Buy to Let and private renting

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basementer
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Re: Buy to Let and private renting

Post by basementer » Sun Sep 12, 2021 2:49 pm

noggins wrote:
Sun Sep 12, 2021 11:58 am
Isnt the fundamental thing behind BTL is that its the one investment where a regular person can leverage their money. I dont think you can go to Barclays and say, ive got 100 grand, lend me another 100 so i can buy 200k of shares.
Think again. I trade shares through one of the Australasian high street banks (ASB) and they do exactly that: I can use my existing portfolio as security for a loan account in order to buy more shares. Their margin ratios are here: https://www.asb.co.nz/documents/asb-sec ... ities.html
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Re: Buy to Let and private renting

Post by Opti » Sun Sep 12, 2021 3:07 pm

I may be wrong here, but I don't think BTL in the UK is quite the same. The loan is secured on your speculative purchase of the asset, not assets you already own.
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Re: Buy to Let and private renting

Post by basementer » Sun Sep 12, 2021 3:29 pm

The difference, I think, is not in what asset is being used as security. The bank will lend on anything so long as it's given a first charge. It's more that in BTL, the bank also considers the likely income stream from letting the property when it assesses your ability to meet the interest payments on the loan. That doesn't happen when you buy shares on margin lending, they don't treat the likely dividends as reliable income, so there isn't the same feedback loop.
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Re: Buy to Let and private renting

Post by discovolante » Sun Sep 12, 2021 6:30 pm

I sincerely apologise for providing some actual information and research that people could base their opinions on, rather than just random anecdotes. Helpfully, the 200 page report has an executive summary, and is also broken down into handy chapters so you can easily look for the topics you might be interested in, and the English Housing Survey is likewise broken down into sections.

So far the only anti-landlord measure people have specifically objected to in this thread was JQH's suggestion of right to buy, and he has already conceded that it could be qualified to require that the landlord has a minimum number of properties, for example. I reacted quite enthusiastically because I think there is something inherently ridiculous in one family being able to own the same bit of land for the best part of a millennium, because that is surely not a particularly good way to make best use of land.

Other than that, other responses to criticisms of buy to let have been people giving examples that for the most part, aren't actually buy to let. And even then, many (but not all of them) point out that landlords could be adversely affected by different rules (yes) without considering that the point is that tenants are generally in a pretty precarious position already and it is about redressing the balance. Allo v Psycho's example number 1, of moving from Scotland to England - there is nothing inherently wrong with wanting a bit of security in where you live, but having to sell your house in Scotland only puts you in the same position as all tenants, except tenants (the vast majority of the time) wouldn't actually own any properties, never mind two, and in England they are vulnerable to being booted out at pretty much any time if their landlord decides to do so. So it's not that wanting to keep your house in Scotland is evil, it just assumes that your entitlement to own two properties is greater than tenants' entitlement to have some security of their own. Sure, you could let to people on the understanding that you would want the house back some day, and they may be happy with that at the time, but people's circumstances change and that might not always be the case, and not all landlords would be as honest or scrupulous about their intentions, as dyqik found out to his detriment on three occasions.

For what its worth I think there is a role for private renting in the UK because it fills a huge gap, and there *is* something to be said for having flexibility to move (although private renting isn't the only way to achieve this), but tenants get a raw deal that I don't think is balanced out by the complaining landlords who have to deal with 'nightmare tenants' - yes it happens and there may be occasions where it is really really bad, and I'm sorry about that, but for the most part if you decide to run a business you have to be prepared for financial losses, just as with any other business.

Anyway the next bit of this post is just some ramblings in response to other posts in the thread, not trying to make some overarching point but thought I may as well chuck it in. A lot of it is to do with court/tribunal proceedings and so on but I thought I'd throw it in just to try and illustrate some of the other issues connected with being a tenant.

There's been reference to tenants' lack of security in the UK. I'm not going to compare to other countries in Europe/the world, but since December 2017 Scotland has had Private Residential Tenancies (PRTs), which basically abolish 'no grounds' evictions - although they do introduce a ground for eviction that didn't exist previously, i.e. the landlord wants to sell the property. I rent through a PRT myself and it is much more reassuring although because my landlord is landed gentry and has kids I wouldn't be remotely surprised if he intends to boot us out one day because his kids want to move in, or something along those lines. Before that Scotland had something very similar to Assured Shorthold Tenancies in England, except here they are called Short Assured Tenancies* (because why make things straightforward and use the same names eh). The method of ending those types of tenancies wasn't identical to ASTs but it was very similar in that landlords could end the tenancy for any reason providing the contractual tenancy had ended.

