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Never heard of this term, but it sounds.. normal? I’m not really clear on the morality issue here; it seems to be that 1. People should own not rent, and 2. BTL

by setr 5y ago

Never heard of this term, but it sounds.. normal? I’m not really clear on the morality issue here; it seems to be that 1. People should own not rent, and 2. BTL players tend to operate as bad owners. Point 1. is just absurd, because that’s obviously true but it’s also obviously true that renters rent for a reason — they don’t want to, or can’t afford, the cost of total ownership over the property; telling them not to rent is simply telling them not to have shelter (you must be in a good position, or you shouldn’t have a position at all is a ridiculous stance) Point 2 is reasonable, but it’s not clear to me the relationship between BTL and bad ownership — the moral hazard seems to be purely with.. the owners themselves. There’s nothing described in the article that suggests BTL incentivizes or drives bad ownership practice, beyond giving the opportunity to be any kind of owner at all

thatguy0900 5y ago
I think the problem is when renters buy up all the property that is designed for owners. They can afford to pay far more than owners who want to live there, look up the stories of investment funds buying up huge swathes of residential land. No one who just wants a house can compete with that. It maybe wouldn't be an issue if widespread nimbyism and red tape in large meant barely any new ousting is coming online in many places,either.
- setr 5y ago
  The thing I never understood with investment funds doing that is that they should be able to make more money on their investment by renting it out while they’re holding it — the rent high enough to cover near any risk, as rent normally is priced for. It doesn’t make sense to do nothing, unless the act of renting has itself become to expensive to recoup on
jlokier 5y ago
Your rebuttal of point 1 is premised on the idea that prices are out of reach for the tenants. I see two problems with that. First problem is that prices are obviously not representative of the "honest" costs of ownership (such as maintenance, repairs, furnishing, the building, etc); it is utterly dominated by market forces that determine sale price. And price is very much a function of who else is in the market. It's almost a simple competition game. As long as there are would-be buy-to-let landlords, who have much easier access to finance than tenants, and whose access to finance goes up in a competitive market for properties (because rent goes up, which raises the finance available), those landlords automatically win the finance and market forces game. This doesn't mean the tenants can't afford ownership when you are comparing, as you should, to a version of the game without would-be buy-to-let landlords, because prices would be lower and purchasing opportunities would be greater. Second problem is, even despite the advantageously-financed competition, it's often not true that tenants cannot afford the cost including the sale price. Many tenants are paying higher in rent for many years, even decades, compared with what the mortgage would be on the same properties. So those tenants could afford it - but financially the landlord is a better bet for the bank, so they win on that front too. One of the problems in the UK is that the tenants' payment history does not contribute towards their credit record, so they are often considered uncreditworthy for a mortgage despite an established and long history of paying more than a mortgage. But even if that were included, a well-backed commercial operation, and their requirement being for interest-only mortgages (because that's all buy-to-let requires), will still win the finance competition. I would say the morality issue is that renting can be precarious and unpleasant compared with owning, and the issues become more serious if it's for many years as it limits people's other life choices. So it's unfair that people are forced to rent when they would like to buy and could afford it if they weren't losing the finance game to well-financed commercial buyers. Difficult issues with renting that add to the moral issue: - Pets are not allowed almost universally. - Regular inspections (check your lifestyle is satisfactory to the landlord, don't be visibly alternative looking, take a day off work to clean before each inspection, hide the pets, hide the boy/girlfriend sometimes, hide the baby (I'm serious, I know someone who was kicked out when a newborn arrived, and there were no directly attached neighbours to be disturbed or zoning reasons)). - Having to keep moving each time you encounter landlords who terminate without giving any reason or don't renew the tenancies (which are virtually always <=12 months in the UK precisely so that tenants can't have full legal rights). Yes landlords do this when there's already a perfactly good tenant in place, sometimes because they think they can drastically raise the rent in a hot market, and sometimes it's not the far away landlord but a property agent who advises termination, seeing an opportunity for a new-tenancy commission. - Requirements for 6 or even 12 months rent up front are increasing (12 months happened to me twice). That's on top of the deposit (1 or 2 months). - No control over the state of your kitchen, laundry, bathroom, carpets, lighting, windows, etc. You get what comes with the property and you're stuck with it. There might not be good choices on the market at a reasonable price or suitable location, and in practice it will never be upgraded while you are there. And you certainly can't fit out a place in your own taste. - In some towns, you can't even choose your own furniture, because unfurnished properties are too scarce, and furnished properties come full already. Often with furniture that doesn't get upgraded until long after a property owner would have replaced it. - Can't learn how to do physical upgrades and repairs (what we call DIY in the UK), because it's generally not allowed when renting. That's quite sad when you grew up watching your parents do that sort of thing and would like to. > Point 2: BTL incentivizes or drives bad ownership practice Well, for example (in the UK). Consider solar panels on roofs. There's a grant partially subsidising their installation. Many people get them installed, net emissions eventually go down. Except, have you ever heard of a solar panel being installed on a buy to let property after it is bought? I haven't. The tenants aren't able to even if they wanted to, and the landlords aren't motivated to. For that matter, have you even heard of a buy to let property having its single-glazed windows upgraded? I have, but only rarely and only when there's no tenant.

