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Posts posted by roblpm

  1. I think the foreign money as a driver is more myth than meaningful. It might pay for the glittering blocks along the riverfront but what's driving the city-wide rise has always been cheap money and ambitious couples - like the OP and partner - who are ready to take the debt on. When the banks take the easy money away, prices tank. It might be fair to say that property in the UK was undervalued in 97 and lawyers/agents were almost talking you out of bothering to buy, there was no property service industry like today. But rather than foreigners arriving with suitcases of cash to buy modest terraces in Acton etc, I see it as a long easy-credit binge from 2000-onwards to keep the economy chugging as the West declined. The chug hiccuped in 2008, first sign of the artifice/rigging exposed behind the scenes, and then they fired it up again. I feel as though we're getting close to another hiccup now, but there's still an awful lot of cheap money sloshing around. But I can see London crashing, just as it has at points over the last 100 years, always related to events and always fragile. You can't have an economic model that only pays out, it would be like a desert casino where nobody can lose as long as they put their chips on the table. Casinos need suckers. Even Tokyo crashed. London is no different, they can't take us back to an 80s style public sector state and preserve the common wealth, the property gains will be stripped away.

    Just to clarify as the OP - when we bought our first flat at £94k I think we just about had a joint income of £94k.

    When we bought the second flat at about £320k we only needed a £200k mortgage, actually I think my wife had stopped working but I was earning about £75k. So not exactly nutty multiples.

    My original point in this thread was that is it obviously easy to be overleveraged, but in a low interest, cheap money, asset inflation bubble if you want to keep up with the jones's you need a bit of leverage. We sold up, and are now completely debt free (actually I owe £320 on my amex credit card which I pay off every month, just use it to get airmiles!).

    We will never be able to move back to London. Luckily I dont particularly want to. My wife might want to though.

    Just saying that hpc (and myself) called it completely wrong on London over the last 10 years.

  2. That's insane. It won't give you 1800, but I assume you moved to somewhere off Dalry Road (those developments at the tracks) to have at least some train noise in your life? ;) I lived for more than 5 years between Leith Walk and Easter Road (posh, I know :) the rent was a steal!), and the airport noise was sometimes just annoying (yes, you can hear it there).

    No train noise at all where we live in Edinburgh now.

    Every train in and out of London Bridge went past our flat, 900 in, 900 out!!

  3. Russian ( or other oligarchs) is not causing these bubbles.Plenty of evidence for that: there were bubles constantly frothing for the past 17 years ( and before) both in London and the rest of UK - oligarchs were not buying in those days and there were not that many oligarchs then anyway.,,,Each time the Government introduced any prop ups (QE , Help to buy, FLS, backdoor schemes,..) house prices have gone up. Surely, there were no ques of oligarchs forming to buy the house coinciding with the above Government schemes. Also, I live in zone 2/3 London and have not seen those oligarchs or their kids buying here for all these years. Instead, it is Help to buy, etc. debt slaves " buying" these criminal and illegally built properties ( window is 10 feet from the passing train in "exclusive development or almost built on the roundabout) where the density of population far exceeds the common sense and building regulations. Anyhow, I am sure that these oligarchs also take the substantial mortgage from UK banks, hence we are all on hook for their debts. And you can be pretty sure that these oligarchs are not into BTL.

    As you say the London boom has been going for about 18 years. I agree that the government has propped up the prices. The problem for London is the additional demand from abroad.

    I have lived in zone 2 myself and havent seen any oligarchs. But if there werent any I wouldnt have been living in Brixton I would have been living in Marylebone.

    Actually we used to have 1800 trains go past our back window when we lived just off Tower Bridge Road. I quite liked it!! Christmas Day was weird!

  4. Wrong ?

    Prices collapsed in 2007.

    The government printed money and gave it to london bankers to speculate on and support house prices.

    The created a pre-eleciton london mega bubble

    Loads of people saw what was coming with FLS/HTB/Mass state proaganda and rightly predicted what would happen, the brave profitted from it, the sane is sitting watching it.

    If by wrong you mean right then I agree.

    I am sure I agree whatever way you put it!