I'm not sure what impact PRTs has had on tenants' overall security and evictions. There may be some commentary somewhere but it's probably quite hard to tell because for half of the time they've been in place there has been a pandemic which changed the game when it came to eviction and so on. There is a report from Shelter Scotland here https://scotland.shelter.org.uk/profess ... mendations which sampled some tenancy eviction cases and it shows some PRT evictions but I think it's probably too early to identify any clear trends. Obviously Shelter will have their own slant on things but there are some numbers and stuff in there. It will probably always be difficult to be certain though because Tribunal statistics will also only show the evictions that actually go as far as court/tribunal proceedings - it won't take into account the number of tenants who just leave after they are told to by their landlord, which I would guess is probably fairly common in a lot of no-grounds evictions (SATs and ASTs). That's probably where things like the English Housing Survey and equivalents come in handy.

Another thing you'll notice is that court proceedings relating to private tenancies in Scotland happen in a tribunal, not the courts, and this has been the case since around the same time PRTs came in, I think. In England (and Wales I think? correct me if I'm wrong) all proceedings of that nature take place in the county courts, which are not entirely inaccessible but can be pretty stressful environments. The idea of the tribunal in Scotland is to make the process more accessible, and less financially ruinous if you're unsuccessful because unless there has been some pretty bad behaviour from your side of things you are unlikely to be ordered to pay your opponent's legal expenses. This probably favours tenants because as you'll see from the Shelter report, usually landlords are legally represented and tenants are not. I can see in the report that some tenants feel the process isn't fit for purpose. I've done Tribunal hearings (as a representative, not for myself) and personally have found them much more pleasant and easy to deal with than court hearings, but I appreciate that I'm making a comparison and being stuck in the midst of it is probably a different matter. Not to mention that in one case the nature of the directions given by the Tribunal put the landlord on a stronger footing procedurally than the tenant - inadvertently I think, I have to say - fortunately I was able to sort that out but an unrepresented tenant may not have known what to do about it.

There was some talk a few years ago of creating a similar tribunal in England. The down side of the lack of almost-automatic awards of legal expenses to the winning side is that it would be much harder, as a tenant (and a landlord I suppose but they are more likely to be represented anyway), to find legal representation. Legal aid fees are a pittance (and worse in Scotland than England) so lawyers would probably want to know that in at least some cases they may stand a chance of getting their full legal fees back, and also this system completely rules out 'no win no fee' which is all that's left for a lot of court proceedings in England due to legal aid cuts. So although it does reduce the financial risk to tenants in one sense it does also have that knock-on effect of making it more difficult to get legal representation in the first place.


*Not hugely relevant but another difference between English ASTs and Scottish SATs is that, when both were introduced in around 1989, in order to create a short assured tenancy, i.e. one which creates no grounds/fault evictions, rather than a plain assured tenancy which has much more security as certain grounds have to be made out, the landlord had to serve a notice on the tenant prior to the tenancy commencing saying that it would be an AST/SAT. However in England, in about 1997 I think, they scrapped all that so that pretty much any assured tenancy (with some exceptions) would automatically be an AST unless a notice was served to the contrary - I assume because landlords kept accidentally creating assured tenancies and couldn't get rid of their tenants (as one of my friends who has tenants in Scotland recently realised, oops). They didn't get rid of the requirement to serve a notice in Scotland. I have no idea how many accidentally-non-short-assured tenancies there are or have been in Scotland, and I haven't lived/worked in Scotland long enough to really have any anecdotal experience either, but presumably someone has some idea somewhere.
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Re: Buy to Let and private renting

Post by WFJ » Sun Sep 12, 2021 7:29 pm

discovolante wrote:
Sun Sep 12, 2021 6:30 pm
I sincerely apologise for providing some actual information and research that people could base their opinions on, rather than just random anecdotes. Helpfully, the 200 page report has an executive summary, and is also broken down into handy chapters so you can easily look for the topics you might be interested in, and the English Housing Survey is likewise broken down into sections.
I assume this is a response to my comment. Sorry if I offended you, but I was not criticising you for posting the information, rather EPD's suggestion I "Read some of your links" to find evidence for his transparently obvious claim.

