A possible progressive loophole in landlording - what am I getting wrong?

[Zetetic]

Given that at its core the idea is about using the equity in your home for a social good, I feel like that would probably be better achieved by doing something like selling up and donating some of the released equity

The correct answer is that you use the existing capital - i.e. the house - to setup a housing co-op. This isn't a new idea, of course.

Although this does mean that you don't get to be a "nice" landlord which seems to be the actual point of the proposed scheme.

[TrenterPercenter]

I think I'm envisaging widespread rent controls where a load of landlords don't find it particularly profitable any more.

Yes but the thing is to shave off the landlords that are making ridiculous money from those that actually are struggling.  This also has the impact of considering assets such as houses, from a financial perspective as ethical vehicles for change without just saying stuff like all property is theft.

[TrenterPercenter]

Although this does mean that you don't get to be a "nice" landlord which seems to be the actual point of the proposed scheme.

Not the point but if it persuades people then sure why not.

The correct answer is that you use the existing capital - i.e. the house - to setup a housing co-op. This isn't a new idea, of course.

Anymore info here? You can do this on an individual basis?

[TrenterPercenter]

Buy charging below market rent, you're effectively giving money away. I don't think there is anything wrong with what you are proposing, but it's just giving money away to people who can't afford a house in a slightly complicated fashion. There are probably more tax efficient ways of doing it.

Richer people giving money away to poorer people - through the medium of the very things that costs the most and that destroys local economies and communities - Yes please!


And absolutely build more houses whilst we are at it.

[Dr Rock]

Will you be making sure you are giving away money to a nice struggling family, or will you accept a lazy dole scrounger on housing benefit? What if the nice struggling family are all racists, or have a fat dog?

[Dr Rock]

They tend to go hand-in-hand now I think about it.

[The Dog]

What if I got my slaves to work for Help the Aged?

[katzenjammer]

But there are degrees - in fact I think this whole landlords as strivers myth is something that needs looking at if you are paying £130 pm on your mortgage and charging renter £900 pm that is a serious mark up that is 9k extra year a markup of nearly 700%. That is the reality in the current system.  The "gambling" comes from landlords then using this disposable income to invest further then relate these cost back to the renter - this is the problems and I've seen it with my own eyes many times from friends that do this kind of thing.

I obviously didn't make myself clear. I'm just trying to point out you will have problems when variable costs arise that a 'traditional' landlord won't, because that money will have to come from somewhere.

Sorry I've not really understood this; do you mean just give someone your house? ...

No, I mean you sell someone your house with an agreement for them to pay you back in instalments instead of with a lump sum. You effectively become their mortgage provider and you can set the interest rate which could be 0%. I know someone that has done this. So far it's working out fine.

[katzenjammer]

Will you be making sure you are giving away money to a nice struggling family, or will you accept a lazy dole scrounger on housing benefit? What if the nice struggling family are all racists, or have a fat dog?

Or they sublet it at the market rate and pocket the difference?

[TrenterPercenter]

Will you be making sure you are giving away money to a nice struggling family, or will you accept a lazy dole scrounger on housing benefit? What if the nice struggling family are all racists, or have a fat dog?

That is why this was something that came about with me looking the significant saving homeowners can make by overpaying their mortgage but then led to me thinking those gains should be partly handed down to people that need them more.

So a blanket policy for all rentier capitalists and one absolutely against all forms of canine weightism.  The whole "no DSS" stuff is separate to this, again if you want to force people to rent their second homes for nothing at gun point, or stop them buying second homes then this is an option but you'll have to get people to vote for it - I am open to suggestions of how you might do this.

[TrenterPercenter]

I obviously didn't make myself clear. I'm just trying to point out you will have problems when variable costs arise that a 'traditional' landlord won't, because that money will have to come from somewhere.

Yes but that is why you "fix" the ratio to payments at a reasonable level - we are not saying no profit just not 700% profit that is then being fired into other vehicles of inequality.

No, I mean you sell someone your house with an agreement for them to pay you back in instalments instead of with a lump sum. You effectively become their mortgage provider and you can set the interest rate which could be 0%. I know someone that has done this. So far it's working out fine.

At a policy level this would be a hard sell, I didn't know you could do this though surely you need to be approved to be a mortgage provider so what you are saying is just giving someone you house on an agreement for them to pay.  I think we need to move away from the individualised interpretation of all of this.

[Dr Rock]

I thought this was about individuals/couples who were nice, renting to other nice people? When did it become about making people do this at gun point?

