Friday, Nov 14, 2008
Property: The End of the Affair ?
BBC2: Property: The End of the Affair ?
BBC last night. I'm presuming most of the "savvy" BTL editors & senior producers have now
full dumped their "portfolios".
Posted by doomwatch @ 01:23 PM (618 views) Add Comment
10 Comments
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1. str 2007 said...
Right I've watched the programme althrough.
My opinion is this view is wrong.
People should not be basing their futures on renting.
The way forward for this country is for everyone to own their own home.
If you can afford rent then you can afford an interest only mortgage - that is how the numbers work.
Everyone will need a roof over there head when they retire. Therefore if renting is the chosen option then a secondary investment must be made in order to keep the roof over ones haed during retirement (which now everyone has stopped smoking could be 30 years).
The nature of that secondary investment is that it may not perform (remember endowment mortgages ?).
The only way to ensure shelter in retirement is to pay off the mortgage. This BTW will also be far cheaper over a 25 year peiod than building up enough funds to cover 30 years of renting in retirement.
If mortgages are capped to 3x1 salary (or whatever is the decision on multiples) and people are limited to owning one house then everyone will be able to afford their own house as there are enough houses to go round.
This needn't limit the mobility of the work force either and here is how.
Each Local authority can set up a fund for investment by individuals of that borough to purchase what is percieved to be the required number of rental properties for that town/area. Should someone need to move to a different area for a contract period they can rent one of these properties and in turn in their own town put their property temporarily in their own local authorities rental pool.
This method will take the speculation out of property which is inherently the problem with property.
Individuals will be able to invest in a stable property market in smaller sums (maybe 20-30k) as part of a balanced portfolio rather than 1,2 or 3 extra whole properties that then makes things very unbalanced.
The liklihood would be that large proportions of communities would invest in their 'local property fund'. Meaning it's then in the communities interest to keep areas and neighbourhoods as good as possible.
If everyone owned their own properties we wouldn't have the problems we do with these ghetto neighbourhoods.
One thing is for sure - there is no way that renting is the correct long term solution for most people (anymore than buying an overpriced house with an oversized mortgage is).
Also let's not forget that if people were restricted to max 3x 1 salary then it is in everyones interest to invest in shares etc. which will enable our businesses to invest in more technologies and better techniques etc.
It must be better for society to create it's personal reirement packages for people through investing in businesses rather than investing in property.
2. Danny said...
3:05: FT correspondent states:
"I think prices will return to 2007 levels, roughly a decade."
So within the first few minutes of this documentary, you have a member of the FT on the BBC stating absolute Bull*hit.
The bottom line is that WE CONTROL the market.
WE.
THE FTB's.
Q. Why are house prices in freefall?
A. Because the housing market CANNOT survive without FTB’s.
When all these 'experts' economists, speculate talk about how much they will drop by.
35%, 50%. What they are really doing is trying to forecast WHEN FTB’s will return to the market.
We wont be returning until they reduce threefold. Back to 2000 prices, when this bubble began./
GAME OVER
3. sold out said...
I noticed lots of "reluctant landlords" in this progam, from ftb's who bought at peak to developers.
So we should expect an oversupply of rentals soon, which will no doubt push rents down.Good.
They will also have no significant affect on house prices (IMO)as repo's and forced sellers will no doubt push prices down.Good.
4. jack c said...
@str 2007 - I have replied on the thread from yesterday of which this is a duplication
5. Fjcruiser said...
Interesting programme.
Couple of remarks, interesting to see that bewteen 1995 and 2002, you would have made more money by owning than by renting: 1995 was the bottom of the property market and 2002 was already 2 years into property madness.property prices increased much faster than rental prices.
I think the primary reason for the letting agent to rent over buying was a pure business decision: he can deduct the rental cost as business expenses since he probably rent the place as a business.Owning a property cos he cannot find a 10 year lease, means he will have to pay either CGT on selling or large IHT. His case was specific to his business rather than purely looking at renting vs buying.
Otherwise, very interesting to see how people got themselves indebted in the pursuit of a dream. It also highlight that tenants in the UK do not have may rights. Perhaps with the glut of properties out for rent, things might change and long leases may be signed.
6. mark wadsworth said...
As the delightful Merryn Somerset Webb point out, sometimes renting is better, sometimes buying is better, and lots of people ending up choosing the wrong option.
Which is argument #937 for Land Value Tax. In effect, you buy the bricks and mortar with a mortgage, that's your to own.
But instead of incurring a huge further debt to pay for the land and paying interest to the bank on that for 25 years (and paying for local amenities again out of income tax rerouted via central gummint), you only pay a token amount for the land and pay Land Value Tax to the local council* every year to cover local amenities, so your income tax can come down a bit.
* The amount thereof would be rather less than the interest on the land element that recent purchasers are paying.
Result, for FTBs who want to own to live, it's a double win. For vendors it's a break even (more LVT, less income tax), but no more bubbles.
Here endeth.
7. Maihem said...
str2007, you forgot to price in the cost of the risk. If I take a mortgage and house prices tumble, I don't owe the bank a house, I owe its price as was - which I no longer have. Ergo, I'm foobar'd.
Renting with France style leases offers the sweet spot between personal environmental flexibility, risk, and price. As population goes up, the only sustainable models are either: government owns most homes, or floated corporations own most homes.
Everything else leads to usury or feudalism.
8. 51ck-6-51x said...
str7 "If you can afford rent you can afford interest only" - yeah, but you may well prefer to rent if you plan to move on within a some relatively short time frame due to transaction fees. Effectively this is a no arbitrage argument - it implies that all but short term lets should be cheaper than the interest only payments in the market. That is rents should come down (AST with it's implied yearly renewal is a market regulation which effectively distorts this though)
9. str 2007 said...
Jack C
And I came back again on yesterdays
10. Tenyearstogetmymoneyback said...
In response to Sold Outs comments at 3 and a comment on another thread about asking prices.
I had a look at the Rentals section of RightMove today and was surprised how much rents seem to have come down.
I last looked about 3 months ago when I started renting this place. Another house about the same size but not in
quite as convenient location for me was still there with a different letting agent. For the same rent I would have a bigger
choice now.
The for sale section didn't seem to have moved at all. I wonder if there is anyone left at estate agents to update it.
I did read that Rightmoves business was down with lots of agents not paying their fees.
:- Duncan
p.s Still miffed that back in 1995 I could have bought a really nice detached house for £92000.
The people were trying to sell it on the cheap with a home made sign in their garden.
The big problem was I couldn't sell my 3 bed terrace for £52000 back them :-(