Generation Rent

James M, just as you tell me I’ve made some fundamentally wrong assumptions concerning your personal lifestyle, I can assure you that your most recent post also has very much got the wrong end of several sticks about my situation. Let me just say that I absolutely agree with you about the financial choice FTBs have to make when deciding to purchase, and I agree indeed that far too many choose the iPhone/gym/flash car/too many visits to the nail salon etc. choices. But sensible ones don’t, they do save, have done for many years, and have a deposit which frankly exceeds the total purchase price of some properties in areas such as those examples you mention. They also have regular jobs earning above the reported national average wage for which they have studied for some years, never accumulated a student debt, paid their own way and done everything you would expect and more. Please believe me, I have done all the relevant research to back up my opinions as stated. It IS difficult to converse with strangers on emotive topics online, especially if, like me, you do not want to put any personal information out there. You have to trust your correspondents more than normal, which is why I took such exception to you effectively telling me I was lying with my example about the 17 BTLs v the 1 FTB. It’s quite true. I take your point about there “only” being 1 FTB interested, but that was on the first day of viewing, which happened to be a weekday when most FTBs would have been at work. So you could take the inference that only the BTLs were available on that day as they don’t have a “proper” 9 – 5 job, but are living off their property income. Additional FTBs did view the property in the evening and at the weekend, but it was sold to a BTL. I’ll also say that it’s impossible to generalise; there are always going to be BTLs with genuine motives who do try to help their tenants. You may be one, it’s impossible for me to tell. And there are regional variations in many factors. So, very tricky, as there will always be a counter argument. You have given some in this last post, but with respect, I still think you are hiding behind them, and not acknowledging my main, indeed only, point. If I want to buy your hypothetical fish and chips, I have a choice. I might choose a savaloy instead of fish, or just go for the bag of chips. Or indeed, only have bread and butter that night as I don’t have the cash available. But I HAVE to live somewhere, and if the only properties which I might be able to afford in the area I have to live in for work or family purposes are owned by BTLs, I’m forced to rent from them, or maybe stay at home with ageing parents well into my middle age, if they have a home of their own to offer me and the space to spare. This allows the BTLs to say they’re providing a vital function for me, whereas if I’d been able to outbid them, I’d have my own place. I assume you own your own house as well as those you rent out – isn’t it nice to know you do, or will one day, own it outright, then no-one can evict you, you can choose how to decorate and manage it without needing to consult the owner, you can leave a major asset to your kids…. I could go on and on about the advantages, but you must already know them. The vast majority of BTLs aren’t as “Good” as you make yourself to be (many examples all over the media), but you are ALL taking properties out of the market for fundamentally your own personal profit, albeit in the longer term, and denying that option to others at an earlier stage of their lives. If you choose to assuage your conscience by buying holiday homes for the disadvantaged, then that’s good, but it does highlight just how much profit you’re making to allow you to do so, and the cynical may choose to examine the tax break situation which this allows. I do accept some do choose to rent. If it’s their free choice, they will have presumably weighed the pros and cons before making it. If they are forced to rent, as in my example, it crushes the sprit out of them, and they wonder whether it’s all worth the effort. Constantly. This is why I think BTL for private individuals is wrong, immoral and should be banned. You gave an example earlier asking should profits from retail be banned. No, because I have a choice to shop there. If I owned your electricity, gas or water supply, there was no other option available to you, and I charged what I wanted, you’d be concerned, even if I charge a “fair” price. And if I could make a huge capital profit when I chose by selling it, would that be right? Of course not. So, thanks for your offer to meet up and justify things from your personal perspective, but it wouldn’t change things one jot. I’m not interested in how the figures may add up for you or any other individual BTL. I just feel the practice should not be allowed on moral grounds. I could go on, it’s an enormous topic, but I don’t think we’re going to convince each other.

Hello again Foxwatcher. I’ve been trying to not get drawn into commenting on your posts but I’m so surprised by some of the things you’re saying I’m afraid I couldn’t resist any longer.

