UKC

I find this below, rather interesting, and concerning too, regarding the health outcomes associated with living in private rented accomodation, rather than (at some piont) owning one's own home. Given a national shortage of affordable homes, I find it can put incomes from BTL's into a certain stark perspective, almost as if using them as an income stream (allowing for there being a need for some rented accomodation in society) is ensuring that others in society age more quicky biologically. It's rather bleak, but reality sometimes is. 

https://www.understandingsociety.ac.uk/news/2023/10/11/renting-a-home-linke...

''The analysis showed that living in a privately rented home was associated with faster biological ageing. What’s more, the impact of renting in the private sector, as opposed to outright ownership (with no mortgage), was almost double that of being out of work rather than being employed. It was also 50% greater than having been a former smoker as opposed to never having smoked.''

In reply to Timmd:

One school of thought is that it is very difficult to have a secure comfortable retirement unless you own your home.

Not just the financial aspect but the fact that it is insecure, despite supposed laws to the contrary.

In reply to Timmd:

I have always regarded 'buy to let' as a truly immoral form of investment.

Even if you’re a caring Landlord, repairing stuff when it gets broken, etc., you're still a negative factor in the plight of young people simply not being able to ever conceive of owning their own home because you're mainly bidding on exactly the same properties…

In reply to Pete O'Donovan:

Not sure it's that clear cut. My daughter has just finished uni and like many others used lets. Going into the big world she has said she doesn't want to be tied up with financial commitments like a mortgage even if she could get one.

In reply to Timmd:

Thought experiment:  there are no rental properties of any sort for any reason.

How does that work out for you?

The real challenge is to ensure balance.  It's possible - most of Europe has a stable, high quality lettings sector that makes an adequate return but is in-line with cost of housing broadly.  Notably it's long-term - frequently multi-generational.

In reply to Pete O'Donovan:

...plight of young people simply not being able to ever conceive of owning their own home because you're mainly bidding on exactly the same properties..

You have a point.  The fact that we, as a country, have had to house 7,000,000 immigrants to the UK since 2000 is not helping either.

In reply to cwarby:

There's definitely a place for short term private rentals, I was happy living like that for years. But for people raising a family it's just not the secure home they need. There are far too many people living with the stress of struggling to pay rent on a place with no idea whether they'll still be there in 6 months.

It's all Thatcher's fault for selling off the council housing. What we need is a massive program of building and / or acquiring social housing stock, and an end to right-to-buy. A home at an affordable rent with security for life should be a basic human right. If we had this in place, people renting out homes for profit wouldn't be a problem, they'd be catering to a market that wants their services.

In reply to cwarby:

Uni is a very specific sector and one where, arguably, the uni should be providing the accommodation (house or halls), rather than the private sector. I remember the landlord when I was a student owned something like 30+ student houses and lived in a mansion!

Your wider point that there should be a percentage of affordable rental properties is valid for people like your daughter, or other people, for example, working away from home, etc.

In reply to Timmd:

It isn't the principle of buy-to-let that's the problem. There's plenty of demand for short and medium term rental properties and these have to be owned and let by someone. Rather, it's the completely unregulated nature of the market that's the problem. Tenants make money for landlords, as is only fair to an extent. But then people see money being made and want a part of it. Banks see money to be made from lending and want a part of it. These extra cuts need to come from somewhere and inevitably it's the tenant who loses out as rents inevitably go up, causing ever more people wanting a slice of the pie and rents keep on rising.

If the government sees affordable rental properties as being necessary for a successful economy (which i think it should if it's taking a longer term view) then rent rises need to be limited somehow, whether by regulated prices, tax on letting profits or whatever. Without some kind of intervention we end up precisely where we are now, with workers unable to afford to live where jobs are, and with few people able to save to afford motgages on overpriced houses

In reply to lowersharpnose:

3.6 Million, not 7. https://migrationobservatory.ox.ac.uk/resources/briefings/the-impact-of-mig... You've lumped in natural growth with net migration.

In reply to john arran:

I found this article quite interesting as it challenged a lot of my pre-conceived notions about affordable housing (but it obviously assumes a very unfettered free market):

https://kevinerdmann.substack.com/p/we-need-affordable-housing-not-market

I'd love to see similar studies in places (maybe Nordic countries) where there is quite a kot of renting, but also mor regulated markets.

In reply to john arran:

I think you live outside of the UK now so this question is only aimed at you for that reason!

I'm aware that renting long term is far more commonplace in much of Europe than it is in the UK. But how do those people pay rent in retirement? Better pensions? Lower rents so that savings can be built up while working to fund rent in retirement? Or something else?

In reply to cwarby:

No offence to your daughter but having just left uni she is probably quite young with little life experience. She doesn't want a financial comittment like a mortgage but she will pay more in rent. 

My mortgage was paid off at 48 years old, I was paying £400 a month and I now pay nothing other than a bit of maintenance. The identical house opposite is rented, the current rate is £1000 a month. 

