Buying a house (and renting)

Oblomov Boblomov wrote:Jesus in a decade or so home ownership among under 35s will have fallen off a cliff. The majority of people will end up spending their whole lives giving most of their salaries to private landlords.

Grumpy David wrote:

Oblomov Boblomov wrote:Homes Under The Hammer is infuriating. Talking up some banana split who owns 200+ properties that he turns all into multiple occupancies to rent out like it's great. Latest is a three bed terraced that he's converting into a five bed strawberry floating prick.

This is all Margaret Thatcher's fault!

This won't calm you down.

The banks beating first-time buyers to new homes

Financial giants have seized on buying and renting out properties as a more attractive source of income than offering mortgages

https://www.thetimes.co.uk/article/69bc2332-0749-11ec-ab20-2ce30c912e38?shareToken=a4de62c56b258b3ec3754416ff31c642

For first-time buyers looking for an affordable home within a reasonable distance of London, the flats in Peterborough’s newest development tick every possible box.

Standing by the River Nene, overlooking canal boats and swans, the 358 well-built flats mostly have balconies or outside space and are a five-minute walk to the station, from where the journey to King’s Cross takes less than an hour.

The Fletton Quays block attracted attention from buyers from Peterborough and beyond, but they found themselves up against a serious contender: Lloyds Banking Group.

Britain’s second-biggest bank scooped up 45 homes — one in eight of those available — off-plan when they went on sale in September 2018. The deal is the first step in the bank’s mission to become one of the UK’s largest landlords. Lloyds aims to be renting 50,000 homes — the size of a small town — by 2031.

The banking giant is one of a growing group of large investors looking to shore up balance sheets by becoming landlords of residential properties.

Banks, pension funds and asset managers are buying thousands of new-build starter homes. The homes never go on sale to ordinary buyers, but are packaged up and traded between banks, funds and insurance firms as assets.

Some financial firms are going into partnership with developers to have blocks built specifically to be rented out and to create profitable investment portfolios. Others are buying up homes that would otherwise have been for sale — as happened in Peterborough.

The sector is growing rapidly. While “build-to-rent” accounted for only 5 per cent of properties last year — about 12,500 — the estate agent Savills predicts that by 2031, there could be 1.75 million such homes.

With interest rates at historic lows, investors are honing in on rent as a secure, long-term stream of income. The yields are attractive, yet low risk, and the value of the property is likely to increase. As far as they are concerned, win-win. But critics say the hidden market created by such deals is taking supply from first-time buyers. “If it is the case that these sorts of investments are forcing out, or jumping in front of, first-time buyers then that is where problems start to occur,” said Clive Betts, Labour MP for Sheffield South East and chairman of the Commons housing, communities and local government committee.

“The housing crisis continues to loom large and we should be doing everything to allow first-time buyers on the property ladder, not allowing them to be pushed to the back of the queue.”

Betts added that many build-to-rent investments provided money for new development and said that as long as they were additional to properties for first-time buyers, they played an important role in the housing market.

Hannah Harrison, a 22-year-old receptionist born and raised in Peterborough, said: “I want to live here, all my friends and family are here and [the development] would be an absolutely ideal location for me, but we’re completely priced out.”

She is living with her parents and saving for a house deposit, but says it will be almost impossible for her to buy. “It feels like [banks] are cheating the system. They have the money to buy it and it pushes prices up for the rest of us.”

Until relatively recently, finance giants steered clear of the private rental market. This was partly down to reputational risk — one source said that no bank wanted to appear in the newspapers with the headline “the bank won’t unblock my toilet” — and also because they worried about the security of income from private renters.

But low interest rates have forced investment firms to search for other sources of returns. At the same time, rising prices and stagnant wages have left first-time buyers locked out of ownership, meaning demand for rental homes has grown. And private buy-to-let investors have been hit with a tax crackdown.

Proponents of build to rent argue that the rise of the corporate landlord will professionalise renting, now dominated by amateur landlords often accused of treating tenants poorly. They also argue that any new home is a good thing and will help lower house prices.

“Institutional investment in residential property to rent has come a long way,” said Lawrence Bowles, director of residential research at Savills. “I think ultimately we are reaching a point where nearly everybody in the country will own part of a home, because their pension fund is buying it up.”

House prices in Peterborough have jumped 15 per cent to an average of £226,921 since 2018. Experts said that Lloyds’ decision to buy flats in an existing development was relatively unusual. More commonly, banks and other finance firms go into partnership with developers.

Companies involved include Legal & General, M&G and Goldman Sachs, as well as lesser-known private equity firms, family offices and companies which invest on behalf of pension funds.

PRS Reit is an investment fund that focuses on the private rental sector. It owns 4,000 rental properties in the UK. It was launched and is advised by Sigma Capital, which helps institutional investors build and buy private rental homes.

One such estate sits in the town of Walkden — a 20-minute train ride to Manchester city centre and an increasingly popular spot with homebuyers.

By the end of 2020 it was included in the top 20 most sought after places to live in the UK, according to Countrywide, an estate agent. The average house price in the town increased 11 per cent to £213,000 in the year to this month.

The 100-plus two-bed flats and three and four-bed homes, all red-brick with different-coloured doors, on the Holyoake Road estate are minutes from the station and a a popular primary school.

