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Is buying to rent immoral?

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It's not immoral at all.

People who pay rent are people who cannot afford a mortgage. However they still need a place to live, and that isn't going to be free.

But why can't those people afford a home of their own? Could it be in part because a market in which there is already undersupply is being revisited by people who have already shopped once? It's not as if there is no connection between house prices and the demand for houses generated by people looking to buy to rent: they find tenants by pricing them out of the market and then use the money generated here to revisit and buy again.

Reply 81

Rakas21

The cost of renting is simply a function of the level of supply and demand. Quite simply in urban areas in particular we see few properties being built (developers holding land is a factor) and high demand due to population growth (immigration is a factor).

If we take the census results which suggested a 7% population rise in the last decade then at 0.7% per year of around 62,000000 allowing for just under a 50% rate of demand for property ownership (children, families) then we need to produce around 200,000 properties per year simply to keep up with demand. It is the supply of credit (currently low) which simply dictates whether this lack of supply (less than 100,000 properties were built in 2011) feeds into rental inflation or house price inflation (low availability of credit increases the demand for rental accommodation, high availability of credit decreases the demand for rental accommodation - buying and renting are substitutional goods) so long as the supply of property is below the required equilibrium level.

If we really want to help society then let us not penalise landlords who seek prosperity but let us take correct policy action such as restricting the amount of land which developers can hold or giving tax breaks to encourage greater construction so that the supply of property increases and the cost of renting at the very least slows if not falls because we can at least be certain that the current level of credit is good for the long term health of the economy as banks avoid excessive risk and pumping up house prices (though i fear the £130bn guarantee will do that).

It's all about the supply side policy guys.

Reply 82

FranticMind

Original post by dannydoy

Potentially, However if we role the clock back 15 years say, Property was a lot cheaper back then and thus more "homeless people" (not homeless people per se, but people who don't own their own home) could afford to buy.

At the moment the housing prices are high and propertys are reasonably sparce. If you took the landlords out of the equation, were to pass a law that you could only own one house for example, then prices would fall as there would be more properties available.

Thus "homeless people" would be able to buy a home and begin to bbuild their wealth.

This is true but the rule might be better as:

You can only rent one home out at a time. Otherwise people who need to live in the city during the week and at home on the weekend would suffer from rent prices.

Reply 83

Dragonfly07

Original post by FranticMind

Homeless people don't 'bid' for houses. They either go for state support, try to rent bedsits.

Homeless people generally have very little money. Even if house prices were £10k a home they WOULDN'T HAVE ONE.

They don't give a damn, most of them have much more significant troubles than housing.

HOMELESSNESS IS NOT THE PROBLEM ITS THE RESULT OF A PROBLEM.

Geez why does nobody get that...

Lack of jobs, mental instability, drug addictions, crime.

I would argue that the three things are highlighted are actually the result of homelessness (and poverty in general) rather than the other way around.

Reply 84

Hopple

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tazarooni89

(edited 3 years ago)

Reply 85

tazarooni89

Original post by Hopple

You haven't addressed morality here at all. I'd argue that housing is such a basic necessity that it should go along with food, water and utilities, the stuff that the government should try and get the prices of down, not watch and even encourage the increase.

I think you're misunderstanding my argument then, and your other points seem to suggest this as well. My argument isn't really about the issue of morality. Morality is such a subjective idea that it's possible to consider pretty much anything with any negative effect to be immoral, depending on what your standards are. So that's not something I'm going to debate about, because there's no definitive "correct" answer. It's a matter of opinion - and debates concerning matters of opinion have no end.

All I'm saying is that, the reasons you have provided for considering buy-to-let as immoral do not only apply to housing. Each one can also apply to many other types of business and investment as well - in which case, there are plenty of other things you would also have to start considering as immoral, if you wish to be consistent. At the end of the day, renting out a house that you own is just another way of doing business.

I can understand why you don't like it, because it makes the rich richer, and the poor poorer - even to the extent that they find it difficult to afford basic things that they need. All I'm saying is that housing is not the only culprit of this. A capitalistic society based (partially on the free market) has the effect of making the rich richer and the poor poorer totally embedded within it. The ability of being able to buy and rent houses is a cause of it, but not the cause of it.

