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Comment by awjr | Hacker News Reader

I'm beginning to look at the housing market in the UK, a bit like the diamond market. Where the market is effectively controlled by 1-2 companies that ensure the release of a controlled quantity into the market at any one time.

Developers have a huge land bank upon which they could develop high density cheap accommodation using modern commercial property techniques however this would destroy their market. It's better to release 200k of 'stock' per year in the market to maintain high house prices.

It helps that the government has pretty much stripped the ability of councils to build houses, and more importantly, the sale of council houses (right to buy). Bring in the fact none of these houses have a 'no second home' clause means they are bought up as buy to let facilitated by a change in banking regulation in 1996 that allowed buy to let mortgages.

So yeah, we have a housing stock problem. Start thinking about it like the diamond business and the similarities are quite scary.

View on HN

There's an easy solution to the developer land-banking problem: levy a tax on the unimproved value of land.

Most taxes have some sort of efficiency cost (e.g. income tax means people work less hours than they otherwise would have). Recent modelling by the Australian Treasury suggests that a LVT (set at a sensible rate) actually has a negative efficiency cost: that is, it increases economic efficiency, resulting in higher levels of economic output.

Modelling: http://i.imgur.com/NxWo7DP.png

EDIT: and just for some general background - https://en.wikipedia.org/wiki/Georgism

If you're looking for a new house in the UK, then you're going to get ripped off. Poor quality construction, too many tiny rooms, no outside space, design deficiencies which mean the house is unlikely to last 30 years without major reconstruction, an insurance policy that's not worth the paper its written on, an emerging scandal in leasehold contracts.

Buy an old house, preferably a Victorian terraced house or a solidly constructed 1930s-1960s council house.

New build houses in the UK all seem to have those crazy American-style hollow walls - that's the worst thing about them.

Also similar to American houses, they now are all built around wooden frames. That's cheap and easy (the frames are made in a factory and just screwed together on site), but in a wet and windy island it's a very bad idea. Any significant roofing leak which isn't fixed immediately will destroy the house, and helpfully these wooden framed houses are dressed in fake brick and plastic cladding which cover up evidence of leaks.

Having lived in American houses for about 30 years now, leaking isn't an issue if you have a good roof that is maintained. I live in the north, an even worse than rain we get lots of snow that leads to "ice dams" forming on roofs. Even with that we don't have problems with leaking.

Absolutely, if you have a good roof which is maintained, not the cheapest possible roof which goes unmaintained because naive buyers think that because it's a new house with an "insurance" policy they will never need to maintain anything.

So the problem isn't so much the roofs but rather a lack of education and informed buyers.

The problem is use of softwood timber frames (because: cheap) in a very wet country, adding the cheapest possible roof, then cladding the whole lot so you cannot see any leaks or other damage happening. Then selling the resulting tiny flat to a first time buyer who doesn't know any better for an average of £232K (2016 figure). IoW a systematic failure at all stages.

Knowing family in N.E. where it rains, and snows quite a bit and remains damp for most of the year (ponds) the construction type doesn't seem to be deficient in that sense. They are however, not the same construction as older house from 1800s, early 1900s --but those too have their issues with very irregular construction. Things which would not be allowed today (narrow staircases, irregular architecture and of course, no accommodation for modern plumbing or electricity).

I've pondered where you even start today if you want to build an 1800's style "built to last" home that ignores cost, and focuses both on longevity and ease of maintenance.

With some modern design concepts (e.g. leaving plenty of plenum for unanticipated future cabling/plumbing needs) I think you could come up with a very pleasant place to live, just at probably quadruple the price.

Is anyone building stuff like this today? Or would this have to be some extremely custom stuff you need to research and act as a contractor managing a bunch of subcontractors?

> I've pondered where you even start today if you want to build an 1800's style "built to last" home...

> Is anyone building stuff like this today?

can it even be done while satisfying modern building codes and energy efficiency requirements?

Post and beam construction is the way to go for that type of house. Cost is about 1.75x the average home.

They are built all of the time. Invest in good windows, metal roof, and good drainage and the house will be around 200 years from now.

The farmers I worked for as a teenager revovated their Dutch built barn (ca. 1660) into a home. The secret is keeping the water out.

