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0:10 AM, 5th July 2023, About 10 months ago 82
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Since tenants pay for their landlord’s buy to let mortgage repayments, they should get a share of the profits, one leading commentator says.
John Bird is the founder and editor-in-chief of The Big Issue, a social enterprise and street newspaper, and in the latest issue he says that ‘making money from buy-to-let properties has long been like shooting fish in a barrel for landlords’.
And it is now time that ‘renters got their share’.
In his article, Mr Bird tells the story of ‘Jim’ who, 20 years ago, began renting a flat that, if he could have afforded to, would have bought for £100,00.
But that didn’t happen and over 20 years, Jim’s rent doubled and now the landlord wants him to leave so he can sell the flat.
Mr Bird says that the landlord has issued a Section 21 ‘no-fault’ notice but says that since 2003 when Jim moved in, the flat’s value has rocketed to £500,000.
That means £400,000 has been added to the value of the property while Jim has never missed a rent payment.
Mr Bird writes: “As it was a buy-to-let, the money borrowed from the bank was paid for by Jim’s rent. The person who borrowed the money did not have to pay for the mortgage.
“The buy-to-let arrangement, as long as the property value does not fall, is an ingenious way of borrowing money so that you can increase your income, and also see the steady increase in the value of what you bought with your mortgage.”
He goes on to say that after 20 years, the money paid by Jim hasn’t improved his worth – but his rent payments have increased his landlord’s value.
And when his three months ‘notice is up, he won’t be getting a share of that value.
Instead, he will be searching for a new home and facing a shortage of flats with fast-rising rents.
Mr Bird writes: “What the buy-to-let market has done has increased the chance of quite ordinary people to cash in on gaining wealth and property.
“Around 90% of rentals are owned by individuals who own maybe one or two buy-to-lets.
“It is often their pension and what they want to pass on to their children.”
He says there are firms buying and letting dozens of properties but ‘small-fry buy-to-let landlords dominate the market’.
He continues: “The landlord has not created the increased value. Jim has. So why not cut him in when you throw him out and sell the property for top price?
“I asked this of a woman who told me that she bought a flat five years ago and is now selling it for twice the price: Had you thought of rewarding the person who made this profit for you?
“She pointed out that if the market had gone the other way, then she would have been taking all the risks. True.
“But for the last 30 years making money out of buy-to-lets has been like shooting fish in barrel.”
Mr Bird says that buy to let has enabled investors to build a portfolio who would not have been able to do so without the ‘giant rip-off of the tenant’.
He adds: “The tax relief that goes with owning property you let out, a tax bonus to encourage investment, adds to this.
“Your standing in the community because you own property is reflected in also having to pay less for your credit.
“And you’ve got something to give the kids.”
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Steven Walsh
9:05 AM, 7th July 2023, About 10 months ago
Reply to the comment left by G Master at 06/07/2023 - 22:51
In that case. Il be looking for a doctor with a 100k year salary.
Steven Walsh
9:14 AM, 7th July 2023, About 10 months ago
Yes also some people actually prefer to rent.
I suppose the advange to that would be you not tied in to 2 or 5 years fixed rate mortgage. And all other problems that go with it.
You could literally give your month notice and move to another part of the country of you wished. So ok rent is higher but from one point view have more freedom.
Denise G
10:02 AM, 7th July 2023, About 10 months ago
So by the same argument every single business that sells anything to me at more than they paid for it, and is therefore making a profit from me and my dosh should share their profits with me?
There's already a scheme called shared ownership - and BTL ain't it!
What a load of old tosh Mr Bird spouts; he's the very reason I stopped buying The Big Issue
Steve Guest
10:10 AM, 7th July 2023, About 10 months ago
I have several properties , where I am, which haven't reached the value they were 15 years ago , so who is going to pay me the capital loss when I sell?
Steph Brownlow
21:52 PM, 7th July 2023, About 10 months ago
So are the tenants going to pay towards any improvements required under the EPC regulations a new boiler, solar panels etc and any other improvements that they get the benefit of forr free. I doubt it.
MartinR
7:44 AM, 8th July 2023, About 10 months ago
Just shows you what a fool he is. He has now made enough money to turn left.
Will the tenants be sharing the losses? Will they be contributing to bringing properties up to meet the energy efficiency requirements, of course they won’t.
Give him the Bird!
Steven Walsh
7:53 AM, 8th July 2023, About 10 months ago
Reply to the comment left by Robert Johnson at 05/07/2023 - 16:16
Yes that's it. Only the elite should be allowed to own a property a car, eat meat etc.
While the rest of us peasents should get on our hands and knees and kiss the boots of our overlords.
NO THANKS.
Better to die like a Man.
Than live as a coward
Laura Delow
8:42 AM, 8th July 2023, About 10 months ago
I feel like I've just been transported to some crazy parallel universe! Beam me up Scotty!
Anthony Delaney
12:28 PM, 8th July 2023, About 10 months ago
Typical socialist with no clue as to why investors invest.
Using this idiots model; would the tenant share the losses if the property was sold below purchase price? Not a prayer. These types want no risk, no work, no effort and to share the fruits of others labours. Many houses bought in the early 90s in the northeast are still below that purchase price. They are in negative equity
Could've, would've, might have...
The words of a failure using hindsight as his measure of what he would have done. He still can. Buy your own house, take the risk, maintain and manage it and reap the rewards for your risk and effort. Nobody is stopping you. Take control of your life!
This clown is a typical socialist want to take no risk, do effort and reap the rewards of the hard work and risk capital of others. Sooner or later that strategy will fail as we will all do nothing instead and they will run out of our money! Then there would be fewer houses on the market to rent, pushing up rental costs for the few fools prepared to rent them. That would put more pressure on social housing.
My worry is that these types exist in the Labour party and it wouldn't surprise me if they came up with this loony idea. They'd call it a windfall tax or something.
Abraham George
14:06 PM, 8th July 2023, About 10 months ago
Its clear that Mr Bird do not understand anything about finance and has been educated with a communist mindset to leech off from the wealthy landlords !
May be he should go and learn ABC of financial freedom rather than preaching for rogue tennants for gaining popularity for his personal gains !
Ignore him completely and let him blabber about! Crying will stop once they realise that there is no free meal from the landlords !
Britain needs to stand for hardwork rather than to encourage laziness and cheap exploration from Landlords ! Mr Bird 🐦 can fly around and perch on the branch he likes rather than to talk nonsense ! Best wishes to all the hard working Landlord class ! Poor will always remain poor with Mr Birds mind set !