Property prices thread

[Jacob]

If you look back at your first post, you were the one who proposed a definition.  It was wrong, but it suited your argument.  It is too cute by half to now say you don't want to discuss whether the definition you gave that is the whole basis for your position is flawed or not.

I thought "residential properties" meant "housing" and used the term as such to make my point. I was not proposing a definition, and am happy to use any definition you prefer to clearly communicate my point - which is that financial benefits were provided to landlords and prospective landlords for buying housing, benefits which were not provided to people wanting to buy that exact same housing for the purpose of living in it themselves; and that that state of affairs is seen as poor public policy (hence "scandal") because it represented a wealth transfer to those who were well off, and did not positively impact the housing situation.

What I'm interested in learning about is whether that was in fact good public policy, ultimately insignificant, or whether it was in fact crappy public policy like Tamas, Josq, and others are saying.

I thought you might have some insight here, but if you are not interested in that line of discussion that is of course your prerogative.

If you have a different point to make, I'd be happy to hear it. Otherwise, have a nice day.

[Jacob]

People buying existing housing for the purpose of renting it out got financial benefits that were not provided for people buying housing for the purpose of living in it.

Yes. The other side of this is that this tax relief applies to individuals who buy a property in their own name with a personal mortgage.

This type of tax relief (and lower taxes generally) would be available if they set up a company to hold the property. As I say on balance I think it's probably right to have got rid of it because I broadly think those individual, hobbyist landlords who are buying for retirement income are generally worse landlords than a corporate.

This is either good public policy or not good public policy. The prevailing opinion in the UK seems to be that it's poor public policy, hence it's "a scandal".

You seem to be arguing that it was good public policy?

I think six of one half of the other

I think it's probably better to get rid of it than not. The downside has been that it has really impacted the profit for individual landlords, so I believe there has been a decline of properties available on the private rental market as those landlords get out - either selling properties to corporates or to individuals as owner-occupiers. I don't necessarily think it was a scandal though.

But I think the purpose was broadly to encourage that type of investment as a form of retirement saving. For an individual it was a tax efficient way to invest. For that policy goal of the 90s/00s Britain I think it worked.

On the other hand the reason it was got rid of was "fairness". For all that's posted on here, the last 14 years of Tory government have always tried to produce tax changes that can broadly be described as progressive (in particular by the IfS scorecard) - and have significantly increased the tax take as a proportion of GDP. I think a lot of that has actually just been by introducing complications.

But to the extent that their goal was to increase the tax take on higher rate tax payers v lower rate tax payers (while also leveling the plaing field between owner-occupiers and landlords) then they've met their goal.

I don't think either goal was to increase housing supply because it's not about supply or demand just ownership.

Thank you

[Josquius]

Same question to you, if the imperative is to create more housing, why the angst against policies which encourage the creation of rental units?

This creation involves the elimination of owner occupier housing units.
And it isn't just a neutral replacement either. Demand is far outpacing supply and this is adding even more demand.

I suppose you could argue there is some actual creation going on where they subdivide a 3 bed house into 5 bedsits... But this is more a symptom of our problem than a solution.

Nothing wrong with right to buy per se (originally a 1970s Labour policy promoted by the left of the party). It was the 40-60% discounts against market value and the fact that the receipts couldn't be spent on new housing that was the issue.

The left of the Labour party in the 70s wasn't exactly a font of universally good ideas.

Even without the discounts its an idea with lots of issues.
It contributes to creating Swiss cheese social housing where you'll often find in a single block of flats 3 social landlords, 3 private individual landlords, 3 corporate private landlords, 3 owner-occupiers. Makes sorting out any maintenance works a absolute nightmare.
Even away from flats having such weirdly scattered estates can really reduce efficiency of maintenance and damage the ability of social landlords to do much more than the minimum, poor anti social behaviour management, etc...

Then there's also the factor that there's a big need for social housing in some areas where building more housing just isnt particularly practically possible.
It's often about more than just having the money. There's also having the sites and permission.
Even assuming they can get all this it leaves quite a large gap between a sale and a replacement.

Were it up to me I'd have some social housing built basically along shared ownership lines (though improvements definitely possible there) but most of the rest should be totally blocked from ever being sold.
Living in social housing should be a good enough deal you don't want to buy.
If you really really do have to, the reduced rents you're paying there should help you save for a house elsewhere.