The ice dams are due to poor air sealing and attic insulation. If you fix those, you won't get ice dams anymore (and your utility bills will go down!)

http://structuretech1.com/ice-dams-2/

> Also similar to American houses, they now are all built around wooden frames. That's cheap and easy (the frames are made in a factory and just screwed together on site), but in a wet and windy island it's a very bad idea. Any significant roofing leak which isn't fixed immediately will destroy the house, and helpfully these wooden framed houses are dressed in fake brick and plastic cladding which cover up evidence of leaks.

Nearly every one of these criticisms is a desirable feature of traditional Japanese architecture. Houses are assembled from standardized materials produced off-site and fitted together without nails (wood joinery). Many interior walls and some exterior walls are literally made of paper, in sliding wooden frames (exterior shoji almost always have sliding wooden covers that are deployed at night). Special attention is paid to the thatched or tiled roof.

Japan is a very wet place. In summer there are typhoons at least every week and it's miserably hot and humid. Traditional houses are perfectly adapted for this: when you need to you can slide open most of the walls and take advantage of every breeze. I believe that most of the wood is cedar, which is resistant to rot, and most of the structure is left visible (i.e. no plaster) so any problems are readily apparent.

Houses seem less adapted to winter, but people adapt by using deep baths, kotatsu, and quilted clothing to heat their bodies rather than the entire inside of the house.

Earthquakes are pretty common in Japan, one of the reason lighter materials are used. Traditional buildings are typically built on stone foundations. Structural posts are fitted with stone "feet" that are free to slide around on the foundation during earthquakes.

Japanese don't value permanence in architecture the way Europeans do -- even the Ise Jungu (shrine), a national monument, is rebuilt every N years -- yet in the area I lived (Nara prefecture) there were many traditional houses over a hundred years old. There is at least one wooden building at Horyuji (temple) that is ~1200 years old.

[Thanks to Dr. Lloyd Fulton for that class in traditional Japanese architecture at Waseda U. Miss you, sensei.]

>Japanese don't value permanence in architecture the way Europeans do...

That may be a big part of the explanation. It's fairly common for Japanese people to have the existing house torn down and rebuilt when they buy a property.

I didn't know traditional houses over a hundred years old existed in this country. The sole exception that have witnessed are western style building in Hakodate, however they are anything but traditional.

More importantly, when you speak about these throwable houses, are you sure that is a "desirable feature"?

Houses have been timber framed in the UK since the sixties. There is nothing wrong with timber frame houses, Bergen gets much more rain than most places in the UK and is still mostly timber houses. I've lived in a timber framed house clad in horizontal planks for the last thirties years in Norway (the house was built in 1952) and it's fine. Modern Norwegian houses are often made of kits of parts but that generally makes them better not worse.

It might be that the UK has more than its fair share of cowboy builders. It is not the building technique that is at fault but the execution of it.

As an American, how else do you build houses? Solid concrete? That seems a little ridiculous, especially for interior walls...

Not usually concrete in a domestic house, but solid red brick or stone blocks for the internal walls yes. Hollow walls like a kind of wood and plaster tent seems just as ridiculous to me. Solid walls keep the house cool or warm and stop noise.

New construction (at least in the north central US) is minimum 2"x6" studs in the exterior walls filled with fiberglass insulation and pretty significant blown fiberglass insulation in the roof. Most of the noise going between interior rooms is a result of the use of cheap, hollow doors; usage of solid oak doors minimizes sound travel between rooms. Additional noise-damping insulation can be installed between rooms if desired that effectively eliminate all sound travel between rooms.

I'd speculate that a well-build modern wood-and-sheetrock house is probably more energy efficient and quieter than an early 20th-century double- or triple-brick house.

Also, wood-and-sheetrock is a lot easier/cheaper to replace than brick when a tornado comes along and knocks the house down, which is possible in 75% of the US.

There are significant areas of the US where I suspect it's actually illegal to build an all-brick house (as opposed to just quite expensive).

The UK is basically tectonically stable, which means those brick houses aren't likely to collapse into a multi-ton pile of bricks when the mortar crumbles or cracks in an earthquake. The same cannot be said of many areas in the USA, and it only takes one earthquake every few decades to drive that point home.

