7 ms·

What a horrible idea Buy-to-let is causing immense social and economic problems in the UK. It's a nice way for the rich to tax the poor. Atlas shrugged.

amelius 7y ago
See also recent demonstrations in Berlin. Increasing housing costs are changing the character of the city.
- bubblewrap 7y ago
  And you think if everybody would buy their own houses, that wouldn't be the case? Like the poor artists who made Berlin famous, who thrived when there was an endless supply of living space (because of the wall and other issues), they would just have bought their own places and gentrification would have been staved off forever? Are you sure it is not the other way round: increasing attractiveness of the city (change of character) has lead to increased housing costs?
  - kitten_mittens_ 7y ago
    70% of Germans rent. Any increase in rents is broadly felt, especially compared to America, where most political power in most cities resides with homeowners (~63% of the population). https://www.bloomberg.com/news/articles/2019-04-13/berlin-housing-backlash-spurs-drive-to-nationalize-real-estate https://www.bloomberg.com/news/articles/2019-04-13/berlin-ho...
    - sokoloff 7y ago
      Increases in rent are driven more by people wanting to rent in a given area (typically driven by jobs) than by an owner or landlord selling a house to a different landlord. Rental demand is much more variable over time than the change in supply from marginal landlords buying existing properties.
    - bubblewrap 7y ago
      If prices are rising, people are crying because they are not home owners. If they are falling, people are crying because they are homeowners. Weren't a lot of people in the US screwed when the last housing bubble burst (2008)?
solipsism 7y ago
I'm struggling to understand what "Atlas shrugged" means in the context of your statement. I understand the term in the context of the story, as well as in the context of Rand's philosophy. But what could it possibly mean here?
- rubyfan 7y ago
  Same, perhaps it’s unrelated to the story?
- andy_ppp 7y ago
  I read it to mean that nobody cares about the consequences as long as individualism rules.
bubblewrap 7y ago
If you think houses are a good investment, buy them. Even the poor can get a loan from the bank and do it. The reality is probably that it is an investment like any other, with risks. People who buy houses to let take that risk and provide people with living space to rent. Which has advantages as well as disadvantages.
- verbify 7y ago
  > Even the poor can get a loan from the bank and do it. You usually need a deposit for a loan. Poor people generally don't have huge amounts of savings.
  - bubblewrap 7y ago
    I think you can start with buying smaller things first, and build up from that. Like buying something for 100000$. Then you don't need as big of a loan. Also, isn't that an argument for providing housing to rent. If poor people can't afford to buy houses, where would they live, if there weren't houses to rent?
    - verbify 7y ago
      I think we have very different definitions of poor. $100k with a LTV of 10% means savings of $10k (besides the other fees of buying a place). Poor people don't have that. A quick Google showed that the median savings account balance across American households is $4,830. And when you have a median that's considerably lower than the average, it means that the poor people are doing worse. The likelihood is they're in debt. And as an aside, seeing as this is the UK, $100k wouldn't buy a house in an area that is desirable or has jobs, so you'd struggle to live there or rent it out.
      - bubblewrap 7y ago
        How many people are poor like that? And the amount of money they hold seems a poor indicator, too. People who have paid off half their million dollar house, and have an income of 20k/month would count as poor. If the average household has 5k in savings, pool with your parents to get to 10k. Or take on some night time job once per week, to earn an extra 400$ per month, and save for 2 years. And you don't have to buy a whole house, a small flat can be a sufficient start. I have to say I have never done this, but I was recently in talks with people who propose doing that and help people who do it. It sounded plausible - why not? You can buy a rented flat (that already has tenants who pay rent). So the numbers are pretty much clear. They told me the bank doesn't count the rent as your income, though. That is the catch. So for your first investment like that, you have to be creditworthy on your own. However, after a while you can build trust with the bank (they see the rent from the tenants keeps coming on a regular basis), and get more credit. Then you can start the next project. You don't have to invest in a desirable area, as you don't want to live there yourself. Nevertheless, I am still not convinced it is for me. I worry too much about bad tenants, things breaking on the property and so on. I have almost no knowledge about housing properties (like to how do you recognize damage to the property before buying it, how much do repairs cost, and so on).
bufferoverflow 7y ago
Who are renters supposed to rent from then?
- deleted 7y ago
  [deleted]
- retiredcoder 7y ago
  Corporations (while I don’t think it is necessary better or worse) but there is a professional rental market too.
  - bufferoverflow 7y ago
    So if a person incorporates and buys an apartment to rent, then it somehow changes everything?
    - 4rtergsedhg 7y ago
      It is different. Corporations can then go and list their holdings as a REIT on a Stock Exchange, thus allowing the general public to benefit from their arrangement. When private ownership is renting housing, you have either Banks (in the case of servicing debt) or individuals profiting at the expense of the general public.
    - retiredcoder 7y ago
      Like the sibling commenter said, there are different venues for providing rental supply, sometimes making a public or private investment. Again, I am not advocating either way as I am not in real state industry to have perspective on it.
lotsofpulp 7y ago
Renting homes is not causing social and economic problems. Technology and efficiencies of scale obviating many jobs and concentrating them in small regions, causing an increase in demand without a correspondingly large enough increase in supply of housing is causing social and economic problems. The solution to pricing problems is adjusting the demand or the supply curves.
- wwqrd 7y ago
  I think the point is that if you have money to begin with you can leverage that against those that don't. In the UK a mortgage is generally cheaper than rent. You "choose" to rent when you have no other choice.
  - lotsofpulp 7y ago
    You can only "leverage" that against those that don't because of excess demand versus supply. If there were many regions with good income security and upward potential, then it would bring rents down to levels at which owning vs renting wouldn't be so lopsided. The other side of this coin is also the lack of income (or sufficient income), due to the reduced value of human labor due to the aforementioned automation and also the 3 billion other people in the world wanting to share in the dream of having the luxuries of the developed nations. My point is that offering a residence for rent isn't inherently bad, and that attacking that isn't going to solve anything. Although, I think there are other problems caused by private ownership of land.
    - wwqrd 7y ago
      I’m not disparaging people looking out for themselves. However, renting out an asset (which generally isn’t depreciating) is only going to increase the inequity between the renter and the landlord. If their relationship is based entirely on who can afford a deposit then I don’t see what excess of demand and supply has to do with it. If you’re talking about building so many houses that they loose their value as a commodity entirely, the problem there is an entire generation who have staked their pensions on property. I don’t have any answers.
HeWhoLurksLate 7y ago
Hold up, I thought Atlas referred to the rich people that made their money by building up industries, and that their shrugging was them "dropping the mantle" because they were getting taxed to death? I haven't read that book in a while, but it really feels like you're misconstruing this.