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Re: Buy to Let and private renting

Post by IvanV » Sun Sep 12, 2021 10:17 pm

Opti wrote:
Sun Sep 12, 2021 2:31 pm
The people I know who have done BTL have mostly fallen squarely into the group defined as successors to Peter Rachman and Nicholas van Whatshisface (who, for a short period, I was a tenant of).
I'm sure there are some very fair and reasonable landlords out there, but there are, for sure, a lot of shits in the business. Tenants need more protection and security in the UK. They enjoy that in Spain.
Nicholas Adolf von Hessen is what he changed his name by deed poll to in 2009, presumably the better to frighten his tenants. Born Nicholas Hoogstraten, and doubtless his criminal record is under that name, the "van" is as phony as Mohamed Fayed's "al-". But Nicholas van What's-his-face is what he was called in some song. There is something fascinating about people as evil and vain as him (his palace remains unfinished), and doubtless you'd have to be far richer than him to finish it off - Rod Hull made a similar mistake, and did end up penniless in consequence). But how upon earth he persuaded a judge to accept he had no money to pay compensation for the death of Mohamed Raja, when everyone knows he owns a string of properties - which he has publicly admitted using pseudonyms for - I don't know.

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Re: Buy to Let and private renting

Post by Millennie Al » Mon Sep 13, 2021 1:45 am

JQH wrote:
Fri Sep 10, 2021 6:57 am
Millennie Al wrote:
Fri Sep 10, 2021 1:36 am
JQH wrote:
Thu Sep 09, 2021 4:59 pm
Private tenants should have the same Right to Buy as local authority tenants. With the same discounts.
Why? If you rent a car do you expect the right to buy it?
For the same reason that local authority tenants have the right to buy.
The leasing company buys its cars with tax money?
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Re: Buy to Let and private renting

Post by Millennie Al » Mon Sep 13, 2021 1:56 am

tom p wrote:
Fri Sep 10, 2021 1:08 pm
The biggest driver of instability is the length of the contract and the fact hat as a tenant after the contract ends that's it, you're out on your ear if you don't accept the rent-hike.
That's not in inherent in buy-to-let - it is a deliberate effect of the legislation governing tenancies. A tenant may want a fixed term tenacy of four years to cover a job or course of study, but will not find any (sane) landlord to offer such a thing because the landlord would have no way of enforcing the time period.
In the Netherlands, once you sign a contract, that's the price you pay forever, with the landlord permitted only to increase by inflation as determined by the RPI from the Dutch government.
Does that mean a person might be paying one amount, but their neighbour in an identical property might be paying a very different amount if the tenancies started under different market conditions?
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Re: Buy to Let and private renting

Post by Millennie Al » Mon Sep 13, 2021 1:59 am

WFJ wrote:
Sat Sep 11, 2021 7:16 am
A council tax/home tax system that penalised underutilisation of houses to encourage those whose children have grown up to downsize would help
Something like the "bedroom tax"? Somehow that didn't go down well!
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Re: Buy to Let and private renting

Post by Millennie Al » Mon Sep 13, 2021 2:07 am

discovolante wrote:
Fri Sep 10, 2021 9:08 pm
The English Housing Survey for the private rented sector over 2019-2020 (methodology not checked): https://www.gov.uk/government/statistic ... ted-sector found that private renters had lived in their accommodation for 4.3 years on average, compared to 12.2 years for social renters and 17.4 years for owner occupiers. 53% had lived in their accommodation for two years or less (compared to 20% of social renters and 14% of owners). So, quite a difference that is unlikely to be accounted for by lets that are short term by design e.g. temporary relocation.

I would speculate that this skew is partly due to the number of houses in multiple occupation, which again I assume generally have pretty high turnover (based on personal experience at least). I'm quite happy to say that that's just speculation though, rather than asserting it as some self-evident fact without trying to back it up.
In a coiuntry which is obsessed with homeowning, I expect that a lot of the skew is caused by private renters moving to buy as soon as they can, and social renters being too poor to do so. For many long-term social renters, it would probably make sense to give them a heavily discounted property rather than keep them renting for life, but that's an unpopular policy.
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Re: Buy to Let and private renting

Post by Millennie Al » Mon Sep 13, 2021 2:14 am

noggins wrote:
Sun Sep 12, 2021 12:26 pm
(Interupt - hey, renters, what happens in practice if a tenant wants to quit a couple of months into a 6 month tenancy? Asking for the tenant. Pm if you like)
That depends on how poor and unscrupulous they are. They could just stop paying the rent and move out. If they don't have the money, the landlord will be unable to do anything. If they do have the money, but are unscrupulous, they may be able to avoid being caught until the landlord gives up.

