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A UK perspective: over the past decade there has been an enormous growth in the buy-to-let market and the UK is now overun by the worst type of property owner:

A UK perspective: over the past decade there has been an enormous growth in the buy-to-let market and the UK is now overun by the worst type of property owner: the buy-to-let (buy-to-rent) landlord or "property investor". They treat housing as a pure profit-making exercise. When more and more homes in your area get bought by property investors and buy-to-let landlords it can have a detrimental effect (I've seen it happen to my street). The neighbourhood feels more anonymous as people come and go more frequently. Neither the absentee landlord or the tenants have a commitment to the area. If buy-to-let comes to dominate a neighbourhood, can you ever build a community around such a neighbourhood? Buy-to-let is rampant in the UK. Other European countries sensibly restrict it's growth or they enact strict tenancy laws to deter the worst type of buy-to-let landord (UK laws are weighted in favour of landlords). In the UK, we've lost any sense that housing has a social component. I write a blog about housing in the UK and wrote about this topic five years ago. Depressingly, the situation is even worse today. http://designofhomes.co.uk/016-damaging-effects-of-buy-to-let.html http://designofhomes.co.uk/016-damaging-effects-of-buy-to-le...

kghose 12y ago
In suburbs of Boston this is a very common thing. They are "all cash buyers" and often beat out regular folk who want to buy a home via a mortgage.
- jseliger 12y ago
  In suburbs of Boston this is a very common thing. They are "all cash buyers" and often beat out regular folk who want to buy a home via a mortgage. Boston's extensive housing development limits enable this behavior; in a functioning market we'd see supply rise to meet demand. See Yglesias's The Rent is Too Damn High (http://www.amazon.com/dp/B0078XGJXO http://www.amazon.com/dp/B0078XGJXO) for more.
  - cbd1984 12y ago
    > in a functioning market we'd see supply rise to meet demand So, tear down existing buildings to build higher, dig more basements, or subdivide existing properties? Because you can't assume there's always free land to build new buildings on. Even if you assume the city is in the middle of a desert and there's essentially infinite room to grow horizontally, eventually you lose the reason people came to the city in the first place: The city itself, which you aren't really living in if you're commuting from a neighborhood more than an hour away from the city proper, or the city before it added on a dozen outlying regions.
- eru 12y ago
  The less mortgages the better. No mortgage, no fear of underwater mortgage.
rahimnathwani 12y ago
Are you suggesting that people shouldn't have the flexibility to move easily if they get a new job/partner or have a change in circumstances? That's what happens if every home must be owner-occupied and there isn't a liquid rental market. I moved to China a few years ago. I am glad that I was able to let my flat (to responsible tenants who have paid the rent on time for >3 years) and that I was able to rent an apartment in Beijing. Selling my flat in London and buying one on Beijing would have been impossible and, even if it had been possible, why should I invest in a property in Beijing just because I want to live here for a few years? And why should I sell my flat in London? EDIT: s/chance/change
- 67726e 12y ago
  Your parent post is not talking about some schmuck moving abroad for a few years. He is talking about the type of person who buys up property with the sole intention of making money by renting it off to others.
  - Sophistifunk 12y ago
    Where the hell else will rental properties come from?
    - sliverstorm 12y ago
      Perhaps you buy a second home and have enough income to keep & rent your first home. Perhaps it is a vacation home for you, so you timeshare.
      - eru 12y ago
        How is buying a second home and renting out the first one different from buying a second home and renting out the second one?
        sliverstorm 12y ago
        Oh, I can't prove anything, but to explain what I mean a little better, renting the first is a much more natural progression. Like a hermit crab moving up in shell sizes. You rent the first property as a consequence of buying a new house, rather than as the entire purpose of the second purchase.
cletus 12y ago
In Australia, investment residential property is seen as almost an inalienable right and a cultural norm. I've lived in the UK and opinions there vary a lot. In London, it doesn't really have a negative connotation that I can recall. In rural parts, it tends to be viewed very negatively. I seem to remember reading a story about anger against "Londoners" driving up local property prices (with weekend homes) resulting in someone burning one down. Weekend homes are a different beast of course but the anger comes from basically the same place: the perception that "outsiders" are making housing unaffordable for "locals". This seems to be a very Luddite view. If it weren't for people letting out property rental homes wouldn't exist outside of, say, council-run rental buildings. I don't see that as a good thing. Some places have tackled this problem with regulation eg making it difficult for foreigners to buy real estate or punitive capital gains taxes on short-term property sales like in Switzerland. In NYC we have a different problem: rich people parking money in real estate leading to what are known as "ghost buildings". This is mainly a Manhattan issue. Historically NYC had rent control that ended in the early 70s (meaning no new rent control leases were issued, existing ones remained while the tenants remained). Reforms were enacted to allow tenants to buy their apartments leading to the "coop", which accounts for the vast majority of Manhattan apartments. A coop is an interesting beast. Technically you own shares in the coop. The coop owns the building. Your shares entitle you to reside in a given apartment. You must comply with the coop's rules. Coops are typically for primary residences and, to a lesser extent, pied-a-terres. You can sublet coops you own in some cases but it tends to be pretty restrictive (eg only for 2 years out of every 5 and you have to own it for at least 2 years). The effect of this is that coops tend to have very high occupancy rates (in real terms) and relatively low turnover. Most new builds are condos, where you own your property outright and are a member of an HOA (Home Owners Association). Buying a coop will involve getting approval by the board, which can place wildly varying limits on mortgage amounts, income to debt ratios, requiring personal and professional references and so on. Condos however require only finance approval (the building has a right of first refusal). So a lot of condos are owned by wealthy people who might visit for a few days a year if at all. I don't think this ghost building phenomenon is healthy for a community and is certainly a problem if all construction falls into that category. Buy-to-let isn't the problem here. Unchecked buy-to-let might well be. Banning it is throwing the baby out with the bathwater. A more nuanced scheme might give tax abatements for owner-occupied properties in the coop model. Or put quotes on investment property in a given area. You can even create markets for such things eg NYC has a market for "air rights" above buildings to allow really tall buildings. As far as "crappy" rental property goes, that's pretty much rental property all over.

