Can We Compile A List Of Uk Property Myths ?

[Casual Observer]

Sorry if this one has been posed already, haven't got time to read thru all of the previous:

Myth: A 20% fall will only wipe out last year's 20% rise.

Fact: A 20% fall wipes out a 25% rise (and 33% wipes out a 50% rise!)

[Guest muttley]

If you have made money from property in the last 5 years then you are a "Property Expert".

[Guest Charlie The Tramp]

If you have made money from property in the last 5 years then you are a "Property Expert".

<{POST_SNAPBACK}>

I thank you young muttley, makes one feel so humble to receive such a compliment.

[Guest muttley]

I thank you young muttley, makes one feel so humble to receive such a compliment.

<{POST_SNAPBACK}>

Er..that's my nomination for "Property Myth" Charlie..

[Guest Charlie The Tramp]

Er..that's my nomination for "Property Myth" Charlie..

<{POST_SNAPBACK}>

Sorry.

I had better add my "Property Myth" or two actually.

1. Your property is your pension.

2. Buy aged 25 sell aged 65, and spend your remaining days living at the Ritz.

[Gen-X]

Not sure if it is counted as a myth,

A 20% increase in price followed by a 20% drop in price, you do not reach the original value.

For example a 20% increase on a start price of 100K

100 + (0.2*100) = 120K

20% decrease on 120K

120 – (0.2*120) = 96K

[John_99]

Myth - ]Britain is short of land

Reality - Britain has a land Surplus. [/b]

Contrary to popular belief, the UK has approximately only 7.1% of its land built on. The Urban plot of 4 million acres is only 6.6%. The UK actually has a surplus of land. Despite claims of concreting over the South East of England, only 7.1% is built on with the Home Counties being underpopulated. The North West of England is densest with 9.9% of the land built up.

SOME FACTS:

* The UK has 60 million acres of land in total. Approx 1 milions acres per million of population. Approx 1 acre per person.

* 70% of the land is owned by 1% of the population.

* Just 6,000 or so landowners -- mostly aristocrats, but also large institutions and the Crown -- own about 40 million acres, two thirds of the UK.

* Britain's top 20 landowning families have bought or inherited an area big enough to swallow up the entire counties of Kent, Essex and Bedfordshire, with more to spare.

* Big landowners measure their holdings by the square mile; the average Briton living in a privately owned property has to exist on 340 square yards.

* Each home pays £550/ann. on average in council tax while each landowning home receives £12,169/ann. in subsidies. The poor subsidising the super rich. In Ireland where land redistribution occurred, there is no council tax.

* A building plot, the land, now constitutes between half to two- thirds of the cost of a new house. In London land is off the scale.

* 60 million people live in 24 million "dwellings".

* These 24 million dwellings sit on approx 4.4 million acres (7.7% of the land).

* Of the 24 million dwellings, 11% owned by private landlords and 65% privately owned.

* 19 million privately owned homes, inc gardens, sit on 5.8% of the land.

* Average dwelling has 2.4 people in it.

* 77% of the population of 60 million (projected to be more in new census) live on only 5.8% of the land, about 3.5 million acres (total 60 million).

* Agriculture only accounts for 3% of the economy at most and holds 68% of the land.

* The overall agricultural subsidy is about £4.5 billion per year, up to £6

billion if BSE and Foot and Mouth is taken into account.

* Agriculture has a turnover is only £15 billion per annum, less than many companies.

* Agriculture is subsidsed to 40% if Foot and Mouth and BSE is taken into account.

* Applied to the acres agriculture absorbs, and about 16 million acres are uneconomic, which is near 27% of the total UK land mass.

* Average density of people on one residential acre is 12 to 13.

* If every village, town and city was twice the size, the total area taken up would be less than 15% of the land mass.

* 10.9 million homes carries a mortgage of some kind.

* Average value of an acre of development land is £404,000. High in south east of £704,154, low in north east of £226,624. London is in a category of its own.

* Reservations of land have been place by builders to a value of 37 billion to build the 3-4 million homes required. The land reserved is almost wholly owned by aristocrats; with none of it on the land registry. This land is coming out of subsidised rural estates, land held by off-shore trusts and companies and effectively untaxed.

* Tony Blair ejected 66 hereditary peers from the House of Lords, predominantly large landowners, owning the equivalent of 4.5 average sized counties.

[zzg113]

the Home Counties being underpopulated.

This does not square with my day-to-day experience. I would say the Home Counties are very overpopulated.

