Foreign Ownership of UK assets.

[twist]

There's always another crash .

I bought my house just before the recession when prices were still high, over the next few years my house price only fell by a few minor %, its now worth quite a lot more than I paid. I think there may be another crash but its not going to be a CRASH. Demand outstrips supply and there are a lot of people that will pay what they need to own a home.

Anyway, back to the original topic. Sorry OP.

 

[Llamaman]

Foreign ownership of domestic rental properties is bound to lead to trouble.
There are many and complex laws that landlords must comply with.
How would that work with foreign absentee landlords.

Before I owned a property, all but one of my landlords were UK residents. They all broke the law, either through ignorance or willful disobedience.

 

[viv1969]

It's not that it was OK for me but not OK for others. Very buoyant market in the 90s (like London now) but property was actually a lot cheaper. My first flat cost about 70K - that was like 2.5 times joint income or whatever. Wages have risen somewhat but property has risen somewhat more so your multiples now are much higher.

Advice is still if you can afford it buy the most expensive property you can. But if you can't, look at other ways of paying for where you live and wait for the next crash

OK...But your initial post was:

We need to get over this idea of people owning the house they live in. It's out of date and actually damaging.

The two POV just don't sit right together.

 

[Ricardodaforce]

I read with horror that the UK's 'buy to let king' Fergus Wilson is selling his 1000 house portfolio in Kent to foreign buyers, particularly those based in China and India. I understand that the majority of countries in the world have mechanisms to limit or prevent foreign ownership of property, the UK is in a minority where everything's for sale!

Personally I'm not too comfortable with the idea of 'buy to let' anyway but feel that selling large chunks of the countries housing stock to foreign investors is a huge mistake. Is nothing actually owned by 'UK PLC' (ie 'us') anymore? Will our future generations be resident in the UK simply to profit absentee foreign landlords and employers? Maybe it doesn't really matter, what do others think?

I couldn't give a s***. Also I am sure that any British investor could have bought the stock if they wanted to. The buyer will always want to maximise his return and if a British investor doesn't fancy the opportunity, then why shouldn't an overseas buyer take it.

 

[Llamaman]

That's part of the problem though - the revenue (in the form of rent) will leave the country and not be available to be spent in the UK.

But the tax on that revenue will still be due in the UK, which is no different wherever the landlord is resident.

 

[jakeblu]

Depends on the type of business an employer is in. At the end of the day they have to make profits, they have competitors who may well have lower operating costs due to being in another country where wages and overheads can be lower. As an example, up until 2013 I was a press toolmaker at Ford, ok my wages weren't at a level that needs subsidising, but due to UK wages and operational costs, they had to shut us down and the work will be done in other countries with lower costs. This means that Ford Europe can return to profit without having to raise car prices instead, which would mean they would no longer be so competitive against other manufacturers. I'd rather see employers in this country providing work with wages that may need to be supplemented, than not have them here at all and those workers unemployed and living completely off benefits.

Personally I always felt that if you cannot afford to pay your employers a living wage, then you really ought not to be in business.

 

[Mr Bump]

Rent = waste money
Buy = Investment

I can appreciate renting for some is the only option and that's why we have a very boyant rental market.
but if you can afford to then buy a house then its the best option it can even be cheaper in the long run.

 

[dejongj]

Personally I always felt that if you cannot afford to pay your employers a living wage, then you really ought not to be in business.

Oh man, I would not go to work if I had to pay my employers. No way. I know some industries had that practise but definitely not something I would consider

 

[nilagin]

Personally I always felt that if you cannot afford to pay your employers a living wage, then you really ought not to be in business.

I'd much prefer my employers to be paying me.

 

[dejongj]

Maybe it's time to stop subsidising low pay and making the cost of living a more important factor in the cost of business decision making. At the moment an employer can pay below a living wage and rely upon the state to subsidise employee living costs through tax credits and benefits. As a country we demonise the low paid employee whilst accepting the concept of paying someone less than it costs them to live as somehow normal. If employers had to increase wages to the point employees could afford to live in the areas around their businesses could we encourage development in the regions away from the South-East and London? Most of Europe manages to maintain economies not completely focussed on one small part of their countries.