Rent will always go up due to market forces, housing prices going up and a lack of supply of starter homes but when you buy you buy at a price and that's it, there can be a bit of fluctuation based on the interest rate but unless you massively over extend it's far cheaper over a lifetime to buy over renting. You also have a valuable asset that you can sell if you need to rather than paying more money to gain assets for other people. 

In reply to john arran:

The principle of (mortgaged) buy to let in the UK is a problem though - you've mentioned some of it. It massively tips the scales towards those that already own property as they can remortgage to release sums of money that typical first-time buyers can't accumulate easily without parental help. They then compete to buy properties that first-time buyers would buy, driving up prices, and then renting properties back to these potential first-time buyers. These properties are then taken out of the buying/selling market in the long run and so depressing the usual activity of FTBs selling to move upwards. 

The two big issues were the introduction of the assured shorthold tenancy - with the associated massive insecurity of 2 months' notice "no fault" evictions, and then the buy to let mortgages that followed this. As well as the selling off and non-replacement of council housing it was a huge error to allow this to continue unchecked - particularly the competition for pre-existing homes in an already constrained market. If people want to invest in property then it should be geared towards expanding housing provision - i.e. building more homes specifically for rental.

In reply to Timmd:

 BTL is rental capitalism which is horrendous. 

In reply to Alasdair Fulton:

It might be 7 million if you count children of immigrants born in the UK.

"ONS figures show that in 2022, 30.3% of births in England and Wales were to non-UK born mothers. This is higher than the share of non-UK born people in England and Wales, primarily because non-UK born women are more likely to be of childbearing age. The estimated total fertility rate of foreign-born women living in England or Wales has declined over the past ten years to just below the ‘replacement rate’ and stood at 2.03 in 2021, the latest year with available data. This compared to 1.54 for UK-born women. Note that these figures include non-UK born women regardless of how long they have lived in the UK."

https://migrationobservatory.ox.ac.uk/resources/briefings/the-impact-of-mig...

In reply to Alasdair Fulton:

There are housing capacity issues in Nordic countries. It’s not a specific U.K. issue. A recent visit to Stockholm brought this home to me. 

In reply to Offwidth:

I have a suspicion (and no facts to prove it), that families who immigrate here might be more likely to just live in one house. Whereas UK born families, fairly frequently, have parents living in separate houses, so each parent needs a house big enough for them and their kids. 

I'm not criticising, but it's just a fact that couples don't stay together as much as they used to (and often quite rightly so), but if immigrants come from more traditional societies (which not all do) then they might be more likely to stay together. 

So despite falling fertility rates, the demand for family homes amongst UK born people may continue to rise 

In reply to Sam Beaton:

Where I lived previously here in Germany my neighbour was a long-term renter and certainly an above-average earner. I asked him about this and he explained that he was better off renting because he could invest more in his pension. He was the finance manager in an automotive company so had a good grasp of how to use the various tax incentives available.

In reply to neilh:

Oh, I'm sure there are housing shortages in the Nordixs too - I was meaning more in relation to the study I linked to which seems to be based on a very unregulated housing market (the US) so I was wondering if the same finding hold true in places where rent controls and higher proportion of government built rental housing exists. I just pointed at Nordic countries on the assumption they might be an example of this, whether they are or not I'm not totally sure, as I've not looked into it in detail. 

In reply to Sam Beaton:

As far as I'm aware, pensions in France are notably better than the equivalent in the UK, so will be more likely to be sufficient. However, since we live in a rural area and I don't really know anyone who's renting and near retirement age, I couldn't really tell you how the finances stack up.

In reply to Alasdair Fulton:

I'm currently in Finland and used to own a house here so was interested in your point about more renting in the Nordics. I've done a bit of googling and I'm not sure if it's true. The figures I've found aren't totally clear, different charts on Statista.com say slightly different things but it looks like in Norway Finland and possibly Sweden, more people own than in the UK, whilst only Denmark is lower - not dissimilar to German low rates.

In reply to john arran:

I don't have any figures to hand but I've always understood that rent controls are stricter in France than in the UK. I also suspect that there is a lot more social housing - a quick search on Wikipedia suggests 4.3 million households in France compared to 4.2 million people in the UK although this might not be comparing like with like.

https://fr.wikipedia.org/wiki/Habitation_%C3%A0_loyer_mod%C3%A9r%C3%A9

https://en.wikipedia.org/wiki/Public_housing_in_the_United_Kingdom

In reply to Alasdair Fulton:

You might be right.  I got that number from the ONS somewhere. 

Your link significantly understates the effect on the population from migration because "This retrospective analysis does not account for the contribution of past migration to natural change – mainly to births" 

This matters because the 30% of all births are to immigrants. 

This could well be the source of most of the difference between 3.6 million and 7.  Also, there were ~650,00 last year alone which I think are excluded from the link figures.