    Where I disagree is that the government printing money ZIRP etc stopped a massive crash in the rest of the country. London didnt need it and therefore boomed.

    I suppose what I am saying the rest of the country reacts to UK economics. London reacts to world economics.

  5. Living in London seems to be the lowest common denominator for people with little imagination. Don't know what to do with your life = move to London.

    Couldn't agree more. My wife who is from Camden Town originally thinks I am crazy to want to spend my time sailing, travelling, doing adventurous stuff with the kids, sport etc. Its only about work and buying property! Maybe a little light relief of going to a museum and and overpriced and overcrowded posh cafe!

  6. Well it seems like its 10 years that I have been a member on here. Haven't posted much for the last 5 years though...................

    I lived in Central London, and was convinced of a forthcoming crash well before I "found" hpc in 2005.

    We bought a flat in Brixton for £97k in 1997, (joint income about 80k!), then kept that and bought a flat in Bermondsey for about £320k in 2000, in what we thought was stretching ourselves to the limit kind of a way!

    Current values probably £300k and £800k conservatively.

    So we wanted a family home which we couldnt afford in London in 2005 so moved to Edinburgh and now own a perfectly nice house in a great area, good schools etc. I have a successful business and my wife is doing a PHD at Edinburgh Uni. So all good and miles better than if we had stayed in London.

    However from a financial perspective we lost out on about £500k of growth in property values. So we would have made more money just sitting tight and eeking out a crap existence in London.

    Now I can understand a lack of sympathy from anyone on here who cant afford a house. Its a disaster having high house prices for anyone. And to be honest the kids are better off out of it as London prices skew what you think you will do with your life.

    A mate of mine is bemoaning the fact that if he sells his small 2 bed zone 1 flat for 1.2m by the time he has paid off his mortgage he wont be able to get anything inside zone 3!! Bonkers!

    But my point is that London IS different. I was watching the Jaques Peretti program on the TV last week and it is clear to me that in London you are not competing with the UK for houses but the whole world. So the economic rules go out the window.

    So my advice (which I am sure people dont need) is dont think about the London market the same way as the rest of the country. Ie inflation up - interest rates up - prices down etc etc etc as there will be a Russian oligarch standing behind you happy to park his money out of his country. I imagine that a Russian oligarch wouldnt even care if the values went down by 20% as his money in property in london is not taxed and is safe.

    The non dom rules are a joke. We are one of the biggest tax havens in the world. But I cant see a Russian Oligarch wanting to park his money in Aberystwyth. London is what they want.



  7. Now, my lurking suggests most here are usually of the opinion that it is time to sell up, but I'm wondering.

    Consider a hypothetical situation.

    2 btl properties, West London, LTV below 35%. Gains, supposedly, of 20% per annum currently, if figures are to be believed.

    Now, although low proportionately, that mortgage is still 7 figures. Comfortably covered by rental at present.

    But if things change....

    Would now be a good time to sell one, pay off mortgages and costs, and be left far less exposed with the single mortgage free property remaining?

    Or would you end up kicking yourself for walking when things seem so buoyant, even if the gains at present might appear, to some, to be unsustainable?

    If the rent covers the mortgages etc I would keep them. I think in the long term London will outperform everywhere else. We sold in london 8 years ago. Bad mistake! SO what if it goes down 20%?

    I think most of the sell pressure on here comes from people who are not in the market. I would stay in it if you can.

  8. Islington fifty years ago was a dump; nobody wanted to live there and there were very few nice houses. What you see in Islington now are the slum dwelling of the fifties which teachers bought, tarted up and sold on. Teachers would have been quite likely to have had council houses in the sixties anyway, so would not have needed to buy.

    London has always been expensive but nothing like it is now. My father bought a 3 bed terrace house with garden in a zone 3 suburb in 1968 for £5000, which was twice his salary, probably not much more than a teacher's. My mother was a housewife and had no income. Imagine that now!

    OK maybe Islington was a bad example. A nice area of London 50 years ago was probably quite expensive!

  9. Go for it!

    What can go wrong?

    It's different now.