And like turkeys voting for Christmas, we keep voting in parties dedicated to dismantling social housing - but "I'm alright Jack"

That is not an issue of employers. They'd would have to up the prices for the products sold. Thus the "people" will have more income but also increased outgoings. Basically it stays neutral and only one group wins

It is not that different than the house prices going up. Buyers were willing to pay more because they could borrow more. It accelerated the process of an increase more than if they were sensible and didn't pay stupid prices. But hey two income families, high multiple loans, general acceptance that debt is ok has changed all that.

Until we realise that it is us doing this to ourselves it is not going to change.

All this talk about living wage is not going to change anything. It isn't ambitious enough. There will always be people undercutting people. Forcing a minimum level just raises that bar, increase costs for all with only a single winner. Not good at all.

 

[jakeblu]

I'd much prefer my employers to be paying me.

Lol bloody iPhone keypad

 

[dejongj]

Lol bloody iPhone keypad

See that is what wrong with the youth of today. Always blame someone else

 

[jakeblu]

That is not an issue of employers. They'd would have to up the prices for the products sold. Thus the "people" will have more income but also increased outgoings. Basically it stays neutral and only one group wins

It is not that different than the house prices going up. Buyers were willing to pay more because they could borrow more. It accelerated the process of an increase more than if they were sensible and didn't pay stupid prices. But hey two income families, high multiple loans, general acceptance that debt is ok has changed all that.

Until we realise that it is us doing this to ourselves it is not going to change.

All this talk about living wage is not going to change anything. It isn't ambitious enough. There will always be people undercutting people. Forcing a minimum level just raises that bar, increase costs for all with only a single winner. Not good at all.

I don't go with that sorry, its like the argument against the minimum wage and how it would cripple the UK economy, yeah sure it did. Just like all the other legislation such as maternity leave and health and safety. If we left it to business to reform we'd still be sending kids to work. If a system can only exist by relying on governments subsidies then its a system that is failing.

 

[jakeblu]

See that is what wrong with the youth of today. Always blame someone else

No ones called me a youth for 30 years

 

[JonathanRyan]

OK...But your initial post was:

The two POV just don't sit right together.

What can I say? I'm not a economics expert......

My belief is that people in this country are wedded to the idea of owning the house they live in. An Englishman's home and all that. For many this is becoming unaffordable. Right now "we" (basically the government but under pressure from a bunch of people) are bending over backwards to help people who can't afford to to buy their houses. If they can't afford them, then there's a problem here. Either we need to carry on helping these people or (more likely) we get bored of doing that and help a whole different bunch of people to buy even more houses. The first group end up largely in more financial trouble than they started.

I really think it's worth looking at alternatives. And these seem to be

1. Magically fix the housing market so property is affordable again
2. Massively increase wages so people can afford property again
3. Accept that it's not a good idea to own property and let people be happy renting. And yes, I know that looks awfully like reinventing that council house scheme that Mrs Thatcher was dead set against.

I can't off hand think of any others. And 1 & 2 are both identical and impossible. So my suggestion is to stop spending huge sums of money helping people to do stuff that is bad for others and may be bad for them and have another think about it.

 

[dejongj]

I don't go with that sorry, its like the argument against the minimum wage and how it would cripple the UK economy, yeah sure it did. Just like all the other legislation such as maternity leave and health and safety. If we left it to business to reform we'd still be sending kids to work. If a system can only exist by relying on governments subsidies then its a system that is failing.

I don't necessarily disagree but come at it from a different angle.

Basically this living wage nonsense is just raising the minimum wage. If that is what people want then lets have one minimum level and lets remove minimum wage and call it living wage. I've got not issue with that.

However what we mustn't forget is that it is the government that is distorting the market not the employers. If workers weren't willing to work for the remuneration they is on offer then something would change.

Lets not focus on the minimum level, but lets ain much higher. Many companies have to pay or provide the right conditions. Happens without state interference until there is interference like with child benefit, tax thresholds and the likes. It is ridiculous that sometimes it works out better to go for less because the government makes up the difference and people loose that benefit.

Stop the distortion and the true value will prevail. And merely have a safety net in place at the bottom.

 

[boyfalldown]

Foreign ownership of domestic rental properties is bound to lead to trouble.
There are many and complex laws that landlords must comply with.
How would that work with foreign absentee landlords.

why? - a local agent would be perfectly capable of ensuring all laws were complied with

 

[jakeblu]

Cant believe where almost in agreement, almost

Stop the distortion and the true value will prevail. And merely have a safety net in place at the bottom.