If they're more moral than that, the best case is they find a replacement tenant and either sub-let (if permitted by their tenancy, or if the landlord won't find out) or offer the new tenant to the landlord (who should accept as the tenant is clearly being a nice person).
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Re: Buy to Let and private renting

Post by Millennie Al » Mon Sep 13, 2021 2:21 am

nezumi wrote:
Sat Sep 11, 2021 8:30 am
The real answer to the issue is to enable councils to build social housing again! Let them build for rent or sale and reinvest the proceeds into more houses and better services. Obviously. They don't need to build so much it ruins the equity parade, just enough to slow it down to a point where property inflation doesn't outstrip wage inflation.
Find someone who owns and insures a house in England and compare the price of the house to the price the insurance company suggest would cover complete rebuilding if it wer destroyed. There's a huge difference. This is due entirely to rules and regulations which prevent properties being built or greatly slow down building. There is no need for councils to build housing - there are plenty of commercial companies that would be delighted to. All that's needed is to stop putting obstacles in their way.
We could also incentivise removing office blocks and replacing them with cheap single person/couple/small family apartments. It's not like we need loads of office blocks now, is it? I don't know about London, but up here in the grim North there are office blocks that have sat empty for 20 years plus! I haven't seen any new ones going up round here lately though, thankfully.
Again, you don't need to incentivise it. No capitalist will be happy with money tied up in a building that's not making any money. They would be delighted to convert it into residential property. But they're not allowed to as they'd need to get planning permission, which is very slow and can come with conditions which make it unprofitable.
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Re: Buy to Let and private renting

Post by Millennie Al » Mon Sep 13, 2021 2:56 am

discovolante wrote:
Sun Sep 12, 2021 6:30 pm
I sincerely apologise for providing some actual information and research that people could base their opinions on, rather than just random anecdotes. Helpfully, the 200 page report has an executive summary, and is also broken down into handy chapters so you can easily look for the topics you might be interested in, and the English Housing Survey is likewise broken down into sections.
I can assure you that your efforts did not go entirely unappreciated.

From that document we find:
there are an estimated 2.3m adults in England who are private
landlords in some form.
So if every person in England is renting an separate property, each landlord owns an average of 25 properties. Adjusting to be more realistic, this means that there are many landlords who only own a few properties - possibly only one. Such landlords are not necessarily very expert at being a landlord. There's nothing about being a landlord that makes you any more likely to be a nice person than the general population, so we would expect there would be plenty of anecodtes of bad landlords.
So far the only anti-landlord measure people have specifically objected to in this thread was JQH's suggestion of right to buy, and he has already conceded that it could be qualified to require that the landlord has a minimum number of properties, for example.
In which case a surprising number of landlords will be found to own less than that minimum, whther this is achived by owning companies that own the property or families where each menber mysteriously owns just under the threshold even though one member seems to be the only one doing any work. And, of course, you also need to take into account the statistic above - the market does not considit of a few big landlords, but many small ones.
I reacted quite enthusiastically because I think there is something inherently ridiculous in one family being able to own the same bit of land for the best part of a millennium, because that is surely not a particularly good way to make best use of land.
The fact that they haven't lost it over that timescale suggests they're doing pretty good. I expect that if you looked at the fortunes of families that owned land 1000 years ago you'd find that all but a very few had lost it.
tenants are generally in a pretty precarious position already and it is about redressing the balance.
Landlords are also in a precarious position. They have a very valuable asset that someone else has uncontrolled access to. And that someone, once they leave, may disappear, making it very hard to pursue them for causing losses.
There was some talk a few years ago of creating a similar tribunal in England. The down side of the lack of almost-automatic awards of legal expenses to the winning side is that it would be much harder, as a tenant (and a landlord I suppose but they are more likely to be represented anyway), to find legal representation. Legal aid fees are a pittance (and worse in Scotland than England) so lawyers would probably want to know that in at least some cases they may stand a chance of getting their full legal fees back, and also this system completely rules out 'no win no fee' which is all that's left for a lot of court proceedings in England due to legal aid cuts. So although it does reduce the financial risk to tenants in one sense it does also have that knock-on effect of making it more difficult to get legal representation in the first place.
I'll just mention in passing that the state of legal aid is thoroughly disgraceful. But there's no sign of change there.
...English ASTs and Scottish SATs is that, when both were introduced in around 1989, in order to create a short assured tenancy, i.e. one which creates no grounds/fault evictions, rather than a plain assured tenancy which has much more security as certain grounds have to be made out...
It's worth considering why renting was changed in favour of landlords. This was done to benefit tenants. While this effect may be rather surprising, it's well known. When the balance is tilted too much in favour of tenants, this creates a shortage of rental properties (and the landlords become ever more unscrupulous as they attempt to make a profit). Tenants may explot the inability to terminate their tenancies to sub-let at a profit, or it may merely be that in order to find somewhere to rent you need to know someone who is leaving. It's easy, politically, for this to form a viscious circle - people complain more about landlords, so politicians tilt the balance further, making things worse.
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Re: Buy to Let and private renting