    I have been a bear since 1997 when we first bought in london. I was an IT contractor and my other half was a trainee doctor and we bought a plce of 94k, didnt want to stretch to 137k.

    All I mean is that we are not going to go back to those sort of prices.

    I think it was around 1997 when Buy to Let mortgages came in. The yield where we bought in Brixton would have been 10-15%. That's one reason why prices went up so fast.

    I then got cold feet around 2005, sold up and moved to edinburgh. Was convinced it was going to be armageddon. Since then the last place we sold has gone on to double in price.

    I think there are many things, not least governrment policy that prop up London prices. So by all means plan for a crash. But it may never come. I truly think it is different now, in that at this meeting I asked the guy what the natural base rate should be. 5% he said. Cue indrawn breath from everyone else in the meeting.

    The population at large think interest rates being low is a good thing. Aint going to change soon.

    I can see London going up another 20% and then crashing 30?

    Whats your best estimate.

    All the estimates on this site for the last 10 years as far as London is concerned have been way out.

  10. I suppose in theory a rate hike would pull the plug on HPI- but then so would an invasion from Mars- of the two the latter seems more likely to happen.

    I was at a meeting with a regional agent from the bank of england last week. Hell will freeze over before they raise rates significantly. 0.25 % a time if you are lucky.

    So I have bought an off plan place in London!! Only logical thing to do! If prices go up by 50% I am ok. If prices go down 50% I will sell at a loss and buy a better place at 50% off.

    London is never going to crash in a big way.

    I think people forget that it has always been expensive? I am not sure a teacher could have afforded a nice house in Islington 50 years ago??

    If we had kept 2 flats we owned in the mid 2000s and not sold and moved out I would be retired by now at 45 (and bored you might say!)!

  11. Well we sold 2 places in London in 2005 and 2007, moved to Edinburgh and on paper are now about 500k worse off than if we had stayed.

    Problem is that i cant see how we could have done any different.

    I used the profit from the move to set up a business that now supports our family.

    Also my mate who stayed might now live in a flat which he bought for 400k and is now worth 700k but he is still trapped! Who cares how much the house you live in is worth??!! Why does it matter! Just enables people to get more debt!

    We now don't have a mortgage and can save money.

    Though of course what i am going to do is buy a flat in London!!!!

    Its a curse as even after all the above i wish we hadn't sold in London!! For some reason unearned income seems so much better to everyone than being productive!!

  12. There is no bubble, there is no bubble, there is no bubble......

    OK but say the bubble bursts, there is so much demand that people would start buying even if prices were falling I think. As not everone is in it to make money, some people just want a place to live.

    The other main piece on the news was on south east airport expansion, seems the government has no interest in the regions and the south east will just keep getting more congested and more expensive. Crazy really when the rest of the country (bar maybe birmingham and manchester) is empty!

  13. Well I am off work sick and there was just an item on the London news about the Walthamstow bubble!! Prices up 50% in a year!

    The only thing about London is that I have been waiting for the crash since 2004 and dont see it coming any time soon. There are so many people waiting to buy that even if the prices dropped there would be massive demand.

    Luckily I now live in Edinburgh. Wont ever own a million pound house but then again I have a great house, can go sailing after work and dont have to go on the tube or sit on the M25!!

  14. A work colleague has a husband who is a physic professor (and doctorate) who got into Florida real estate in 2007 as an investment. Sure thing he told me, he'd done the sums and it was a guaranteed return.

    Educational achievement and common sense don't necessarily go hand in hand.

    I have zero debt.

    As i also pointed out in the original post i have been reading this site daily since 2005.

    My real point under the rant is the low interest rate environment making it extremely difficult to create income from capital. My maths is good enough for that!

  15. Do it yourself.

    If you run your own business you are in a unique position to be able to run your own scheme; pension contributions from your business are tax deductible as are the administration costs.

    You can buy your own offices/premises through the scheme and pay rent (again, tax deductible) from the business. Your business can borrow money from the scheme to buy assets for the business and the interest is, again, tax deductible.

    SSAS schemes such as Rowanmoor's are low cost and not overly complicated if you are prepared to do a bit of work . There is no spiv advisor taking 2% of your pot each year and you are in control; charges aren't based on the the size of the scheme.

