0:10 AM, 5th July 2023, About A year 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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DavidN
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Sign Up10:41 AM, 6th July 2023, About A year ago
How can this work with any incorporated ownership, especially the current explosion of commercial build to let by investment funds, eg recent 33 storey block.
Abandons reality / shows lack of market knowledge for a cheap headline
Gromit
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Sign Up11:21 AM, 6th July 2023, About A year ago
Reply to the comment left by DavidN at 06/07/2023 - 10:41It won't happen this is just pure distraction politics
John ferrier
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Sign Up12:37 PM, 6th July 2023, About A year ago
So John Bird thinks or wishes we should share the capital gains when we sell a property
I have 18 flats all under 13 years old
I built them myself I have 45% mortgage interest only. They are all in my own name not LTD company
I get taxed on the full rent I receive I also can’t raise the rent from £545 a month as it would put me into the 40% tax bracket I would be taking it of the tenants to pay HMRC
I can only assume that John Bird comments are in the hope something like this could get passed by the Green Party . In turn would then force every BTL landlord to sell up before it’s implemented
Then we would have thousands of tenants out on the street selling the big issue for less than the minimum wage
But hold on this won’t be a problem as all there vendors get a big dividend every year from John Bird 😂😂😂
He may say he is a charity but how much of a income does he take first
For a business man he really is thick as mince
As for my tenants I offered every one of them 2 years rent money back if they bought the flat at the home report price
I built the flats 12 years ago they have increased in value by 7% not 1 tenant has took me up on my offer but has had the benefit of living there for over 10 years they are all working and probably could afford to buy something if they wished instead they live free of repairs mortgage rate going up and every other expense that come with being a BTL
John ferrier
Upforlet .com
Paul Power
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Sign Up12:39 PM, 6th July 2023, About A year ago
Reply to the comment left by Mark Alexander - Founder of Property118 at 05/07/2023 - 09:42
Look for the opportunity. Remove the capital gains from properties and split the previous owed tax based on hmrc calculation. Both sides come out better off. Probably attractive to both sides but not the government
John ferrier
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Sign Up12:50 PM, 6th July 2023, About A year ago
You and I know that’s never going to happen
I really don’t mind change but the problem we have as more landlords like my self sell up there is nothing out there that is a better alternative
The next wave will be a landlord cannot sell his property with out the convent of the tenant
That’s when there will be the biggest house shortage since the end of world war 2
John ferrier
Upforlet.com
Yvonne Halliday
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Sign Up17:24 PM, 6th July 2023, About A year ago
Reply to the comment left by yashdra Desai at 05/07/2023 - 09:28
100% agree I've sold all 5 of my portfolio at a loss. No financial equivalent for the stress of keeping up to date with increasing legislation and the stasi behaviour of local council licencing. I always looked after my properties with a 'would I like to live there' attitude. Same day resolution in the main to problems from leaks to mice. Fallen ceiling and broken boiler aside! It's such a sorry state for tenants and landlords alike!!!
FredB
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Sign Up20:28 PM, 6th July 2023, About A year ago
Is this John Bird bloke for real. My tenants live in two very nice house's. When the boiler breaks I fix it. If the carpets warn I replace it, yes they pay me rent (below market value) but they have no maintenance or rediculas tax bill every year. My tenants live better than me, I have no central heating or double glazing. They don't have to chop wood or cut up kindling to keep warm. Just because I took the opportunity to work hard, save and try to fund a semi decent retirement (in 20 years time) and they didn't, why should I give them some of my profit if I ever choose to sell and possibly fund a house for me to live in. I live in a caravan because I can't afford to live in a house, let alone a life style like John Bird (I presume)
This is my first post, I have been reading everyone for a while but when this idiot popped up I had to say my bit lol
I feel a bit better now 🙂
RGJ25
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Sign Up21:10 PM, 6th July 2023, About A year ago
Jim did not create the landlord's increased value, the landlord invested a 25% deposit at least, weathered many storms and paid for all of the insurance and maintenance whilst Jim has been living comparatively care and risk-free for 20 years. Are we saying that when the owner of Jim's favourite cafe sells-up at a profit that he deserves a share for all of those cups of tea and baguettes he paid for?
Mark McNicholas
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Sign Up21:18 PM, 6th July 2023, About A year ago
If I ever bought a “big issue”, I certainly wouldn’t now. ANOTHER British fantasist.
G Master
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Sign Up22:51 PM, 6th July 2023, About A year ago
If my tenant will share his income with me, I'll share my capital gains.
Oh, and what happens when I have negative equity?