[Zetetic]

I suspect that the "No DSS" stuff would become very much part of this - if the rent-level was capped in a binding way then you're likely to see other forms of pricing and discrimination creep in. (This isn't a good argument against rent controls in general, just that you then need even more aggressive policing of other barriers.)

There isn't a way forward on housing in Britain via either the Westminster government or charity.

if you want to force people to rent their second homes for nothing at gun point, or stop them buying second homes then this is an option but you'll have to get people to vote for it

https://gov.wales/sites/default/files/publications/2021-11/cooperation-agreement-2021.pdf

Or you just burn down their two homes, which acts a disincentive for future multiple-home-ownership.

[TrenterPercenter]

I thought this was about individuals/couples who were nice, renting to other nice people? When did it become about making people do this at gun point?

No for some reason several posters seem to think this is about "being nice" despite me pointing out from the off that this is about policy.

I'm not saying you have to make people give their assets away for free at gunpoint but I think you might want to come prepared if you are going to try and get people to do so......being serious I mean the first whiff of "taking away" your assets and it is over from a PR perspective needs to be something that is progressive but not seen as punitive so that people vote for it.

[TrenterPercenter]

I suspect that the "No DSS" stuff would become very much part of this - if the rent-level was capped in a binding way then you're likely to see other forms of pricing and discrimination creep in. (This isn't a good argument against rent controls in general, just that you then need even more aggressive policing of other barriers.)

I don't see how this is any different from now - people rightly or wrongly choose who they let their properties too.  I'm talking about reasonable and fair (more fair than now) ways in which rents can be controlled taking into account peoples mortgages are variable.  Letting to those on benefits would be a decision like it is now you either mandate it at a public level (something you could do) or you don't (currently).

Again we seem to be going down this nice nice moralistic pathway of deciding who get your fantasy second home - seems rather besides the point to me.

Or you just burn down their two homes, which acts a disincentive for future multiple-home-ownership.

Now we are talking.

[Buelligan]

Could one donate surplus money to organisations like Shelter, Acorn or an appropriate local group?  Or you could remortgage your house, use the money to build one or two or more smaller, greener, homes and use the money from selling them again to pay off the loan (increasing the housing stock). 

https://www.acorntheunion.org.uk/

[Mr Farenheit]

If you rent out a property at significantly below market rate you will be swamped with applicants. How do you schedule the dozens (hundreds if you're in a city, thousands if you're in London) that want to view it? Tons of people will try and pay you the deposit as soon as you open the door, maybe even before. Do you accept the first one that does that? Turn away everyone else? You will have hundreds wanting to give you a deposit and sign up- how do you decide who the lucky one is?

There's only one way

[Zetetic]

You'll tend to see more aggressive pursuit of maximising profit by other means, if landlords are unable to raise the cash-rent. (You're right that we do see this now - it's more of a problem in the parts of the UK where it's simply not possible to raise cash-rents any higher without making them utterly affordable.)

I guess it's also with noting that the "No DSS" is stuff is all criminal now in Wales and England, AFAIK, because of the implied discrimination with respect to certain protected characteristics (gender, disability). Largely unenforced of course - letting agents are happy to talk in newspapers about how they fuck over people in receipt of benefits.

[Zetetic]

Could one donate surplus money to organisations like Shelter, Acorn or an appropriate local group?
...
https://www.acorntheunion.org.uk/

I don't think ACORN generally wants money from landlords, tbh. I don't think this is unrelated to the fundamental problem with the proposed scheme - that it continues to concentrate power in the hands of a class of people with capital.

(Noting that ACORN shows that it's possible to exercise some power over landlords without going via electoral politics.)

[TrenterPercenter]

OK you've worn me down.  Everything should stay as it is - it was just a thought.


Going to invest any monies in barbed wire and gun turrets under the advice of Crenners.

[Buelligan]

I don't think ACORN generally wants money from landlords, tbh. I don't think this is unrelated to the fundamental problem with the proposed scheme - that it continues to concentrate power in the hands of a class of people with capital.

(Noting that ACORN shows that it's possible to exercise some power over landlords without going via electoral politics.)

I was suggesting donating as an alternative to landlording.

[Buelligan]

Another alternative might be to work to elect a socialist government who would tax people according to their wealth and provide affordable homes for everyone.   Although that might prevent people having a second home, even if they promise to rent it out nicely like a great big kind king.

[chveik]

[Jasha]

Robbing Peter to pay Paul

How so Jasha?