Full brick :)

No, please no concrete for the walls. I have lived in an an apartment that had concrete walls in Bangalore and it's just terrible. Concrete amplifies both hot and cold weathers. So you are spending a ton of money on air-conditioning and heating as well. Admitted, in Bangalore you don't need heating but I can't imagine a concrete house in the northern hemisphere. Like others have stated, solid bricks, stones or even clay bricks are a better alternative. You still need to use cement but that's alright.

Concrete walls are rare in Bangalore. Cement bricks seem to be common these days.

Even until a few years back it was all clay bricks.

Agree with you. Full concrete homes are basically the furnace and freezer experience.

The thermal mass in construction is like adding inductors and capacitors to a circuit. It has to be tuned to the local climate. The best you can do with thermal mass alone is an interior that is always the local mean temperature (like in a cave).

So in a thermal wall, you should match the rate at which heat conducts through the wall to the thickness of the wall, such that it takes about (12 + 24n) hours for heat applied to the exterior of the wall to radiate from the interior of the wall, and vice versa. You're trying to eliminate the daily temperature variation, so that the heating or cooling load will be more stable.

Adding phase-change materials to the concrete mix would help, but for the most part, the traditional building method in the region has been tuned by trial and error. If you build an adobe house in New Mexico, you make the walls from local materials, with the same thickness as the traditional homes. Or you get an engineer to do the thermal calculations.

Most houses built in the US just stick to the building code, which is generally good enough to accommodate local weather conditions without breaking out the calculators.

Right. Writing code to estimate the optimum thickness was one of our homework problems in modeling and simulation class, back in the day. I expect running that sim on a PC would be trivial today, but back then it took a significant amount of time on a fast SPARCstation.

(the basic idea was to model the wall as extremely thin slices so the heat transfer between slices can be approximated easily. How thin? You kept making them thinner until the model stabilized).

The wall thickness we derived was very close to the wall thickness traditionally used by the indigenous people of the area. What are the odds? :-)

The 1920s ex-council house I live in is built from two layers of brick separated by a cavity (with metal ties between the layers, which are themselves a problem because they rust). Unbelievably even the internal walls are also all two layers of brick. All I know is that labour must have been very cheap in 1920.

The outer cavity is designed to stop water from crossing from the outside to the interior.

There is a fashion for filling the cavity with insulating materials, but that leads to problems because it can draw water between the layers.

My 1959 red brick construction house in Tucson, Arizona is built the exact same way, but for heat control in the summer.

I also own a rental house that is 100 years old made of 14" thick mud adobe walls, including the interior walls! Also done for temperature control.

Bricks, in the majority of the world for the last thousand years. Making interior wall with plaster or wood is illegal in some european countries.

Bricks have very low r-value meaning that you pay a lot of money to heat/cool them. Bricks is a bad choice for construction anywhere where indoor climate control is an issue.

American construction is strong enough to last for a few hundred years if you maintain it. While it isn't passive house efficient it is efficient (and it isn't clear that a passive house is even possible in our climate - many of them make other compromises which means they rot out in a few years).

Wait, what?

How can you know about r-values but not that every modern house built has cavity walls that can be/are insulated?[1]

Even hundred-year old houses can be insulated by DIY drylining. You'll lose about 10cm of floor space though. Sometimes there's even some government grants available for this[2]

[1]http://www.residentialenergydynamics.com/portals/0/Resources...

[2]http://i.telegraph.co.uk/multimedia/archive/02041/jeff-howel...

I'm biased to US construction methods of course. Note that while bricks are themselves of a worse r-value than wood, but wood isn't actually a great r-value either.

Note that bricks are not a strong as wood under tension. They do well under compression, but that is not all the loads to account for. Bricks are used in cities and commercial construction primarily because they do not burn and so you can use them as a safety barrier.

Possibly the difference he's noting is using wooden studs vs. metal studs? which definitely feel more hollow.

No, literally all the internal walls in my house are built from two solid layers of red bricks. There's no wood or metal involved. This is normal in most of the west outside America.

Oh, ya not sure if I've ever even seen that. I live in an old (by American standards) 1950's apartment building with plaster walls, but pretty sure still hollow underneath.

Seems like that would make it harder to frame a new subdivision in under a week.

Yes you can't slice-and-dice it like I'm sure you can wood. But they last forever. Houses here are routinely hundreds of years old where in the US the approach seems to be to knock down the wooden houses and build them again before they get that old.