In reply to mik82:

This is the issue, I have mentioned this before but it's worth trotting out again. Of the 100 houses on our old street only 2 we're owner occupied, the rest were a mix of small time 1 or 2 property landlords and large property companies. The houses were all back to back 2 bed perfect starter houses. When we put ours on the market we were inundated with cash buyers, all landlords willing to pay market value as fast as the sale can legally go through. Normal buyers can't compete with that.

Fortunately we were in a good financial position and sold for below market value to the daughter of a family friend to help her get a leg up in life. 

If the rest of the estate is the same and I suspect it is that is thousands of houses, all starter homes locked out of the market. 

In reply to Dax H:

No offence taken, I would agree she's naive in many respects. She asked me what pro rata meant the other day! But I think she probably thinks that the first job will be a stepping stone and you simply can't buy, sell, move, repeat. It costs too much.

I take your point about buying, I like you paid my mortgage off at 50. But look at new builds. Locally, you can buy a house for £113,000. That's the headline, except it's for 40% share. So how many people are going to work through their finances over decades to actually buy it outright? You obviously thought and planned, but I would think many don't . And you're tied up to the developers "maintenance" costs. 

In reply to TobyA:

Germany is a land of private renters for a number of reasons (there are 1.09 social housing units) but generally the housing market is more stable than in the UK though with a different profile. 

For a private mortgage there is no tax relief on the interest which can make renting and investing part of ones earnings elsewhere more attractive, however for a credit taken out for a property to rent the interest is completely tax relievable which considerably changes the balance of affordability between self-owning and renting. That is a renter does not have to bear the burden of the interest rates on the property that the owner would pay whereas if they bought it they would.

In reply to lowersharpnose:

And even with that, our birth rate is well below replacement level, so that's probably a good thing. With an aging population, if we want state pensions when I reach that age then someone has to have babies (and I don't like babies, so I'm not contributing to the solution! I am very accepting that I won't have a pension, but I'm not sure everyone is). 

In reply to cwarby:

I definitely have mixed feelings about the shared ownership schemes. On the one hand it gives people a stake in their home but on the other hand lots will never be able to pay it off and still end up paying rent until they die. There is also no way I would touch a house new enough to have a maintenance charge, your held to ransom for someone to rock up twice a year and mow the verges at an extortionate cost. 

It was not so much the same of council houses as the failure to use that revenue for building more housing. 

Near me half the former council houses have been turned into student accommodation with many now  being owned by Chinese property firms so that the rent is exported and does not reach the local economy. Canny Commies exploiting the free market.

In reply to TobyA:

I can't speak to the whole country but in Copenhagen a little over 20% of units are owner occupied. The rest is pretty evenly divided between private rentals, social housing, and housing cooperatives.

In reply to Timmd:

I have four questions for you, Timmd. Each one is earnest, with no attack implied. You won't respond to this post, so they will remain rhetorical. 

Do you have any experience in arranging accommodation for people unlikely to reach a position where they could arrange a mortgage and try to own a home?

Do you know anybody using a BTL as a source of income?

Did you study biology at school?

Are you a fan of confirmation bias? 

In reply to Pete O'Donovan:

What about “The Boss” (J.A.) Was he immoral?

In reply to Philb1950:

I regarded John as a good friend, but his politics were miles away from mine. It should be noted that John actually started his property empire well before BTL came on the scene.

As you're no doubt aware, there are quite a few other people on the Sheffield climbing scene (including some of my personal friends) who are also invested in residential property and I have absolutely no qualms about making my feelings on the subject known to them.

In reply to Pete O'Donovan:

When interest rates were at ridiculously low levels, buying a property and renting it out was the most sensible (safe) thing to do for anyone who had some money to invest e.g. a newly retired person with a lump sum. You could have put it in the bank and seen a return far below inflation or you could have risked it in stocks and shares.

So while buying a house purely to rent might have a negative effect on first time buyers it surely isn’t immoral to put one’s own welfare before a stranger’s?

In reply to Pete O'Donovan:

I assume you would see building/development companies charging rent on the new build that someone has bought into as equally immoral. In some respects I think it's worse.

As an aside, do these companies pay CGT if the building is sold at a higher price than originally agreed? Private landlords would.

In reply to Gormenghast:

I don’t think that reasoning holds up too well. It’s easy to think of lots of ways that people prioritise their own interests over those of strangers that are generally accepted as immoral. I’m finding it harder to think of selfless examples of immoral acts. I’d say the idea of morality exists precisely to limit self-interested behaviour that has a negative impact on others.

I don’t think I’d go so far as to say that small-time landlords are necessarily immoral, but I wouldn’t say it’s a moral choice either.  

In reply to Hooo:

I think we need a fundamental rethink about what Social Housing is for. At the moment Registered Providers aim to balance the books, with surplus being reinvested in the stock. The main things that threaten that are 1) supply changes - inflation on building materials/ contractors and 2) demand changes - void properties mean a loss in rent, refurbishment costs, the admin cost to relet the property and a lack of a settled customer base - people are more likely to leave a property in the first couple of years. 