Unfortunately the true value for a business is one that maximises profit not one that pays a decent wage, not all businesses mind, but most.

 

[Alastair]

Stop the distortion and the true value will prevail. And merely have a safety net in place at the bottom.

The growing disparity between the top 1% of pay and the bottom 50% of pay should tell you this is a pipe dream and won't happen.

The irony is that the state creates some of the poorest paid jobs in the country (mostly in the social care sector), pays for-profit organisations to provide these services in place of the public sector (NHS/LAs), and then subsidies these for-profit companies by topping up the p|ss-poor wages with tax credits and benefits.

The market does not work when it comes to employee welfare and working conditions. And the public largely doesn't care about the welfare or working conditions of those that produce the goods they purchase.


If you're working at below the living wage you're trapped.. you can't move out of the area to an area that's cheaper to live because you won't get the same housing support and you can't afford to live without it, you're either relying on family for childcare or family are dependent upon you for personal care because if you're low paid the odds are that the rest of your family are too - so unles you all move none of you move. You take the sh|t paid jobs that are available and rely on the state to top them up to the point you can live. Because there's a captive workforce employers drop to the lowest common denominator in terms of wages.

I know contractors in London that pay their subbies different rates dependent upon the job they're doing - if it's a contract for TfL or the Mayor's office it's London Living Wage because it's written into the contract with the client and the client audits compliance, anything else and it's minimum wage because it's the least they can legally pay.

 

[Mr Bump]

All of the above drives us to the crux of the problem though, education. In this day and age we still have acres of dross coming out of school thick as pig sh*t.
I have quite a few friends with kids and all of there kids have been encouraged to seek further education and are doing great.

If you start in life poorly you are never going to able to rise to a good standard of life not in todays society its just to competitive.
and frankly I have no time and no tax money for those who refuse to make the effort.

 

[KIPAX]

If you start in life poorly you are never going to able to rise to a good standard of life .

haha what complete and utter rubbish ...Not many have a choice that early..its down to parents... people can rise from a poor education and make something of themselves if they want ..

 

[shreds]

Shortage of houses is piffle put out by developers and bolstered by the Government who are in the building industy's pocket

 

[dean messenger]

rent or buy, makes no odds to me, where i live ( surrey ) prices are so over inflated anyway both are a struggle. The area here has a bad rep ( a rural council estate is probably best way to describe it though its like a self contained micro town , schools, shopping parade, couple of pubs and population round 20,000 ) surrounded by fields, farmland and woodland its on the outside looks a nice area but has a bad name due to a few undesirables and the high unemployment in the area ( sounds like alot of places really ).
Yet a 3 bed terraced council house averages at around £300,000.. i cant and never could afford a mortgage that high so am forced to rent. and even that is £700 a month ( council not private ( private rent here is around £1200+ ).
how much would a mortgage be a month ( taking into account variables like initial deposit , how many years its for, interest rates etc) ive no idea but i would guess it could actually be lower than the rent. certainly i know my ex and her partner pay on there mortgage half what our monthly rent is.

certainly in this part of the country theres no low cost solution be it rent or buy, unless you are on benefits and get everything paid for.
Simple fact is the government have screwed over the country by selling off half there houses , pushing rentals up and allowing overseas buyers to snap up the properties leaving a huge shortage for low income familes or those new to the housing list and thus driving up rental and buying prices. ( shortage creates premium ).
When my parents moved into there rented 3 bedroom home ( which they are still in ) in 1958 they had a choice of about 20 houses and no wait.
when i went on the housing list i waited 11 years to get a pokey 1 bedroom flat , and now with 2 daughters we are still in a frankly crap to small property ( maisonette in block of 8 with communal grass area and 2 very small bedrooms ) . we cant afford to private rent or buy because of how the market only caters for high earners or those on benefits. those in the majority middle area dont have a chance any more.

 

[Llamaman]

1. Magically fix the housing market so property is affordable again
2. Massively increase wages so people can afford property again
...1 & 2 are both identical and impossible.

You can achieve (1) without (2) by building a lot more houses. Supply and demand.

 

[Mr Bump]

haha what complete and utter rubbish ...Not many have a choice that early..its down to parents... people can rise from a poor education and make something of themselves if they want ..

yes they can and they do, children have been transforming into parents for decades but still they fail?
scrap benefits, start up the workhouses.