It's not financially viable. For arguments sake 30 is about the age now when people can afford a mortgage and you've paid it off 10yrs early that makes you 45, so now you've got to enter into another mortgage you'll only get a 20yr term on a supplemental house that will cost you 15yrs of house price inflation since your original purchase. So now you've got a shorter term on a more expensive asset, how do you make up the difference between the cost of your original mortgage and your second? Well you've either had a string of fantastic promotions and your current salary covers the difference or the below market raterental income form the first supplements the payments on the second, you are using a renter to cover your mortgage, so the charitable aspect of undercutting the buy to rent landlords is also subsidising your own mortgage. You have become a buy to renter.

[TrenterPercenter]

Up for banning all second homes and electing a socialist government.

Should be easy only 550k people in the country have them so a pretty small voting block in the grand scheme of things.

https://www.theguardian.com/commentisfree/2021/jun/23/second-homes-uk-government-britain-housing-crisis

An interesting article.  One of the claims often made is that landlords are doing a public service I'm just suggesting that in doing so their are expectations that come with that service i.e. making housing affordable for those that need it - it's a compromise I'd sooner ban them, reign in the banks and direct the massive waste of money or indulgence in greed to bette uses but I think that is going to be quite a leap from where we are currently.

[TrenterPercenter]

It's not financially viable. For arguments sake 30 is about the age now when people can afford a mortgage and you've paid it off 10yrs early that makes you 45, so now you've got to enter into another mortgage you'll only get a 20yr term on a supplemental house that will cost you 15yrs of house price inflation since your original purchase. So now you've got a shorter term on a more expensive asset, how do you make up the difference between the cost of your original mortgage and your second? Well you've either had a string of fantastic promotions and your current salary covers the difference or the below market raterental income form the first supplements the payments on the second, you are using a renter to cover your mortgage, so the charitable aspect of undercutting the buy to rent landlords is also subsidising your own mortgage. You have become a buy to renter.

I thought this might come up.  Well exactly this is what is happening people are propping themselves up on the backs of renters and getting renters to not just pay off the house they are living in but the new unaffordable investment they have just taken on.   This is what is going on, it's shit.

As a homeowner that has accumulated capital in assets you are in a better position than those that haven't.  That is the short and long of it just because your capital allows you to buy a bigger and better home and put the bill on someone else's back doesn't mean it is Ok. If you couldn't do this i.e. the rent was capped  to outstanding payments then you would have factor this in when buying another property rather than making a money factor out of someone elses misery.

[touchingcloth]

I think the family who rents below market rates is the main beneficiary relatively, sure if you want to compare feeling nice and fuzzy with not having to pay extorsionate rents then I'm happy with this.  Homeowners get to feel warm and fuzzy and renters get to eat suits me.

Fair enough, though I guess I'm confused about what the proposal actually is ha. Personally I can't see myself chasing a second home and mortgage once I have paid off the current place so it's probably not aimed at people like me who have found their - and get ready to hurl, readers - forever home.

[Jasha]

I thought this might come up.  Well exactly this is what is happening people are propping themselves up on the backs of renters and getting renters to not just pay off the house they are living in but the new unaffordable investment they have just taken on.   This is what is going on, it's shit

But that's exactly what you proposed in your first post. Whether you offer a reduction on the rent or not you're still using the renter to subsidize yourself

[TrenterPercenter]

But that's exactly what you proposed in your first post. Whether you offer a reduction on the rent or not you're still using the renter to subsidize yourself

Yes but I was suggesting a way that ameliorates that; you might have gathered by now that I'm suggesting this as I don't think banning second homes or private landlords will work/happen despite it being my preferred choice.  It is important that these things are systemic things not just individual "Christian" charity stuff, a system that is "fair" (but ultimately helps those that need it most).

[TrenterPercenter]

Fair enough, though I guess I'm confused about what the proposal actually is ha. Personally I can't see myself chasing a second home and mortgage once I have paid off the current place so it's probably not aimed at people like me who have found their - and get ready to hurl, readers - forever home.

No that is nice that you've got the place you want.  Of course the other thing is being mortgage free and wiring your disposables to charities etc... but I don't think this changes the system.  Just for clarity I'm not suggesting everyone buy a second home I'm saying those that do could have reasonable caps placed on them and these caps could be relative to the outstanding costs of their assets so that they can't just pass the cost of their second home onto others under the cover that it is costing them the same amount of money to service the mortgage as it was when they first bought it (plus all the issues that come with all the associated inequality).