3 ms·

> buy to let. I'd like to see buy to let severely curtailed within the city, as it's certainly driving up already high prices. I'm familiar with the argument t

by rsj_hn 5y ago

> buy to let. I'd like to see buy to let severely curtailed within the city, as it's certainly driving up already high prices. I'm familiar with the argument that AirBnB reduces rental stock by devoting it to tourism. But I rarely encounter someone who is mad that more rental stock is being added. Wouldn't you want rental prices to fall by increasing the availability of rental stock? Is a big gap between the cost of renting and the cost of owning a good thing?

throaway46546 5y ago
Sounds like a NIMBY
- bartread 5y ago
  Sounds like somebody who doesn't know what NIMBY means. Seriously, go and look it up before you throw your cheap and uninformed shots around. They aren't welcome here (and, yes, I note that you're hiding behind a throwaway account to do it, so you're gutless as well as ignorant).
  - throaway46546 5y ago
    Perhaps I misjudged you then. Why do you think building more housing would make the city "an absolutely intolerable place to be for everyone"?
bencollier49 5y ago
In the UK housing market, the availability of cheap credit in the buy-to-let market has driven the cost of a home up to levels of unaffordability for the average person. It's made worse by the treatment of housing as an asset class, which means that the traditional solution (build more) has been shown to be ineffective. There is a whole class of people who buy house after house, and make a lot of money out of it, and it drives division in society, as buying is cheaper then renting. The government has made some moves towards making BTL less profitable, but realistically this has only had the effect of discouraging new entrants, and driving the sector to a corporate model, which is even worse.
- rsj_hn 5y ago
  > In the UK housing market, the availability of cheap credit in the buy-to-let market has driven the cost of a home up to levels of unaffordability for the average person. Let's say you borrow at 0% interest and with zero down. And you take out an interest-only loan -- that's the loosest possible lending standard, right? Still you would not pull the trigger and buy to let unless: rent > interest + maintenance + cost of dealing with tenants. That means that lax lending standards can at most drive the price of ownership up to the price of renting (but not really, since there are gaps between renters). At the same time, the more rental stock is added, the more rents fall, making housing cheaper in the area. So I disagree that low mortgate rates can allow rental investment to create a bubble. Rental investment is the one place where you are guaranteed there isn't going to be a bubble, because they are approaching this as a cashflow decision. Where you see bubbles is in people buying homes for themselves to occupy, so there is no sanity check to see if it pencils out our not in terms of rental cash flows. So cheap credit can absolutely cause high prices as a result of owner-occupants, but not as a result of buy to let. When that happens, you see rental stock being taken out of the market and used for owner occupancy. This is why nations with a large share of renters, like Germany, are also nations with the fewest housing bubbles. Housing bubbles are a phenomena for owner-occupants, because the value of living in a place is so subjective and can be devoid of actual incomes. Rent, on the other hand, must be paid with income.
bartread 5y ago
This is the problem. Rental stock isn't being added. Private residences are being built that are then bought up by private landlords rather than people who actually want to live there. Private landlords then rent those properties out at a profit, because the yield is good enough for them to do so. This leaves fewer properties available to buy. You can argue about whether buying property is a good model or not: in lots of countries in Europe it's not considered the norm, but I'm talking specifically about the UK where it is. Having more rental properties here is fine, but it's also not necessarily what people here want: many people want to buy their homes, and it's better that they do so in a market that isn't skewed by private landlords mopping up large quantities of property. In some parts of the country, though as I've already acknowledged it's unclear to me that this applies to Cambridge, AirBnb (and holiday homes in a more general sense) are a significant contributor to a lack of available property for long-term residents, or people who want to be long-term residents.

by rsj_hn 5y ago

throaway46546 5y ago

Sounds like a NIMBY

bartread 5y ago
Sounds like somebody who doesn't know what NIMBY means. Seriously, go and look it up before you throw your cheap and uninformed shots around. They aren't welcome here (and, yes, I note that you're hiding behind a throwaway account to do it, so you're gutless as well as ignorant).
- throaway46546 5y ago
  Perhaps I misjudged you then. Why do you think building more housing would make the city "an absolutely intolerable place to be for everyone"?

bencollier49 5y ago

In the UK housing market, the availability of cheap credit in the buy-to-let market has driven the cost of a home up to levels of unaffordability for the average person. It's made worse by the treatment of housing as an asset class, which means that the traditional solution (build more) has been shown to be ineffective. There is a whole class of people who buy house after house, and make a lot of money out of it, and it drives division in society, as buying is cheaper then renting. The government has made some moves towards making BTL less profitable, but realistically this has only had the effect of discouraging new entrants, and driving the sector to a corporate model, which is even worse.

rsj_hn 5y ago
> In the UK housing market, the availability of cheap credit in the buy-to-let market has driven the cost of a home up to levels of unaffordability for the average person. Let's say you borrow at 0% interest and with zero down. And you take out an interest-only loan -- that's the loosest possible lending standard, right? Still you would not pull the trigger and buy to let unless: rent > interest + maintenance + cost of dealing with tenants. That means that lax lending standards can at most drive the price of ownership up to the price of renting (but not really, since there are gaps between renters). At the same time, the more rental stock is added, the more rents fall, making housing cheaper in the area. So I disagree that low mortgate rates can allow rental investment to create a bubble. Rental investment is the one place where you are guaranteed there isn't going to be a bubble, because they are approaching this as a cashflow decision. Where you see bubbles is in people buying homes for themselves to occupy, so there is no sanity check to see if it pencils out our not in terms of rental cash flows. So cheap credit can absolutely cause high prices as a result of owner-occupants, but not as a result of buy to let. When that happens, you see rental stock being taken out of the market and used for owner occupancy. This is why nations with a large share of renters, like Germany, are also nations with the fewest housing bubbles. Housing bubbles are a phenomena for owner-occupants, because the value of living in a place is so subjective and can be devoid of actual incomes. Rent, on the other hand, must be paid with income.

bartread 5y ago

This is the problem. Rental stock isn't being added. Private residences are being built that are then bought up by private landlords rather than people who actually want to live there. Private landlords then rent those properties out at a profit, because the yield is good enough for them to do so. This leaves fewer properties available to buy. You can argue about whether buying property is a good model or not: in lots of countries in Europe it's not considered the norm, but I'm talking specifically about the UK where it is. Having more rental properties here is fine, but it's also not necessarily what people here want: many people want to buy their homes, and it's better that they do so in a market that isn't skewed by private landlords mopping up large quantities of property. In some parts of the country, though as I've already acknowledged it's unclear to me that this applies to Cambridge, AirBnb (and holiday homes in a more general sense) are a significant contributor to a lack of available property for long-term residents, or people who want to be long-term residents.