The effect of this is that Social Housing landlords are incentivised to give people a home for life - given a flat at age 18, carted out of a bungalow in a box at 80+ (hopefully). So as the demand for social housing increases, the only way we meet that is by building new homes (or buying existing ones - but this is fraught with compliance risk and is harder to make the business case given the need to balance the books). So supply of housing can never keep up with demand.

We should find a way to support people with housing when they need it and incentivise them to move on if and when their circumstances allow.

In reply to Timmd:

You can do this with a lot of complex issues..... first massively oversimplify, then use emotive language to demonise a group of people, framing it as a matter of 'morality'. It happens a lot online and it is mostly detrimental to society, stoking division and entrenchment.

The UK housing market is indeed a clusterfeck, but unpicking the mess is complex and the focus should be on policy rather than individual cogs in the machine.

In reply to Stuart Williams:

So if I have the choice between protecting my money against inflation or possibly helping out a complete stranger and thereby making myself poorer I should choose the latter?

In some utopian world maybe but I can’t see my wife or dependents thanking me for it.

Another thing which hasn't been mentioned is how BTL generally causes properties to be neglected. 

Renters don't care much because they don't own it, so they're not fussed if they're heavy-handed with the fitted cupboards, broken door furniture, long-term slow leaks, etc. etc. They're not responsible for 'general wear and tear'. 

Landlords don't care because they still get their money every month and a tub of Johnstone's Matt costs a tenner when the previous tenants move out. Something needs replacing, let's say a door. Are they going to buy a nice solid wood door, or are they going to buy the £40 cardboard door? Why would they spend hundreds on a nice door? The Landlord isn't the one looking at it and the tenants will just break it anyway! Old boiler is clinging on for dear life; woefully inefficient, breaking down all the time, massively inconvenient. Are they going to spend £2k on a good new one, or use their handyman/property management company to bodge it to limp on for another year? The landlord doesn't have to have those cold showers. Roof is leaking and attic bedroom looks grim with black mold all over. £10k on a new roof or £50 man-up-a-ladder to stick some flashband over the issue? Landlord doesn't have to have their lungs ruined. 

This leads to the slow decline in the state of the property over many years until it gets to the point where the house needs a full renovation and they can't just patch it up anymore. This is usually costed and realised to be uneconomical, and so the house goes to the market with an expected large return on the landlords initial investment, even though it is probably in much worse condition. This, along with the overall housing shortage, drives up property prices and leads to desperate first-time-buyers getting absolute shit-tips that they then spend the next decade fixing. I've experienced this, my friends have experienced it.

There is a generation of people who were lucky enough to live in a time of cheap housing and were encouraged to buy up property as an investment. Now they sit on this passive income and refuse to acknowledge not only how radged it is but also how immoral their position is. This same generation are a large demographic on here also so I fully expect the thumbs down and the 'justifications' of how those landlords are fulfilling a vital role.  

In reply to PaulJepson:

I'm not sure that is a valid argument against BTL, you get exactly the same issues with social housing.

In reply to Gormenghast:

You have a choice between investing ethically or not. Some people make a killing investing in tobacco, arms, etc. It's not utopian to refuse to invest in things that cause harm. 

In reply to Hooo:

I think it’s utopian to ask some people to greatly reduce their incomes  and therefore reduce their own standard of living purely on the basis that it might help a complete stranger.

I’m also not sure that you should be comparing arms and tobacco with house rental.

In reply to Gormenghast:

Helping out strangers at personal cost to yourself is the standard example of a good moral choice, e.g. the good Samaritan.

It might not be the sensible choice but if your primary concern is to make the best moral choice then yes the latter is what you should choose.

In reply to Hooo:

It might not be utopian to invest ethically or to do a little to help others but equating arms and tobacco to housing seems a little crazy.

In reply to cumbria mammoth:

My primary goal is the welfare of my family.

If I can achieve that while maintaining a moral stance then fine. If not then that’s fine as well.

In reply to PaulJepson:

Not quite. There were a relatively small number of people within that generation who managed to do that.

In reply to Gormenghast:

There are other areas where you can put your money especially where its a long term investment..there are plenty of other invesment choices for a return.

In reply to neilh:

You'd have to go for an 'ethical' investment if you were concerned about the morality of what you were investing in. Most will prioritise not losing out to inflation and risk to return factors.

I've got to say I'm amazed and somewhat depressed by this thread. The housing problems in this country are a political failure, that people cannot see that and are whining about the morality of generation 'n' is sadly indicative of our times. They don't seem to know what government is actually for..... seem to be thinking that society can somehow function by calling out the 'morality' of an imagined group online. Jeez.