[crazy canuck]

I'm not interested in arguing definitions with you.

If you look back at your first post, you were the one who proposed a definition.  It was wrong, but it suited your argument.  It is too cute by half to now say you don't want to discuss whether the definition you gave that is the whole basis for your position is flawed or not.

It was not a wrong definition in the UK. A property with tenants or owner-occupiers in it is a residential property, NOT a commercial one.

I think you are misunderstanding another distinction in property law - the distinction between commercial property and other properties.  Rental property is certainly not commercial property, but it is property which is used for business purposes - ie. rental.

[crazy canuck]

Same question to you, if the imperative is to create more housing, why the angst against policies which encourage the creation of rental units?

This creation involves the elimination of owner occupier housing units.
And it isn't just a neutral replacement either. Demand is far outpacing supply and this is adding even more demand.

I suppose you could argue there is some actual creation going on where they subdivide a 3 bed house into 5 bedsits... But this is more a symptom of our problem than a solution.

Implicit in your criticism is that housing units would have been purchased by those who are now renting those same units.  I suppose the further assumption is that the reason the first assumption is true is because the rent is higher than the carrying costs of actually purchasing.

And so, if that all of that is true, why didn't the renter just purchase the property in the first place?

[Josquius]

Same question to you, if the imperative is to create more housing, why the angst against policies which encourage the creation of rental units?

This creation involves the elimination of owner occupier housing units.
And it isn't just a neutral replacement either. Demand is far outpacing supply and this is adding even more demand.

I suppose you could argue there is some actual creation going on where they subdivide a 3 bed house into 5 bedsits... But this is more a symptom of our problem than a solution.

Implicit in your criticism is that housing units would have been purchased by those who are now renting those same units.  I suppose the further assumption is that the reason the first assumption is true is because the rent is higher than the carrying costs of actually purchasing.

And so, if that all of that is true, why didn't the renter just purchase the property in the first place?

We are over simplifying here of course. But the basic answer would be that they could have afforded the house in a market where only people like themselves were interested in buying it to live in,  but not in a market where you have wealthier people offering greater sums to get it as a buy to let property.

I think you are misunderstanding another distinction in property law - the distinction between commercial property and other properties.  Rental property is certainly not commercial property, but it is property which is used for business purposes - ie. rental.   

Maybe a difference in tax law between countries here.
A lot of these buy to let people aren't getting business income off it. From what I gather its only once they get a sizable portfolio that it becomes best practice to setup a business.

[crazy canuck]

We are over simplifying here of course. But the basic answer would be that they could have afforded the house in a market where only people like themselves were interested in buying it to live in,  but not in a market where you have wealthier people offering greater sums to get it as a buy to let property.

Yes, that is the implicit assumption for sure.  But is there any support for that contention?  Prices are rising all over the world.  It is not a function of local tax policy regarding writing off interest.
 

Maybe a difference in tax law between countries here.
A lot of these buy to let people aren't getting business income off it. From what I gather its only once they get a sizable portfolio that it becomes best practice to setup a business.

I think there is perhaps another error of definition creeping in.  A business need not be a company.  The last time I looked at the stats, most businesses were actually not incorporated.  So if someone is running a business of renting property they are entitled to write off the costs of running that business, even if they are running the business as a sole proprietor (i.e. a non incorporated person who is taking the income personally as the owner of the business).

[Tamas]

I'm not interested in arguing definitions with you.

If you look back at your first post, you were the one who proposed a definition.  It was wrong, but it suited your argument.  It is too cute by half to now say you don't want to discuss whether the definition you gave that is the whole basis for your position is flawed or not.

It was not a wrong definition in the UK. A property with tenants or owner-occupiers in it is a residential property, NOT a commercial one.

I think you are misunderstanding another distinction in property law - the distinction between commercial property and other properties.  Rental property is certainly not commercial property, but it is property which is used for business purposes - ie. rental.

So we agree residential property can also mean tenants as residents, good.

[Josquius]

We are over simplifying here of course. But the basic answer would be that they could have afforded the house in a market where only people like themselves were interested in buying it to live in,  but not in a market where you have wealthier people offering greater sums to get it as a buy to let property.

Yes, that is the implicit assumption for sure.  But is there any support for that contention?  Prices are rising all over the world.  It is not a function of local tax policy regarding writing off interest.
 

