There are a number of problems associated with 'Buy to Let' property investments which cause economic problems.
1...There is usually no counterbalance to counter the return which is being made on the investment. This means there is little given back to the economy which is providing the return for the investor.
Usually, buy to let properties are existing properties, often many decades old. For this reason little or no employment is generated by this so called 'business' investment. To make an investment- i.e To put in an amount of money in purely for the purpose of getting more out, unless you are creating some sort of employment, is not sustainable within an economy. The investor is demanding more from the economy without giving anything back to the economy. This applies to any business or investment which does not create any or minimal employment. This is a very simple and very important economic fact. You can not take money out of the economy by any form of business or investment unless you are creating employment at the same time. Continuous investment in these negative businesses will damage the economy, increase living costs, create unemployment and eventually contribute to an economic crisis.
2...There are increasing costs mounting on the welfare system as a result of investments in homes by landlords.
The rising costs of home rent become the responsibility of the tax payer when the tenant is unable to work. This could be for various reasons such as illness, injury or disability, but most likely due to lack of available suitable employment. The conditions for unemployment can be created by a rise in living costs which has been contributed to by landlords demanding the highest possible rent for their property. Living costs are also a cost for businesses as it is businesses which pay most of our living costs in the form of wages. If landlords raise the rent to a level which is close to the tenants maximum affordability level, added to other increasing living costs (some of these related to other types of investment), the tenants may find themselves in a situation where they would be no worse off not working at all.
3...Pensioners get left stranded.
Another problem arises when the tenant reaches retirement age. Where a person does not own their own home, it is likely that the state will be paying the rent on the home from then on. If the landlords base their monthly rent on an employed persons income, it is inevitable that the tenant will not be able to afford the same level of payments after retirement. In years to come this will have a devastating affect on the economy. If landlords in the future are treated with preference above home buyers who want to buy some where to live (which is the situation today-2011- see elsewhere in Anti-Crisis Economics on how landlords have been dominating the housing market for some years),then they will be able to buy a growing proportion of homes in the future. The working population would become slaves, paying rent on their own property as well as future tax increases to cover the cost of a growing number of elderly people living in rented properties. The knock on effect will ripple through the economy. For people working now, but on a relatively low income, with other rising costs also added, with other rising costs also added, it is likely that many people will not be able to afford to work and cover the cost of their rented home in the future. It is also likely these people could be labelled lazy layabouts by politicians of the future.With the current government policies and banking practises, it is difficult to see how employers are going to be able to afford staff who are going to have to bare such a financial burden.
1...There is usually no counterbalance to counter the return which is being made on the investment. This means there is little given back to the economy which is providing the return for the investor.
Usually, buy to let properties are existing properties, often many decades old. For this reason little or no employment is generated by this so called 'business' investment. To make an investment- i.e To put in an amount of money in purely for the purpose of getting more out, unless you are creating some sort of employment, is not sustainable within an economy. The investor is demanding more from the economy without giving anything back to the economy. This applies to any business or investment which does not create any or minimal employment. This is a very simple and very important economic fact. You can not take money out of the economy by any form of business or investment unless you are creating employment at the same time. Continuous investment in these negative businesses will damage the economy, increase living costs, create unemployment and eventually contribute to an economic crisis.
2...There are increasing costs mounting on the welfare system as a result of investments in homes by landlords.
The rising costs of home rent become the responsibility of the tax payer when the tenant is unable to work. This could be for various reasons such as illness, injury or disability, but most likely due to lack of available suitable employment. The conditions for unemployment can be created by a rise in living costs which has been contributed to by landlords demanding the highest possible rent for their property. Living costs are also a cost for businesses as it is businesses which pay most of our living costs in the form of wages. If landlords raise the rent to a level which is close to the tenants maximum affordability level, added to other increasing living costs (some of these related to other types of investment), the tenants may find themselves in a situation where they would be no worse off not working at all.
3...Pensioners get left stranded.
Another problem arises when the tenant reaches retirement age. Where a person does not own their own home, it is likely that the state will be paying the rent on the home from then on. If the landlords base their monthly rent on an employed persons income, it is inevitable that the tenant will not be able to afford the same level of payments after retirement. In years to come this will have a devastating affect on the economy. If landlords in the future are treated with preference above home buyers who want to buy some where to live (which is the situation today-2011- see elsewhere in Anti-Crisis Economics on how landlords have been dominating the housing market for some years),then they will be able to buy a growing proportion of homes in the future. The working population would become slaves, paying rent on their own property as well as future tax increases to cover the cost of a growing number of elderly people living in rented properties. The knock on effect will ripple through the economy. For people working now, but on a relatively low income, with other rising costs also added, with other rising costs also added, it is likely that many people will not be able to afford to work and cover the cost of their rented home in the future. It is also likely these people could be labelled lazy layabouts by politicians of the future.With the current government policies and banking practises, it is difficult to see how employers are going to be able to afford staff who are going to have to bare such a financial burden.
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