amelius 7y ago

See also recent demonstrations in Berlin. Increasing housing costs are changing the character of the city.

bubblewrap 7y ago
And you think if everybody would buy their own houses, that wouldn't be the case? Like the poor artists who made Berlin famous, who thrived when there was an endless supply of living space (because of the wall and other issues), they would just have bought their own places and gentrification would have been staved off forever? Are you sure it is not the other way round: increasing attractiveness of the city (change of character) has lead to increased housing costs?
- kitten_mittens_ 7y ago
  70% of Germans rent. Any increase in rents is broadly felt, especially compared to America, where most political power in most cities resides with homeowners (~63% of the population). https://www.bloomberg.com/news/articles/2019-04-13/berlin-housing-backlash-spurs-drive-to-nationalize-real-estate https://www.bloomberg.com/news/articles/2019-04-13/berlin-ho...
  - sokoloff 7y ago
    Increases in rent are driven more by people wanting to rent in a given area (typically driven by jobs) than by an owner or landlord selling a house to a different landlord. Rental demand is much more variable over time than the change in supply from marginal landlords buying existing properties.
  - bubblewrap 7y ago
    If prices are rising, people are crying because they are not home owners. If they are falling, people are crying because they are homeowners. Weren't a lot of people in the US screwed when the last housing bubble burst (2008)?

solipsism 7y ago

I'm struggling to understand what "Atlas shrugged" means in the context of your statement. I understand the term in the context of the story, as well as in the context of Rand's philosophy. But what could it possibly mean here?

rubyfan 7y ago
Same, perhaps it’s unrelated to the story?
andy_ppp 7y ago
I read it to mean that nobody cares about the consequences as long as individualism rules.

bubblewrap 7y ago

If you think houses are a good investment, buy them. Even the poor can get a loan from the bank and do it. The reality is probably that it is an investment like any other, with risks. People who buy houses to let take that risk and provide people with living space to rent. Which has advantages as well as disadvantages.

