There is something I don't get about house prices. If prices are pushed up, beyond the reach of many would-be buyers, in part by the large part of the housing stock that is now in the hands of buy-to-let landlords, then where do people live who can not affor to buy a house? Obviously for some the answer is on the street, or with the parents, but for most I would think the answer would have to be that they rent those BTL properties.
OK, how much do they pay in rent? If it is more than the mortgage repayments, why do they not just buy the house? If it is less than the mortgage repayments, why is the landlord holding on to the property? Perhaps because he expects to make a profit out of capital growth.
But how can the price of the house keep increasing to provide this "growth", if fewer and fewer people can afford to buy it? Unless of course the landlord intends to sell it to another BTL landlord; who will presumably pay a higher price for it.
But why will the new BTL buyer pay a higher price for it? Not for the rent. It must be that he too expects an increase in price that he can profit from later, even if he has to rent it at a net negative yield in the meantime.
So the rising prices depend on buying and selling among BTL landlords, who do not actualy have a need for this asset and do not make a profit directly from it. In what way is this not a speculative bubble?
OK, how much do they pay in rent? If it is more than the mortgage repayments, why do they not just buy the house? If it is less than the mortgage repayments, why is the landlord holding on to the property? Perhaps because he expects to make a profit out of capital growth.
But how can the price of the house keep increasing to provide this "growth", if fewer and fewer people can afford to buy it? Unless of course the landlord intends to sell it to another BTL landlord; who will presumably pay a higher price for it.
But why will the new BTL buyer pay a higher price for it? Not for the rent. It must be that he too expects an increase in price that he can profit from later, even if he has to rent it at a net negative yield in the meantime.
So the rising prices depend on buying and selling among BTL landlords, who do not actualy have a need for this asset and do not make a profit directly from it. In what way is this not a speculative bubble?
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