Tenants pay their rent to Simple Life, a subsidiary of Sigma Capital. Many would far rather be paying a mortgage.

They include an account manager, Kirstie, 29, and her 29-year-old partner. They saved a 15 per cent deposit and wanted to buy a £100,000 house in the area, but despite both earning decent salaries, their application was rejected.

The mortgage would have cost them about £200 a month. Instead, they are paying £925 in rent to Simple Life.

Government schemes have done little to help them, she said, and the problem was made worse by rental schemes such as this one because “it takes all the houses off the market".

Another Holyoake Road resident Greg Kaufman, 52, who lives with 47-year-old Jacqui and their 13-year-old twins Oliver and Freya, said he felt “completely trapped” in the rental market.

He applied for a mortgage to move to a bigger home but was refused. In need of more space, the family had to rent instead. “I never missed a payment on a mortgage in my life, in 14 years,” said Kaufman, who worked in a security role when he applied for a new loan. “And I’ve never missed a rent payment.”

Built in 2017, the estate was owned and rented out by the asset manager BlackRock for the first three years. In December, the properties were packaged up and sold to PRS Reit for £19 million.

PRS Reit said it was building quality homes for people that the marketplace had typically underserved and that the rental market often made homes affordable for those unable to buy.

Lloyds said: “Citra Living [its build-to-rent venture] is embarking on a first step to provide incremental housing stock for the private rental sector. Lloyds has lent more than £9 billion to first-time buyers in 2021.”

While the UK needs a competitive rental market, the housing crisis looms large. For many, homeownership will never be more than a dream.

Tomous wrote:That should be illegal. They shouldn't be able to operate in the renting and mortgage markets simultaneously.

Qikz wrote:There should 100% be a law stopping someone from legally owning more than one or maybe two homes. It's the only way this is ever going to stop.

Qikz wrote:

Oblomov Boblomov wrote:Jesus in a decade or so home ownership among under 35s will have fallen off a cliff. The majority of people will end up spending their whole lives giving most of their salaries to private landlords.

Ignoring the fact I could only afford 40% of my flat so I'm in shared ownership (in a 1 bedroomed flat for strawberry float sake) I got told when initially looking that if I find somewhere I basically need to hope to god that I get in there before a landlord does. Landlords are so strawberry floating rich they pay by cash upfront and they're essentially buying up all of the 1 bed properties before newer buyers even have a chance. That's also not taking into account that our generations salaries are so low and house prices are so high that we can't even get a mortgage to cover the full amount especially if you're on your own.

There should 100% be a law stopping someone from legally owning more than one or maybe two homes. It's the only way this is ever going to stop.

Stugene wrote:

Qikz wrote:

Oblomov Boblomov wrote:Jesus in a decade or so home ownership among under 35s will have fallen off a cliff. The majority of people will end up spending their whole lives giving most of their salaries to private landlords.

Ignoring the fact I could only afford 40% of my flat so I'm in shared ownership (in a 1 bedroomed flat for strawberry float sake) I got told when initially looking that if I find somewhere I basically need to hope to god that I get in there before a landlord does. Landlords are so strawberry floating rich they pay by cash upfront and they're essentially buying up all of the 1 bed properties before newer buyers even have a chance. That's also not taking into account that our generations salaries are so low and house prices are so high that we can't even get a mortgage to cover the full amount especially if you're on your own.

There should 100% be a law stopping someone from legally owning more than one or maybe two homes. It's the only way this is ever going to stop.

if they are buying up all the 1 bedroom flats, then consider buying a 2 bedroom flat.

Winckle wrote:

Stugene wrote:

Qikz wrote:

Oblomov Boblomov wrote:Jesus in a decade or so home ownership among under 35s will have fallen off a cliff. The majority of people will end up spending their whole lives giving most of their salaries to private landlords.

Ignoring the fact I could only afford 40% of my flat so I'm in shared ownership (in a 1 bedroomed flat for strawberry float sake) I got told when initially looking that if I find somewhere I basically need to hope to god that I get in there before a landlord does. Landlords are so strawberry floating rich they pay by cash upfront and they're essentially buying up all of the 1 bed properties before newer buyers even have a chance. That's also not taking into account that our generations salaries are so low and house prices are so high that we can't even get a mortgage to cover the full amount especially if you're on your own.

There should 100% be a law stopping someone from legally owning more than one or maybe two homes. It's the only way this is ever going to stop.

if they are buying up all the 1 bedroom flats, then consider buying a 2 bedroom flat.

Victor Mildew wrote:Mrs wants to look at a house that's come up for sale on our road

Moggy wrote:The owner of the house I am trying to buy emailed me earlier. She asked for the link to my flat's listing as she has a couple of contacts that might be interested in buying flats in Bristol.

I sent it to her and she's come back saying she's going to pass the details onto a couple of people who buy flats and then rent them out.

Seems a bit weird to me so I'm not getting my hopes up.

Tomous wrote:

Moggy wrote:The owner of the house I am trying to buy emailed me earlier. She asked for the link to my flat's listing as she has a couple of contacts that might be interested in buying flats in Bristol.

I sent it to her and she's come back saying she's going to pass the details onto a couple of people who buy flats and then rent them out.

Seems a bit weird to me so I'm not getting my hopes up.

Perhaps she's desperate to move and knows some landlords? Can't hurt for her to ask them.