Yes, most people would argue that it is the government's duty to, not necessarily nullify this effect totally, but to counteract it in some way. And it does do this in various ways, e.g. by taxing higher proportions of rich people's income (including that gained from rental properties), using this revenue to provide basic needs for free or at subsidised costs etc.

Reply 86

Hopple

Original post by tazarooni89

I think you're misunderstanding my argument then, and your other points seem to suggest this as well. My argument isn't really about the issue of morality. Morality is such a subjective idea that it's possible to consider pretty much anything with any negative effect to be immoral, depending on what your standards are. So that's not something I'm going to debate about, because there's no definitive "correct" answer. It's a matter of opinion - and debates concerning matters of opinion have no end.

That's what this thread is about, the morality of buying houses to let them out.

All I'm saying is that, the reasons you have provided for considering buy-to-let as immoral do not only apply to housing. Each one can also apply to many other types of business and investment as well - in which case, there are plenty of other things you would also have to start considering as immoral, if you wish to be consistent. At the end of the day, renting out a house that you own is just another way of doing business.

I can understand why you don't like it, because it makes the rich richer, and the poor poorer - even to the extent that they find it difficult to afford basic things that they need. All I'm saying is that housing is not the only culprit of this. A capitalistic society based (partially on the free market) has the effect of making the rich richer and the poor poorer totally embedded within it. The ability of being able to buy and rent houses is a cause of it, but not the cause of it.

Yes, most people would argue that it is the government's duty to, not necessarily nullify this effect totally, but to counteract it in some way. And it does do this in various ways, e.g. by taxing higher proportions of rich people's income (including that gained from rental properties), using this revenue to provide basic needs for free or at subsidised costs etc.

So just because there are other things which make people's standards of living worse means we shouldn't worry about ever increasing costs of living? I don't follow your reasoning.

Look at the effects of buying to let on the large scale. Is that a good (or at least, an acceptable) thing? If not, should the government step in to stop it?

Reply 87

tazarooni89

Original post by Hopple

That's what this thread is about, the morality of buying houses to let them out.

So just because there are other things which make people's standards of living worse means we shouldn't worry about ever increasing costs of living? I don't follow your reasoning.

I didn't say we shouldn't worry about them.

Look at the effects of buying to let on the large scale. Is that a good (or at least, an acceptable) thing?

It depends on your point of view. Almost any action that a government takes will be beneficial for some people and detrimental to others. Whether or not it's a "good" thing depends on which camp you fall into.

For example, I own a flat. So I'm not going to be too pleased if everyone suddenly stops buying-to-let, because the price of my flat will go down, and when I sell it I'll get much less than I paid, and will become "poorer". Whereas someone who has just sold a property and is now looking to buy another, but hasn't got one yet will find it advantageous, and become "richer".

Is this a good thing or a bad thing? It depends who you're asking. There's no point trying to discuss it in terms of finding a correct answer to the question in your thread title.
The only way in which I can assess the merits of your idea is to see whether you are happy to apply the same principle consistently towards any other part of the economy which demonstrates similar characteristics.

If not, should the government step in to stop it?

As I mentioned, the government already steps in to counteract accelerated redistribution of wealth from the rich to the poor.

Reply 88

Hopple

Original post by tazarooni89

And my argument is a response to the fact that you consider this immoral - that in order to be consistent, there are plenty of other types of ordinary day-to-day business that you'd have to consider immoral as well (though I think it's unlikely that you do).

I didn't say we shouldn't worry about them.

...

The only way in which I can assess the merits of your idea is to see whether you are happy to apply the same principle consistently towards any other part of the economy which demonstrates similar characteristics.

So you're going to go through everything seeing if there's something I don't feel the same way about? Well, we've done housing, water and food, what's next?

Clearly the extent to which I feel the government should step in is dependent on the scale of the harm that is occurring, and the potential for it to increase in future. I don't have to think that the government must encourage all that it deems good the same amount, nor discourage all that it deems bad the same amount which I think is what you're trying to say.

Making theft a crime is bad for thieves but good for their (would be) victims. That doesn't mean we can't say theft is bad for society. That's why I keep asking you to look at the big picture.

As I mentioned, the government already steps in to counteract accelerated redistribution of wealth from the rich to the poor.

Not enough, clearly.