It's complicated as this isn't the only factor at play in the price of properties.
But certainly house price rises are wavering of late with lots of landlords getting out.

As I say too it's generally shifting who is missing out. Often the renters aren't people who can even afford to rent and are getting benefits to do this.
Often you also see people "dropping down a level" when it comes time to buy - rent in the poshest area, buy in the 2nd poshest.

So it's swings and roundabouts.
 Buy to let being crushed is a good thing, but it is having the effect that those who are losing out are far more commonly those on the bottom who are otherwise homeless and can't really flat share or live with parents as many of the buyers do.

On a short term this is a huge problem though longer term it seems right to me that the market is brought to this natural state and then the government need to do their job and properly provide for the poor themselves rather than subsidising buy to letters.

[Grey Fox]

Isn't the answer to that to create even more rental supply?

No, that's very bad. It gives even more power to the capital class.

[crazy canuck]

I'm not interested in arguing definitions with you.

If you look back at your first post, you were the one who proposed a definition.  It was wrong, but it suited your argument.  It is too cute by half to now say you don't want to discuss whether the definition you gave that is the whole basis for your position is flawed or not.

It was not a wrong definition in the UK. A property with tenants or owner-occupiers in it is a residential property, NOT a commercial one.

I think you are misunderstanding another distinction in property law - the distinction between commercial property and other properties.  Rental property is certainly not commercial property, but it is property which is used for business purposes - ie. rental.

So we agree residential property can also mean tenants as residents, good.

Tenants are rent paying occupiers of the space. They have no rights as a resident of the property other than those granted under law to renters. The failure to draw distinction between ownership rights and rental rights is a fundamental error.

[Tamas]

I'm not interested in arguing definitions with you.

If you look back at your first post, you were the one who proposed a definition.  It was wrong, but it suited your argument.  It is too cute by half to now say you don't want to discuss whether the definition you gave that is the whole basis for your position is flawed or not.

It was not a wrong definition in the UK. A property with tenants or owner-occupiers in it is a residential property, NOT a commercial one.

I think you are misunderstanding another distinction in property law - the distinction between commercial property and other properties.  Rental property is certainly not commercial property, but it is property which is used for business purposes - ie. rental.

So we agree residential property can also mean tenants as residents, good.

Tenants are rent paying occupiers of the space. They have no rights as a resident of the property other than those granted under law to renters. The failure to draw distinction between ownership rights and rental rights is a fundamental error.

I don't know what you are on about I don't think we are having the debate you think we are having. You wrote it is incorrect to call rented out properties residential they should be called rental properties. In the UK I have never in 11 years heard that term used, however I had been desiflgnated a resident in properties I rented. So there is nothing to debate, you were wrong in the context of the topic which was the UK and may very well have been right in a Canada context which I did not challenge.

[crazy canuck]

I'm not interested in arguing definitions with you.

If you look back at your first post, you were the one who proposed a definition.  It was wrong, but it suited your argument.  It is too cute by half to now say you don't want to discuss whether the definition you gave that is the whole basis for your position is flawed or not.

It was not a wrong definition in the UK. A property with tenants or owner-occupiers in it is a residential property, NOT a commercial one.

I think you are misunderstanding another distinction in property law - the distinction between commercial property and other properties.  Rental property is certainly not commercial property, but it is property which is used for business purposes - ie. rental.

So we agree residential property can also mean tenants as residents, good.

Tenants are rent paying occupiers of the space. They have no rights as a resident of the property other than those granted under law to renters. The failure to draw distinction between ownership rights and rental rights is a fundamental error.

I don't know what you are on about I don't think we are having the debate you think we are having. You wrote it is incorrect to call rented out properties residential they should be called rental properties. In the UK I have never in 11 years heard that term used, however I had been desiflgnated a resident in properties I rented. So there is nothing to debate, you were wrong in the context of the topic which was the UK and may very well have been right in a Canada context which I did not challenge.

Really you have never heard something referred to as a rental property? I find that very hard to believe.  But if that's true, there must be some other British name for rental property.

[crazy canuck]

I see CC is in a mood again

Well, yeah sloppy use of language to defend a public policy position is always problematic.

[crazy canuck]

Isn't the answer to that to create even more rental supply?

No, that's very bad. It gives even more power to the capital class.

A true Marxist, better for the system, to fail completely than to ameliorate the concerns of the poor and let the system continue.