From The Conversation, February 1:
The housing prospects for young people in the UK were completely changed by the global financial crisis of 2007-09. While the government largely succeeded in rescuing the banks and the housing market, it created an environment where house prices remained high and mortgages were only available to those who could afford hefty deposits. As a result, many young people who might have got a foot on the property ladder were forced to keep renting.
While this has prompted much concern in recent years about the prospects for “generation rent”, the flipside is that it created an investment opportunity. To meet the demands of this demographic, property investors started putting billions of pounds into a new housing class known as build-to-rent (BTR).
To understand this shift, we’ve been researching the rise of these properties in one of the UK’s leading cities, Manchester. It demonstrates a change in the kinds of organisations that own UK homes, and some difficult implications for those who rent them.
The new property boom
The residential rental market used to be mainly made up of buy-to-lets, which are typically owned by small-scale landlords who have a relatively small number of properties in their portfolios. Build-to-rent, on the other hand, refers to large blocks of housing units owned by institutional investors such as pension or investment funds.This housing class has grown significantly over the past ten years: by the end of 2022, it accounted for over 240,000 units built or under construction in the UK. Property group Savills predicts that this will increase fivefold over the next decade.
These new corporate landlords were attracted by the fact that they could earn a high yield on their investment from rents (at least when interest rates were low). There were also valuable economies of scale in marketing, managing and maintaining multiple blocks of flats that were all in the same area.
London is the largest market for this kind of property in the UK, accounting for about 50% of completed BTR properties. But as our recent paper shows, its presence is growing in cities like Manchester. In the city regional centre, which includes Manchester city centre, Salford Quays, central Salford and the Pomona area of Trafford, out of 45,000 new housing units built between 2012 and 2020, 22,984 were BTR. That’s just short of one-fifth of the national total....
....MUCH MORE
Related (among dozens of posts), the intro to and outro from "Huge Human Inequality Study Hints Revolution is in Store for U.S.":
As we, and before us (way before us) Ben Franklin* have pointed out, the surest way to create a permanent underclass is to keep a population from getting on even the first rung of the wealth accumulation ladder.
In most cases this means real estate, access to which is limited by zoning laws and construction regulations constricting supply. Politicians working for their political masters/funders.
Another way to keep the populace from accumulating wealth is to keep the cost of daily expenses, food, rent, transportation, equal to or a bit above income so there is no accumulation of capital and preferably a slide into debt.
A third way to make the rich richer and the poor poorer is to pump enough money into the system to inflate asset prices, benefiting those who already own the assets and combined with the other factors, keep folks in a hand-to-mouth existence....The easiest way to create a dependent class is to price them out of the real estate markets.And June 2020:
"In countries fully settled…those who cannot get land must labor for others that have it; when laborers are plenty, their wages will be low; by low wages a family is supported with difficulty; this difficulty deters many from marriage, who therefore long continue servants and single...."In the United States The Land Ordinance of 1785 set the cost of land purchased from the government at $1.00 per acre in sections of 640 acres.
This price was raised to $2.00/acre in 1800 but purchase was paid for in four equal annual payments.
In 1820 the price of Federal lands was reduced to $1.25 per acre with payment in cash.
An alternate conveyance in the 1862 Homestead Act maintained the $1.25 price.
Compare the wages various craftsmen could command:
In 1785 a journeyman carpenter in New York City was paid $1.12 ½ per day....
Haves and Have Nots: The Real Real Estate State and Artificial Scarcity, Technology and Planning
And August 2020
"The Asset Economy" (or how to create an underclass)
