Thursday, August 30, 2012
Let’s just sell the whole country to foreigners and rent it back
Rise in foreign landlords is 'crowding out first-time buyers’
An influx of foreign investors is driving a resurgence in Britain’s buy-to-let market, holding house prices steady but threatening to push up rents and crowd out first-time buyers. The Bank of England stated: “Foreign investors [have] branched out of commercial property in the capital and begun also to invest in the London residential lettings market.†While growth in buy-to-let demand had helped “to put a floor under pricesâ€, according to the Bank, mortgage experts have warned that first-time buyers are being priced out of the market. Ray Boulger, a mortgage specialist at John Charcol said: “The basic premise that landlords are crowding out first-time buyers is right. If first-time buyers weren’t competing with landlords, then prices would be cheaper.â€
14 thoughts on “Let’s just sell the whole country to foreigners and rent it back”
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hpwatcher says:
There always seems to be something, some excuse or some reason, why UK house prices remain so high.
Funny that isn’t it?
happy mondays says:
Cap Rents!
ontheotherhand says:
Eh? How can more rental property supply ‘push up rents’?
taffee says:
@3
because we’re in new financial times,where we print money,bail out the reckless,punish the prudent and everything just goes up regarding property
wdbeast says:
That’s fine by me, let them take the risk followed by the hit!
greenmind says:
When the housing supply is inelastic, ie not responsive to increased demand, then it is a monopoly. Housing – being a basic need – new households are forced to pay the ever rising asking price. It ends with renters in overcrowded and/or substandard housing in servitude to landlords not much different to the time of Dickens.
Thecountofnowhere says:
Britain Shame…letting foreigners profit while the British people suffer.
tommyr says:
What really annoys me is foreigners (not living in the UK) don’t have to pay CGT when they sell a house in Britain. With a housing shortage I don’t see why foreigners should have an advantage.
Davidwd says:
The local councils are so opposed to developement and the government is so keen on migrants moving in to the UK there will always be a shortage of homes and unafordable homes!!!!!!!
mark wadsworth says:
Greenmind: “When the housing supply is inelastic, ie not responsive to increased demand, then it is a monopoly.”
Correct, correct, correct.
While the Homeys sort of admit that land/housing is inelastic, they refuse to accept it is a monopoly or a cartel. When you are buying or renting land, you are not paying the owner for any value he created, you are paying membership fees to be able to join the cartel. It’s no different to the grey market in taxi driver permits. The more the local council rations permits, the more they are worth.
And as any cursory understanding of economics tells us, a tax is borne/paid by whichever factor is less price-elastic. Smokers are price insensitive and manufacturers of cigarettes are price elastic, so tobacco duty is nearly all borne by smokers and tobacco company profits are barely affected. Demand for housing is reasonably price elastic (housing is just one of many things which people spend their limited budgets on, and people will room-share if rents are high enough) and supply of land is entirely price inelastic, so a tax on land is born entirely by the land owner.
http://en.wikipedia.org/wiki/Tax_incidence
Reticent says:
OTOH, the increase in supply is met by the increase in demand by the households that would otherwise have bought, but are forced to rent instead. Since those households are at the margin of being able to afford to buy, they can afford higher rents than the median tenant, thus increasing the demand for rent, as measured in money.
Whether the landlord is foreign or a second-home owner, the effect is the same, and explains why we have seen vast rent increases despite the current economic climate (rental demand has increased because people are putting off buying, whether out of choice or because the banks are not lending to FTBs).
dill says:
Let’s just sell the whole country to foreigners
Well, given the state of it, they’re welcome to it.
It then becomes their problem.
libertas says:
Yea, well that’s what happens when you devalue the currency stupid. Everything gets bought up for pennies on the pound by the banks and corporations and government which print money and, foreigners who hold stronger foreign currencies. The domestic middle class then collapses.
mr g says:
But, but, I thought foreigners were to be welcomed with open arms in the UK.