Reply 89

tazarooni89

Original post by Hopple

So you're going to go through everything seeing if there's something I don't feel the same way about? Well, we've done housing, water and food, what's next?

There's no need to go through everything. I've already mentioned water for example, and you seem happy enough with the idea that all the services which result in me having water ought to be paid for - even if it means that I'm paying for continual usage, rather than paying to gain ownership of something.

Clearly the extent to which I feel the government should step in is dependent on the scale of the harm that is occurring, and the potential for it to increase in future. I don't have to think that the government must encourage all that it deems good the same amount, nor discourage all that it deems bad the same amount which I think is what you're trying to say.

Not really sure what makes you think I'm trying to say that.

Making theft a crime is bad for thieves but good for their (would be) victims. That doesn't mean we can't say theft is bad for society. That's why I keep asking you to look at the big picture.

Theft is an extreme example. It's quite easy to compare a hypothetical society in which theft is legal to one where it is not. The overall effect is that everyone has less incentive to work for anything because it's easier to steal what they want, and that everyone has to fear that any of their possessions could go missing at any time. If theft is legal and everyone is able to do it, it's hard to see any benefit really. Even the thieves don't really benefit in such a society, due to there being so little available for them to steal in the first place.

Whereas in this case, there are many conflicting, but significant interests. How can you measure the benefit caused by some extra people being able to afford houses due to lower prices, against the possibility that this might not even happen (e.g. earnings falling due to deflation, as a result of house prices decreasing since this represents the bulk of most people's expenditure), against the harm caused to people losing out from a loss in value of their homes, against the incentive effects it may have on developers to build more and increase the supply of houses... etc.
The benefits and detriments are not so clearly defined.

Not enough, clearly.

Clearly? What exactly constitutes "enough" then?

(edited 11 years ago)

Reply 90

Hopple

Original post by tazarooni89

Don't forget the differences I pointed out, rather than just saying similarities you noticed.

Not really sure what makes you think I'm trying to say that.

Then what are you saying? Why are other similar actions relevant to this?

Not everyone can steal. I imagine the young, and especially young men, would have a better start in life - not complete reign of course, other people would gain such as manufacturers of sturdy doors and windows. The same reasoning applies to any actions that a person might do, they do it for gain. Outlawing or otherwise discouraging it will hurt those people.

You also continue to ignore the crippling effects of buying to let. People are being squeezed for longer not only because things are more expensive, but because they have to stump up a larger percentage of it, and they can save less in the meantime. I'm also not sure why you raise unwillingness to build more houses as an effect of lower house prices - you're right that it would be a disincentive, but given that even now housebuilding needs to be government backed, and many landlords being happy to sit on empty properties (or the land) until they find someone desperate enough to rip off, we already need government intervention. It's more that landlords are effectively saying "You need somewhere to live, and we've got the places to live, so keep paying us more and more and we'll use your money to snap up any new houses too". Then again, you'd probably oppose building more homes anyway because it would decrease the value of your home.

I also dispute your assertion that people are harmed by their house price falling. To use your situation as an example, you paid £X, the market rate for your flat. If the market rate goes down, to say £X/2, you can still sell your flat for enough money to buy an equivalent one, just as would have been the case if the market rate went up to £2X. Sure, the people who treat houses as an investment rather than a home would lose out, but that's the damaging behaviour I wish to discourage.

Clearly? What exactly constitutes "enough" then?

Where the standard of living isn't being deliberately driven down.

(edited 11 years ago)

Reply 91

Fullofsurprises

Original post by rockrunride

Landlords use a very advantageous position (their increased possession of assets) to extract yet more wealth from a very disadvantaged population, who gain no real advantage bar their satisfaction at gaining shelter. The word 'immoral' carries a strong stigma, but as a landlord you are by default indifferent to the plight of millions of homeless people.

The right to buy council houses arguably caused the problem. Not only pouring millions of pounds' worth of public assets (in the discounts) down the drain so a few people could pocket the money by reselling their property at the new market rate, but also then not replacing the homes by building more public housing! Thatcher's the reason why we won't be able to buy before the age of about 35.

