[Drivingforfun]

No question really, just thought it could make an interesting topic?

I was reading the ad for a house for sale which happened to mention a potential rental value, which worked out at around 5.4% yield per year

Take off income tax which could be 40-45%++ if you have a job or other properties but even if just basic rate, the return is then 4.3% a year...Then obviously need to maintain and keep it insured & legal, brings it down to about 3-3.5% and that's without the risk of having no, or worse a bad, tenant

Putting aside other investments (stocks etc.) simply sticking the money in a savings account offers that return with zero risk, and zero work

I sympathise that for tenants the supply of property is super low and rents are high, but is that because there's no incentive to be a landlord?

My only thought is the situation is intentional to make buying easier, but most have the familiar issue of finding a deposit

Would I be onto something with an idea for a fund for investors with capital to put this into, which aspiring homeowners could borrow from to secure their mortgage deposit... So would-be landlords are profiting from the property market in a more (tax- & otherwise) efficient way without "hogging" properties & at the same time it's helping struggling people to buy their homes?

Surely there's a reason this hasn't been done before 🤔

[Beelzebub]

Originally Posted by Drivingforfun

Surely there's a reason this hasn't been done before 🤔

It has been done before. It was called a building society!

[Santa]

Yes - already started in 1775.

You looked at net income but failed to include capital appreciation.

[olduser]

Sometime ago I worked with a Swedish engineer for long hours, in the chit chat he told me he thought the English were mad for buying houses.
In Sweden most rented from the government, which he thought coped better with life's needs.

Leave home - small flat, become a couple - two roomed flat, marriage prospect of family - large flat or house, children leave home - back to flat or small house, and so on to death, should you change job - rent another house/flat near new job.

It works because the state can borrow to build cheaper than any company or private individual, so rent doe's not have to repay owners mortgage, he was fairly confident that the government broke even.

Whilst renting, no interest or capital repayments.
Rent is less dependant on inflation/interest, so no rapid changes.

Snags, the biggest one is the financial sector looses a good earner, boo who, all this (less rent) goes into the renters bank account.

When I got married Building society's would not lend unless you (the applicant) were to live in the house, you had to be a saver at the society, should you later want to rent it out, the society would have a board meeting to decide but getting permission to rent out was very rare.
Renting to family or an employee would help but it was still difficult.
I think the reasoning was, in the event of foreclosure, it would easy to eject the owner but more complicated if there was a tenant involved.

I am not sure you still do but back then, as part of the setup fee, you paid the Building societies premium on an insurance against the risk of you not re paying.
So in effect the money loaned you was never at risk.

I couldn't find a valid argument against his viewpoint.

And of course the readily available mortgages enabled house prices to rise.

And the winner is - - - - the finance sector, now there's a surprise!

[Rolebama]

What is now just Co-op started pretty much the same way, started as the London Cooperative Society and was run for the 'members'. Anybody could shop there, but if you were a member you would accrue dividends which you could take as goods. I remember taking the card to buy the extras for Christmas back in the 50s. Some supermarkets now run various Loyalty Card schemes but they are not the same.

[Beelzebub]

Originally Posted by Rolebama

What is now just Co-op started pretty much the same way, started as the London Cooperative Society and was run for the 'members'. .

Strange to relate, not everything originated in London. In the Co-op's case it began in Rochdale, which I believe is somewhere in the north of England.
See https://en.wikipedia.org/wiki/The_Co-operative_Group

[Rolebama]

@Beelzebub Please excuse me if my memory isn't what it once was, but I am reasonably certain that I remember the shop logos changing from LCS to CWS (Co-operative wholesale Society), in the late 50s or early 60s. My assumption is that this was when various co-operative societies merged?

[olduser]

It looks as though your memory is not that bad.😉

https://en.wikipedia.org/wiki/London...rative_Society