Post by Allo V Psycho » Mon Sep 13, 2021 9:03 am

Thanks, Disco, this and the previous link are very helpful
discovolante wrote:
Sun Sep 12, 2021 6:30 pm

So far the only anti-landlord measure people have specifically objected to in this thread was JQH's suggestion of right to buy, and he has already conceded that it could be qualified to require that the landlord has a minimum number of properties, for example.
Yes, and JQH's suggestion, I think, is a good one. I also objected to a required 'discount' though, even for commercial landlords, because they would just leave the market, and even returning their properties to the housing market wouldn't necessarily help many of those who need to rent, because their need is for short term properties, or they can't afford the deposit.

I reacted quite enthusiastically because I think there is something inherently ridiculous in one family being able to own the same bit of land for the best part of a millennium, because that is surely not a particularly good way to make best use of land.
Is this a common state of affairs? Millennial owners, I would have thought, must be quite rare, and I'm not clear how longevity of ownership in itself predicts how well or badly the land is used.
Other than that, other responses to criticisms of buy to let have been people giving examples that for the most part, aren't actually buy to let.
This is quite true, and is the point I was trying to make - that there are some people like me who become 'landlords' without having 'bought to let' - but proposed remedies such as the 'right to buy the property you are renting', and 'discounts' would apply to them as well.
And even then, many (but not all of them) point out that landlords could be adversely affected by different rules (yes) without considering that the point is that tenants are generally in a pretty precarious position already and it is about redressing the balance. Allo v Psycho's example number 1, of moving from Scotland to England - there is nothing inherently wrong with wanting a bit of security in where you live, but having to sell your house in Scotland only puts you in the same position as all tenants, except tenants (the vast majority of the time) wouldn't actually own any properties, never mind two, and in England they are vulnerable to being booted out at pretty much any time if their landlord decides to do so. So it's not that wanting to keep your house in Scotland is evil, it just assumes that your entitlement to own two properties is greater than tenants' entitlement to have some security of their own.
I may not express this very well. My 'entitlement to own two houses' is just the personal one of doing what I would like to, with my own money (or rather the building society's money, since I didn't have that kind of cash). The entitlement of tenants to housing security is a societal one (which I would like to see addressed, by laws protecting tenants, which also are fair to landlords). I don't think these two things are irreconcilable, or that they stand in opposition to each other.

And I didn't 'have' to sell the house in Scotland. What I didn't have to do was put it on the rental market. Which is a personal version of the general one others on the thread are making - that intentionally punitive restrictions on landlords risk reducing the rental stock. Again, I hope that legislation could be drafted that resolves these challenges - the tribunal system in Scotland sounds perhaps a promising step.
For what its worth I think there is a role for private renting in the UK because it fills a huge gap, and there *is* something to be said for having flexibility to move (although private renting isn't the only way to achieve this), but tenants get a raw deal that I don't think is balanced out by the complaining landlords who have to deal with 'nightmare tenants' - yes it happens and there may be occasions where it is really really bad, and I'm sorry about that, but for the most part if you decide to run a business you have to be prepared for financial losses, just as with any other business.
Yes, and this brings us back to where I started from, which is that not every landlord is running a business. But for those who are, surely it is appropriate that there is contract law which offers reasonable protection to both parties.

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Re: Buy to Let and private renting

Post by Imrael » Mon Sep 13, 2021 10:05 am

Landlords are also in a precarious position. They have a very valuable asset that someone else has uncontrolled access to.
Very much this, and exactly why as soon as I can get reasonably get out of this I will. Current tenant is OK and I'll certainly find out if she might be able to buy, but otherwise as soon as she's gone there will be one less house in the rental pool. Whether this is a good or bad thing I'll leave for others to judge.