In reply to Gormenghast:

It's not necessarily the safest thing to do. A single property is very much an "all the eggs in one basket" investment. Cash buying maybe, but if you're buying with a BTL mortgage then you have the potential of losing more than 100% of the original investment and your own home if things go wrong. All it takes is a couple of months of arrears for an LPA receiver to be appointed. You're never at risk of this with simple stocks/shares investing. 

In reply to Gormenghast:

The arms and tobacco was an extreme example, to show that any investment should have a moral consideration. 

Investing in whatever gets you the most income with no consideration for the consequences for others is immoral in my book.

You can argue that BTL investing is ethical, or at least no worse than other options, but you didn't do that. You said that it was utopian to even think about the external consequences of your investment, all that mattered to you was making the most money.

In reply to Timmd:

I'm going to be a bit contrarian on this post ... go easy on me.

What isn't spoken about in this debate is how policy has/is affecting the rental market and how that stock of available rental properties is affecting rental prices.

#1 - I don't believe that BTL is in and of itself bad.  Much like I think the government, eventually, got it right on zero hrs contracts ... the key here is about choice.  It should be possible for those who want to own a property to get on the property ladder at a reasonable cost .. and it should be possible for those who want to rent to also do so at reasonable cost.  The problem is that in both situations right now ... it is becoming increasing expensive to either own or rent a property in the locations where the work is.

#2 - Supply and Demand 101. 

 - Consumer:  As price increases -> consumer demand falls.  

 - Supplier:  As price increases -> supplier willingness to produce more increases.

The idea being that these 2x factors float independently until the point of equilibrium.   However ... that isn't what is happening in the housing market:

1. Consumer demand isn't falling .. because A/ the population is growing, B/ more people live on their own, C/ people need a roof over their head and D/ renters cannot afford to pivot into the "bought" housing market because they can't build the necessary deposit.  So Consumer demand is working in reverse as prices rise ... or ... demand is staying strong as prices continue to rise.
2. Supplier willingness to produce (more rental properties) is being curtailed.  1/  It's impossible to build new houses in the UK at a rate commensurate to the demand - that's a policy choice and 2/ ideologically we've voted in politicians who have made BTL increasing unpopular as an investment decision which in turn has driven BTL investors out of the market, who then have sold up their properties, which have then gone to the bought market and in turn driven down the volume of properties available to rent on the market - also a policy choice.

The market is broken - it is no longer behaving rationally.  The answers must be a massive liberalization in where and how many properties can be built annually AND (this is the bit people do not like) we need to make it appetizing for BTL investors to buy properties and put them out to rent to actually create the necessary stock of rental properties to meet the rental demand.  FYI - BTL investors won't buy back into the market until it becomes an attractive investment choice again.

#3 - A failure to build more houses is NOT the primary determinant in the massive house prices rises we have seen in the last decades - money supply is!

Although I have alluded to planning regulation above ... lack of supply isn't the primary determinant of house prices in the UK - slack monetary policy is (has been since 2008-ish).  The ultra-ultra-ultra low interest rate environment that existed from 2008-2022 (don't kill me - only just beginning to normalize to historic rates now) is largely responsible for the ultra high house prices we now see.

Q: Why?

A:  Because ultra low interest rates allowed people to borrow much more money.  When they borrowed much more money .. that caused them to bid up house prices as they competed against one another for the same properties in an environment, alluded to above, where the government has opted for policy choices that keep new house building supply low.  This was/is a policy choice - a bad choice.  In parallel, we drove BTL investors out the market who then sold up and their stock of properties were quickly snapped up and taken out of rental stock by the pumped up red hot bought market high on ultra low interest rates.

We voted for these policies through electing NIMBY and anti BTL politicians. 

Solution:  A/  Long term we need more normal interest rates, B/ we need to massively liberalize house building policy (no more NIMBY) and C/ we need BTL investors to start buying back into the market to create rental supply.

Wooosaaa ... let the attacks begin. 

In reply to Gormenghast:

What choices you make and what motivations you prioritise are entirely up to you. I haven’t told you what to do or criticised your choices. I was just challenging the argument that “looking out for number one” is always moral.

If making the most moral choice possible was your goal then doing what has the most chance of benefiting rather than disadvantaging others would probably be the way to go, yeah. If your priorities lie elsewhere (and all of ours do sometimes) then just own that. 

In reply to Timmd:

Partly for mischief (so don't take me too seriously) but equally or greater part genuine argument. Let's reframe that.

Yesterday I hired 2 wetsuits, 2 BCDs, 2 regs, 2 cylinders (for me one for my son). I paid money and someone else profited. Now long run it'd be cheaper for us to have used our own kit. Is it wrong to rent kit if circumstances require? Is it wrong for someone to hire kit to us?

Is it wrong to rent a house/flat? Is it wrong for someone to let out a house/flat?

While I agree that some/many cases of buy to let are "bad" (anti social profiteering) I don't agree that ALL cases are always  "bad". So we can't equate "buy to let = evil" or whatever, as sometimes it may be a social service (and sometimes the opposite).

It depends... ... ...

