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About 7upfree

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  1. The worrying thing is that 11% operating margin (as distinct from net margin) is hardly a fabulous return - and that's with funding for lending. Even if they were selling houses at zero margin, theywould still be unaffordable. The combination of relatively high land prices, expensive imported materials purchased with devalued sterling, high oil prices, high infrastructure costs and professional fees make for a lethal mix in so far as affordability is concerned. In fairness to Barker, I seem to recall that she produced a good report a few years back that supported some form LVT for land with
  2. I will dig out my tax return details when I get a minute. Basically, we were getting £500 per month on a flat worth £90k so give or take 6% yield. Interest on a £50k mortgage was @ 4% so around £2k per anum. Factors fees - £500 per anum 1 month rental void - £500 per anum 1 month council tax - £120 Letting Agent fees - £1200 Repairs - £100 - £500 per anum Cleaning - £50 Accrual for painting, decorating, new kitchen, bathroom and other capex on a 5-15 year basis - at least £1k per anum Share of accountants fees for tax return - £100 Advertising, lease renewal fees, £100 That's befo
  3. It's total rubbish. BTL yields of 3.8% are totally atypical. As a general, net yields are 50% of gross yields when you take into account all of the fees and costs. The big one which is always omitted is the necessary accrual for a new bathroom and kitchen every 10-15 years or other capital and revenue expenditure. It's fantasy accounting to omit these costs - and that's before any interest rate sensitivity analysis is performed. We had an accidental BTL that was only 50% geared and it lost money every year without fail - and that's with very few voids. The only profit we made was derived from
  4. Is it not often said that you can run a deficit pretty much in perpetuity provided you are also running a current account surplus? From what I can make out, that is likely to change as a result of demographics and more "local" competition makes it cheaper for even Japanese companies to manufacture in other pacific rim countries. Thanks for your helpful posts - makes an understanding of this issue all the clearer. One further question: do you think that the reason why monetary velocity has been falling since 1980 is simply a reflection of the fact that with increased levels of credit, money
  5. If it was hoarded in cash or other financial assets would it make a difference?
  6. Can someone who knows better answer a question on the graph? As I understand it, QE is justified at the moment because monetary velocity has collapsed. Therefore, by increasing the supply of money can be safely increased without causing inflation. As an when monetary velocity increases once more, QE will be unwound (yes, I know - ha, ha) and the money supply will contract. Now, given the decline in monetary velocity from 1980 onwards, why have we had relatively strong growth? Is it not the case that looking at the graph in isolation and without taking into account the total quantity of money i
  7. I keep an eye on the UK swap market from time to time. It would seem in July that short term swap rates rose quite dramatically in % terms in July but long term rates fell. Not sure how banks like Santander fund themselves for SVR mortgages (no doubt a mix of savings and wholesale funding) but assuming they are dependent on short term rates, it to some extent explains the rising costs. Pretty good gross margin at 4.74%, however! Have a look: http://www.swap-rates.com/UKSwap.html
  8. That's absolutely correct. If you look at the RBS figures from their results thread, it is now perfectly clear that the banks could easily sustain a 10-20% fall in property prices without it being a game changer. BTL is now the government's chosen method of social housing provision. They are a captive market. cut housing benefit by 30%, who are the BTL crowd going to let to? Very often social housing BTL is not at the standard acceptable to non social renters. Moreover, it is often located in areas where employment and thus rental demand is lower. So Mr BTL is forced to sell - at a loss (and o
  9. The funniest thing about the original article is that the proposal is no less absurd than the creation of money out of thin air in the first place. The idea that the interest accrued funding a tax cut might give rise to a bank credibility problem is beyond parody! Everyone knows the gilts will all be canceled in any event. Can you imagine the Bank releasing the purchased gilts back into the market place? No - neither can I. Worst of all is that I know this is all a ghastly charade but I can do little to influence what happens next. The reality is that this will all happen again. Some other g
  10. I saw the same spot on the news this morning. I may have misheard but the suggestion was that there were around 4 billion barrels of proven reserves in Dakota (and I presume part of Canada). Sounds impressive until you reflect that, with world consumption at over 80 million barrels per day, this find will power the world economy for a mere 50 days (assuming a billion is a thousand million). Still, you can't beat a bit of perspective....
  11. Absolutely correct. A client of mine recently purchased a property for 155k. Seller had turned down an offer of 350k 7 years ago.... It would cost over 500k to build at today's prices.
  12. Neither- it's the average mortgage advance in 1986. The £12k figure is the average recorded income(s) on the mortgage application.
  13. I'm not quite sure what impact this would have on what I have said. Do you have any figures to support what you say (genuine question btw - not meant to be confrontational).
  14. Cheers - nice to hear from you. Have been waiting for our favourite uber-mentalist to invade the thread. Hopefully he's too "tired" to post....
  15. Yes,I have seen some anecdotal evidence to that effect but have not investigated it in any meaningful way. It seems to me however that by looking at household income we overcome the problem you allude to. There is a very broad alignment between average recorded income for mortgage advances compared to household income - particularly when excluding the lower quintile.
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