Previous tenants, after over 10 years of apparent reasonableness, left, leaving a distant relative in the house who dodged inspection visits, trashed the interior and (most importantly) didnt report a roof leak which spread and made extensive building work necessary. For which I got to keep the deposit of approximately 2% of the total bill. (or maybe 3% of the part that wasnt fair wear and tear, to be obsessively fair)

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Re: Buy to Let and private renting

Post by Hunting Dog » Mon Sep 13, 2021 11:23 am

Millennie Al wrote:
Mon Sep 13, 2021 2:21 am
nezumi wrote:
Sat Sep 11, 2021 8:30 am
We could also incentivise removing office blocks and replacing them with cheap single person/couple/small family apartments. It's not like we need loads of office blocks now, is it? I don't know about London, but up here in the grim North there are office blocks that have sat empty for 20 years plus! I haven't seen any new ones going up round here lately though, thankfully.
Again, you don't need to incentivise it. No capitalist will be happy with money tied up in a building that's not making any money. They would be delighted to convert it into residential property. But they're not allowed to as they'd need to get planning permission, which is very slow and can come with conditions which make it unprofitable.
Tories de-regulated office to residential conversions a few years ago - there might be other reasons why it's unprofitable - but planning and/or any inconvenience about having to meet basic space/amenity standards isn't the issue.

EDIT: that is conversion not knocking down and starting again, so perhaps the conversion costs are higher, and not profitable in lower house price areas? There's certainly a lot of conversions to slum residential happening around here.

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Re: Buy to Let and private renting

Post by shpalman » Mon Sep 13, 2021 11:59 am

molto tricky

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Re: Buy to Let and private renting

Post by IvanV » Mon Sep 13, 2021 2:31 pm

shpalman wrote:
Mon Sep 13, 2021 11:59 am
Conversion maybe isn't the best idea though: ‘It's like an open prison’: the catastrophe of converting office blocks to homes
If you build new dwellings, there are minimum standards you have to adhere to. If you convert an office block into dwellings, these rules do not apply. Nice little earner. This is the cause of this specific problem. Doubtless people like the incorruptible Mr Jenrick* listened carefully to the arguments presented by developers, as he has done at dinners and the like on previous occasions, and considered this the best way for the nation to handle this.

*I have no idea if he was the relevant minister in charge when these rules were brought in, and I can't be bothered looking it up on this occasion. But he stands as an example of the kind of person whose job it might have been.

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Re: Buy to Let and private renting

Post by Hunting Dog » Mon Sep 13, 2021 6:05 pm

IvanV wrote:
Mon Sep 13, 2021 2:31 pm
shpalman wrote:
Mon Sep 13, 2021 11:59 am
Conversion maybe isn't the best idea though: ‘It's like an open prison’: the catastrophe of converting office blocks to homes
If you build new dwellings, there are minimum standards you have to adhere to. If you convert an office block into dwellings, these rules do not apply. Nice little earner. This is the cause of this specific problem. Doubtless people like the incorruptible Mr Jenrick* listened carefully to the arguments presented by developers, as he has done at dinners and the like on previous occasions, and considered this the best way for the nation to handle this.

*I have no idea if he was the relevant minister in charge when these rules were brought in, and I can't be bothered looking it up on this occasion. But he stands as an example of the kind of person whose job it might have been.
I hadn't realised but aparently those standards might be going too - that linked article says:
The experiment has been catastrophic in several significant respects, but the government has recently decided to
double down on it, expanding their policy such that office blocks may now be replaced with entirely new buildings without permission.
- not sure if that actually got through parliament or not

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Re: Buy to Let and private renting

Post by IvanV » Mon Sep 13, 2021 7:00 pm

Hunting Dog wrote:
Mon Sep 13, 2021 6:05 pm
... apparently those standards might be going too - that linked article says:
The experiment has been catastrophic in several significant respects, but the government has recently decided to
double down on it, expanding their policy such that office blocks may now be replaced with entirely new buildings without permission.
- not sure if that actually got through parliament or not
Something like that seems already possible.
Consider this recently built up-market apartment block called Chiltern Place, which I know very well as I have gone past this location in both directions on my normal daily commute for much of the last 30 years. It was completed about 3 years ago, and took about 4 years to build, including the demolition of what was there previously.

