Pablo
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Posts posted by Pablo
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Something that I have never found particularly clear about HTB
In the following scenarios
Property is £600k
Deposit £30k
Mortgage £330k
HTB £240k Loan
Situ One - House prices drop 10% and you dont repay any of the HTB, just make the ongoing payments after 5 years. You want to sell after 5 years, so they take your 5% deposit and then reduce your HTB loan by £30k as well?
Situ Two - House prices go up 10%, and you pay the massive HTB loan back after 5 years. Do the government then retain the right to keep a % of any 'gains' when somebody sells? I think I read that when you come to pay back the HTB loan, they then revalue it and you have to pay back the 40% HTB loan back on that amount but nothing in the future.
I think anyone assuming it is a 5 year interest free loan is wrong and the government pocket some cash back in the form of your deposit in a crash or a % of the increased value after 5 or more years. Am I correct?
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The key development in the housing market however has been the rise of mortgage lending to ‘buy to let’ purchasers – ie landlords – rather than to owner occupiers. The private rental sector in the UK has been growing rapidly over the past 15 years partly due to structural reasons. The stock of mortgage lending for buy to let has increased from £65bn to £200bn over the last decade. And it is growing quickly now, by around 9% a year. Buy to let now represents 16% of the overall mortgage stock and accounted for 80% of net lending over the past year.
Quite astonishing.
So basically whilst BTL represents 16% of mortgage stock, 80% of a net lending in 2015 was to BTL'ers.
I thought that BTL was ridiculous, but I didn't know it accounted for that much.
If the BTL'ers pull out, surely that will result in a freefall on prices? If I was in the BTL game I would be very worried that I would be caught with a property that is about to go in freefall as the BTL'ers pull out, as threatened by their own association/trade body.
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Do you have a source for that stat? Seems too good to be true... I.e a lot of btl folk that could flood the market if they lose their nerve!
I read somewhere that 14% was BTL, 83% does seem high for BTL/Speculative but anything is possible and if BTL is that much of a driver, lets see those cards fall!
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I have a fear that property prices will only ease when interest rates go up...which isn't likely to be anytime soon.
For those more knowledgeable, are there any historical events where prices have dived despite the age old scenario of sky high demand, not enough property being built, combined with low interest rates?
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Even with low rates I just don't understand how these prices are affordable on average salaries
Affordable is one thing, they aren't affordable but they attainable.
Attainable = People will stretch to their limit, using joint incomes (and with HTB). I wouldn't say the 'average' buyer is able to buy, but there are still plenty of people in the slightly above average (and above) level to hoover up the available property.
When you are faced with £15-18k annual rents, people get very very desperate.
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i have been trying to avert my gaze for the moment, but is it true to say that we are still in a world of zero reality for most buyers.
Despite china issues, worldwide declines in shares, increased BTL taxation e.t.c prices still rise! (I am talking £300-800k London, not prime prime)
Presumably due to HTB 40% and rising rents and BTL'ers trying to get in before the April cut off.
Are people expecting prices to fall off a cliff in March/April (when new BTL buyers wont be able to complete in time).
Or a bit more of the same, with HTB charging through?
Although it is absolute insanity, I can understand why people are buying out of fear, particularly as people have quite logically been projecting a crash for years.
Are there any stronger signs of a crash in the £300-800k market at the moment?
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I can't understand a BTL'ers choice to buy buy buy now?
They know their margins are going to be hugely reduced, if not negative
They know the market should they come to sell in 2-5 years will be greatly reduced as demand from BTL'ers will be greatly reduced
They can see the world stockmarket imploding and the likely impact over the short to longer term
Is it just blind faith that things wont change and prices 'always go up', or something else?
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How many of the 15% losers are salaried working class?
Even if PCL falls 50% how many can afford?
I think it will get noisy if houses under £500K start falling in double digits.
Nail on head, it will need to impact the £500k and under market otherwise for most people, it will be a case of 'doesn't affect me' and so attitudes never change.
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Whole thing is built on confidence, nothing else. As you say, people are confident of the government creating ways to keep the market up.
