Buy to Let and private renting

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Millennie Al
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Re: Buy to Let and private renting

Post by Millennie Al » Fri Sep 24, 2021 2:05 am

sheldrake wrote:
Thu Sep 23, 2021 5:51 am
Millennie Al wrote:
Thu Sep 23, 2021 1:41 am


So about half the household's income went on rent (obviously women didn't earn wages as housework for a family was a full time job then).
Women in the poorest families often did do some paid work in those days, but yes, having half your income go to an investor is grim.
Yes, but that was quite a hardship since it was on top of onerous work at home.
That rather depends on whether you have one of those old fashioned jobs for life or not. If you lose your job, owning your house can be quite a problem as you have to sell it or let it, and if you lost jour job due to an economic downturn (which might be fairly local if a big employer closes) that can be difficult. And, in sufficiently bad times, your mortgage repayments can rise to the point where you can no longer pay them. In the 70's and 80's interest rates were typically over 10% and peaked about 17%. Today's rates are minuscule.
Not sure which country you're based in, but in the UK you can get help paying mortgage interest (but not capital) from the state for mortgage balances up to (I think) about 200k iirc, as that usually works out cheaper than paying the rent via housing benefit for a re-housed family.
Yes. That's Support for Mortgage Interest (SMI) but it's a loan and only starts after 39 weeks or 9 months. But owning the house is still a burden if you need to move elsewhere for a new job.
Mortgage repossessions don't generally start with the first missed repayment either, so it very much depends how quickly you get another job. They're definitely supposed to try and work out a repayment plan with you first, and if you can't agree on one then they have to go to court https://england.shelter.org.uk/housing_ ... on_process
Indeed. And something similar can be said for tenancies - a landlord cannot throw you out on the first day your rent is overdue.
That depends on whether you're prepared to live like a poor person. If you're willing to sub-let rooms (which may require hiding this from tyour landlord), it should be possible to save quite a lot.
This option is not really practical for many people with children. I certainly wouldn't have wanted to take in a stranger as a lodger when my children were in primary school.
I was thinking of people doing this before they have children, though technically it's still a matter of willingness in any circumstances.

IvanV
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Re: Buy to Let and private renting

Post by IvanV » Fri Sep 24, 2021 1:09 pm

Millennie Al wrote:
Tue Sep 21, 2021 10:52 pm
So I think we do actually need a different model for building lower cost housing, so that it is built to what society needs, and is built to a quality suitable for living for the future.
That's basically wanting to supply something below cost. So the free market cannot do it and it needs to be done by charity or by government. The obvious model is for state provided housing to be rented cheaply to those in need, and sold at a discount to those likely to remain in need in the longer term. Since that's a combination of policy from both left and right, it'll probably never be done.
I don't think so. So much of the value of a house is in the value of the land, and the value of the land is negotiable depending upon what you are allowed to build on it, so long as there is a net profit left over and land is worth more than alternative non-housing uses, there is a profit. It is just not the maximum profit. There is a financial window for a negotiation, which is basically what happens in any planning model.
Millennie Al wrote:
Tue Sep 21, 2021 10:52 pm
He just can't get good builders interested in the business, because there is far more money to be made building higher quality houses for people with much larger budgets.
Well, obviously he need to pay more, then.
He is limited by law to putting it to competitive tender, and appraising the tender on fair and objective grounds. It is very difficult in such situations to ignore or rule out cheap tenders. It's even more difficult when there is a long history of the quality builders refusing even to participate in the tenders because they know they will be beat.

You or I can go, he looks like a cheap-skate shark I'm not buying from them. In fact, they aren't even on the list of builders I'd invite to bid. But you can't do that if you are subject to tendering laws. It is very difficult devising a tender to specify the quality you want and pay for it, because quality is such a subjective matter to specify clearly and enforceably.

IvanV
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Re: Buy to Let and private renting

Post by IvanV » Fri Sep 24, 2021 1:43 pm

Woodchopper wrote:
Thu Sep 23, 2021 8:52 am
... in the UK you can get help paying mortgage interest (but not capital) from the state for mortgage balances up to (I think) about 200k iirc, as that usually works out cheaper than paying the rent via housing benefit for a re-housed family....
In the UK its also possible to get mortgage payment protection insurance which will cover the payments for a period in case of unemployment or sickness.
Is this supposed to be a satirical comment? Ie a way of saying that the protections in the quote you commented on are rubbish?

If not, then you might have misunderstood the PPI scandal.

The main cited complaint in the PPI scandal was mis-selling, a useful cover-all term which fails to specify the nature of the scam. The main thing that was mentioned, perhaps because it was less shocking than the main offence, was the large rake-offs were being taken (This source cites a court case where 72% of the premium being taken as profit, split between the lender and insurer.

But the real scandal, the reason that there was such large free profit in the premiums, is that these policies were often useless. Typically Catch-22 clauses were incorporated, written in such a way that once you were ill or unemployed, you were no longer eligible to make a claim for being ill or unemployed. I think I saw an estimate once that total claims paid on PPI insurance were only about 10% of the premiums paid.

Maybe there are now fit-for-purpose PPI contracts. But after what happened in the past, no one will touch them with a bargepole these days. As the first link I cited mentioned, very few new policies have been taken out since 2010.

