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House Price Crash Forum


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Everything posted by arrgee1991

  1. Exactly and for those who have the child benefit clawed back between £50K and £60K, and those who have their personal allowance removed at over £100K it is even better. An example with two children IN £10000 gross £4030 net - (£4200 tax + £1770 cb) £11380 with employers NI OUT £2845 tax free £8535 taxed at 20% = £1707 £6828 £9673 £4030 makes £9673 - 140% gain
  2. The only inflexible part is you can't get hold of it until you are 55. They are flexible enough to allow you to invest in many asset types, either directly or indirectly. The big downside are the charges, but they can be kept low by choosing the right investments.
  3. A very simplistic example, but if you do this one day before you retire at the end of the tax year.... You get £1000 gross of the money you earn over £42K That £580 net as you pay £420 tax +NI If you put the £1000 into the pension it can become £1138 with employers NI added under salary sacrifice The next day in the new tax year when you have stopped working... With zero growth when you withdraw you get £284.50 tax free The remaining £853.50 is taxed at 20% = £170.70 So you get another £682.80 Which leaves you with £967.30 That is 14% off the £1138 or just 3% off the original gross of £1000. Or alternatively 66% growth on the £580 net you would have got yesterday. The closer you get to retirement, the better this works as you lose the risk of a radical change to the tax regime. Also should you have a large pension fund, then you have to drawdown over a longer period, but given you need an income when you retire that's no bad thing.
  4. I haven't forgotten it and as you write makes it even better. The closer you get to retirement, the easier it is http://www.telegraph.co.uk/finance/economics/10602490/Imagine-the-explosion-of-growth-if-we-got-serious-about-tax-cutting.html
  5. But what are the sellers going to do? Aren't they mainly going to buy? There just aren't enough houses being produced in some areas causing a scarcity. More and more people are only selling when they have to (divorce, larger family, change in job etc.) . The more house is worth the less likely the sale is discretionary given the costs involved in buying a new house.
  6. I suspect the latter as well, but it is possible that internal pressures could force the government's hand sooner.
  7. I'm not sure why my feelings, which I have not expressed one way nor the other, matter. That is what I wrote. I have not in any way expressed my feeling. The consequences are likely to be horrendous, so the UK government will ensure interest rates won't rise in the UK until there is no alternative but to increase them. That could be due to internal or external pressure.
  8. Pension - if you are a higher rate tax payer and your company pays its NI into a low cost fund or you have a SIPP. Under current rules, avoid 50-65% tax on the way in, pay 20% tax on the way out. The pensions man made a good point that if you have a house and borrow against it to BTL then you are putting all your chips on black. If the property market goes then you are gone with it. Look at what happened in Ireland.
  9. Agreed. Once the US and Eurozone raise interest rates the UK will have to follow.
  10. For any business when costs rise, then prices rise or the business ceases to be profitable. Should interest rates rise (pretty unlikely) then anyone who has bought at the low interest rates post 2008 will see no profit, so their options are to sell, possibly in a falling market or attempt to increase rents. They have no other means of seriously reducing costs if the mortgage is the main cost. The article makes assumptions that look flawed. Interest rates will rise when unemployment is low and there is wage inflation. So under these conditions it is highly likely rents will rise.
  11. Until events force the hand of the UK government, I don't see interest rate and hence mortgage rates rising. The main assumption of the article is "if interest rates rose to the levels hinted at by the Bank of England Governor, Mark Carney.". They won't. So it's probably not the worst time to enter buy to let. It's worse than any time in the last six to eight years, but the worst time is yet to come.
  12. I believe this is what I wrote. If the assumptions in the article come to pass, landlords will look to raise rents or they have negative return. Or they will sell. But I don't believe mortgage rates will rise as they will create the mass repossessions that will accompany this. Rents have been stable as costs have fallen since 2008. No need for landlords to increase rents when their main outlay is covered.
  13. Sonny? Did you read what I wrote? Why do you think I am looking for solace? As for squeezing more money out of tenants, that happens all the time. Rents are up along with prices in London, and if you don't want to pay the increase, no problem for the landlord, it's easy to find someone who will. I mostly agree with this, but my point is should mortgage interest rates rise rents will rise with them or if rents do not increase landlords sell as they can't keep up the payments. Despite all the warnings of interest rate rises, they have stayed static for 5 years, and I doubt they will rise in the near future as the consequences are too horrendous for the UK. Just going back to 2007 levels of interest rates would see a sharp rise in repossessions. I don't think now is the worst time to get into buy to let. I think it has been a bad move at any point in the last five years, but I think the worst time is yet to come. Once property prices plateau and there is no appreciation, then that will be the worst time. No one will even consider it once they start to fall.
  14. I thought people got into buy to let for the money rather than quality tenants. Also there are very few council tenancies. If interest rates rise, rents will. Landlords, especially those who have become landlords in last five years, won't want an asset with negative return.
  15. Yes. Personally buy to let is little different from pay day loans. Those who are credit worthy borrow for little and get more from those who are not. The rich rob the poor.
  16. They can do what they like. They have two options when yields are negative. Sell or increase the rent. Either way the renter pays.
  17. People have to live somewhere. If you own a home, your repayments go up. If you rent, rent rises. If rents go up 20% everywhere, then your only option to pay the same rent is to move somewhere cheaper which means smaller or further away, which isn't always possible. You may not want it, but given the scarcity of property you may have to.
  18. The worst time to get into buy to let is just before prices fall. Who knows when that will be. This article is assuming a lot. The increase in interest rates may not happen. Many who retire will not buy to let. Rents will rise if interest rates rise. I believe the changes to annuities will result in less buy to let as those approaching retirement seek easy gains from pension contributions.
  19. Used it for the first time in about three years yesterday to check on the number of sales in my area since records began. Looks like there are about half the number of sales pre-2008, and then when I did a search within half a mile of where I live, just two properties available between £360K and £1.2m in a fairly densely populated part of outer London. From what I read, no sellers. The way things are going the only way to get a house will be to inherit one.
  20. The lack of supply means there can be around twenty buyers interested in any property that comes up for sale in London. No sellers, loads of buyers, hence prices rise. The thing about the boom years is there were more sales as stamp duty was less punitive. When I bought in 2001, I paid 1% on my place, but if I sold the buyer would pay 4%. My cost of moving back then was less than £5,000 including paying EAs to sell my place. The people we bought off probably had similar costs. To move to a property worth the same as mine is "worth" now, I'd be down by £40-£50K. Just not worth selling even though I'd like to.
  21. No one can afford to sell, hardly any property around so if you have to buy you pay more. in our area within a half mile radius, according to rightmove only two properties between £360K and £1.2m
  22. When was that chart first shown on here? I think the mania phase(16 years) started around 1998 and is still going. The awareness phase (5 years) was from 1992 - 1997. It needs re-plotting.
  23. I did a 24 hour hire for that purpose in September. Only cost me £20 for the day, and even got the shopping once I dropped all the kids off :-) Generally get the shopping delivered once a week andK pick up what I need inbetween at Waitrose getting a free coffee and newspaper to boot.. Bit of a pain humping a bag of shopping on the tube, but cheaper than spending £2K/annum to have a car on the drive.
  24. Amazed so many people buy cars. Most just are left on drives in our street. I gave mine up a few years ago and just rent whatever I need whenever I need. I have a £40 insurance to cover excess claims and can get a car for less than £100/week or £40/weekend delivered to my door.
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