I wouldn't quite go that far, I think there are quite a few splits
1) Confidence as you say, some people really can't see a London drop
2) Those who just have blind faith they will be OK, no real insight either way but just want a home at any cost
3) Those who see how much they are spending on rent (often 1200-1500 p/m) and would rather put that into a mortgage and owning a property
4) Those who can see the massive risks but also see that prices outside of prime are still going up in price, so there is a real risk that they get priced out, or wait another year - burn £18k on rent and then are faced with ever higher prices
5) Those who continue to wait for this whole farce to crack and fall apart, there are signs of it (lots more property hitting the market and number of reductions from a highhhh starting point). However it is a waiting game and who knows when this will all crack ! I hope soon.
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My neighbour trying to flog his flat (64m2, 2 ish bed) in w9 for 795k. In 4 months in 2 viewings. It's empty so a nice little opportunity cost of missed rental income too. Probably not helped that there are 7 or 8 similar ones in the same building for sale and another 30 in the surrounding 3 or so streets. And the same amount of flats for up for rent.
That sounds juicy even for W9, W9 is typically nearer £10k per SQM when I was looking a few months ago.
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Something is happening in the last week, I had follow up calls from EA's I haven't heard from in a while.
Either they are looking for more buyers or they have so much property to sell, verging on the former based on the limited amount of new properties I am seeing entering the market.
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I have started a new tenancy whilst I see what the market does over the next year.
The electrician came to do some work and gave some interesting insights into his experiences:-
- The days of 'friendly' brokers are certainly long over, so most people are now getting a buy to let mortgage for the first year and then converting it to a normal mortgage after a year plus. Apparently once your foot is through the door, the mortgages come more easily ! Oh dear
- Stories of how his own property have increased in value, inc a £100k mortgage resulting in a £250k rise.
- E.t.c e.t.c
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I thought it was 56 sqm, but agree it was too much for the size (even in today's market). Although most of a similar size now come on at 550k!
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It does seem the market is a little spooked.
I viewed this 2+ months ago http://www.rightmove.co.uk/property-for-sale/property-48938279.html
It already had one failed sale due to a Mortgage rejection, and now it looks like yet another failed sale!
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Interest from sellers has certainly grown significantly from my searches, I have two searches set up on Rightmove
1) Warwick Avenue/Queens Park/Kilburn
2) Taplow/Burnham
Having just checked, I have received about 8 emails today with in total about 15 properties. That is a massive increase compared to the usual....although I can't say the value is getting any better. Properties I would have expected to see at 500k are now 520k, although a few more competitive ones in there (all at high high prices but not high high plus 10%!)
Oh and another one has just popped on after this screenshot!
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We've defintely seen more reporting of the problems in London ( and the falls ).
How long can it be till the flood gates open ?
I still think an "event" is needed to kick off a full scale collapse.
That event could be anything now, a
0.50.25 % rise in interest rates would probably do it
It really is 2007 all over again, I think it was shown in 2007 that state backed sub-prime lending was a really bad idea...so what have the tories done ?
Agreed, I was actually just wondering the same question.
I know many are thinking October but ultimately there needs to be some shock that makes people doubt a) financial stability b)realisation that house prices don't always go up!.
I am wondering if this is now going to be Q2 2016 realistically if not 2017. Certainly hope it's earlier!
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Were these selling at these prices before for a comparable property, or just an optimistic seller?
Interestingly I did come across one property that had been on the market for a couple of months in Kilburn at £440k for a 2 bed, it then sold and officially went through around March time (£435k), come to May and the buyers have put it back on the market at £440k...still not sold.
What are you thoughts around that?
1) Money laundering?
2) BTL'er realising the market wasn't growing ?
3) Genuine reason
4) Thoughts?
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Another seemingly more biased twist http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/11691775/Strong-demand-pushes-home-sales-closer-to-asking-prices.html
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The British economy is quite sensitive how many businesses (mainly SMEs) fail during recessions.
