Property prices thread

[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.
 

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.

But that's really the issue isn't it?  if you create public policy which forces out the number of rental units available, there are almost certainly going to be an increase number of homeless homeless people.

Which is why I stated the question the way I did, if providing more rental units is the imperative.

But you really seem to be disagreeing about is that assumed imperative.  You seem to be advocating for a public policy outcome which reduces rental units so that in the price of all property declines.

I think that's very bad public policy and does a great disservice to those who cannot afford to purchase their own homes.

[Sheilbh]

Homelessness was very nearly wiped out by the last Labour government (and entirely during covid). It's vastly increased since 2010, but primarily because of austerity (particularly cuts to local government who are responsible for that).

It's one of the clearest, most obvious and shaming demonstrations of the last 14 years. Not sure it's been too much a function of property shortage (though the cost of social housing is) or ending the tax break for buy to let.

[Jacob]

Sheilbh, is your understanding that buy to let:

1) Increased housing starts?

2) Significantly increased the availability of rental housing (potentially keeping rent relatively low), thus keeping homelessness lower?

Because if so, it seems pretty good.

[Syt]

Bloody millennials. 



(Haven't read the article, but choose to believe it's a 100% accurate summary. )

[The Brain]

It's true in Britain. External plumbing, separate hot and cold water, fake fireplaces, carpet in the bathrooms, washing machine in the kitchen.

[Josquius]

But that's really the issue isn't it?  if you create public policy which forces out the number of rental units available, there are almost certainly going to be an increase number of homeless homeless people.

Which is why I stated the question the way I did, if providing more rental units is the imperative.

But you really seem to be disagreeing about is that assumed imperative.  You seem to be advocating for a public policy outcome which reduces rental units so that in the price of all property declines.

I think that's very bad public policy and does a great disservice to those who cannot afford to purchase their own homes.

We need to underline again though that the number of available homes isn't being reduced. Pieces are just being shuffled around the board to make things more equitable.

You have the old way, where people with buy to let mortgages are making unearned money. Often this is off the government paying decent money to house (very often in shit conditions) people that can't afford housing themselves and, due to past penny wise pound foolish policies, the government can't house in a more efficient way.
Then you have the shift, where people with some money who were previously priced out of affording a home will be more able to afford one.

The fundamental problem still remains - we haven't built nearly enough houses.
However providing for this bottom rung group who are just trying not to be properly homeless is much easier to do than meeting the needs of those who are a few steps above beggars can't be choosers.

Somewhat related to the problem and shifting demand issues, but not due to to these recent changes... A great place we saw this shift locally was in a part of town called Heaton. Traditionally a working class/verging on middle class, decent residential area, go back 15 years and it was rapidly becoming a student ghetto. People were buying up family homes that went on the market and subdividing them into basic HMOs for students.

Building more family homes- nightmare. Space is at a premium. You need a lot of land to provide for what that market demands. Especially if you're going for this outer-city/inner-suburb location that was really appealing.

Building more student homes on the other hand... they're single young people. They don't need much. Tower blocks being built around the city centre house them far more efficiently and in a way that is better for the students themselves- they want to be near the centre where the universities and the pubs are.

Today there's been a big shift of students into living in these new blocks around the centre whilst Heaton is frequently being mentioned in the national press as a real up and coming funky area for young families.

The only losers are the people who wanted to make money buying property then charging basically the same rent they would have done for the whole house to each of the 5 students they packed into the house (I'm seriously annoyed about this in hindsight). Sadly they've largely been replaced by corporate landlords owning the tower blocks and who also overcharging, but you can't win them all.

[Sheilbh]

Sheilbh, is your understanding that buy to let:

1) Increased housing starts?

My read - which could be wrong - is that it basically had no impact on this. It increased the size of the private rental sector and was also part of social housing (as housing benefit is up to a % of market rent and largely goes to private landlords). So it changed the ownership mix of housing stock, but I think it's probably unlikely to have made a huge difference to the amount of housing stock. One slight caveat is I suspect buy to let owners may have divided houses - so, for example, terraced houses in London split into two or three one bed flats (I live in one now).

