Tuesday, October 26, 2010

Institutional investors wanted

What Britain can learn from the German property market

Outside the social housing sector, the UK has long been dependent on the small private landlord (the buy-to-let landlord) to provide housing. However, I wonder if this is good enough. Some small landlords are excellent, some are awful. Most suffer from lack of scale (they don't have full-time handymen at their beck and call) and from cash flow problems: when the purchase of a new boiler requires several months' worth of rent to be set aside and there is a mortgage to be paid, not very many tenants get new boilers. But regardless of whether buy-to-let is a good or bad thing, it still isn't able to provide for a market shifting en masse to needing good long-term rental property. For that, we need the institutional sector.

Posted by drewster @ 11:15 AM (1350 views)
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8 thoughts on “Institutional investors wanted

  • Good analysis. There’s no question we need a healthy rented sector with a decent mix of public and private provision. The question is whether the regulatory framework and tax incentives to provide it should be there mainly to foster the creation of an army of mini-Rachmanns, or to promote institutions who will provide it efficiently and professionally.

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  • when government owned council houses,if the people were working they paid rent albeit lower than private sector.

    fast forward and we now pay up to £900 per month to private landlords

    margaret thatcher should never have sold off council houses

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  • House prices in Germany are regulated. You can buy and sell at any price you want, however what the banks use as a loan value is not the ‘market price’ at which a willing buyer and willing seller agree. The loan value is based on land price & accommodation value both at square metre prices. Banks generally will loan only upto 60% of this book value, the loans are typically batched and sold onto institutes (say insurance companies, or local government). That’s why there is no housing bubble here.

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  • > Most suffer from lack of scale (they don’t have full-time handymen at their beck and call) and from cash flow problems: when the purchase of a new boiler requires several months’ worth of rent to be set aside and there is a mortgage to be paid, not very many tenants get new boilers.

    Give me a break, if you owned your own home you’d still have to save up for a boiler and you wouldn’t have “handymen” (actually its heating engineers and skilled joiners etc) on your payroll either….if you don’t want to rent then don’t. Renting isn’t the equivalent of staying in a hotel.

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  • a Rachman @ 5 said…..

    ‘f you don’t want to rent then don’t’

    …….and do what exactly, you crass idiot?……

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  • tenyearstogetmymoneyback says:

    A_landlord

    So you are suggesting that tennants should pay for things like new boilers thus pushing the value of the property further beyond their means. If a homeowner fits a new boiler they will get a decent proportion of the money back when they sell.

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  • “Give me a break, if you owned your own home you’d still have to save up for a boiler and you wouldn’t have “handymen” (actually its heating engineers and skilled joiners etc) on your payroll either….if you don’t want to rent then don’t. Renting isn’t the equivalent of staying in a hotel.”

    Actually they’re handymen. Engineers have degrees and you don’t need a degree to put in a new boiler.

    “Renting isn’t the equivalent of staying in a hotel.”

    Yes it is. If something isn’t working the tenant can demand that the landlord fixes it immediately. If they don’t then the tenant can arrange to have someone else fix it and bill the landlord (or just subtract it from the rent). That’s how it works. The landlord provides the service.

    Slumlord are we? Handyman with a BTL are we?? In touble are we??? Not going to be able compete with a proper landlord that can afford to put in a new boiler????

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  • ‘Renting isn’t the equivalent of staying in a hotel’. Exactly. How dare these insects demand basic commodities such as working boilers? Sheesh, they’ll want roofs which don’t leak next. If they don’t wish to rent from some skank who wants to make money without providing a service, they should just go and die on the streets or something.

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