much what corner shops do when they go to the cash-and-carry!

I'm sorry, but you seem to have a very strange idea of what people worry about:

they are also having to live with the thoroughly unpleasant feeling of having priced someone out of a home.

Again, you don't seem to understand - other people don't live in your world, they don't have your 'ethics', they don't see the same problems. The number of people in this country who own BTL's and lose sleep over 'the thoroughly unpleasant feeling of having priced someone out of a home' must be miniscule.

The current trends in HPI are bad for our economy, I'll agree, but BTL and the general capitalist society we live in is not satans work.

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HOLA4421

There's nothing wrong with it. If you want to set up business by buying in bulk from a supermarket and then selling the produce on a stall somewhere you ar eperfectly entitled to do it!

It is not unethical, it is not illegal. It might not make financial sense but it's not wrong! In fact it's pretty much what corner shops do when they go to the cash-and-carry!

I'm sorry, but you seem to have a very strange idea of what people worry about:

Again, you don't seem to understand - other people don't live in your world, they don't have your 'ethics', they don't see the same problems. The number of people in this country who own BTL's and lose sleep over 'the thoroughly unpleasant feeling of having priced someone out of a home' must be miniscule.

The current trends in HPI are bad for our economy, I'll agree, but BTL and the general capitalist society we live in is not satans work.

Lol! Sorry, you'll never convince me that BTLs are harmless. And you still haven't offered any kind of justification for them.

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HOLA4422

Lol! Sorry, you'll never convince me that BTLs are harmless. And you still haven't offered any kind of justification for them.

How about we use your previous logic and my last post...

Lol! Sorry, you'll never convince me that cash-and-carrys are harmless. And you still haven't offered any kind of justification for them.

I don't have to!

And that's the point isn't it...

(and btw, I don't own a BTL, I have no intentions of buying one)

Edited by billyswizz
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HOLA4423
Guest donall

Mags.

Do you think that the supermarkets themselves buy all the food, set up stalls and sell it at a vastly inflated price to the empovrished customer?

If you look at what a litre of milk costs and what the farmer gets you'd see that.

The BTL landlords these days are much better than the slum-landlords in the past, AND there are controls in place to ensure that buildings are up to standard.

Still, it is right that those who take risks reap reward for their efforts.

Home owneship is a relatively new idea in the UK and a lot of other countries have much lower ownership rates than us, e.g. Sweden, Germany and France.

The cost of building or renovating a house is substantial compared with the expected return, that's why BTL is needed.

Especially in a society that is increasingly mobile - people are moving home to go to university, work, divorce etc...

Renting is a lot quicker and easier to do than buying and it's cheaper too in the short run.

As for your arm breaking doctors - BTL bring properties to the market either by upgading older properties, or new properties. For those BTLers who are buying houses that FTBers would be buying, this leads higher prices. Which is a bad thing - if you think that it leads to a house price crash.

Houses are either built by public or private funding. If you are a fan of public housing i suggest you go live in one. Privately funded housing allows the needs of the market be met. The market isn't perfect and it needs to be controlled - but it is the best way we have.

If there is to be a HPC isn't it a good thing that those off the bottom rung of the ladder can't get a foothold. The hatred that you people have towards BTLers is just fear and envy.

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HOLA4424

How about we use your previous logic and my last post...

I don't have to!

And that's the point isn't it...

(and btw, I don't own a BTL, I have no intentions of buying one)

Not really - not if you're trying to argue that they are ethical.

Mags.

Do you think that the supermarkets themselves buy all the food, set up stalls and sell it at a vastly inflated price to the empovrished customer?

If you look at what a litre of milk costs and what the farmer gets you'd see that.

The BTL landlords these days are much better than the slum-landlords in the past, AND there are controls in place to ensure that buildings are up to standard.

Still, it is right that those who take risks reap reward for their efforts.

Home owneship is a relatively new idea in the UK and a lot of other countries have much lower ownership rates than us, e.g. Sweden, Germany and France.

The cost of building or renovating a house is substantial compared with the expected return, that's why BTL is needed.

Especially in a society that is increasingly mobile - people are moving home to go to university, work, divorce etc...

Renting is a lot quicker and easier to do than buying and it's cheaper too in the short run.

As for your arm breaking doctors - BTL bring properties to the market either by upgading older properties, or new properties. For those BTLers who are buying houses that FTBers would be buying, this leads higher prices. Which is a bad thing - if you think that it leads to a house price crash.

Houses are either built by public or private funding. If you are a fan of public housing i suggest you go live in one. Privately funded housing allows the needs of the market be met. The market isn't perfect and it needs to be controlled - but it is the best way we have.

If there is to be a HPC isn't it a good thing that those off the bottom rung of the ladder can't get a foothold. The hatred that you people have towards BTLers is just fear and envy.

BTLs are simply trying to get something for nothing. It's a bandwagon. You make out they are risk takers! They not at all! Much the opposite! And as for fear and envy - grow up! A level playing field is all most people want. You've raised BTL to some ridiculous ethical height when you know full well that if these people didn't think they could get something for nothing they wouldn't touch property with a bargepole. You're trying to justify the unjustifiable, and make out that those who raise objections on ethical grounds are fearful and envious. If it wasn't so naive it would be offensive.

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HOLA4425

Not really - not if you're trying to argue that they are ethical.

So you believe that something has to be positively ethical or unethical (black or white)? Something can't simply be? In my opinion BTL's are not unethical. It doesn't make them an ethical alternative to cardboard boxes, but they're still not unethical. I don't have to argue that they're ethical because they don't have to be ethical to exist without the alternative of being unethical. (stopping being I confuse myself even more!)

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