But generally I don't think it's a factor not least because the people who benefit from the buy to let rates are people who arre buying and taking out mortgages in their own name. They're not setting up a company which would be a more tax efficient way of doing it (and probably better from a liability perspective). So I don't think they're going to be capable of doing the build to let approach.

Also, as I've mentioned before, our planning system can be unpredictable and involve long which means we have far, far fewer "small" developers than countries like France and Germany. That sector is dominated by bigger players who can afford the risk (it's why I think planning reform could increase supply but also sources of supply, make it more competitive and diverse in terms of what's being built). But buy to let are basically in the already built market.

2) Significantly increased the availability of rental housing (potentially keeping rent relatively low), thus keeping homelessness lower?

Because if so, it seems pretty good.

So I think this is a bit of a maybe. As I say my understanding is that analysts have said that one of the factors driving rents at the minute (which are increasing a lot faster than house prices) is that buy to let landlords are getting out of the market. It may also be a factor in house prices flat-lining. Some are professionalising and incorporating a company to take hold the property because there's still tax benefits that way, but others are just selling up either to owner-occupiers or corporate landlords. So even if that isn't necessarily changing the availability of homes to rent structurally it means there's an uneven market as they're sold/change hands.

Anecdotally I know a few people who have had that experience that the landlord won't renew their tenancy because they intend to sell. Similarly I believe the previous owner of my flat (which I now own with a mortgage) was a buy to let landlord.

On the interaction with homelessness, I'm not so sure. I think part of it is possibly related to rent prices increasing as private renters tend to be most at risk, so if the change to buy to let has increased rents then it's a factor. But I'm not sure it's a big one.

As I say the last Labour government had rough sleeping down to about 500 people in the UK. From everything I've read it was very, very difficult to get the number lower because those people's needs were quite difficult to meet and there was an element of "lifestyle choice" for a hard core within that group. But "lifestyle choice" was a phrase Suella Braverman used to describe the current situation which is just wrong. This year I think the estimate is that there's around 4,000 rough sleepers which is vastly higher - I don't think those extra 3,500 people who Labour had housed have made a new "lifestyle choice" in the last 15 years.

However beyond rough sleepers there are other categories of homelessness - people with precarious housing/unofficially homeless (in shelters, B&Bs, squats etc), the statutorily homeless (declared to their local authority and seeking support) and others. I think the big drivers of that are less to do with availability or even price of properties to rent and more to do with benefit reforms by George Osborne as part of austerity - in particular the benefit cap, the two child benefit limit, the way universal credit works where that's been introduced and the "bedroom tax". It's really difficult to compare homelessness with now and 2010, as the rough sleepers are just the visibly homeless, and there's been changes to statistic collection so we have far better data now (this is one of the slight curses of this government is that on lots of metrics they're condemned for, often it's literally because we've only recently started counting - so some of those condemnations are fair, others probably not) - but overall it looks like homelessness has at least doubled in the last 15 years.

That then can lead to rough sleeping because, for people who are homeless the support is from the local authority, but local authorities have a lot of statutory duties (roads, bins, social care for adults, social care for kids, safeguarding etc). As part of austerity central government funding to local government was cut hugely - I think it's climbing again now but about a 50% cut of core funding from 2010 to 2020. Understandably local authorities have often made the decision to cut back on everything else they can to protect the budget for children's services, children's social care etc - and that goes for homelessness too. While the funding has been cut the priority and focus for local authorities in emergency housing and that sort of thing has gone to families with children.

[viper37]

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.

You don't get to have a revolution when the bellies are full.

[Admiral Yi]

Unless Tolkien was bitching specifically about stuff in *his* back yard I wouldn't call him a NIMBY.

[Admiral Yi]

woops

[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.

You don't get to have a revolution when the bellies are full.

True that

[Syt]

Even if you think you have problems finding the right home, spare a thought for these poor dog owners.

[Josquius]

Was recommended this guy lately. Makes interesting videos aimed at at just the right level of nerd but not an economist.