In reply to Gormenghast:

Capital has the ability to shape their inheritance in more ways than one, maybe being sent out into a fair world with a favourable wealth to income ratio and good social mobility is preferable to being given a silver spoon with which to fend off the starving homeless, so you never know.

In reply to CantClimbTom:

The different things being rented aren't really comparable, are they. The differences are vastly bigger than the similarities. 

• Housing is a basic need. Diving equipment is a luxury. 
• There's a fundamental shortage of housing in this country, but not of diving kit, as far as I'm aware.
• Diving kit typically takes up a rather smaller proportion of people's income than housing. 
• People don't typically take out huge loans secured against diving kit.
• The owners of diving kit probably don't see their kit as an investment that will appreciate over time and pressure the government to enact policies to maintain the value.

I also wouldn't be astonished if maintenance of diving kit was more heavily regulated than maintenance of rental housing. Regardless of regulation, I bet it's done better in practice!

In reply to timjones:

Really? All the flats in our street (a mix of housing association and private owned1800s townhouses and tenements) have just had new kitchens and bathrooms fitted.

Surely it depends on the aims and management of the housing association? 

In reply to neilh:

For most people there are only three places to invest their spare money.

Stocks and shares - can be good but a decent return can mean too high a risk for cautious investors.

Savings account - a laughable return until quite recently.

Housing - for many it offered a reasonably safe return and a reasonably safe investment.

Now that interest rates have remained high while inflation has fallen then longer term savings accounts are a worthwhile proposition.

In reply to Alasdair Fulton:

I'm sure that you get both good and bad in social housing and private let's.

I'm not sure why we should believe that one is better than the other.

Having spent a few years working as a milkman I certainly saw quite a few instances where tenants absolutely wrecked properties.

In reply to PaulJepson:

This is true at the moment, but only because there's a general housing shortage. If there were plentiful housing and landlords were competing for tenants there'd be more of an incentive to maintain properties well. 

In reply to john arran:

Sensible, reasoned post!

Also BTL is open to abuse by renters as much as landlords.  I know plenty of people with BTL properties who find that despite glowing references, the tenants simply refuse to pay rent, and it is nigh on impossible to recover the rent.  Then even if the landlord goes through the laborious process to end a tenancy, it will only work if the tenants have somewhere to go, and that relies on the non-paying tenants getting a good payment reference reference.  If they don't get a good payment reference, no landlord or letting agency will take them, so they'll end up staying.  So landlords are forced to give a glowing reference purely to get the people who can't be arsed to pay out of their house. So the cycle continues as they have a glowing reference. 

In reply to Gormenghast:

Under each each heading you have a vast choice. Including stuffing money into a pension. 

In reply to neilh:

Not much use stuffing money into a pension when you’re retired which is how I imagine many people get a lump sum which needs investing (or spending) ASAP.

In reply to cwarby:

I never understood that.  I've dealt with homelessness. In practical terms, not being able to afford my rent was no different from not being able to afford a mortgage. You are tied in to monthly payments no matter what, and they tend to be less if all you are paying is a mortgage.

I'm in my 50s and have no hope of owning, have no parents I can ever move in with if need be (or receive inheritance from). I get that a rental market is necessary. But I've spent my entire life paying off other people's mortgages on their second or third homes.

In reply to Timmd:

Poor people die sooner, it's always been the case. Unsurprisingly the poorest people tend not to be homeowners. You can't try and pin their shorter life spans on landlords any more than you can retailers of fake Adidas tracksuits. Certainly, a correlation between lower life spans and wearers of such clothing but the two aren't linked. 

In reply to Lord_ash2000:

The researchers claim to have corrected for that. It’s mentioned in the third para of the OP’s linked article.

In reply to Thugitty Jugitty:

And they found that people living in rented social housing didn't age faster, when the same correction was applied. 

In reply to timjones:

Of course, there's good and bad everywhere. I've been lucky that 3 out of 4 times I've been renting we had great landlords. All three had lived in the property previously, moved and kept them as rentals. The one shitty landlady we had was a slightly mad Aussy woman in Chamonix and even then, she wasn't too bad. I've rented my flat for a while and think I was a decent landlord. 

However... Proper "BTL's" I would argue have quite different aims that a social housing association. 

BTL=maximise profit, minimise costs and provide accommodation that just meets market need. Push rent wherever possible. 

Social: agreed standard of living, sensible rent costs and keeping the building in a decent state of repair. 

In reply to Alasdair Fulton:

Thats how we ended up being Landlords. Bought a property together and rented out our previous properties. 

We were definitely guilty of charging as much as we could, which comfortably covered the mortgage and other expenses, fortunately for very little effort. The real profit we made however, was due to the early 2000's property boom. I'm not convinced house price increases benefit home owners, but they do benefit people with multiple properties, at the expense of those yet to get on the property ladder. With hindsight, even with selling one of the properties below market value to long term tenants, I am uncomfortable with the small impact my time as landlord might have had, but at least I don't have to try to explain it to any children. 