It’s a shame you don’t acknowledge any of our points but continue to say that we’re some sort of evil wrongdoers when you’ve never actually met us and see what we do.

So, our lettings businesses are just that. We run businesses and we take a profit from them, albeit small. I have responded before to your accusation that we drive expensive cars and I pointed out my van is old, indeed it has done over 132,000 miles. My wife’s car is not far behind that mileage so you see our little profit does not afford us the lifestyle you claim we have. Similarly, we have had no break at all this year but we hope to have 4 nights away in the UK in half-term, so no foreign holidays.

Tell me, if I had a fish and chip shop, which of course provides an essential service of food, would you be OK if I made a profit on my sales? I’m guessing you would otherwise the business would collapse. And if I sold the business would you allow me a profit on it if I could make one? I’m guessing you would so why is it different for us, if indeed we manage to make a profit on a property sale.

And for the umpteenth time I will offer to meet with you and show you the numbers but you have never even shown an interest and instead accused me of falsifying them without sight of them.

Instead you continue to bang on about how we’re cheating FTB’s out of houses, yet in the one example you’ve offered of a house for sale you say only one FTB was after the house. Here’s a challenge for you, let’s meet I’ll show you the numbers, you supply me with the address and I’ll do some digging into who actually bought it, etc, and we can examine why your FTB wasn’t successful. Does that sound like a good deal?

Now I absolutely need to correct you on landlords forcing up prices and forcing FTB’s out. Firstly price is influenced by supply and demand, that is for sure, but the real driver behind price is the availability of credit. When we had the recession, or credit crunch, prices dropped like a stone. Indeed in my area, a 3 bed terraced house went from about £110k to under £70k. I saw some around £65k, yet there wasn’t a queue of FTB’s out of the estate agents doors. Why?? Because they couldn’t get a mortgage. Actually very few people could get a mortgage hence the prices dropped to where they did. Now interest rates have been rock bottom for years and credit is easy to get, for most, not the FTB I’m afraid. This is largely due to the mortgage market review which has meant that finances are heavily scrutinised. If you have mobile phone contracts, gym membership, or any other monthly regular outgoings it counts against you!! Landlords didn’t come up with these rules, the financial services industry did and how do you think it affects youngsters that have to join David Lloyd, Virgin Active or One Leisure? And of course they simply have to have an Iphone 6 with unlimited download and so forth.

I would even go so far as to say that landlords actually help to keep the price of starter homes down because of the enormous number of HMO’s (Houses in Multiple Occupancy) that we own across the country. Imagine if they were all shut down overnight and all those tenants started looking to buy a one or two bed house or flat. Do you take my point there? A starter home might house one or two people whereas an HMO could house 3, 4, 5, 6, 10 or more people.

Never fear though FW. Some top economists around the world predict a correction in house prices within the next two years, and particularly in London, which is the most over-priced city in the Western world. This will knock on to areas outside the capital and if FTB’s take action now then they may (and I do mean ‘may’) be in a position to take advantage. If I was talking to a FTB now I would suggest that they save like they’ve never saved before. Cancel the gym, downgrade the phone and cut outgoings to a bare minimum. If prices drop by 30% again then they need to be able to act at a time when it will likely be difficult to get a mortgage again. Will the average FTB do it??? I doubt it very much. They prefer to whine and moan that landlords are evil wrongdoers cheating them out of their right of home ownership.

Well I don’t donate the profits to charity because as from now I will have to donate both profits, losses and my day job to the government. But I suppose keeping my rents at 25% below market value for 10 years is a form of kindly donation to the tenants. And yes, very much part of the reason I do this is because I enjoy helping people back on their feet. Although I’m sure you donate far more time and money than me to good causes. Did I ever tell you about the time I funded the purchase of a holiday cottage in Derbyshire just so a local group for mentally handicapped children could have free holidays in perpetuity…?