foxytrader

Fascinating research DOH thank you. Think the flippers tend to do well for a few years then find they have to hold on to a property or take a loss and reduce their overall profitability. It appears quite similar to day trading in stocks and futures. You can be successful if you can secure finance and keep everything turning over but if you take a couple of losses and credit tightens then it's probably time to change asset class. Savvy investors particularly in premium London areas can do this - after all 10% on a £2m property over 6 months is still £100k after costs but before tax. However mere amateurs look like they will lose money in real terms - after all no woman I know would spend £2m and not redecorate and replace the kitchen - £100k at least I would have thought.

Reckon it won't be quite that awful. Think a £180k (at the top) 2 bed yuppy flat is probably now worth £150k. Leeds has 4500 more in production and the same amount with planning permission. Give it a year the same flat will be worth £120k. At this point do you sell for say £115k taking a hit for 65k plus costs or do you say I have a £145k mortgage which is costing me £8k a year and in 5 years time the market will "probably" have recovered to my original mortgage level. I may get say £400pcm for the flat (£1000 now) for half the time so only really losing £5k pa!! Total cost in real money in 2011 after a £145k sale - £35k deposit and costs £1.5K £30k (6 years of annual £5k loss on mortgage) £1k Sale costs Total approx loss £67k. Although there is only a nominal capital loss of approx 30% there is a real cash loss of nearly double that. 50% loss quickly for the easily-panicked and the same but much more slowly for the over-confident. Easy come easy go.

Unfortunately not. It made them aware of the "potential" exposure these companies had to their scheme if certain actuarial assumptions were used. Not the same thing. Either way it spelt the death of FS schemes for all but the most patriarchal of employer whether by obliging them to allocate a much larger proportion of the company's "wealth" to the scheme or by making it prohibitively expensive for the balance sheet to run this type of scheme in the future. Company pensions were/are a perk like a company car or a subsidised mortgage - no-one is entitled to them. The Fox

Spot on NB. Not one iota of sympathy for any of them.

Oddly enough they are experiencing technical difficulties on the thisismoney.co.uk website so unable to read your link. However without seeing it I think I can guess the gist. Buy if you want to Househunter you will find enough encouragement on the "bull" side from EAs and financial journalists who spend their time being lunched by people with a misplaced vested interest in an artificially high housing market and in 2 or 3 years time no-one on this website will know what happened to you. However if you wish my advice I would suggest any rises will be modest and characteristic of any asset class at the fag-end of a bull market. Once you factor in stamp duty legals mortgage arrangement fees valuations etc and the loss of flexibility that occurs when you buy a property in a flat to falling market - it will IMHO cost you considerably more than having the luxury of waiting and biding your time. Good luck.

Yes thought this was a bit desperate and I believe it also came out before the Pre-Budget Report. The whole tone of the article is rather odd. CML expects a rise of 4% but offer no reason for it and at the same time expect a fall in volume of over 20%. So as posted elsewhere why is this market the only one anywhere that can defy simple laws of supply and demand? They also go on to say that the fall in transactions will be offset by remortgaging. Reckon it is going to be extremely difficult to MEW a BTL whose value is dramatically under water. Far more significant news IMHO was the fact that one major BTL lender will now not lend on new-build property at all. Idle over-optimistic speculation versus cold hard business reality. This is a desperate little report with no hard facts put forward by a trade body some of whose own members cannot reveal the real situation without running the risk of breaking Stock Exchange rules.

Link please.

No just valuations.

Perfectly correct - from an investment viewpoint placing residential property into a Sipp was a really bad idea and professionally I for one would have had a great deal of difficulty justifying it should Compliance have queried my advice. However the fact that £5bn (apparently) had been earmarked for it combined with the ridiculous assumption that property always goes up suggests that normal investment criteria had gone out of the window. The jubilation is based on the same principle as house prices have been pushed up - confidence. VIs pump up the market/ lenders overlend/prices rise/people buy more/remortgage or MEW/prices rise ad infinitum. This virtuous circle (or Ponzi scheme as it is more accurately known) has been turning consistently more slowly over the last 2 years as prices have stagnated/sales take longer/gap between asking price and sale price widens/ etc. Sipps were a further potential delaying tactic before the inevitable fall started to accelerate. Imagine you are on a rollercoaster and it has finally reached the top of the hill huffing and puffing moving almost imperceptibly. The market is poised tantalisingly but realistically there is/was only one way for this rollercoaster to go - down. Sipps and their cruel appearance and disappearance is that tiny little bit of pressure required to send the rollercoaster hurtling at great speed towards that dunking through the log flume. The BTLs and the heavy MEWers are screaming loudest. In genuine fear. The realist professional landlords took hats and oilskins. The rest of us are playing on the dodgems chatting up your girlfriend. The Fox

You can't sue someone for mis-selling who isn't regulated and Inside Track isn't an FSA-regulated firm. Doesn't (didn't!!) have to be. Their website is still taking bookings for the seminars!! No they aren't but who advised on the mortgage? They will be.