    BTL has no such tax advantages and offers a poor yield (which is reduced further by the sort of running costs commercial landlords aren't exposed to) on a depreciating asset and the prospect of a long term decline in rental yield as the effects of LAHB changes work their way through the whole rental market. On, and your tenants may not treat your pension 'asset' with quite the reverence you do.

    Good luck.

    Thanks for that.

    However I hold vanguard funds in a sippdeal sipp so my annual charges are around 0.3%

    And also I am planning on selling the business in about 15 years as my business partner is older than me and not sure I want all my eggs in that basket!!

  16. You will need a 600K pot in 20 years time (assuming inflation rate is 3.5%) to have a 300K pot in todays money.

    You need to invest £1300 a month at 6% return to have a 600K pot in 20 years.

    If inflation is higher or your investment return is lower then you need to invest more.

    I used this calculator.


    Great, thanks for that.

    So my original point was that this job is then equivalent to a private sector job at £55,600 and should be advertised as such! Then private / public sector jobs could be compared properly.

  17. Universities have switched to career average, typically accrued at 1/80th.

    So someone cleverer do the maths for me. 40k job for 20 years means 10k pension. 3.3% annuity requires 300k.

    Someone adjust that for inflation and investment growth and tell me what the equivalent person would have to contribute to a private pension per month to get the equivalent?

  18. I made the mistake of building a business. I wish I'd become a property speculator, its what the banks and government want.

    Well tbh the only flip side of that is i know if i had become a property speculator i wouldnt have stopped and would now be wiped out! Or waiting for an interest rate rise to wipe me out. I am now so underleveraged it hurts!!

  19. BTL, in spite of involving leverage to buy a property, IS a financial product, just as any other pension product is.

    In other words, it relies on a return from consumers ( ultimately) to provide a profit.

    If Pension funds cant do it, then neither will BTL.

    They both depend on people spending money.....

    Well thats true, but i think what that doesn't take in to accoubt is that the pension funds will pay agents to do the admin, management etc whereas a btl landlord is doing some of that themselves to make the return slightly better.

  20. You would make a perfect landlord. Would you like me to introduce you to a mortgage broker?

    Thats a bit harsh.

    I have been an accidental landlord before, i have a physics degree (so can do sums to a certain degree) and am a Chartered Tax Advisor so have a reasonable knowledge of tax and financial products. I just meant the figures are not exact.

    The point is that the government Zirp drives down annuity rates and makes property investment more attractive.

  21. You don't have to buy an annuity there are other options....income draw down or abandon a pension altogether and pile into ISA's.

    Ok, good point and thanks for trying to calm me down, however i think unless you are very wealthy they limit incone drawdown to 120% of the equivalent annuity.

    Isas are an option i suppose. And then spend the capital slowly!!

  22. I have been a member of this site for nearly 10 years.I am 44.

    Sold in 2005 in London. Bought 2009 in Edinburgh. So for somewhere to live we are in OK shape.


    On the pension front we are shafted:

    http://www.guardian.co.uk/money/2013/apr/23/falling-annuity-rates-cost-retirement -> 3% annuity rates mean to get an income of 25k at 65 need to have a £750k pension pot.

    Unfortunately I have my own business, should have been a Doctor/Police Man/MP etc etc Wife isnt working but I have told her she can only get a job with a final salary pension! I have used all my money for the last 10 years to try and build the business, pay employers NI and keep people off the dole!

    So I can either try and put away say £3k a month for 20 years and end up with about 2k a month income (and lord knows what the annuity rates will be by then). Or get some buy to lets (say £600k worth), subsidise them to say £1k a month, and end up with a £2k a month income in 20 years. BTW I dont have 3k a month to do that anyway!!

    I havent done the proper maths on this, and having rental properties is undoubtably a hassle/job etc.

    But tell me why I am wrong!!!!!!!!!!!!!!!

    QE should be banned.

    Public sector jobs should advertise what the annual pension provision is worth along with the salary. ie "this job pays 35k a year and the pension is worth 15k a year".

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