It has been developed by Ronson Capital Partners, the finance vehicle of convicted criminal and jailbird Gerald Ronson. I would suggest that it is the kind of apartment block where the apartments are in general more for owning than for living in. There are many such apartment blocks in up-market locations in central London these days, especially for example around the edges of Hyde Park. And few places are more fashionable in London just now than Chiltern Street. Their owners typically occupy them for only a few days or weeks a year, if that. But they are in a highly suitable location and a very suitable price should you happen to have a lot of money people might otherwise ask questions about.

As you can see this tall building
Chiltern St new appt block.jpg
Chiltern St new appt block.jpg (134.76 KiB) Viewed 258 times
is rather out of scale with the streetscape of Chiltern St
Chiltern St streetscape.jpg
Chiltern St streetscape.jpg (238.66 KiB) Viewed 258 times
and also Paddington St, which has similar height buildings.

And the reason it was allowed is that it replaces a tall office building
Former Chiltern House.jpg
Former Chiltern House.jpg (148.45 KiB) Viewed 258 times
that was somehow allowed to be built there around about 1990-1995-ish. I remember it being built. After just over 20 years, this rather up-market office building, far from being converted to apartments, was demolished. A short life indeed for such a building. There must have been a lot of money in it if such a high quality office building of recent construction was worth knocking down.

Among the advantages of replacing offices with very posh apartment blocks in central London, whether by conversion or demolition, is the fact that the domestic property taxes on large expensive apartments are but a tiny fraction of the business rates you'd pay on commercial space of the same floor area.

Millennie Al
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Re: Buy to Let and private renting

Post by Millennie Al » Wed Sep 15, 2021 12:00 am

Hunting Dog wrote:
Mon Sep 13, 2021 11:23 am
Millennie Al wrote:
Mon Sep 13, 2021 2:21 am
Again, you don't need to incentivise it. No capitalist will be happy with money tied up in a building that's not making any money. They would be delighted to convert it into residential property. But they're not allowed to as they'd need to get planning permission, which is very slow and can come with conditions which make it unprofitable.
Tories de-regulated office to residential conversions a few years ago - there might be other reasons why it's unprofitable - but planning and/or any inconvenience about having to meet basic space/amenity standards isn't the issue.
Good point! I was wrong there. It has been somewhat de-regulated. (Well, technically yu still have to get approval, but it cannot be refused). From that article, it seems that there are conditions which make it unworkable for many buildings. Every kitchen, living room, and bedroom must have natural light. That's a problem because many office buildings are intended to be big open spaces with artificial light. If you design a block of flats it'll be thin enough in one dimension that you have only rooms along the walls and a corridor in the middle, so that the rooms can have windows. Maybe you could convert the outer portion of an office block and leave the inner, now windowless, core for offices. Also you cannot change the exterior, so no extra doors. The article points out that this is a problem for bins and bikes. The article doesn't mention it, but a consequence of not being allowed to change the exterior means it'll probably still look like and office building (and can't have balconies etc) so might not be very desireable to live in.
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IvanV
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Re: Buy to Let and private renting

Post by IvanV » Fri Sep 17, 2021 12:59 pm

discovolante wrote:
Thu Sep 09, 2021 6:23 pm
Anyway, some people at LSE argue that supply has very little to do with increased house prices and decreased ownership, and that it's more to do with low mortgage interest rates and a collapse in banks lending to first time buyers: https://blogs.lse.ac.uk/politicsandpoli ... ng-crisis/ although maybe if there weren't so many BTLers to lend to they might be more likely to lend to FTBers...
I find this LSE blog, which I read shortly after it was first published, unsatisfactory for a number of reasons. I've been cogitating on how best to comment on it. And I now set forth my criticisms of it.

His 3 key points seem to be:
(1) Even quite a substantial reduction in house prices will not increase the proportion of owner-occupiers very much
(2) There is no shortage of dwellings, rather there is an increasing overhang of more dwellings than households
(3) Recent history and statistical studies on this indicate that the house prices don't change very much as a result of an increase in the supply of the number of dwellings.

My comments are as follows:

(1) Doesn't really address the key issue of housing policy. What matters most for housing policy is affordable housing, not a specific financial model for purchasing housing services. So our aim should be to get people into better houses, (better in all sorts of ways) at a reduced cost of occupation.

Further it is a vacuous and obvious statement. Being able to own a house is about access to capital, not about being able to afford to live in it. To take the example again of the family living near me, who are getting evicted from a large mansion because they are forever late with the rent, yet have recent reg LandRover and Audi TT on the drive. Why are they renting rather than owning a house at their age (ca 40 I'd guess)? Because they don't have sufficient access to capital. They plainly have substantial income to afford to live in such a mansion and drive those posh cars. But they can't get access to capital to buy a house such as they'd like to live in. And I guess after being evicted their credit rating will be even worse.