kghose 12y ago

In suburbs of Boston this is a very common thing. They are "all cash buyers" and often beat out regular folk who want to buy a home via a mortgage.

jseliger 12y ago
In suburbs of Boston this is a very common thing. They are "all cash buyers" and often beat out regular folk who want to buy a home via a mortgage. Boston's extensive housing development limits enable this behavior; in a functioning market we'd see supply rise to meet demand. See Yglesias's The Rent is Too Damn High (http://www.amazon.com/dp/B0078XGJXO http://www.amazon.com/dp/B0078XGJXO) for more.
- cbd1984 12y ago
  > in a functioning market we'd see supply rise to meet demand So, tear down existing buildings to build higher, dig more basements, or subdivide existing properties? Because you can't assume there's always free land to build new buildings on. Even if you assume the city is in the middle of a desert and there's essentially infinite room to grow horizontally, eventually you lose the reason people came to the city in the first place: The city itself, which you aren't really living in if you're commuting from a neighborhood more than an hour away from the city proper, or the city before it added on a dozen outlying regions.
eru 12y ago
The less mortgages the better. No mortgage, no fear of underwater mortgage.

rahimnathwani 12y ago

Are you suggesting that people shouldn't have the flexibility to move easily if they get a new job/partner or have a change in circumstances? That's what happens if every home must be owner-occupied and there isn't a liquid rental market. I moved to China a few years ago. I am glad that I was able to let my flat (to responsible tenants who have paid the rent on time for >3 years) and that I was able to rent an apartment in Beijing. Selling my flat in London and buying one on Beijing would have been impossible and, even if it had been possible, why should I invest in a property in Beijing just because I want to live here for a few years? And why should I sell my flat in London? EDIT: s/chance/change

67726e 12y ago
Your parent post is not talking about some schmuck moving abroad for a few years. He is talking about the type of person who buys up property with the sole intention of making money by renting it off to others.
- Sophistifunk 12y ago
  Where the hell else will rental properties come from?
  - sliverstorm 12y ago
    Perhaps you buy a second home and have enough income to keep & rent your first home. Perhaps it is a vacation home for you, so you timeshare.
    - eru 12y ago
      How is buying a second home and renting out the first one different from buying a second home and renting out the second one?
      - sliverstorm 12y ago
        Oh, I can't prove anything, but to explain what I mean a little better, renting the first is a much more natural progression. Like a hermit crab moving up in shell sizes. You rent the first property as a consequence of buying a new house, rather than as the entire purpose of the second purchase.

cletus 12y ago

In Australia, investment residential property is seen as almost an inalienable right and a cultural norm. I've lived in the UK and opinions there vary a lot. In London, it doesn't really have a negative connotation that I can recall. In rural parts, it tends to be viewed very negatively. I seem to remember reading a story about anger against "Londoners" driving up local property prices (with weekend homes) resulting in someone burning one down. Weekend homes are a different beast of course but the anger comes from basically the same place: the perception that "outsiders" are making housing unaffordable for "locals". This seems to be a very Luddite view. If it weren't for people letting out property rental homes wouldn't exist outside of, say, council-run rental buildings. I don't see that as a good thing. Some places have tackled this problem with regulation eg making it difficult for foreigners to buy real estate or punitive capital gains taxes on short-term property sales like in Switzerland. In NYC we have a different problem: rich people parking money in real estate leading to what are known as "ghost buildings". This is mainly a Manhattan issue. Historically NYC had rent control that ended in the early 70s (meaning no new rent control leases were issued, existing ones remained while the tenants remained). Reforms were enacted to allow tenants to buy their apartments leading to the "coop", which accounts for the vast majority of Manhattan apartments. A coop is an interesting beast. Technically you own shares in the coop. The coop owns the building. Your shares entitle you to reside in a given apartment. You must comply with the coop's rules. Coops are typically for primary residences and, to a lesser extent, pied-a-terres. You can sublet coops you own in some cases but it tends to be pretty restrictive (eg only for 2 years out of every 5 and you have to own it for at least 2 years). The effect of this is that coops tend to have very high occupancy rates (in real terms) and relatively low turnover. Most new builds are condos, where you own your property outright and are a member of an HOA (Home Owners Association). Buying a coop will involve getting approval by the board, which can place wildly varying limits on mortgage amounts, income to debt ratios, requiring personal and professional references and so on. Condos however require only finance approval (the building has a right of first refusal). So a lot of condos are owned by wealthy people who might visit for a few days a year if at all. I don't think this ghost building phenomenon is healthy for a community and is certainly a problem if all construction falls into that category. Buy-to-let isn't the problem here. Unchecked buy-to-let might well be. Banning it is throwing the baby out with the bathwater. A more nuanced scheme might give tax abatements for owner-occupied properties in the coop model. Or put quotes on investment property in a given area. You can even create markets for such things eg NYC has a market for "air rights" above buildings to allow really tall buildings. As far as "crappy" rental property goes, that's pretty much rental property all over.