verbify 7y ago
> Even the poor can get a loan from the bank and do it. You usually need a deposit for a loan. Poor people generally don't have huge amounts of savings.
- bubblewrap 7y ago
  I think you can start with buying smaller things first, and build up from that. Like buying something for 100000$. Then you don't need as big of a loan. Also, isn't that an argument for providing housing to rent. If poor people can't afford to buy houses, where would they live, if there weren't houses to rent?
  - verbify 7y ago
    I think we have very different definitions of poor. $100k with a LTV of 10% means savings of $10k (besides the other fees of buying a place). Poor people don't have that. A quick Google showed that the median savings account balance across American households is $4,830. And when you have a median that's considerably lower than the average, it means that the poor people are doing worse. The likelihood is they're in debt. And as an aside, seeing as this is the UK, $100k wouldn't buy a house in an area that is desirable or has jobs, so you'd struggle to live there or rent it out.
    - bubblewrap 7y ago
      How many people are poor like that? And the amount of money they hold seems a poor indicator, too. People who have paid off half their million dollar house, and have an income of 20k/month would count as poor. If the average household has 5k in savings, pool with your parents to get to 10k. Or take on some night time job once per week, to earn an extra 400$ per month, and save for 2 years. And you don't have to buy a whole house, a small flat can be a sufficient start. I have to say I have never done this, but I was recently in talks with people who propose doing that and help people who do it. It sounded plausible - why not? You can buy a rented flat (that already has tenants who pay rent). So the numbers are pretty much clear. They told me the bank doesn't count the rent as your income, though. That is the catch. So for your first investment like that, you have to be creditworthy on your own. However, after a while you can build trust with the bank (they see the rent from the tenants keeps coming on a regular basis), and get more credit. Then you can start the next project. You don't have to invest in a desirable area, as you don't want to live there yourself. Nevertheless, I am still not convinced it is for me. I worry too much about bad tenants, things breaking on the property and so on. I have almost no knowledge about housing properties (like to how do you recognize damage to the property before buying it, how much do repairs cost, and so on).

bufferoverflow 7y ago

Who are renters supposed to rent from then?

deleted 7y ago
[deleted]
retiredcoder 7y ago
Corporations (while I don’t think it is necessary better or worse) but there is a professional rental market too.
- bufferoverflow 7y ago
  So if a person incorporates and buys an apartment to rent, then it somehow changes everything?
  - 4rtergsedhg 7y ago
    It is different. Corporations can then go and list their holdings as a REIT on a Stock Exchange, thus allowing the general public to benefit from their arrangement. When private ownership is renting housing, you have either Banks (in the case of servicing debt) or individuals profiting at the expense of the general public.
  - retiredcoder 7y ago
    Like the sibling commenter said, there are different venues for providing rental supply, sometimes making a public or private investment. Again, I am not advocating either way as I am not in real state industry to have perspective on it.

lotsofpulp 7y ago

Renting homes is not causing social and economic problems. Technology and efficiencies of scale obviating many jobs and concentrating them in small regions, causing an increase in demand without a correspondingly large enough increase in supply of housing is causing social and economic problems. The solution to pricing problems is adjusting the demand or the supply curves.

wwqrd 7y ago
I think the point is that if you have money to begin with you can leverage that against those that don't. In the UK a mortgage is generally cheaper than rent. You "choose" to rent when you have no other choice.
- lotsofpulp 7y ago
  You can only "leverage" that against those that don't because of excess demand versus supply. If there were many regions with good income security and upward potential, then it would bring rents down to levels at which owning vs renting wouldn't be so lopsided. The other side of this coin is also the lack of income (or sufficient income), due to the reduced value of human labor due to the aforementioned automation and also the 3 billion other people in the world wanting to share in the dream of having the luxuries of the developed nations. My point is that offering a residence for rent isn't inherently bad, and that attacking that isn't going to solve anything. Although, I think there are other problems caused by private ownership of land.
  - wwqrd 7y ago
    I’m not disparaging people looking out for themselves. However, renting out an asset (which generally isn’t depreciating) is only going to increase the inequity between the renter and the landlord. If their relationship is based entirely on who can afford a deposit then I don’t see what excess of demand and supply has to do with it. If you’re talking about building so many houses that they loose their value as a commodity entirely, the problem there is an entire generation who have staked their pensions on property. I don’t have any answers.

HeWhoLurksLate 7y ago

Hold up, I thought Atlas referred to the rich people that made their money by building up industries, and that their shrugging was them "dropping the mantle" because they were getting taxed to death? I haven't read that book in a while, but it really feels like you're misconstruing this.