Employed to be given council house "priority"

[FridgeMagnet]

If the demand was half what it is now, would the rents be just as high with the current housing stock? No, so demand must be a component of that high price. That's not to say there are not other components, but demand is a major one.

Prices do not result from some sort of GCSE supply/demand graph. If, somehow, only 10% of people who wanted rental property remained - which isn't going to happen, partly because of the factors that affect rents in the first place - would people start renting it for less than their mortgage repayments on it to chase the market? Is there some sort of "supply" issue with housing as you've suggested by talking about building it? (there isn't - there is a vast amount of vacant property) And so on.

 

[weepiper]

hmm

my 'no' was in reply to your 'another way to put it is that there is low supply' and suggestion that if rents were to go down no landlord would want to rent.

 

[lighterthief]

Prices do not result from some sort of GCSE supply/demand graph. If, somehow, only 10% of people who wanted rental property remained - which isn't going to happen, partly because of the factors that affect rents in the first place - would people start renting it for less than their mortgage repayments on it to chase the market? Is there some sort of "supply" issue with housing as you've suggested by talking about building it? (there isn't - there is a vast amount of vacant property) And so on.

IIRC there's around 300,000 long-term vacant private properties in England. That's not enough to meet demand.

 

[ItWillNeverWork]

If, somehow, only 10% of people who wanted rental property remained - which isn't going to happen, partly because of the factors that affect rents in the first place - would people start renting it for less than their mortgage repayments on it to chase the market?.

No. You make a fair point that there is a stickyness downwards below a certain price level, but that is not to say no downwards movement in rents is possible.

Is there some sort of "supply" issue with housing as you've suggested by talking about building it?

Supply is about more than the objective amount of houses, it is also about willingness to provide the product demanded. Once again, what do you think would happen if rents were restricted to a level that did not permit a profit to be made? People would be less likely to rent their properties and a shortage of supply would result.

Of course, the government could just build loads more council houses and solve the problem in one swoop.

 

[ItWillNeverWork]

my 'no' was in reply to your 'another way to put it is that there is low supply' and suggestion that if rents were to go down no landlord would want to rent.

No landlord would want to rent. Not one with any hope of making money at least.

 

[marty21]

Cheers for saying absolutely nothing whilst appearing full of wisdom. Care to offer anything on the subject that isn't a platitude?

and blind support for the market is better?

 

[ItWillNeverWork]

and blind support for the market is better?

Your answer to my question is 'no' then.

 

[marty21]

Your answer to my question is 'no' then.

rent controls would bring down house prices as BTL wouldn't be as profitable -

 

[ItWillNeverWork]

rent controls would bring down house prices as BTL wouldn't be as profitable -

It wouldn't be profitable at all, and as a result there would be a lack of available rented properties. AND THAT'S MY POINT!

 

[Thora]

It wouldn't be profitable at all, and as a result there would be a lack of available rented properties. AND THAT'S MY POINT!

Maybe more people would be able to buy houses to live in if BTL landlords weren't pushing prices up though?

 

[marty21]

It wouldn't be profitable at all, and as a result there would be a lack of available rented properties. AND THAT'S MY POINT!

BTL people would sell - meaning more people could buy!! and more could afford to buy as your precious market would drive the prices down due to more being on the market.

 

[marty21]

Maybe more people would be able to buy houses to live in if BTL landlords weren't pushing prices up though?

exactly AND THAT'S MY POINT!

 

[rover07]

Maybe more people would be able to buy houses to live in if BTL landlords weren't pushing prices up though?

I dont think the BTL landlords are to blame as such. They are pawns competing with each other in the market driven by ever higher mortgages and bank lending.

The problem is the lack of alternative to BTL especially as they can usually outbid first-time buyers for houses that come up for sale.

Lack of council housing which kept prices down is the main problem. Or rent controls which amounts to the same thing.

 

[ItWillNeverWork]

BTL people would sell - meaning more people could buy!! and more could afford to buy as your precious market would drive the prices down due to more being on the market.

exactly AND THAT'S MY POINT!

I don't think you know what your point is. You say that BTL forces up house prices, so you obviously believe that increased demand pushes up prices. You also acknowledge that an increased supply of houses would lower prices. So how on earth can you object to the statement that a rent ceiling would lower supply? They follow logically from each other.

As an aside, I agree with you that abolishing BTL would reduce the upward pressure on house prices, and that this would mean more people could afford to buy, but are you seriously suggesting that ALL those people who are currently renting would want or be able to buy? If not, tell me why I am wrong in insisting that rent control leads to a shortage of rented properties?

 

[ymu]

The main problem with BTL is that they are amateur landlords who do not have the income/capital to cover a shortfall on rent vs costs, especially in the early years of the mortgage. Rents should be a great deal lower than the mortgage, because the mortgage reduces over time whilst rents increase, plus the capital value of the property is also increasing - hence the number of new builds deliberately left empty because no rental income at all was required for them to make a profit.

Housing should not be allowed to be an investment vehicle, and certainly not for short-term investments. Take the whole lot into public ownership, offer existing owners tenancy for life at a reasonable rent, job done.

 

[DownwardDog]

BTL people would sell - meaning more people could buy!! and more could afford to buy as your precious market would drive the prices down due to more being on the market.

If all you want is to crash the housing market then there are easier ways to do it than rent controls. Just remove the primary residence CGT exemption.

 

[pk]

What we need to do is sell off more council houses.

