Old Conservatives don't understand

[ellal]

Firstly, the cost to build is usually significantly less than the market value, sometimes less than half.
Secondly, right to buy has caps and those eligible will have had to qualify with points that are geared to the most needy

Only less than half if you ignore the land costs...

On the other hand if a council was able to build on land that it (i.e. the public) owns, then that would make sense in building council houses.

There are many reasons why they effectively can't do that, but mainly that they have to provide mandatory services which are not fully funded so are forced to sell off assets. In this case the land.

Plus developers are ripping off councils en masse, and in some cases maybe in collusion with...

As an example, I heard of a small development which had to include a few so called 'affordable' units.
After agreeing the developer came back and said they couldn't do it so it had to go before an independent tribunal.
The amount they needed to pay the council was about £800k.
A while later they came back and said all we can afford is £25k and this was accepted by the council.
So no 'affordable' units at all and a big win for the developers!

 

[motorbiking]

Not according to the industry

Revealed: The UK’s most profitable new build markets - Showhouse

% Revealed: The UK’s most profitable new build markets %

www.showhouse.co.uk

The research shows that on average across these major cities, it costs £139,238 to build a new home, while the average market value is currently £320,515. This is a positive difference of 130%, for developers.

The most profitable market for new-build homes analysed by Warwick Estates is Edinburgh. It costs an estimated £126,400 to construct a new-build home in the Scottish capital while the average sale price is £375,870 – a 197% profit margin for developers.

London ranks second, with an estimated construction cost of £181,700, while the average new-build home sells for £533,642. A 194% profit margin for developers.

The third most profitable new-build market was Bristol (137%), followed by Leeds (133%), Birmingham (107%), Newcastle (101%) and Manchester (85%).

Glasgow ranked bottom of the table, although, with an average construction cost of £139,238 and an average new-build value of £320,525, the city is still home to a 68% profit margin.

maybe the councils are just cr*p at their jobs?

 

[motorbiking]

So lets run those numbers....
I am a council and want to build a house for £139,238 - it is worth £320,515 I have a tenant for 5 years. I rent to him at a discount £700+index p/m. Assuming my property grows 3% a year. It is now worth £382,387. My tenant exercises his right to buy. Assuming CPI is similar to my capital grown he is entitled to a discount £111,290 (capped). - So I can easily afford to build a new one having made just under £176,454k, profit. Allowing for inflation it now costs me £156,713 to replace my sold house. Looks like I can build another too.

 

[JohnD]

Then lets look at this "renters paying the mortgage" claim
take a £245k flat, with a £950-1100 a month rent
with a 10k deposit, the monthly mortgage is around £1,500 on top of that I have maintenance, ground rent, building insurance, landlords insurance and any costs for repairs. Thats another £200 per month.

Explain how the tenant is paying the mortgage?

That's an interesting fantasy.

You claim you bought this flat for £245k.

When was that, and what is its current value?

What do you estimate its value will be when the mortgage is paid off?

What do you call a person who claims he went into business in order to lose money?

A liar? Or a fool? Or both?

 

[aveatry]

In any case with BTL NO ONE is paying the mortgage.

 

[motorbiking]

Mortgage to BtL landlord are getting out of the market because they cannot make the numbers work.. Frankly they shouldn't even expect to make a return with zero capital down.

As of 2023, the current average rental yield in the UK is 4.75%. That's Gross. Mortgage is gonna cost you 6-7%

 

[securespark]

It seemed to me that MCC were more than happy to sell housing stock. The houses needed new roofs and rewiring at a minimum and they didn't relish the thought of doing that to each and every house.

 

[motorbiking]

That's an interesting fantasy.

You claim you bought this flat for £245k.

When was that, and what is its current value?

What do you estimate its value will be when the mortgage is paid off?

What do you call a person who claims he went into business in order to lose money?

A liar? Or a fool? Or both?

If one of your friends had the idea of getting a bank loan to invest in the stock market "to make money" what would you tell him?

 

[JohnD]

That's an interesting fantasy.

You claim you bought this flat for £245k.

When was that, and what is its current value?

What do you estimate its value will be when the mortgage is paid off?

What do you call a person who claims he went into business in order to lose money?

A liar? Or a fool? Or both?

Always nice to see motorbiking refusing to answer.

I remember he never admitted to making up his "press release" story.

 

[carmanmemoranda]

except I did - but you ignored it https://www.diynot.com/diy/threads/old-conservatives-dont-understand.624705/post-5668904

Except that doesn't explain why.

Either tenants have a right to buy at a reduced price (after qualifying points) from their landlord, or they don't.

The type of landlord doesn't matter

 

[JohnD]

Except that doesn't explain why.

Either tenants have a right to buy at a reduced price (after qualifying points) from their landlord, or they don't.

The type of landlord doesn't matter

It does to motorbiking. He divides them into the ones he likes, and the ones he doesn't. Opposite rules apply.

 

[carmanmemoranda]

So lets run those numbers....
I am a council and want to build a house for £139,238 - it is worth £320,515 I have a tenant for 5 years. I rent to him at a discount £700+index p/m. Assuming my property grows 3% a year. It is now worth £382,387. My tenant exercises his right to buy. Assuming CPI is similar to my capital grown he is entitled to a discount £111,290 (capped). - So I can easily afford to build a new one having made just under £176,454k, profit. Allowing for inflation it now costs me £156,713 to replace my sold house. Looks like I can build another too.

So you as a private landlord can do exactly the same.

 

[SimonH2]

Private landlords building more houses?
I'm not saying it doesn't happen, but not at any scale worth a dry w@nk, nationally.

I can't speak for numbers, but people have done studies in the past - and no, at the moment I c.b.a. to go and find links. Apparently BTL landlords do make a significant impact.
When a developer builds a batch of houses, they have the up front costs of buying the land, the materials, the labour to put them up, and eventually they get to sell some houses and start to recoup their outlay. Of particular value are those buyers with the cash to buy off plan - i.e. put down a significant chunk of money up front and wait for the house to be built. I've seen reports that say these buyers can make the difference between a development going ahead or not being financially viable.
And who might have that sort of cash available ? Well your typical owner occupier doesn't as they have their assets tied up in the house they currently live in. However, a portfolio landlord is likely to be able to borrow against their existing properties to pay the deposit. And so while not directly building a huge number, they can enable a larger number of houses to be built. On a par with the council house building in the middle of last century - probably not; but a significant number at least.

 

[gas112]

So you as a private landlord can do exactly the same.

councils already own the land and have vast stocks of it , Private landlord doesnt

 

[carmanmemoranda]

councils already own the land and have vast stocks of it , Private landlord doesnt

His figures show he can afford to buy some.

Councils may have the land, but they don't have the money. Its going into the pockets of the private landlords.

Same rules should apply to all landlords