Well said. Whilst there is always a need for private rented accommodation for those who have a good income but need temporary housing in a different area, the dependence of huge numbers of poorer working people on an exploitative private rental market is utterly wrong. There should be a rapid expansion of decent and affordable social housing, to match the provision that was there for many previous generations. Decent, affordable housing is a fundamental requirement and the system imposed on us by neoliberal politicians since the 80s has demolished this for a great many people, whilst at the same time enriching a small section of affluent property speculators at taxpayer's expense via the housing benefit system.

It is heartening that council houses are now once again being built in areas where they haven't been for decades.

Reply 92

Hopple

Original post by Fullofsurprises

Don't forget the bailouts too.

Reply 93

jacketpotato

Buy-to-rent did not cause high house prices. Neither did right to buy under Thatcher - with more privately owned houses on the market you would expect prices to go down not up.

It is a supply and demand problem. Population has increased much faster than houses can be built. The solution is to relax planning controls and get building.

Reply 94

thecrimsonidol

It's not illegal, and the morality isn't important. If they own the property, they should be able to do with it as they wish

Reply 95

dannydoy

Original post by jacketpotato

Very true' less houses causes higher prices

Who can afford the higher prices? Potential landlords who get potential first time buyers to come and rent from them and pay off their mortgage!

That is perverse in my book

Posted from TSR Mobile

Reply 96

Vintage

Original post by dannydoy

Better for the property owner no doubt. But not good for the tenants.

Posted from TSR Mobile

Yeah but really who's fault is that?

The tennant can't save up a deposit to buy a house anyways so if no-ones renting then where do they live?

Plus a large proportion of people renting are on benefits. (I'm just basing this on my dads tennants over the years) which the government pay the rent essentially.

So if people didn't rent houses where would all these people live?

You can blame Thatcher for selling off all the council houses tbh.

Just because people have worked and got spare money and invested it in making more money doesn't make it immoral. that's just absolutely stupid. It's good business sense.

Reply 97

playingcards

Here is the scenario I find a little troubling.
If Mr X wins / inherits / saves £60k, he could put down the deposit on a house worth £300k. He could take in tenants Mr Y and Miss Z and charge them a steady £500 per month each. At the end of twenty years, Mr X owns 100% of a house, despite only ever paying £60k. Mr Y and Miss Z have paid £120,000 each, and own 0% of the house.
This is parasitic.

Reply 98

Debdener

Original post by FranticMind

It is not always that way. I have lived in rented accommodation for a few years now, in London possibly the worst most overpriced renting location possible.

But it is the landlord that must sort everything out:

People messy slobs get rats - Call landlord
People let ceiling rot causes damage - Call landlord
Boiler breaks - Call landlord
Shower breaks - Call landlord
Yobs smash window - Call landlord

If they refuse, hold back rent and seek legal action.

You see it takes a lot of obligation on both sides. When you own you need to deal with EVERYTHING yourself.

The real *******s are the estate agents. They make tons of money just for talking bull**** and filling in forms. They will drop you like a leper when you've signed the contract!

I'm sorry, but that generalisation of estate agents is BS.
I work part-time as an estate agent, and I have gone more than out of my way to help tenants and landlords. I've had tenants ring me up on my personal mobile on a Sunday, telling me that their pipes are leaking.
When I've suggested getting a plumber round there, they've told me they've gone out to a Wedding ceremony.
I've gone back to the office, picked up a spare set of keys, obtained the tenant's permission to enter the property and turn the stockplug off, so they won't be liable for any resulting damage (good thing Landlord had insurance anyway).

I realise that not all estate agents are squeaky clean, but there are those who are good at what they do, so to make that generalisation, I feel is wrong.

Reply 99

Debdener

Original post by playingcards

At the end of the day, we are a capitalistic state, and not a communist one.
I agree some of the rents are extraordinarily high (especially in the city), but when house prices are relatively high/mortgage rates are relatively high (not the interest rate) then I think it's plausible to have such high rents. Also, if demand is there, then why not?
At the end of the day, if more first-time purchasers were able to get a decent deal from the bank for properties, then there would be a lot less demand, thus cheaper rental rates as well.

I know a few Landlords who are career-landlords, which I think is wrong.
But at the same time, there are people out there who use it to try and get a little bit more out of life/increase standard of living for their families.
And then, there are some tenants who are losing money (due to repairs et al things), but hope to turn it around.