(2) Anyone who has had any recent contact with the housing market knows that it is very hard to find something to buy. There is no evidence of any supply overhang in the market that these academics barmily refer to. (There was a patch in 2019 when it was hard to sell a house, which is why that house near me was rented out rather than sold, as the owner and former occupier would have preferred at that moment, but that was temporary Brexit-related uncertainty.)

What these LSE people completely fail to have noticed is that the reason there is so many more dwellings than households these days is the AirBNB effect. You can have a second house and get very short rents for it. There is a substantial demand not just for permanent dwellings, but also for very short term lets by the day and by the week. But it took an improvement in the market infrastructure - AirBNB etc - to facilitate those transactions and match supply to demand. Of course people complain that it is taking supply out of the market for permanent occupation. But in general deliberately gumming up markets to the advantage of particular interest groups is rarely the best way to develop an economy. The basic problem usually goes back to the planning laws.

And then there is an issue that there is plenty of accommodation, and willingness to provide further planning permission, in places people don't want to live, like depressed former industrial towns without many good value jobs. While it's much harder to find sufficient accommodation in places where the good jobs are, which doubtless is part of why there are so many unfilled vacancies (on top of the obvious proximate reason).

So, actually, in relation to (3), there just has been no test of what effect on prices there would be if there really was a supply overhang. Back in the early 90s, when there really was a supply overhang, priced crashed. Maybe they do have data to show that, at the margin, increase in supply results in a small price change. But that is in the context of a very tight market at all points, and a very small increment in supply. It is a point elasticity, as we economists say. They have absolutely no data to test what would happen if there was a sufficient increase in supply to really show the effect of an overhang in supply. And of course, developers are very careful not to develop so fast as to create local overhangs in supply. It's why they have such a large bank of planning permissions in their pocket. They want to develop local markets incrementally, and not insert so much supply anywhere that it moves the price in a large downward direction, as can inevitably happen. Remember Canary Wharf, when that was first developed? Offices sat empty for many years.

Millennie Al
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Re: Buy to Let and private renting

Post by Millennie Al » Fri Sep 17, 2021 11:35 pm

To add to IvanV's points, it is not reasonable to assert that there is sufficient housing by counting households and housing. People's standards change. Where previously people were willing to stay with parents, or be a lodger, they now want their own place. And people today can quite reasonably want something better than their parents' and grandparents' generations. The way to find out is to build more and see what happens to the price. Once the prices fall to the point where it is uneconomic to build more, people are satisfied.
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plodder
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Re: Buy to Let and private renting

Post by plodder » Sat Sep 18, 2021 8:05 pm

Millennie Al wrote:
Fri Sep 17, 2021 11:35 pm
To add to IvanV's points, it is not reasonable to assert that there is sufficient housing by counting households and housing. People's standards change. Where previously people were willing to stay with parents, or be a lodger, they now want their own place. And people today can quite reasonably want something better than their parents' and grandparents' generations. The way to find out is to build more and see what happens to the price. Once the prices fall to the point where it is uneconomic to build more, people are satisfied.
You're opening your mouth and letting your belly rumble.You are taking the approach that everything is always fine and that policy is pointless. Just because wealthy people want something at the detriment of the poor does not mean that they should automatically have it. There are plenty of homes but the use of homes to provide short term lets has significant impacts to communities especially in tourist areas. The inflation in house prices is clearly down to the availability of credit rather than a lack of long term supply.

Millennie Al
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Re: Buy to Let and private renting

Post by Millennie Al » Sun Sep 19, 2021 1:55 am

plodder wrote:
Sat Sep 18, 2021 8:05 pm
You're opening your mouth and letting your belly rumble.You are taking the approach that everything is always fine and that policy is pointless. Just because wealthy people want something at the detriment of the poor does not mean that they should automatically have it. There are plenty of homes but the use of homes to provide short term lets has significant impacts to communities especially in tourist areas. The inflation in house prices is clearly down to the availability of credit rather than a lack of long term supply.
While you are presenting the view that poor people should stay poor. Why shouldn't poor people become able to afford to go to tourist areas and get short term rentals? Why should that be reserved for the rich or the very rich?
Covid-19 - Don't catch it: don't spread it.

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