[John_99]

This does not square with my day-to-day experience. I would say the Home Counties are very overpopulated.

<{POST_SNAPBACK}>

Sitting on the M25 you may get that impression. Figures state otherwise.

Bad planning and poor transportation can give the impression of a place being too dense.

[Time to raise the rents.]

Actually now I've got one, in reply to another comment on another thread:

http://www.housepricecrash.co.uk/forum/ind...?showtopic=3437

Dear Laurejon,

A correction to your idea that you don't need to tell the lender that it is being let out. Oh, yes you do, if you bought as an intended owner-occupier. It costs more to btl, as the risks to the lender are higher.

<{POST_SNAPBACK}>

I'd just like to wade in with a response to that. In the past, UK landlords paid commercial rates which helped to keep rents high & discourage landlording (for want of a better word) along with the nasty laws that were in place.

After the 1996 Housing Act guaranteeing possession will be returned to the landlord for new tenancies, the BTL loan was born & was priced a little higher than the average OO loan.

Since then BTL has proven itself as quality lending, with default rates much lower than OO defaults (owing to the credibility and financial stature of us landords).

BTL rates are now MORE COMPETETIVE than OO loans, especially for FTB's who due to their small deposits and lack of a long term history, still pay 2% & even more over the base rate.

My loans are base + .74% and if it weren't for the redemption penalty for the next 2 years, I'd head out and refinance at what is now on offer, base + .64%.

If any FTB's can get a long term low variable rate like that, I'd love to hear about it. But please, no 1 year 3% followed by 24 years 6.99% thanks.

The feeling that landlords pay a higher rate due to a higher risk is therefore a property myth and I shall now add this to the property myths thread.

[Yonmon]

TTRTR

I accept what you're saying, but wouldn't it depend partly on the LTV % and/or track record of the BTL borrower?

What LTV are you borrowing to get those deals?

What deal do you think you could get as a "first-time BTLer" as opposed to a well-established BTLer?

Btw, saw your posts on the Somers Board re Derivex. Agree it's probably a scam, but if it isn't I might join you in this BTL lark!

[since the beginning]

Nope you have just taken the timeline that served your purpose.

Don't think anyone is saying that the long term trend is not upwards. However only a BBB would buy now as the short-term to mid-term trend is going to be down. Whats the point of saying yeah but houses always go up (maybe) but may as well wait 3 years and save £25,000 - £30,000 on every £100,000 (x 25 years interest!!!) Who cares about the long term trend!

[wriggly]

Interest rate related myths:

1. If house prices start to fall, the BOE will start to drop interest rates.

2. If interest rates start to drop, house prices will 'go through the roof' once again.

3. Even if interest rates are unchanged, if house prices drop, there will be plenty of savvy FTBs around to buy at the lower prices, thus forcing prices back up to the max.

[Guest pioneer31]

Interest rate related myths:

1. If house prices start to fall, the BOE will start to drop interest rates.

2. If interest rates start to drop, house prices will 'go through the roof' once again.

3. Even if interest rates are unchanged, if house prices drop, there will be plenty of savvy FTBs around to buy at the lower prices, thus forcing prices back up to the max.

<{POST_SNAPBACK}>

you've nicely summarised dogbox's entire argument which he likes to trot out repeatedly.

[laurejon]

Another Myth

There is no such thing as a Savvy FTB.

FTB'ers are the reason the prices rose in the first instance.

Take them out of the equation as is the case today and you have market stability.

Yet another Myth

A boom is always followed by a spectacular bust this is clearly not the case. Other factors have yet to come into play.

[Time to raise the rents.]

TTRTR

I accept what you're saying, but wouldn't it depend partly on the LTV % and/or track record of the BTL borrower?

What LTV are you borrowing to get those deals?

What deal do you think you could get as a "first-time BTLer" as opposed to a well-established BTLer?

Btw, saw your posts on the Somers Board re Derivex. Agree it's probably a scam, but if it isn't I might join you in this BTL lark!

<{POST_SNAPBACK}>

75% LTV for the rate quoted.

Here's another myth:

"I'm a good 'Good Tenant'."

There is no such thing as a good tenant. Joining the two words is a contradiction of terms. If they were good, they'd be a home owner & not a tenants.

Sorry people, it's one that I heard a while back & I think it's true.

[zzg113]

So because someone is a tenant, automatically makes them a bad person IYO TTRTR. What a lovely piece of work you are.

[Time to raise the rents.]

So because someone is a tenant, automatically makes them a bad person IYO TTRTR. What a lovely piece of work you are.

