Quicksilver

Hi Aidan, can you please explain how a HTB buyer is typically in a chain? all FTBs of HTB new builds will NOT be in a chain and my understanding was most were FTBs?

That chart also underplays Trans volumes from past decades as this is all on backdrop of huge population increases. so in % terms transactions are down even more than in nominal terms.

If you take the full cynical HPC view, then buying a 600K HTB new build with the distinct view to "rent" it for 5 years, then walk away form it after a 40% price drop losing just your Deposit, Repayments and SDLT, I did some basic number crunching on this: £30K Deposit & £20K SDLT at 4% Opp Loss per year over 5 years = £61K Opp Loss Repayments made on captial on a 1.94% 5 year fix = £42.5K Service Charges average of £200 a month = £12K Total running cost + losses = £115.5K or £1925 PCM So the absolute worst case scenario is 2K a month cost to buy a place and walk away after 5 years. If said 600K flat could be rented for LESS than £2K PCM over that period it makes sense NOT to buy. (That is a 4% Yield so quite realistic in London) Conclusion: FINELY balanced option but swings in HTB favour as you have 5 years security of tenure, can decorate to your hearts content and dont have to deal with a Landlord. Now for me, 600K gets you junk in London so I wouldnt bite, and my budget is higehr than this, AND I would like a proper house not a 2 bed showbox, but for a young twenty something this is a tempting option as requires relatively little cash down up front.

Better table in the full report:

Did anyone note that all the price growth has come from new builds?

Exactly, hence why I said in MY example to counter your statement earlier: " .....if anyone can afford to repay today at ultra low interest they should be paying off as much as possible ..." Appreciate not many are in the position to potentially lose their personal allowance or even get 40% or 60% tax relief on pension contributions but if they are, your advice may not be very sound financial planning imo.

I respectfully disagree. In the example I espoused above, 5 years of amortizing loan repayments saves you £5K in reduced interest payments versus losing £50K in pension tax relief. its a no brainer from an opportunity gain/loss perspective. its 10x more lucrative before factoring ANY growth in your pension fund over that 5 year period.

Metrobank and Halifax and HSBC all doing IO mortgages with 5 year fixes around the 1,99% to 2.14% range on 75% LTVs. its a product thats sensible for a certain profile of customer only I agree.

I assume by falling back on Lending multiple limits as a hard cap. So max 4.5x lending based on (Salary + Pension contributions) would mean no-one could borrow MORE on interest only. My view is not to borrow more, but to borrow the same amount I would otherwise be able to on repayment but do it more tax efficiently.

There is an argument for interest only mortgages for high earners from a tax efficiency perspective. Chucking the equivalent of £20000 a year (differential between IO and Repayment on a 600K Mortgage) into a pension which then attracts on average an extra 50% tax relief (another 20K) is worth a lot more to a 120K+ earner than using a repayment mortgage. The tax free lump sum at 55 can then be used to pay down a hefty component of the mortgage, and then the final 10 years can be on a repayment basis. This is what I will be looking to do to maximize tax savings assuming a Bank sees it my way as and when I buy my first property.

Looks like a **** up rather than genuine drop? This 2 Bed was listed and then increased in price: https://ww2.zoopla.co.uk/new-homes/details/43906226?search_identifier=f4c5a02cad5292c962d115274ef91bda

Even being very generous and adding 5% a year from its last sale @£230K in 1999, max poss you would get is £600k, its more than double the realistic max. pure insanity.

If its a 2 bed flat less than 800 square foot in London, its gonna get beasted. This is BTL cannon fodder, and the glut of this type of dwelling to come in the next 12 months is going to be devastating on prices.

Albeit very kite flying pricing, this ones down V quick in matter of weeks, someone is panicking. This tower is NOT worth more than £1K per square foot and these 2 beds are tiny at ~760 square feet.

This article is full of some spurious dodgy calculations. used some bizarre assumptions to make the numbers fit the per-determined conclusion.