Steady Munro speculation isn't a naughty word. We are all speculating - STRs that prices will fall BTLs that prices will rise and yields will improve etc Please distinguish between Sipps (an excellent product in existence for 16 years) and the speculation over fine wines BTLs and vintage cars being invested in a Sipp. There is a huge difference. Also "sipps industry" sounds a bit sinister - the vast majority of IFAs and "traditional" Sipps providers (AJ Bell/Sippdeal/James Hay) were at best lukewarm and at worst dead against residential property in Sipps. Standard Life and particularly Hargreaves Lansdown - now that IS sweet. The Fox

We all knew the legislation was still being formulated by the Revenue TTRR. Standard Life and their ilk were simply looking to gain a first-mover advantage. As for others particularly the spivvy firms who were simply one-trick BTL ponies trying to dress themselves up as "investment advisers" - there's always a wider net at the end of a bubble. In stock bear markets the crap shares go down most and the crap stockbrokers get another job. At the fag-end of a housing boom the dross EAs/lenders/surveyors all go to the wall. Any damn fool can make money in a rising market. Now we shall see who can hold on to it in a falling one. My understanding of your position TTRR leads me to believe it won't be a problem for you. Personally think it will present opportunities for true professional landlords as the hobbyists run for the hills.

"The word on the street"? Who are you - Wolfie Smith? Employment and IRs are contributory factors but record numbers of houses were sold in 1988 so not that many people were concerned. People don't talk a market crash whether its stocks houses or anything else. It happens. Its a slow realisation not a bolt from the blue. A week in Dubai for 3k is not the same as choosing to buy a 370k property and hardly an indicator of house price health. I appreciate today has been an awful day for bulls but let's keep some proportion. The Fox

That's out Durch and I don't even have to go the 3rd umpire. Mighty Tharg et al where are you?

"I am ONLY interested to give a little balance to these boards b/c it is ok to believe that we will not have a massive crash UK wide. And many people out in the Uk agree with that." It's ok to believe whatever you like. Plenty of people believed property couldn't crash in 1988, TMTs in 2001 and tulips in the 18th century...and many other people agreed. Depends what you mean by a massive crash. If we saw avarage prices back at 145k in 18 months that would broadly equate to a 20% real fall. Would that be a crash?

Initial reaction here at "large pan-European IFA" is that it completely stuffs residential property in a SIPP. Not only will tax relief not be payable but "tax advantages" eg gross roll up - has also disappeared. REITs are collective investments. Big business but really only in the commercial property market. They can borrow and they can gear up. The Fox

Yes it does Zorn. Where has this increase in value come from? Is it because the house can now perform better that it is running more profitably etc etc? No its an economically parasitic process. It bleeds us all dry and makes the banks and the government rich. Are you old enough to remember pyramid selling? I get 6 people to pay me £50 and each of them then get 6 more each to pay them £50 ad nauseam. There is no effective wealth created. House price inflation is exactly the same. High house prices are generating vast debt which will ultimately have to be repaid - from resources that could have been used to generate real wealth and prosperity. A vibrant economy is NOT a game of selling each other properties at higher and higher prices. The Fox

"I must see 20 BMW X5s @ £50000 a pop every day ffs." Mostly MEWed or bought against paper gains no doubt. Just because he's driving it doesn't mean he's paid for it.

No they didn't. Very few people contributed to pensions then unless they were obliged to. The difference is that they had confidence in the stock market - which is a genuine receptacle and indicator of a country's wealth - rather than the accelerating Ponzi scheme that is the UK house market and which serves no genuine economic purpose. The justification of BTLs as alternatives to pension planning is a relatively recent phenomenon. This works only when prices are rising and a capital gain can be made. As the BTL market looks increasingly sick and the distressed sellers start offloading then we shall see. The great thing about pensions is that once you have made the investment you cannot access it until you retire - BTLs earmarked for "pension planning" tend to be sold and plasma screen TVs, new kitchens and Range Rover Sports tend to be bought. Or worse (and we know its happening) its either MEWed from the BTL or simply justified by "Well I've made 60k on current valuations so I can spend it". No-one has a genuine long-term VI in a rising house market except the Chancellor of the day who will reap 40% on everything once the average house price breaches the IHT threshold, the yield is half the basic-rate allowance or CGT will be charged. Why buy something you can't sell without losing 40% of the gain? Everybody should be hoping for a re-rating of house prices soon or the entire market will cease to function followed by the mother of all crashes. It will happen but when is the issue. If the rise in average house prices is likely to be less than the amount paid in stamp duty and legals then realistically why would you buy? These surveys are genuinely useless - only in the UK would we accept data collated by a company with a vested interest in avoiding one possible survey outcome. EAs have a short-term vested interest because when prices fall so too will volume. Possibly will be a slight rise in the market in early 2006 but those who do buy will be the ones mocked as much as those that bought the second tranche of BP stock. The Fox

Remember Algor "Ultimately cheats don't prosper".