 

[ItWillNeverWork]

If anyone is interested, I found an interesting review of the literature on the topic here;

http://www.csun.edu/~economics/2009-01-jenkins-reach_concl.pdf

My review of the rent-control literature indexed by EconLit (or cited
by such indexed articles) finds that economic research quite consistently and
predominantly frowns on rent control. My findings cover both theoretical and
empirical research on many dimensions of the issue, including housing availability,
maintenance and housing quality, rental rates, political and administrative
costs, and redistribution. As Navarro (1985) notes, “the economics profession
has reached a rare consensus: Rent control creates many more problems than
it solves”

 

[marty21]

I don't think you know what your point is. You say that BTL forces up house prices, so you obviously believe that increased demand pushes up prices. You also acknowledge that an increased supply of houses would lower prices. So how on earth can you object to the statement that a rent ceiling would lower supply? They follow logically from each other.

As an aside, I agree with you that abolishing BTL would reduce the upward pressure on house prices, and that this would mean more people could afford to buy, but are you seriously suggesting that ALL those people who are currently renting would want or be able to buy? If not, tell me why I am wrong in insisting that rent control leads to a shortage of rented properties?

bringing housing prices down would also allow Housing Associations to buy properties at lower prices - thereby increasing the stock of social housing - and the availability of rented places - there would be more people who would buy it was more affordable -

 

[ItWillNeverWork]

bringing housing prices down would also allow Housing Associations to buy properties at lower prices - thereby increasing the stock of social housing - and the availability of rented places - there would be more people who would buy it was more affordable -

And your evidence for this is?

 

[marty21]

And your evidence for this is?

I work in the sector - Housing Associations have bought privately in the past - if prices fall - stands to reason they would be in a position to buy - they borrow money based on the value of their existing properties and rental income - the older ones are mortgage free - the larger housing associations have thousands of rental properties

 

[Louis MacNeice]

fuck off cunt when you've had the "pleasure" of some nightmare family living next door and the mayhem they bring then talk some people can't live with others.
although westminster council are doing it because their wankers. The idea that council estates should not fill up with the worst of the worst is a good one.

Of course employed people can't be nightmare neighbours; it's about behaviour not employment status.

Louis MacNeice

 

[LiamO]

Didn't Council estates used to be 'mixed' before Councils were forced to sell off their best hpusing stock by the 'right to buy scheme'?

 

[scifisam]

Didn't Council estates used to be 'mixed' before Councils were forced to sell off their best hpusing stock by the 'right to buy scheme'?

They still are. Unless you live in an area where unemployment is high enough that lots of people in privately-owned homes are also out of work. Course, an awful lot of council tenants now are pensioners, which greatly increases the proportion of people not working.

 

[past caring]

And your evidence for this is?

is......he's thought about it before shooting his mouth off.

 

[ItWillNeverWork]

I work in the sector - Housing Associations have bought privately in the past - if prices fall - stands to reason they would be in a position to buy - they borrow money based on the value of their existing properties and rental income - the older ones are mortgage free - the larger housing associations have thousands of rental properties

Ok, it seems that there are two directly opposing tendencies working here. A high number of BTL landlords puts upwards pressure on house prices and therefore raises the floor below which rents cannot drop. On the other hand, an increase in BTL also increases the number of available rented properties and has a downward pressure on rents.

The question of whether eliminating BTL would lead to a significant drops in house prices is not something that can be shown by theory (only tendencies can be shown this way), empirical evidence is needed. The link I gave provides a convincing argument against rent control. Also, if the aim is to provide social housing, then why not just use government directly to build council houses?

The thing about attempting to manipulate market forces - and prices are a key component in the operation of those forces - is that it leads to a game of whack-a-mole in which the attempt to eliminate one negative factor leads to another problem popping up elsewhere. The studies of the effect of rent controls over the past century show quite convincingly that they lead to shortage of properties amongst other things.

An more subtle distinction should also be made between different types of rent conrol. The so-called 'first generation' systems are well know to be a disaster, and the vast majority of economists accept this. The impact of second generation systems is a little more ambiguous but still negative.

 

[marty21]

Ok, it seems that there are two directly opposing tendencies working here. A high number of BTL landlords puts upwards pressure on house prices and therefore raises the floor below which rents cannot drop. On the other hand, an increase in BTL also increases the number of available rented properties and has a downward pressure on rents.

The question of whether eliminating BTL would lead to a significant drops in house prices is not something that can be shown by theory (only tendencies can be shown this way), empirical evidence is needed. The link I gave provides a convincing argument against rent control. Also, if the aim is to provide social housing, then why not just use government directly to build council houses?

The thing about attempting to manipulate market forces - and prices are a key component in the operation of those forces - is that it leads to a game of whack-a-mole in which the attempt to eliminate one negative factor leads to another problem popping up elsewhere. The studies of the effect of rent controls over the past century show quite convincingly that they lead to shortage of properties amongst other things.

An more subtly distinction should also be made between different types of rent conrol. The so-called 'first generation' systems are well know to be a disaster, and the vast majority of economists accept this. The impact of second generation systems is a little more ambiguous but still negative.

and yet this government is attempting rent control - by limiting HB payments - working on the assumption that landlords will voluntarily reduce their rents to HB levels

 

[ItWillNeverWork]

and yet this government is attempting rent control - by limiting HB payments - working on the assumption that landlords will voluntarily reduce their rents to HB levels

I'm sure they are.

 

[ItWillNeverWork]

I'm sure they are.

Actually, scrap that last comment. I'm not sure that is what the government are attempting at all; they just want to save money and choose to place the burden of the cuts on normal folk rather than the richest who manage to avoid tax.

 

[marty21]

Actually, scrap that last comment. I'm not sure that is what the government are attempting at all; they just want to save money and choose to place the burden of the cuts on normal folk rather than the richest who manage to avoid tax.

and bringing in rent controls for private rent would cut the HB bill - and private landlords can 'share the pain'