> But they last forever.

At least until the next earthquake, which is a real possibility in much of the US. Light frame houses survive earthquakes pretty well. The brick chimneys on them don't.

> Houses here are routinely hundreds of years old where in the US the approach seems to be to knock down the wooden houses and build them again before they get that old.

Well, yes and no. The US isn't that old. There weren't a lot of homes here hundreds of years ago so obviously there aren't a lot of 200-year old homes now. But yes, there's also a fair bit of demolishing of 50-year old homes.

I live in a four-story condo building that's about 100 years old and entirely wood-framed, all the way down to massive wood beams in the basement that anchor the entire place to the foundation. There's been some moderate renovations of exterior walls because of water damage before, but it's worth the hassles of that kind of thing to know that if an earthquake comes along the building will ride it out without any serious damage.

> There's been some moderate renovations of exterior walls because of water damage before

Yeah, I don't understand the comments in this thread that talk about water damage. Do people in Europe just not bother maintaining their roofs? You can get hidden water damage from a leak into a hollow wall, but it's really not that common. Typically there's visible water staining and severe damage only comes from willfully ignoring that signs.

I know plenty of people with houses over 100 years old in the US, so it's not like the houses aren't lasting that long. Naturally, it's not as large of a portion of the houses as in the UK because the US's population has more than 200% in the past 100 years while the UK's only went up by 50%, so the US needed to do a lot more construction since then.

Brick is very dangerous in an earthquake.

This. You wouldn't catch me in a brick house in Northern California.

Or even in the midwest.

https://en.wikipedia.org/wiki/New_Madrid_Seismic_Zone

It's going to be an ugly, ugly thing if another major quake hits there. The last time the region was sparsely populated. Now there are cities all over the place and and the seismic codes are far more lax than they are in California (if said codes even exist).

Are you talking about using sheetrock instead of plaster, or something else?

Any kind of plaster with just empty space and beams made just out of wood behind them.

New houses in the UK are almost universally a joke(and I've been looking at some recently) - 4-5 bedroom homes with bedrooms so laughably small that they don't even fit a double size bed. So effectively, you take one room for the bedroom, one for a wardrobe, and one for a desk. Idiotic. And like others have mentioned - paper thin walls.

What do people such as yourself have against buy-to-let? It doesn't change the supply level (unless for some reason you need to buy and can't rent). I always thought buy-to-let seemed rather nice and progressive - a good way for ordinary people with a little spare money to invest and build up money for their retirement while their asset still benefits society by being maintained and housing someone. That seems like a great example of sensible British middle-class aspiration.

In the typical UK buy-to-let model, the renter pays more than the landlord's mortgage in rent.

The only thing separating a buy-to-let landlord and their tenants is mortgage availability (i.e. Existing wealth and income multiples)

   the renter pays more than

And why is this a problem? The landlord takes on administrative hassle, and -- more importantly -- risk, for example

- Can't rent out the property.

- Property needs to undergo repair.

- Tenants don't pay rent, destroy the property.

- Liquidity risk: property is not as easy to sell as many other goods, in case of emergency.

All of the above happen with a certain probability and that needs to be priced in. The last one is rarely a problem but the others are major considerations. And I have not even mentioned transaction costs for buying/selling a property, not to mention taxation. For these reasons, property typically doesn't have a good ROI, vis-a-vis e.g. investing in shares. A lot of property investors are naive, and would be better off investing in a passive index fund. So in many cases tenants get a good deal. In my experience buy-to-let is lucrative primarily when

- Landlord has multiple properties, Economies of scale kicks in.

- Landlord has relevant skills (plumber, electrician, or ... tax expert, lawyer) so he can get some jobs that need to be done substantially below market price.

- Is physically close to the property, so can visit/check easily.

- Has unusually low cost of capital (lower than bank-based mortgages).

Ideally more than one of those.

   only thing separating

The landlord has already proven financial stability, while the tenant typically hasn't. Many tenants tend to be young, e.g. students who are by-and-large not yet ready to take on the major responsibility of buying and maintaining a house. My heuristic for when you are ready to buy a property: > 10 years in a stable job, enough savings to put up 1/3 of the price up-front. After-tax income high enough so the mortgage can easily be paid. Good timing for a mortgage when you pay it off a bit before you stop earning (i.e. before retirement). Given a 25 year payment schedule and retirement at 65, age 35-40 would be a great time to get a mortage.

