Lifetime Renting

[Objective Developer]

In my opinion, we have reached a crucial point with the housing market; either prices with correct (nominal or real) or prices rises will continue, possibly facilitated by new finance products that are yet to hit the market (although we have seen hints – intergenerational mortgages, buy with friends etc).

If prices correct, be it through wage inflation or credit tightening, then ownership may once again be an attractive prospect for those of you (us) that see houses as part home, part investment. If not, then it may be that tenure for a majority of UK households moves from owner-occupier to long term tenant (I believe this is the case for France among others).

Obviously, there are many out there that simply dislike the idea of renting long term, and often they cite the restrictive nature of current tenancy agreements (changing decor, installing permanent fittings etc) along with the lack of security (land lord could sell up).

But what if homes were instead owned by professional landlords who granted, say, 30 year leases with agreements for things like internal decoration with written permission? The loan to buy this property could be spread over 3 or 4 generations of a family, meaning that rents may be lower than they are now. And if you had a home for 30 years, it might seem an insignificant investment on the tenets part to install a new bathroom or carpet once in a while.

This is just an idea at this stage and it is in part a result of conversations occurring in my home at the moment. I rent with my partner, she a student, me a planning professional on an average income. Our friends are all clambering to buy, and some are taking on mortgages that I feel are at best dangerous and in some cases clearly foolhardy. I feel that this could be the final push, and that if property prices do not correct then I’m pretty much resided to never owning a house. This in its self does not bother me (She is another matter and heaven hath…); what is disquieting is that there are many landlords who are not professional and are not very well insulated against market volatility. It is this faction that make renters doubt the long term stability of there housing situation.

What are the thoughts of the folks on here? Renters for life if the crash doesn’t happen or are well all to get 4 on the mortgage etc?

Comments invited.

[Marina]

In my opinion, we have reached a crucial point with the housing market; either prices with correct (nominal or real) or prices rises will continue, possibly facilitated by new finance products that are yet to hit the market (although we have seen hints – intergenerational mortgages, buy with friends etc). Err, so it isn't a crucial point then.

If prices correct, be it through wage inflation or credit tightening, then ownership may once again be an attractive prospect for those of you (us) that see houses as part home, part investment. If not, then it may be that tenure for a majority of UK households moves from owner-occupier to long term tenant (I believe this is the case for France among others).

Obviously, there are many out there that simply dislike the idea of renting long term, and often they cite the restrictive nature of current tenancy agreements (changing decor, installing permanent fittings etc) along with the lack of security (land lord could sell up).

But what if homes were instead owned by professional landlords who granted, say, 30 year leases with agreements for things like internal decoration with written permission? The loan to buy this property could be spread over 3 or 4 generations of a family, meaning that rents may be lower than they are now. But what is the difference between a landlord getting a loan that lasts 3 or 4 generations or the 'tenant' getting a loan over 3 or 4 generations and buying the property. All you're really saying is that propery prices are so high the yields don't make sense - so make sense of it by lowering the borrowing costs of buying the property by making the loan 100 years instead of 25 years. Can't see it catching on myself. It's only a pile of bricks and timber for heaven's sake. And if you had a home for 30 years, it might seem an insignificant investment on the tenets part to install a new bathroom or carpet once in a while. It's a big 'What If' - for a kick-off it would need a change in legislation - there doesn't seem to be any calls for a change in legislation.

This is just an idea at this stage and it is in part a result of conversations occurring in my home at the moment. I rent with my partner, she a student, me a planning professional on an average income. Our friends are all clambering to buy, and some are taking on mortgages that I feel are at best dangerous and in some cases clearly foolhardy. I feel that this could be the final push, and that if property prices do not correct then I’m pretty much resided to never owning a house. Why not take out a 100 year loan? This in its self does not bother me (She is another matter and heaven hath…); what is disquieting is that there are many landlords who are not professional and are not very well insulated against market volatility. It is this faction that make renters doubt the long term stability of there housing situation.

What are the thoughts of the folks on here? Renters for life if the crash doesn’t happen or are well all to get 4 on the mortgage etc?

Comments invited.