That may go some way to explaining the 4m people currently claiming incapacity benefit - a record figure which means roughly 12% of the working age population are no longer economically contributing. The low unemployment figures are an absolute sham.

It is possible that your flat was something particularly special W+L but to be honest I never look at the prices of anything I have sold and taken a profit on or sold and lost money on. You can never get out at the top of a market or buy at the absolute bottom. In the words of Warren Buffett "leave a little for the next guy". This market as with any other is a game of reverse pass-the-parcel - you just DONT want to be holding the parcel when it blows up in your face.

Really can't work out why the spin on this is that it's being done because people don't want to do pensions. You can't make a pension contribution at the age of 30 for example of more than 20k anyway so where is the similarity? This is apples and pears stuff. Lorna Bourke - a truly awful financial journalist for many years. Kept backing Equitable Life when every IFA in the country was telling her the "no commission" story was bo**ocks and that the bonuses were unsustainable. Big fan of Zeroes too - because as Investment Trusts they didn't pay commission. This woman cost a lot of people a lot of money and was totally immune to any comeback - if I did what she had done I would be in jail.

Oh come on Erranta this is old stuff. No pension providers have charged up-front commissions for years. Average AMC is 1%. If the performance is sh*t you can move your money to one of 100's of other providers without penalty. You can enter drawdown at 55 and generate your income from your investments. There is no "screwing" at retirement. Everybody gets 25% of the fund tax-free if they want the rest provides the income. SIPPs (which have been around for over 15 years btw) let you pick and choose any fund manager/insurance company/OEIC/UT/IT etc. This type of ignorance terrifies me and particularly today with the issue of the Turner Commission report. No wonder the rich are getting richer (they maximise their pension contributions EVERY year) and the ill-informed aren't making any provision at all because of this sort of folkloric financial view. Sad.

Oh come on Dogbox its not that simple and you are sounding like Norman Tebbit. On the assumption that you think house prices will go on a permanent arc rising and rising then one must get on a ladder as soon as one can. Granted. However the "get on board at any price" mentality ultimately doesn't work. It feeds on itself. Current house price average is 165k ish. Inheritance tax threshold is 275k. Gordon has little or no interest in moving this up for the simple reason that when average house prices reach that threshold (which will happen sometime in the next 10 years if I am right and in the next 2-3 if the bulls are) then of every £ that the average house rises above it 40% currently will ultimately be arriving in the Exchequers pocket. Yes people can choose to sell their house prior to that to go liquid and not pay tax on the gain but in a permanently rising housing market why would they do so? Similarly BTLs will pay 40% tax on sale or 40% income tax on rent. Basic rate taxpayer/owner occupiers will be as rare as hens teeth and squeezed out anyway because the average house price will be 8 times the HRT threshold and average rental yields half the basic rate band so anyone earning more than say 16k in their "other job" will be an HRT. HMRC are eradicating any possibility of using the PPR in inheritance tax planning by challenging every creative scheme the financial services industry comes up with. I am a bear not because of some sense of "the world owes me a living" but because reasonably if the market continues to rise uniformly we are effectively handing 40% of future house price growth to the state. The only way houses will come on to the market is by repossessions death or forced sale for LTC. It will become like an awfully self-satisfied little golf club where the only way to get in is by death or someone elses's misfortune. Older readers may recognise this scenario from Japan in the early 90s and may then make their own extrapolations. I may be wrong. I am not that doctrinaire that I believe I have a monopoly on being right as most bulls appear to feel. This may be a mentality that says like Thomas the Tank Engine "Keep it dark, keep it dark" and if enough people "keep the faith" it won't happen but one day I believe they will see they have been sold a pup that permanently rising house prices are good news for everybody. Ultimately they will see it isn't good for anybody. A re-rating of house prices is essential if we aren't to devote far too much of our wealth to the upmarket caves in which we live. It's not (for me) an issue of lacking Victorian-style moral fibre but rather not wanting to cripple job mobility and aspiration. JMHO.