Plenty of countries do quite well with mostly-rent based system. German Chancellor Merkel rents, for example.

Those with a good financial record thus get to crowd out the market and push up prices for those without the record (and mortgage).

>>For these reasons, property typically doesn't have a good ROI, vis-a-vis e.g. investing in shares.

Have you seen the UK property market recently?

This seems a bizarre assertion given market patterns over the last 15-20 years.

    crowd out the market

Which market? To a pretty good approximation, most people live in exactly one property. If they own more, they rent out the surplus. (Please don't What-About-XYZ me with exceptional cases like billionaires who own multiple properties and let them stand empty. Yes, that happens, but is marginal.) So the owner/renter fraction doesn't as such directly change the amount of available property.

    push up prices

Rental prices are largely determined by two three things: (1) salary levels of the tenants, (2) what fraction of their salary tenants are willing to spend on their dwelling, and (3) supply/demand of housing. I doubt (1, 2) have changed all that much. The main problem in London is (3) because a lot more people moved to London that new housing was built.

Neither have all that much to do with buying vs renting.

>> So the owner/renter fraction doesn't as such directly change the amount of available property.

It changes the prices of properties. When existing owners have much easier access to cheap credit than potential owner-occupiers, they compete with these folks and push prices up. There is more demand to purchase. Not more demand for properties to live in, but more demand to purchase. First time and young buyers get priced out.

>> Rental prices

I wasn't talking about rental prices, I was talking about purchase prices.

The result is that instead of younger people paying a mortgage and gaining an asset over time, they are doing that for someone else.

   young buyers get priced out

It's good that younger people can't easily buy property. They have a substantially higher risk of financial irresponsibility. As dwellings are pretty much the biggest financial investment we make in our lifetimes, care is warrented. Dwellings should be purchased only by those who are very likely to be able to afford this -- even in the event of unplanned and costly life events like illness, children, the dwelling needing costly and unexpected repair etc. That's why stable job with good career prospects, married with children, being able to afford substantial deposit, being older, are good heuristics for who should by property.

Giving a mortgage to everyone encourages financial rectlessness, which lead to the financial crisis of 2007–2008.

>> It's good that younger people can't easily buy property.

No, it's not, and it's not even to the owner-occupier's benefit that the market inflates so much.

>> Dwellings should be purchased only by those who are very likely to be able to afford this

Young people can afford this, who the hell do you think is paying the buy-to-let mortgage crowd's mortgage? The fecking fairies?

>> That's why stable job with good career prospects, married with children, being able to afford substantial deposit, being older, are good heuristics for who should by property.

They're good heuristics for who should already have property, and already have a substantial sum paid down. Something unachievable if people cannot get started in their 20s.

>> Giving a mortgage to everyone encourages financial rectlessness, which lead to the financial crisis of 2007–2008.

I'm not advocating giving a mortgage to everyone, I'm advocating giving out fewer mortgages to those who wish to buy more homes - they're effectively leveraging cheap mortgages to get someone else to buy them a huge asset, and at the same time making that asset further out of reach for the person who is really paying for it.

   who the hell do you think is paying

Typically a collection of ever changing tenants, few of whom are in the position to manage, or even interested in managing a long-term investment like a dwelling.

   should already have property

Why? What's wrong with renting? As I said in a previous post, Chancellor Merkel in Germany rents.

   I'm advocating giving out fewer mortgages

I'm advocating building enough dwellings, not doctoring with symptoms like restriction on mortgages, rent control, draconian building codes, zoning laws and the like. I find it supremely baffling that the obvious solution seems to be deeply unpopular.

>> Typically a collection of ever changing tenants, few of whom are in the position to manage, or even interested in managing a long-term investment like a dwelling

This is less frequently the case in the UK, as the inflated market keeps people renting for longer.

>> Why? What's wrong with renting?

A lot, if that's not where you want to be, and have seen the market mutate in the space of a few years from somewhere that was inclusive for most people earning a decent wage, to something reserved for few, or those who already have property.