 

[nilagin]

What can I say? I'm not a economics expert......

My belief is that people in this country are wedded to the idea of owning the house they live in. An Englishman's home and all that. For many this is becoming unaffordable. Right now "we" (basically the government but under pressure from a bunch of people) are bending over backwards to help people who can't afford to to buy their houses. If they can't afford them, then there's a problem here. Either we need to carry on helping these people or (more likely) we get bored of doing that and help a whole different bunch of people to buy even more houses. The first group end up largely in more financial trouble than they started.

I really think it's worth looking at alternatives. And these seem to be

1. Magically fix the housing market so property is affordable again
2. Massively increase wages so people can afford property again
3. Accept that it's not a good idea to own property and let people be happy renting. And yes, I know that looks awfully like reinventing that council house scheme that Mrs Thatcher was dead set against.

I can't off hand think of any others. And 1 & 2 are both identical and impossible. So my suggestion is to stop spending huge sums of money helping people to do stuff that is bad for others and may be bad for them and have another think about it.

Or you could do what my parents, my sister and I did and not leave home until you can afford it. It's worked for generations and works in other countries too. Too many free loaders getting pregnant and demanding to be housed. Make them stay with the parents instead of inflicting them financially on the rest of us. That should help solve housing issues.

 

[Mr Bump]

Or you could do what my parents, my sister and I did and not leave home until you can afford it. It's worked for generations and works in other countries too. Too many free loaders getting pregnant and demanding to be housed. Make them stay with the parents instead of inflicting them financially on the rest of us. That should help solve housing issues.

absolutely spot on !!!

 

[Llamaman]

Shortage of houses is piffle put out by developers and bolstered by the Government who are in the building industry's pocket

So, you don't believe in supply and demand? How then do you explain the incredible increase in the cost of housing in the UK, which has far outstripped inflation?

 

[Alastair]

All of the above drives us to the crux of the problem though, education. In this day and age we still have acres of dross coming out of school thick as pig sh*t.
I have quite a few friends with kids and all of there kids have been encouraged to seek further education and are doing great.

Regardless of that, we still have essential services that society has defined as being less worthy and have become low paid by default. They are principally around social care of children, the elderly, the unwell and the disabled,

And we keep creating more, we've invented the positions of "care assistant" and "teaching assistant" because nurses and teachers weren't cheap enough. Then there are the cleaners, caterers, the people that process the food we eat and the clothes we wear. Retail is notoriously poor paid. And the accounts clerk that makes the wages payment for the skilled machinist is typically on 30-40% the hourly rate that he is on - and the business needs both of them to function.

You can't educate a society of the need for the professions that are currently regarded as low paid.

But maybe you can educate a society to attribute a decent base value to everyone's work and the hours they spend doing it, regardless of what that work is. This is the purpose of a minimum wage, to set a basic minimum reward for the working time of everyone in society.

 

[nilagin]

So, you don't believe in supply and demand? How then do you explain the incredible increase in the cost of housing in the UK, which has far outstripped inflation?

Interest rates are low. People with money to invest buy houses. Prices rise.

 

[Llamaman]

Interest rates are low. People with money to invest buy houses. Prices rise.

Exactly. An increase in demand (people wanting to buy houses) without an increase of supply (houses for sale) = increase in prices.

Were you trying to disagree with me or illustrate my point? It's not clear from your post.

 

[JonathanRyan]

You can achieve (1) without (2) by building a lot more houses. Supply and demand.

That's true. I suspect economists would start muttering about inelastic supply though

 

[nilagin]

And we keep creating more, we've invented the positions of "care assistant" and "teaching assistant" because nurses and teachers weren't cheap enough.

But assistants aren't as qualified and are only there to assist as the name implies. It would be false economy to employ a fully skilled worker as an assistant and pay them the skilled rate. At the end of the day it provides jobs for lesser skilled people. Can't vouch for care assistants, but teaching assistants earn more than minimum wage anyway.

 

[nilagin]

Exactly. An increase in demand (people wanting to buy houses) without an increase of supply (houses for sale) = increase in prices.

Were you trying to disagree with me or illustrate my point? It's not clear from your post.

Just giving a reason for the increase in prices. It's not so much a case of a shortage as people with money to invest get there first.