by setr 5y ago

thatguy0900 5y ago

I think the problem is when renters buy up all the property that is designed for owners. They can afford to pay far more than owners who want to live there, look up the stories of investment funds buying up huge swathes of residential land. No one who just wants a house can compete with that. It maybe wouldn't be an issue if widespread nimbyism and red tape in large meant barely any new ousting is coming online in many places,either.

setr 5y ago
The thing I never understood with investment funds doing that is that they should be able to make more money on their investment by renting it out while they’re holding it — the rent high enough to cover near any risk, as rent normally is priced for. It doesn’t make sense to do nothing, unless the act of renting has itself become to expensive to recoup on

jlokier 5y ago

Your rebuttal of point 1 is premised on the idea that prices are out of reach for the tenants. I see two problems with that. First problem is that prices are obviously not representative of the "honest" costs of ownership (such as maintenance, repairs, furnishing, the building, etc); it is utterly dominated by market forces that determine sale price. And price is very much a function of who else is in the market. It's almost a simple competition game. As long as there are would-be buy-to-let landlords, who have much easier access to finance than tenants, and whose access to finance goes up in a competitive market for properties (because rent goes up, which raises the finance available), those landlords automatically win the finance and market forces game. This doesn't mean the tenants can't afford ownership when you are comparing, as you should, to a version of the game without would-be buy-to-let landlords, because prices would be lower and purchasing opportunities would be greater. Second problem is, even despite the advantageously-financed competition, it's often not true that tenants cannot afford the cost including the sale price. Many tenants are paying higher in rent for many years, even decades, compared with what the mortgage would be on the same properties. So those tenants could afford it - but financially the landlord is a better bet for the bank, so they win on that front too. One of the problems in the UK is that the tenants' payment history does not contribute towards their credit record, so they are often considered uncreditworthy for a mortgage despite an established and long history of paying more than a mortgage. But even if that were included, a well-backed commercial operation, and their requirement being for interest-only mortgages (because that's all buy-to-let requires), will still win the finance competition. I would say the morality issue is that renting can be precarious and unpleasant compared with owning, and the issues become more serious if it's for many years as it limits people's other life choices. So it's unfair that people are forced to rent when they would like to buy and could afford it if they weren't losing the finance game to well-financed commercial buyers. Difficult issues with renting that add to the moral issue: - Pets are not allowed almost universally. - Regular inspections (check your lifestyle is satisfactory to the landlord, don't be visibly alternative looking, take a day off work to clean before each inspection, hide the pets, hide the boy/girlfriend sometimes, hide the baby (I'm serious, I know someone who was kicked out when a newborn arrived, and there were no directly attached neighbours to be disturbed or zoning reasons)). - Having to keep moving each time you encounter landlords who terminate without giving any reason or don't renew the tenancies (which are virtually always <=12 months in the UK precisely so that tenants can't have full legal rights). Yes landlords do this when there's already a perfactly good tenant in place, sometimes because they think they can drastically raise the rent in a hot market, and sometimes it's not the far away landlord but a property agent who advises termination, seeing an opportunity for a new-tenancy commission. - Requirements for 6 or even 12 months rent up front are increasing (12 months happened to me twice). That's on top of the deposit (1 or 2 months). - No control over the state of your kitchen, laundry, bathroom, carpets, lighting, windows, etc. You get what comes with the property and you're stuck with it. There might not be good choices on the market at a reasonable price or suitable location, and in practice it will never be upgraded while you are there. And you certainly can't fit out a place in your own taste. - In some towns, you can't even choose your own furniture, because unfurnished properties are too scarce, and furnished properties come full already. Often with furniture that doesn't get upgraded until long after a property owner would have replaced it. - Can't learn how to do physical upgrades and repairs (what we call DIY in the UK), because it's generally not allowed when renting. That's quite sad when you grew up watching your parents do that sort of thing and would like to. > Point 2: BTL incentivizes or drives bad ownership practice Well, for example (in the UK). Consider solar panels on roofs. There's a grant partially subsidising their installation. Many people get them installed, net emissions eventually go down. Except, have you ever heard of a solar panel being installed on a buy to let property after it is bought? I haven't. The tenants aren't able to even if they wanted to, and the landlords aren't motivated to. For that matter, have you even heard of a buy to let property having its single-glazed windows upgraded? I have, but only rarely and only when there's no tenant.