>> I'm advocating building enough dwellings,

Good luck with that. Restriction of mortgage is not "doctoring the symptoms" when easing up on certain mortgage categories has been a major cause.

I haven't mentioned those other methods, I have no opinion on them.

    keeps people renting for longer.

That's perfectly compatible with moving a lot.

   A lot,

This has nothing to do with renting vs owning, or even with second mortgages, but is primarily because supply of dwellings did not keep up with demand. The UK, especially the greater London area, has seen a lot of immigration, and on top of that there is the ongoing reduction in family size. So more and more dwellings are needed, but supply has not kept up.

   Restriction of mortgage is not 
   "doctoring the symptoms"

Yes it is, because it neither reduces demand for, nor increases supply of dwellings.

>> That's perfectly compatible with moving a lot.

So what? People who don't want to move a lot find they must keep paying someone else's mortgage as they can't get their own.

>> Yes it is, because it neither reduces demand for, nor increases supply of dwellings.

If buying up housing is made, by whatever means, financially less attractive to those who already own homes then of course this tackles demand for purchases and allows more people who are forced into renting the ability to buy their own home.

   as they can't get their own.

As I said, it's important that not everybody who might be able to afford monthly rates gets a mortgage, for otherwise you'd get too many defaults, leading to financial instability. And very few tenants rent for the whole duration (typically 25-30 years) of a mortgage.

Finally nobody needs to own their dwelling -- renting is fine. I rented most of my life, and so did German chancellor Merkel.

   someone else's mortgage

As I've pointed in previous posts, that's fine, for they provide a valuable service, that can be summarised as a "risk transfer". That needs compensation.

Finally you seem to think that there is a difference between a first and second mortgage: the first being given by magic first-mortgage-fairies out of the goodness of the lender's heart and the second out of sheer greed to oppress people like you. Well, I recommend a quick calculation how much you overpay on the property if you get a first mortgage, vis-a-vis a cash purchase.

   forced into renting the ability

For some bizarre reason you (like many others I have discussed this subject with) are unwilling to admit that the price of dwellings whether paid by rent or mortgage repayment, is primarily (indeed almost exclusively) determined by supply/demand; the solution to high prices is to build more. It's almost like there is some deep-seated investment in the status-quo that is needed to stabilise your world-view. I recommend to let go of your deep seated resentment and instead learn about the social function of credit.

> Dwellings should be purchased only by those who are very likely to be able to afford this -- even in the event of unplanned and costly life events like illness, children, the dwelling needing costly and unexpected repair etc.

Highly leveraged buy-to-let empires are, on the other hand, the paragon of financial sensibility?

Much as private landlords are famed for keeping their properties in good repair?

   Highly leveraged buy-to-let empires

No, au contraire, house-acquisition should always come with a substantial deposit.

> - Can't rent out the property.

> - Property needs to undergo repair.

> - Tenants don't pay rent, destroy the property.

> - Liquidity risk: property is not as easy to sell as many other goods, in case of emergency.

I think only the last one is a real problem. If you buy your own house, then you are your own tenant and your interests align with yourself. You won't destroy the property or leave it empty.

Liquidity is going to be a real risk in the coming negative equity / house price crash however. People forget that not only do house prices go down, but houses become difficult to sell at any acceptable price.

    buy your own house

But we were discussing buy-to-let? The question was: is buy-to-let cruel exploitation of the tenant or not.

I thought we were discussing the difference between renting a house from a BTL landlord vs buying your own house.

> And why is this a problem?

The one huge issue is that the (richer) buyer costs are normally subsidized by the (poorer) renter by government transfers and regulations that force prices up.

Remove the government mangling the sector, and I fully agree, there's no problem at all.

Because it can lead to a market where the price of the goods is much higher, meaning a greater portion of their wealth has to go to housing than would otherwise (on top of receiving no ownership stake)

To illustrate, let's say there are no buy-to-let landlords. Let's also assume the majority have a strong preference to purchase a property over renting (a potentially "better") one (which they do in the UK).

Currently (esp. with the presence of cheap credit), individuals are constrained not by their monthly outgoings (as they would be with rent) but with the amount of leverage the bank will permit them (i.e. their existing capital).

This means the market stabilises at a lower monthly ongoing than it would do if there were no capital constraints.