[Guest mattsta1964]

In my opinion, we have reached a crucial point with the housing market; either prices with correct (nominal or real) or prices rises will continue, possibly facilitated by new finance products that are yet to hit the market (although we have seen hints – intergenerational mortgages, buy with friends etc).

If prices correct, be it through wage inflation or credit tightening, then ownership may once again be an attractive prospect for those of you (us) that see houses as part home, part investment. If not, then it may be that tenure for a majority of UK households moves from owner-occupier to long term tenant (I believe this is the case for France among others).

Obviously, there are many out there that simply dislike the idea of renting long term, and often they cite the restrictive nature of current tenancy agreements (changing decor, installing permanent fittings etc) along with the lack of security (land lord could sell up).

But what if homes were instead owned by professional landlords who granted, say, 30 year leases with agreements for things like internal decoration with written permission? The loan to buy this property could be spread over 3 or 4 generations of a family, meaning that rents may be lower than they are now. And if you had a home for 30 years, it might seem an insignificant investment on the tenets part to install a new bathroom or carpet once in a while.

This is just an idea at this stage and it is in part a result of conversations occurring in my home at the moment. I rent with my partner, she a student, me a planning professional on an average income. Our friends are all clambering to buy, and some are taking on mortgages that I feel are at best dangerous and in some cases clearly foolhardy. I feel that this could be the final push, and that if property prices do not correct then I’m pretty much resided to never owning a house. This in its self does not bother me (She is another matter and heaven hath…); what is disquieting is that there are many landlords who are not professional and are not very well insulated against market volatility. It is this faction that make renters doubt the long term stability of there housing situation.

What are the thoughts of the folks on here? Renters for life if the crash doesn’t happen or are well all to get 4 on the mortgage etc?

Comments invited.

The market WILL crash

It still wont be easy for FTB's if the economy is in recession...........now inevitable

[this_prisoner_is_opting_out]

Here in Belgium a standard lease is 9 years, a landlord who wants you to leave before the end has to have a VERY good reason, and (their) death is not good enough!!

An example would be if they "needed" it for a member of their immediate family and even then you could fight them in court. Tenants re-decorating rented property is very common here.

[Guest Cletus VanDamme]

But what if homes were instead owned by professional landlords who granted, say, 30 year leases with agreements for things like internal decoration with written permission? The loan to buy this property could be spread over 3 or 4 generations of a family, meaning that rents may be lower than they are now. And if you had a home for 30 years, it might seem an insignificant investment on the tenets part to install a new bathroom or carpet once in a while.

We already have this situation: it's called leasehold

You buy the property with a mortgage, but don't own it or the land it sits on. Normally leases are for 99-125 (some new builds 999 years!), but many central London leases are much shorter - some have as little as 40 years remaining. Then they charge you a service charge of £2K per year for painting the communal areas every so often.

So you'd think this would lead to lower prices - wrong. In fact, because of the boom in flat prices, it's often more expensive to buy a leasehold flat than a freehold house in the same area. Where's the logic in that?

Edited September 22, 2006 by Cletus VanDamme

[Objective Developer]

'All you're really saying is that propery prices are so high the yields don't make sense - so make sense of it by lowering the borrowing costs of buying the property by making the loan 100 years instead of 25 years. Can't see it catching on myself. It's only a pile of bricks and timber for heaven's sake.' Marina

Erm, then why are people taking on more risky mortgages in the first place? In fact, why are people even interested in buying houses? Were you being ironic?

[statscat]

We already have this situation: it's called leasehold

You buy the property with a mortgage, but don't own it or the land it sits on. Normally leases are for 99-125 (some new builds 999 years!), but many central London leases are much shorter - some have as little as 40 years remaining. Then they charge you a service charge of £2K per year for painting the communal areas every so often.

So you'd think this would lead to lower prices - wrong. In fact, because of the boom in flat prices, it's often more expensive to buy a leasehold flat than a freehold house in the same area. Where's the logic in that?

Agree with you re leasehold - you are effectively renting the land the house is on for a long period of time - I think there is legislation that can force the sale of the land but the rules are very stringent I seem to recollect you have to show the land has been occupied for 112 years (its a strange number I remember that).