In reply to Moacs:

Good thought experiment.

Very badly, for me, at several points in life.

I’m lucky that I found my way to a part of England where two bed red brick terrace houses can still be bought for under £50k, and rental incomes aren’t obscene.  Most of the country isn’t so lucky.

Indeed.  

My strong view is that privately owned houses shouldn’t be allowed to be rented for profit on an ad-hoc basis.  I would like to see it mandated that privately owned properties be managed by non-profit housing associations that have a high mandate for tenants rights and that guarantee the home owner say 2% above base rate ROI on their property.  Rent is then set by the [owner’s return + pooled maintenance costs + pooled insurance costs + housing association overheads].  This would eliminate risk for the home owner, prevent price gouging, eliminate the waste of space/resource that are letting agencies and prevent price gouging - so long as the housing association has KPIs to meet on price efficiency with a regulator that has teeth.

Too many people our way who drive round in astons and range rovers with personalised plates because they bought up the city centre housing stock when it was cheap, and now price gouge with impunity.

In reply to Pete O'Donovan:

I know you regarded John as a good friend, but I thought it was an interesting juxtaposition of opposing views not causing strife in our ever increasing binary world. Just look at comments on UKC for examples. Anyway hope alls well with you.

In reply to Timmd:

I've just done some quick maths on this, and it would seem that BTL isn't a great investment (I've not been too thorough, so could be some holes in this). 

Some assumptions.

• Trends over the last 30 years
• Using this data for average house prices: https://monevator.com/historical-uk-house-prices/
• 1991 - £50k average price
• 2021 - £250k average price
• Rental Yield of 5%
• Ignore inflation
• Ignore maintenance, mortgage interest etc.

It would seem that from 1991 to 2021, house price rose at an average 5.5% per year.

If you achieved a 5% yield (which I believe to be typical), and bought at £50k in 1991, you would likely have an asset of £250k, + total rent income of £190k.

All sounds amazing. But this is a annual return on investment of 7.5%, which isn't all that great.

I haven't got 30 years of FTSE world data, but I have 19 years worth, and it averaged around 10% over this period.

I think many people prefer to invest in property because it's tangible, you can see it, and more importantly you can barrow against it.

What this means is £50k investment 30 years ago in property, would yield about the same as a stock market investment 30 years ago (*assuming that last 30 years is similar to the last 19 years) with just a £25k investment (you would have about £440k with both approaches, again ignoring interest, fees etc).

And that's ignoring maintenance on the property, insurance, your time, estate agent fees not to mention all your eggs being in one basket. Fees to invest in the stock market are comparatively small.

I guess what I'm getting at is if you're worried about BTL's, then maybe the solution isn't policy, but education. Get more people investing in the stock market, taking responsibility for their retirement, reducing the burden on the state and leave houses for living in.

In reply to montyjohn:

The BTL model that boomed was not about investing a lump but using your assets (mostly owned homes), to secure a loan to invest in BTL. It was policy that made that less attractive/unfeasible to individuals as the tax incentives to do it were removed. Some people are getting round that by setting up companies so that again could be addressed with policy.

Policy could obviously be used to get more properties on the market, higher tax on rental income, lower CGT. That would incentive lots to sell but then public finances would be worse off.

The problem where I live at the moment seems to be that there is now a model that locks out many private buyers with high service charges on new builds. These seem to be funded by institutional investment rather than individuals.

In reply to montyjohn:

You're ignoring the effect of leverage, which you can't get easily with shares (well you can I suppose, but it is incredibly risky). The BTL model was/is based on remortgaging to release money, then buying another house, remortgaging as house prices go up/you've refurbished and repeating. This is great so long as house prices continue to increase, but very bad if there's a prolonged downturn. It should have been wiped out during the financial crisis but was saved by the emergency low interest rates. 

In reply to Timmd:

Sometimes renting works for people. 

I think discounting BTL as entirely bad or entirely good misses a whole lot. 

In reply to mik82:

I mentioned that you can borrow against your assets to expand. Although I spelt it as barrow.

Why is borrowing to buy shares any riskier? Over the short term I would agree as it's a bit more volatile. But long term I wouldn't know that the stocks market is higher risk than housing.

In reply to Mike Stretford:

Depends what service charge is for.It varies and covers maintenance costs for example, so the other argument is your maintence costs are at least known and budgeted for in a service charge.Not an easy area.More rife in London where flats/apartments either purpose built or conversions.

Borrowing large amounts to invest in shares is not available to small private investors, unlike mortgages for housing. The things that are available (spread betting and CFDs) are really quite risky and definite "lose your shirt" territory if you're not careful. 

In reply to Alasdair Fulton:

I guess that leaves the question of how do you define "proper BTLs" and how do you differentiate from people like my own sister who was left 2 small cottages in my fahers will to allow her indepence abd free her from the constant cycle of assessments for disability allowances.