Thus, once buy-to-let landlords with significantly more capital participate, individuals can be "priced" out of the purchase market they would otherwise participate in.

They are instead forced to participate in a rental market that has no capital requirements. Thus, the prices are no longer constrained and can rise.

This can quite reasonably be seen as an unpleasant situation for everyone currently with limited capital - as they are further prevented from obtaining more capital, by both having less disposable income and not receiving the capital they would have from ownership of their property.

What you are arguing for is zero deposit mortgages.

They are a terrible idea, because they encourage irresponsible risk taking in two ways:

- People who are not stable enough to be able to carry a mortgage until it's paid off suddenly can buy dwellings.

- It fuels speculation: just get a dwelling in a desirable area, wait for a year and flip it.

Indeed this was what caused the financial crisis of 2007–2008. Do you want to go back to this?

Asking for ~ 1/3 of the dwelling's price as deposit is a good (and time-tested) heuristic for filtering out those who have a substantially high probability of being financially irresponsible.

   prevented from obtaining more capital

Typically owners of buy-to-let do not acquire more capital while paying off the property. They only do so after the 2nd mortgage is paid off, which is typially when they retire.

In the Netherlands zero deposit mortgages for your primary home are the default.

While there have been shenanigans in the past, up to so called 'career mortgages', where the mortgage amount was based on your career potential, nowadays the lending norms are pretty strict.

I guess it helps there is a 2% tax on the total sum when buying a house, so flipping becomes even less attractive. At least I've never heard anyone about flipping, that is a foreign concept to us.

According to a graph[0] I found housing prices dropped 15-25% between 2008 and 2013. But I feel this was caused by the financial crisis, not the other way around. Yes, a lot of mortgages went under water, but there is simple fix for that: don't move.

Requiring 1/3 down payment seems like it wouldn't allow anyone to buy a home. That would basically require you to 'pay' the mortgage twice, once as rent and once as savings, for about 10 years. Using the average income of €35K, which leads to a max mortgage of €154K, you suggest not living in a home worth over €77K?? I'm not even sure those exist.

[0] https://www.berekenhet.nl/nieuws/prijsontwikkeling-huizenpri... (the lines are different types of homes)

A: It's always a bad deal for the renter.

As a US Midwest renter, it's exactly the same over here, sadly.

If you look at the issue of 'buy to let' you will see a significant upshift in housing values that started in 1996. http://www.housepricecrash.co.uk/ The change that happened there was enabling buy to let mortgages. We're now in situation where upwards of 40% of council houses are buy-to-let owned.

In fact you now have a situation where people hitting retirement, buy houses to let to ensure good income.

We are now in a situation where generation X will almost not be buying a home for until their late 30s.

It's go so bad that St Ives introduced a 'no second homes' clause to all new builds.

I actually think there is nothing wrong with buy to let however you need strong rights for tenants as well as rent contol. Something Germany has successfully done and people are quite happy not owning houses and renting for their life knowing they have strong rights to stay with safe rent levels.

   generation X will almost not be 
   buying a home for until their late 30s.

Why is that a problem? Assuming the usual repayment schedule of 25-30 years, that means the houses are paid off before retirement, i.e. before they stop having an income. That's exactly how it should be. Most people are too unstable (in many senses of the work) in their 20s to take on a major responsibility like a house.

   rent contol.

This leads to massive misallocation of resources such as illegally subletting at market price.

It's quite simple in fact: supply and demand of dwellings needs to be in synch. If you have immigration and/or reduction in family size, you need to build more. For various reasons the obvious solution is typically rejected ...

   Germany

I'd argue that the reason is different, namely that big organisations such as trade unions and (the german version of) pension funds have traditionally provided rental homes at large scale, which kept supply and demand in check. Cf sozialer Wohnungsbau [1].

[1] https://de.wikipedia.org/wiki/Sozialer_Wohnungsbau

> I actually think there is nothing wrong with buy to let however you need strong rights for tenants as well as rent contol. Something Germany has successfully done and people are quite happy not owning houses and renting for their life knowing they have strong rights to stay with safe rent levels.

Germany only has "soft" rent controls. Their purpose is not to actually keep rents low, but to slow their increase so the market has time to react by building new homes. The rent index that municipalities maintain for that purpose also helps with keeping rents transparent, but that's more of a side benefit.

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