<{POST_SNAPBACK}>

Now isn't that twisting it a little?

I'd just prefer to hear the two seperately, for example:

I'm a tenant.

I'm good.

[Yonmon]

Not twisting at all. The clear logic of what you posted above, is that you are asserting:

"All tenants are bad"

Which is exactly what Nicholas von Hoogstraten used to say, except he used the word scum instead of bad. You must be so proud to be a mini-me of old Nick...

[Saving For a Space Ship]

Edit by Mods: Discussion about what a "myth" is has been moved to a separate thread.

[Guest pioneer31]

"Other factors like Low Unemployment and low interest rates will prevent a crash"

Does anyone know the REAL (unfiddled, unspun, unhidden) Unemployment figures? How many of the employed are in high flying jobs and how many are debt-laden graduates in run-of-the-mill McJobs?

Now the market has stalled and is starting to fall do it will continue to do so regardless of interest rates. Can low interest rates offset the fear of Negative Equity? Not a chance. Can low interest rates allow you to have a 5,6,7x mortgage? Not in a falling market. So interest rates will make no difference once the slide is in progress.

Besides the BoE have bigger concerns than the housing market. The adjustment of interest rates is usually in response to the inflation figures, which, as we all know conveniently ignores housing.

[Saving For a Space Ship]

http://www.news.com.au/business/money/stor...5013951,00.html

After 3.5 + years after this thread, I had to post this Australian market article with a summary of UK, Irish & Us hpi drops. Oh my, how things have changed!

'Debunking housing myths' from July 19, 2008

THERE are two housing myths worth debunking. The first is that house prices never fall. The second is that because underlying demand currently exceeds new supply, house prices will keep rising.

Neither is true, Australian house prices can and will fall.

US house price falls of 15.3 per cent over the past year get most publicity, but Irish and British house prices are also falling sharply.

Ireland is down 9.5 per cent and Britain 8.7 per cent. Forecasters predict falls of 30 per cent in US and British house prices and 15 per cent in Ireland.

New housing starts have halved in Ireland and dropped about 30 per cent in the US and Britain.

ANZ economists claimed recently that Australian house prices have never fallen and there is no reason why they will. They are not historians. The house price series they use only starts in the mid-1960s.

Nigel Stapledon from UNSW has published house price data back to 1880 showing Australian house prices fell sharply several times.

You may think house prices never fall because you have never experienced them. However, Australian house prices have fallen previously and house prices are falling overseas.

Of course that does not necessarily mean Australian house prices will fall now, but there is no law of nature that says they cannot fall.

The optimists argue that underlying annual demand for Australian housing is 180,000 units and new starts are only 150,000. They conclude that house prices are likely to rise.

However, underlying demand is a theoretical concept using long-run trends in population growth and household formation. In practice, high house prices mean kids stay home longer, rather than buy new housing and students rent houses together rather than separately.

Actual demand for new houses is currently below underlying demand.

The house price surge was largely due to people bidding up prices of existing housing as interest rates fell and they could access funds more easily.

The rise in interest rates and tightening credit standards reverses the incentive to trade up to better housing. Home loan approvals have dropped 23 per cent in four months, so demand is falling and rates are still rising.

The number of new houses built does not determine supply. About 10 per cent of houses, or over 800,000 houses, are vacant at any time, for example holiday houses.

Financial pressures push empty houses onto the market. Lower clearance rates mean the number of unsold houses is rising. Supply will rise further as share prices fall and unemployment rises, forcing sales of existing houses.

Australia has rapid population growth and mining is boosting income growth. We did not have the large influx of new low-income house buyers that more lax US credit standards allowed. So while house prices may not fall as sharply here as overseas, they will still fall.

Investors renting out houses will be squeezed by rising rates and realise capital losses are possible.

Rents will rise and house prices fall until housing returns are comparable with other assets.

That will improve housing affordability for first-home buyers and eventually stimulate the next upturn.

[loopholes]

http://www.news.com.au/business/money/stor...5013951,00.html

After 3.5 + years after this thread, I had to post this Australian market article with a summary of UK, Irish & Us hpi drops. Oh my, how things have changed!

'Debunking housing myths' from July 19, 2008

It is now a total myth, as spouted by Anne (the house doctor) Maurice et al regarding home dressing to make it sell, it makes no difference as no one will come and see your hard work and cash outlay ;-)

Better off spending the money on chocolate cakes and being happy in your obvious tip lol

Edited January 13, 2009 by loopholes