Additionally interest only mortgages are effectively renting - instead of renting a house you rent the money to buy a house, hoping that the capital accrued allows you to settle the initial sum and downsize at the same time.

[Marina]

'All you're really saying is that propery prices are so high the yields don't make sense - so make sense of it by lowering the borrowing costs of buying the property by making the loan 100 years instead of 25 years. Can't see it catching on myself. It's only a pile of bricks and timber for heaven's sake.' Marina

Erm, then why are people taking on more risky mortgages in the first place? In fact, why are people even interested in buying houses? Were you being ironic?

No, not at all. People will take more risk if they feel it is worth it, or feel they have no choice. So, to get onto the 'property ladder' people are taking on daft mortgages etc. However, there must be a limit.

And, extending the length of a mortgage just means you pay interest for longer - the only benefit is it gives you more time to save up the money to repay the capital.

The more you think about it the more crazy it all is. I used to build houses for a living. I've put up hundreds of the things. From digging the foundations to laying the carpets - 12 weeks. And the cheapest bricks/blocks/timber/kitchens/bathrooms etc used throughout. And you think people should borrow money for 100 years to pay for this?

I'd suggest we go the other way. Anyone up for a barn raising. One day and funny beards for the men.

[Guest Yeahbutnocrash]

The market WILL crash

It still wont be easy for FTB's if the economy is in recession...........now inevitable

Yippee!!! I'll look forwards to buying some really cheap property!! - How long do I have to wait?

[oracle]

In my opinion, we have reached a crucial point with the housing market; either prices with correct (nominal or real) or prices rises will continue, possibly facilitated by new finance products that are yet to hit the market (although we have seen hints – intergenerational mortgages, buy with friends etc).

If prices correct, be it through wage inflation or credit tightening, then ownership may once again be an attractive prospect for those of you (us) that see houses as part home, part investment. If not, then it may be that tenure for a majority of UK households moves from owner-occupier to long term tenant (I believe this is the case for France among others).

Obviously, there are many out there that simply dislike the idea of renting long term, and often they cite the restrictive nature of current tenancy agreements (changing decor, installing permanent fittings etc) along with the lack of security (land lord could sell up).

But what if homes were instead owned by professional landlords who granted, say, 30 year leases with agreements for things like internal decoration with written permission? The loan to buy this property could be spread over 3 or 4 generations of a family, meaning that rents may be lower than they are now. And if you had a home for 30 years, it might seem an insignificant investment on the tenets part to install a new bathroom or carpet once in a while.

This is just an idea at this stage and it is in part a result of conversations occurring in my home at the moment. I rent with my partner, she a student, me a planning professional on an average income. Our friends are all clambering to buy, and some are taking on mortgages that I feel are at best dangerous and in some cases clearly foolhardy. I feel that this could be the final push, and that if property prices do not correct then I’m pretty much resided to never owning a house. This in its self does not bother me (She is another matter and heaven hath…); what is disquieting is that there are many landlords who are not professional and are not very well insulated against market volatility. It is this faction that make renters doubt the long term stability of there housing situation.

What are the thoughts of the folks on here? Renters for life if the crash doesn’t happen or are well all to get 4 on the mortgage etc?

Comments invited.

if you do a bit of research about the 1970's you'll find labour really like imposing rent-controls on people.......what better way to do it than suck everyone into BTL and then pull the rug from under them with a massive hike in joblessness/depression of wages.

this little phase we're going through looks like and smells like the 1970's all over again

[onrollover]

Yippee!!! I'll look forwards to buying some really cheap property!! - How long do I have to wait?

If the market does crash it may not make financial sense to buy as prices could fall gradually over many decades. So you may end up still renting.

[Monopoly]

Here in Belgium a standard lease is 9 years, a landlord who wants you to leave before the end has to have a VERY good reason, and (their) death is not good enough!!

An example would be if they "needed" it for a member of their immediate family and even then you could fight them in court. Tenants re-decorating rented property is very common here.

So far as I know, the standard min. renting contract is 3 years...we had a hell of a time to get out of it