 

[ShawWellPete]

I think Jonathan has some pretty valid points. The UK has an obsession with home ownership which is not reflected in many other countries. However it has rewarded people who invested in their homes as asset inflation pushed prices higher while easier monetary policy kept borrowing rates low and lowered the cost of the leverage.

The problem is that it is easy to get complacent about the risk associated with property. In the early 90's it was possible to buy a three bedroom flat in Islington for £135,000. At the time, the mortgage rate was around 7% (with a bank base rate of 6%) and the rent would have been about 10% of the house value per year. At the time it would not have seemed the no brainer that it appears now with 20:20 hind sight. In September 92 Interest rates went from 10% up to 15% then back to 12% in a single day and the memories of this were still clear in people's minds. The price of property reflected the price of borrowing money to buy the house compared to renting it with a risk adjustment for the borrowing rates going higher.

Jump forward 20ish years and that same flat is worth about £800,000, the rental yield is about 3.5% and a buy to let mortgage on the flat would probably be around 3% although depending on an individual's situation it could be considerably more expensive or, in fact, cheaper. Economically not a massively different proposition from the early 90s with a rental yield that is slightly higher than the borrowing rate.

Anybody that has invested in property in the last 20 years with a mortgage has taken a large, leveraged, investment in interest rates which has massively paid off. They have taken that benefit free of any income or capital gains tax (buy to let investors excluded). I'm not saying this is a bad thing, I'm just pointing out the facts.

We have not had a rate move in the UK since 2009 and the last rate hike was in 2007. The interest rate market is still pretty complacent about rate hikes and if rates are not moving forever then owning rather than renting makes sense. However if interests rates return to anything like the levels they were between 1995 and 2005, then property has to either pretty significantly drop in price or rents have to massively increase way above inflation.

I would question that the risk/reward for buying a property with a large mortgage at the moment.

As for foreign ownership, I don't have a massive problem with overseas investors in the UK seeing opportunities that are not relevant to me (if they fear a depreciation of their own currency for example). This may seem like a bad thing if you are on the side watching property prices increase and wish you could afford to buy, but it may be a lifeline in liquidity when the market turns and buyers are not so easy to find.

 

[Llamaman]

It's not so much a case of a shortage as people with money to invest get there first.

If demand is greater than supply, then by definition you have a shortage.

 

[dejongj]

Cant believe where almost in agreement, almost



Unfortunately the true value for a business is one that maximises profit not one that pays a decent wage, not all businesses mind, but most.

I agree. However in order to deliver a quality product they'll require quality resources. The quality resource have a choice as to work or not for an employer that values them or not. If they weren't able to recruit staff, they'd have to change something in their offering.

 

[JonathanRyan]

In September 92 Interest rates went from 10% up to 15% then back to 12% in a single day and the memories of this were still clear in people's minds.

Yep, I was negotiating the purchase of my first flat at the time. I remember that day pretty clearly. Wasn't there talk of them going to 20%? I remember putting that number in Excel and deciding it was time to go to the pub.

 

[woof woof]

Maybe it doesn't really matter, what do others think?

Of course it matters who owns what. In the best possible scenario "we" would own as much as possible and reap the wealth and use it for whatever purpose we see fit. If someone else owns our stuff the chances are that they're doing it for their own benefit not ours and as such at some point wealth will flow away from us.

There's also the possibility that any decisions made may not be in our interest. This may not be the case with housing, I just don't know, but certainly in industry we've seen factories and businesses closing here rather than in the foreign owners home country for political reasons.

We in the UK have one of the most open markets in the world and we see foreign companies coming to the UK and buying stuff up when the reverse simply would not be allowed in foreign buyers own country. There isn't a world wide open market and there isn't a level playing field but how it is seems to be what we're stuck with as no government we've had in the UK in modern times seems to be interested in being as active in the home and overseas market as other governments seem to be.

 

[Cobra]

me! I have a large family and could never have afforded to buy a house as big as I live in.. a brand new 6 person (3 double bedrooms) house been in from new for last 25 yrs.. on a small street and not on an estate

I accept the fact that you may well have been able to get a larger house by renting than buying initially,
I've been in the same house for over 30 years, "almost new" when I moved in, granted it on an estate, but its pretty quiet.
It has 3 double bedrooms and a 4th which is actually my office.
Twas bought and paid for years ago, but if I was renting, I'd still be paying.
I know where I'd rather be.