I was required by my lender in 1988 to take out one of these policies, as condition for borrowing 95% of property value. I knew it for what it was - a way of taking more money from me, in effect a higher interest rate for a higher risk loan. After about four years, I made a partial capital repayment, and cancelled the insurance. They didn't squeak. But most people would have carried on paying for much longer. Also they'd probably have used the free capital to buy a nice car rather than reduce their mortgage exposure. I'd long worked out that paying down mortgage was one of the highest interest rate investments available to typical home-owner with a mortgage.

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Woodchopper
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Re: Buy to Let and private renting

Post by Woodchopper » Fri Sep 24, 2021 1:48 pm

IvanV wrote:
Fri Sep 24, 2021 1:43 pm
Woodchopper wrote:
Thu Sep 23, 2021 8:52 am
... in the UK you can get help paying mortgage interest (but not capital) from the state for mortgage balances up to (I think) about 200k iirc, as that usually works out cheaper than paying the rent via housing benefit for a re-housed family....
In the UK its also possible to get mortgage payment protection insurance which will cover the payments for a period in case of unemployment or sickness.
Is this supposed to be a satirical comment? Ie a way of saying that the protections in the quote you commented on are rubbish?

If not, then you might have misunderstood the PPI scandal.

The main cited complaint in the PPI scandal was mis-selling, a useful cover-all term which fails to specify the nature of the scam. The main thing that was mentioned, perhaps because it was less shocking than the main offence, was the large rake-offs were being taken (This source cites a court case where 72% of the premium being taken as profit, split between the lender and insurer.

But the real scandal, the reason that there was such large free profit in the premiums, is that these policies were often useless. Typically Catch-22 clauses were incorporated, written in such a way that once you were ill or unemployed, you were no longer eligible to make a claim for being ill or unemployed. I think I saw an estimate once that total claims paid on PPI insurance were only about 10% of the premiums paid.

Maybe there are now fit-for-purpose PPI contracts. But after what happened in the past, no one will touch them with a bargepole these days. As the first link I cited mentioned, very few new policies have been taken out since 2010.

I was required by my lender in 1988 to take out one of these policies, as condition for borrowing 95% of property value. I knew it for what it was - a way of taking more money from me, in effect a higher interest rate for a higher risk loan. After about four years, I made a partial capital repayment, and cancelled the insurance. They didn't squeak. But most people would have carried on paying for much longer. Also they'd probably have used the free capital to buy a nice car rather than reduce their mortgage exposure. I'd long worked out that paying down mortgage was one of the highest interest rate investments available to typical home-owner with a mortgage.
I mentioned it because a friend used the insurance cover to pay his mortgage after he lost his job. Presumably he got one of the less useless policies.

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nekomatic
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Re: Buy to Let and private renting

Post by nekomatic » Fri Sep 24, 2021 5:42 pm

You can certainly get genuine income protection insurance that pays out if you can’t work for a bit, but it’s pretty expensive, because you’re insuring against something that’s not all that unlikely.
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sheldrake
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Re: Buy to Let and private renting

Post by sheldrake » Fri Sep 24, 2021 5:47 pm

Payment protection insurance was often missold along with mortgages in the late 90s/early 2000s iirc.

The whole business model is of course based on the insurance actuaries calculating that the company is likely to make more out of you than you do out of them over the long term, so it's usually better to save up a buffer as fast as you can and then drop it once you can afford to be self-insuring.

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Re: Buy to Let and private renting

Post by plodder » Fri Sep 24, 2021 7:46 pm

sheldrake wrote:
Fri Sep 24, 2021 5:47 pm
Payment protection insurance was often missold along with mortgages in the late 90s/early 2000s iirc.
was it? was it really?
IvanV wrote:
Fri Sep 24, 2021 1:43 pm
sh.t loads on this literally a couple of posts ago
do you have everyone on ignore? is that it?

sheldrake
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Re: Buy to Let and private renting

Post by sheldrake » Fri Sep 24, 2021 7:51 pm

yes I do. I didn't realise you were a kind of informal board neighbourhood watch organiser. do you get a uniform?

Millennie Al
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Re: Buy to Let and private renting

Post by Millennie Al » Sat Sep 25, 2021 1:03 am

There's also a type of mortgage insurance, often referred to an indemnity, which guarantees payments, but only benefits the lender. If you fall behind in payments, the insurance pays the lender, but you are still liable to reimburse the insurer. From the borrower's point of view, it's just a part of the charge for getting the loan - split out to make the payments sound a bit lower.

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Bird on a Fire
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Re: Buy to Let and private renting

Post by Bird on a Fire » Wed Sep 29, 2021 10:59 am

Residents of Berlin have backed a referendum to expropriate and resocialise properties owned by large corporate landlords - those with 3000+ properties, which accounts for 11% of the stock.

It was a non-binding referendum, though, so up to the inchoate local government to decide what to do and how to do it. One to watch.

https://www.theguardian.com/commentisfr ... -corporate
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plodder
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Re: Buy to Let and private renting

Post by plodder » Wed Sep 29, 2021 11:27 am

Millennie Al wrote:
Sat Sep 25, 2021 1:03 am
There's also a type of mortgage insurance, often referred to an indemnity, which guarantees payments, but only benefits the lender. If you fall behind in payments, the insurance pays the lender, but you are still liable to reimburse the insurer. From the borrower's point of view, it's just a part of the charge for getting the loan - split out to make the payments sound a bit lower.
aka yet another layer of spivs

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