Re: Private market undermines social change
Buy-to-let should still have the same basic cost of capital. Sure, it's done on interest-only mortgages. But you still have to find the deposit, and if you want to pay off the mortgage and get out from under the interest payments, you've also got to earn enough to pay the principal. Obviously if house prices zoom up, then you're quids in - hooray! But if you're in a more stable area, that's not quite the case. And you're taking a risk on them going down - especially if you're not making the profits required to cover you in downturns, where selling is a loss-making option.
Add in maintenance, repairs, insurance, loss of earnings from gaps between tenancies etc.
Also, rent is decided by a market. So landlords will charge what they can get away with - i.e. what the market will bear. They'll then provide properties of the quality that they can afford at those prices, so as rents fall, so will either prices or quality of rental properties. As the alternative to renting is buying, the prices are likely to remain strongly linked.
Biting the hand that feeds IT