It seems that majority of these businesses planning in relation to understand and work with economical cycles is shockingly missing or seriously wrong. It is partially driven by very short sighted bonus system (only 12 months or less). And if you are not shareholder you are better off with bonus even if the company fails in 2 years or so ...
I assume that majority of guys building the high rise flats just do not have any clue and do not care about the market downturns ... they will be caught with their pants down ..
I can totally believe the bonus system/we have budget to spend drive, have seen it many times across lots of different industries.
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Yep 60k or so new build flats in the pipeline... I guess once the company has secured funding and booked labor and resources they would struggle to just pull the plug.
Playing devils advocate, I wonder if they are predicting a crash is coming in X months from their figures.
They are securing deposits against a build say due in October (so x amount pre-sold), then they also see that if they don't do it now with some risk, they have to wait another X years for the next cycle to happen.
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Question: I agree that property volumes are low, particularly in the West. However I am also seeing LOTS of cranes/construction around Kilburn/Queens Park and also down towards Wandsworth bridge.
Are the developers just seeing the high prices and jumping on the bandwagon? Presumably they have their own analysts to weight up risk, and are relying on the overseas markets to buy all the new builds? (but this market is also declining).
Just today it has been reported that Hersheys Chocolate is seeing big drops from China for what is a cheap product, let alone whisky e.t.c
I know the count hates stories, but I was at a BBQ on the weekend and typically those in group who wanted to buy were talking....all in agreement with myself.
1) Prices are mental
2) Holding off because a) cant afford or
can see some pretty big drops3) Lots of stories of 'friends' who have bought at record low rates, who know that even a 0.5% rise will mean they have to sell. Literally living on the border. I can understand people who have some contingency and looking to buy for the very long term taking a risk, but where you have that little security/contingency, absolutely CRAZY.
4) Raising the question of why are some very professionally astute people, managing business risk in some circumstances simply fail to look at the underlying market and ASSUME there is no risk. I can only assume they have never seen a bust (but then neither have I).
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£2k-£3k for a 15+ yr old car?
So lets assume it cost £15k new (it was probably less). Thats £12k straight line depreciated from new over 15 yrs = £800 p.a. or £66 per month. For a NEW car.
Not being a Honda expert, that was one example having checked online....e.g. a 2005 Accord with 80k miles is 2.2k www.autotrader.co.uk/classified/advert/201506144318172/sort/default/maximum-age/up_to_10_years_old/channel/cars/maximum-mileage/up_to_100000_miles/usedcars/model/accord/make/honda/postcode/hpc156/onesearchad/used%2Cnearlynew%2Cnew/radius/1500/page/1?logcode=p
Pretty irrelevant what the depreciation was on a 10 year old car, I see a white good such as a Honda Accord costing £2k, and will probably do another 100k without too much hassle with probably just a new clutch and a few consumables. 2000-2005 Audi A4 1.9 TDI's are similar.
In theory you could run that for 10 years (av mileage 10k) for minimal costs, and certainly not £5400 over 3 years with no asset to show at the end.
If you can't afford it, don't get in debt for it. My only personal exception is property, as that is the one area you are never likely to have the full amount to put down on day 1.
The Reason For 40% London Htb ?
in House prices and the economy
Posted
I think I get that, but what about paying off HTB at year 5
£100 k house
5K deposit
20K HTB
75K mortgage
Say you want to pay off the HTB at year 5, do they then revalue the property (lets say £110k) and take the 20% of that. So £22k?
Then HTB has no further involvement in the property i.e % of any future sale?
Because as mentioned before, it may not be the worst way to protect yourself from some losses over the next 5 years.
E.g. would this work on a more likely basis (i,e value of home) using the 40% scheme( although having £200k cash is unlikely)
Property is £600k
Deposit £30k
Mortgage £330k
HTB £240k Loan
Pay off HTB at year 5, but property is now worth £500k, so HTB absorb your £30k deposit and want 40% of £500k (i.e £200k). That means you have paid £560k (230+330) after they have taken your deposit, so it’s absorbed some of the losses and you have saved 5 years worth of interest on £240k?