She does not charge the full market rate or seek huge profits and in return for this she gets tenants that tend to stay for longer and removes the need to constantly re-advertise for new tenants whilst the property sits empty.

In reply to wintertree:

Can I just check that I understand you correctly here, with an example?

I have a house valued at £259k that I let out. You're saying I can have a return of 2% above base. So 5.25% + 2%

That's an annual return of £18,777.50 or £1,564.79/month, plus my costs for maintenance and insurance? 

I don't currently get anywhere near that, sign me up!

Or have I misunderstood?

In reply to hokkyokusei:

Time to up the rent.

Or sell up and invest in stocks.

In reply to hokkyokusei:

Likewise! To take for example a nice north London flat I let out, it's worth say £575k, gets a rent of £1,950pcm, which after necessary costs (EXcluding stuff like unexpected maintenance, capital expenditure etc) is say £20k per annum, so a yield of 3.5%.

In reply to timjones:

Not sure about the definition, but my concern is that having a couple of rental properties due to circumstances like your sister and me, is becoming less attractive/common. We are moving towards fewer landlords, but with larger portfolios. 

So away from this type of set up. 

I can't help thinking Monty has a point, wouldn't it be far less hassle, and probably more profitable, to sell and invest in a fund? It does seem odd that people a borrow significant amounts to invest in property, but not in stocks and shares. We were extremely lucky to have three mortgages in the early 2000's and cashed in at a good time, but investing the resulting profit in the stock market has been far less hassle and more profitable, and given what we have invested in more ethical, over the last 20 years. 

In reply to RobAJones:

it is certainly something that she considers but I suspect that they movements in the market over the last 23 years would mean that she would take a significant hot for capital gains tax and probably be little better off with investments that are nore volatile than property.

If you look at what it would do for the rental market, the 2 cottages would be very likely to be bought by someone who would knock them into one leavine an overpriced status home rather than smaller rental units.  It may be possible to prevent this at first by being selective on the buyers but having spent a good few years watching the local property market it would only be a matter of time before soneone got greedy ad decided to grab a profit.

I really do think that we meed to be careful when we demonise landlords.

In reply to neilh:

Yes I used to be on the committee when I lived in flats and we ran our own management company. In Manchester as well as London the service charges on new builds seem to be excessive, several stimes what we needed to charge to run a healthy balance. 

In reply to PaulJepson:

I agree up to a point.

Yes, your average landlord is not going to be spending top dollar on granite kitchen worktops and jacuzzi baths, they will be fitting out a rental with a hardwearing composite worktop and an £800 Wicks bathroom suite. As you allude to your average tenant generally does not look after a property as well as if it were own. I used to work in lettings many moons ago in a former lifetime and I can say with some confidence that for every crap neglectful landlord who tries to keep entire deposits for spurious reasons there is an equally crap tenant who skips town owing rent and leaving the place in state that can only be described as outright vandalism. As a business we did not want to deal with either crap tenants or landlords and avoided most like the plague once identified. Most landlords did give a shit about the fabric of the building and would not just casually allow leaks or serious defects to cause long term very expensive damage. Most also wanted a happy tenant as they stay longer (fewer voids and change over costs) and the last thing they wanted was being called up several times a day due to an unaddressed broken boiler or washing machine. Most of the landlords I dealt with owned a single rental property that more often or not used to be their own home before they got married/had kids/moved for work etc and were planning on using their property as an income during retirement given the collapse of final salary pension schemes and the uncertainty on relying underperforming stocks and shares. A balanced supply of both private and social housing rentals underpinned with strong protections is required but the latter has been neglected for decades causing rental/house price squeeze. 

In reply to hokkyokusei:

Would I be right to assume you didn’t buy this to let bit are renting it after moving out and deciding what to do?

I was thinking more of the sub £100k-£150k mid terraced around Amazon warehouses and university dominated towns where bulk buying is removing the most affordable housing from the market and landlords are absolutely rinsing the tenants.

In other areas where a sensible return isn’t possible on buy-to-let, that says more about house prices I think.  The problem is 0% of solutions to house prices being too high are at all attractive to home  owners.

Edit: the thread being about buy-to-let which doesn’t make much sense if you have a house whose price is well out of whack with an average ROI on the capital.  

In reply to timjones:

Isn't that above scenario only likely as a result of people buying multiple properties? If your sister sold them as first homes to two people/couples the chances of them  being able to afford to buy the other seems, unlikely in the medium term. In the future can see someone buying one of the properties as an investment/rental/second home and waiting for the other to become available, but not living in a small cottage while they wait? 

In reply to lowersharpnose:

A lot more than 7,000,000 have died since 2000.

In reply to montyjohn:

Im charging the going ratę for the area. I have other investments, this is mostly diversification.

In reply to wintertree:

Got me bang to rights. Moved out, let one of my kids live there for a while, then let it to my cousin for a few years, before finally letting it out 'for real'.

Point taken.