19 May 2016, 5:35pm
housing
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  • Buy to let is a rich person’s game – shock alert.

    Aw, diddums. The Torygraph is spitting bricks about the unprecedented assault on private buy to letters in the Budget. Apparently buying houses to rent out to people too poor to buy them themselves is becoming a rich person’s game. Colour me flabbergasted. You’re buying extra copies of the single most expensive thing most Brits ever buy, just because you can, so you can fleece some of your fellow countrymen for an essential good. Of course BTL is a rich person’s game. The amazing thing is that we permitted, nay subsidised, non-rich but still extremely well-off people to borrow cheap money to give poorer people the shaft for so long, and indeed it’s another rum thing that it was a Labour government that aided this stiffing in the first place and a Tory government that applied the brakes, ever so gently.

    Obviously if you’re rich enough to buy more houses outright, well, go for it. But the one thing that the British housing market doesn’t need is more cheap borrowed money chasing a limited stock of houses, so it’s about time that these leveraged ‘landlords’ got run out of town, particularly at the moment when interest rates are low.

    Now it’s been a very long time since the Ermine rented a place, but my experience of private landlords was that in general they were thieving scum that wanted all the profit for themselves and spent as little as possible on their properties. Now part of that was my own fault – I had bought into the collective mantra the pollutes the British psyche that renting is fundamentally A Bad Thing. I was Monevator’s sister, probably before she was born 😉

    “I am just throwing money away by renting.”

    I combined this with another toxic tendency, one I still struggle with at times, which is if it’s something I don’t feel a passion for, I buy cheap. And often buy twice 😉 Now with renting I avoided the buy twice, but I did buy cheap. Not because I had to – I could have afforded to pay twice as much. But I was tight. Because I am throwing money away by renting, I tried to throw as little money away on that. Not to do something else clever like save for a pension but to spend it on beer and travel and music and shit like that. I was in my 20s FFS. The downside of this of course is that I was drawn to cheapskate landlords, because I was a cheapskate. I’m sure there are good landlords. I never ran into them. I never rented houses, either – only rooms – well and got together with others to rent a house but we each occupied a room. The only decent landlord I had was the work colleague I rented a room from for six months before I stupidly threw money away on buying a house at the top of the market.

    So when the Torygraph wheels out some dude called Craig Scott-Dawkins, ten years younger than I am who  owns five buy-to-let properties in Leamington and Warwick, the Ermine heart of stone chills to his plight

    He said: “I voted Conservative because I thought they were going to take a steady approach. But they’ve knifed us in the back. These changes are making it more difficult for those of us who want to prepare for retirement. 

    Let’s bottom out what is actually happening here. Let’s take a look at Maslow’s Hierarchy of needs, what the human animal focuses on

    1402_Maslow's_Hierarchy_of_Needs.svg

    A house sort of goes in the red bit. Since we’re not snails or tortoises, we need a roof over our heads to keep the rain off, and hairless wonders that we are walls keep the wind off us so we don’t freeze in these cold Northern climes. There’s no fundamental need to own houses, true, and in many other European countries renting is a perfectly good alternative. There is a strong argument to make that renting suits modern employment patterns better, at least until having children, but that’s a different issue. So our poor Craig isn’t rich enough to actually afford to buy the capital base of his evil empire, and he’s bitching about losing his subsidy. Well excuse me Craig, but you aren’t a landlord because guess who owns these damned houses – that’s the bank. You are a lord of jack shit, you are a bank worker making their money work for them. You are also exposing your unfortunate tenants to the risk of you getting taken out by rising interest rates on your overleveraged farrago. How do I know it’s overleveraged? Because you’re a subsidy junkie. If you really had the money you wouldn’t take the hit on the tax changes, because you were charging interest against tax, something that the poor bastards who actually want to buy a house to, y’know, actually live in the darned thing, haven’t been able to do for over 25 years.

    The trouble is that the government in the UK had made regulations about renting so bad for both landlords and renters that it’s a deadly embrace that isn’t much fun for either when it goes wrong. The renters have little security of tenure, but if they dig their heels in the landlords seem to have to jump through some odd legalistic hoops too kick ’em out. It’s something made for people with deep pockets who can play a long game, not the ‘my BTL is my pension’ brigade, who believe in housing as an asset class because they can touch it as opposed to things like shares or bonds. That’s religion, and it shouldn’t be subsidised by the taxpayer, particularly when it puts our young people at such a disadvantage compared to our old gits who have suddenly got pension lump sums to splurge from Osborne’s pension freedoms.

     
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