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austrianec

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  1. Scotland down 4.1%. Data is for April just after their stamp duty holiday ended. Their equivalent to stamp duty meant the savings were lower than in most of England (the threshold only increased by £105k within their lower rate band). Best news I've heard for ages. Wait for our equivalent July/October reports...
  2. This is a mania induced by people misunderstanding the stamp duty holiday, an acute lack of stock coming to market and a general FOMO. What's particularly insane is the regional breakdown whereby you can see the three regions that haven't seen 10% YoY growth are the three regions with house prices averaging over £300k. In other words, this isn't about the stamp duty holiday, it's not about mortgage availability (credit is tighter than pre-Covid/interest rates are up), it's not about a flight to the country from London (North East up by more than the South West) ...it's just madness where anyone who saved any money locked up for the past 12 months is spending it on a house deposit. Of course, in the most expensive regions, they still can't afford a house otherwise I'm sure they'd be even more 'into it'. ****************** If it had any rational basis, then the stamp duty holiday would work as follows in places like Cambridge: Person B accepts offer of £350k for their house with a £250k mortgage from a first-time buyer, Person A, who has a £70k (20%) deposit. Person B buys £500k house with a £400k mortgage from Person C. With stamp duty, Person A can only afford to offer £340k as is spending £2k on stamp duty. Person B only has £90k with which to buy their new house...and can only afford £400k because stamp duty is now £10k. Therefore family houses in Cambridge can increase in price by 25% during the stamp duty holiday...they've gone up by 4% YoY. In Bolton, where house prices are 1/3 as much as Cambridge, the stamp duty holiday doesn't affect the sale of Person B's house (even if they're not a first-time buyer!)...but it does mean they need to pay about £800 of stamp duty on the property they buy off Person C for £165k...otherwise they could have paid £169k So family houses in Bolton should have increased by 3% during the stamp duty holiday and have gone up by 13% YoY! ****************** It's possible the Land Registry have screwed up mix adjustment but it feels very 2006-7ish in the media...yes, there are no 125% mortgages...but the complete contrast between different regions makes me think the 'mania' is strong in this. The interesting thing is...the end of the stamp duty holiday has to cause house price falls in Cambridge...but it doesn't have to cause house price falls in Bolton. I suspect an increase in supply of houses while the supply of greatest fools dwindles (scared by what's happening in Cambridge) will cause falls in Bolton...and, if it's about 'greatest fools', then 'mania' is the best explanation.
  3. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/965665/210301_Budget_Supplementary_Doc_-_mortgage_guarantee_scheme.pdf It is essentially the 2013 scheme rehashed. The important point is that it only applies to 91-95% mortgages so cannot hope to flatten the curve of mortgage interest rates. In the latest BoE mortgage rates, you can see that 85% LTV mortgages charge around 3% interest...which is exactly what 95% mortgages were charging at the end of 2019. 95% mortgages will be priced higher than 85% mortgages so 95% mortgages will be more expensive than they were pre-Covid whatever happens. If house prices are a function of credit availability then this does nothing. This is completely different to when they introduced the scheme in 2013 when 95% mortgages hadn't existed for 5 years and came back at the lowest rate they'd ever been. ******** Stamp duty is an interesting one because, from 1st July, some purchasing a house of £300k would immediately start paying half the stamp duty they would in normal times. Given that one of the arguments for an extension was to avoid a "cliff edge" for people whose purchases drag on beyond the original deadline, they've now potentially created two cliff edges...and potentially differential incentives at different places in a chain. Also, the fact it's a full extension means people will want to sell their houses in the next month or so to take advantage...so we'll probably see a lot of supply coming on the market sooner rather than later (post-lockdown). I don't know how it'll play out but "chaotic" is surely a given. ******** Finally, if people are going to over-bid in the next 3 months, lenders aren't going to want to provide 95% LTV mortgages to them...which may dampen the immediate effect of that policy. Interesting times.
  4. How were you getting the average prices within that 12.4% fall? Is it mix/location-adjusted at all? Having seen how dead the new instructions market has been in Cambridge recently, I wonder whether vendors in high cost markets are sitting on their hands more than in lower cost areas? It's even possible we're just unwinding a boost to the average from the stamp duty holiday (if people in more expensive areas disproportionately seized on it). Alternatively, an incredibly high percentage of properties for sale at the moment seem to be new-builds...so, if you are adjusting the averages, it might be that builders have got the memo on lowering their prices in anticipation of a significant fall/crash to come. If so, that's good news!
  5. As I understand it, the legal requirement is to protect the deposit and send the tenant the details within 30 days of the start of the tenancy. Fail to do that and you are liable for compensation regardless. Admittedly the compensation amount is 1-3x so a landlord might be found guilty for a smaller amount. However, there is absolutely no way they can make any deductions from a deposit for the period it wasn't protected.
  6. I had a situation a few years back when a landlord tried to claim £2,500 in damages to the house, including withholding the whole deposit. When the deposit hasn't been protected, you may be able to get 3 x deposit for each tenancy; technically it's 1-3x. In my case that was an assured shorthold tenancy and a couple of months of periodic tenancy afterwards. I sent him a letter to that effect citing the various precedent cases. He started off making rude phone calls...then he paid for some legal advice...and was advised I was perfectly within my rights so said he'd settle for £250 off the deposit...I stood firm and ended up getting no deposit deductions. It probably caused him a month of stress and landed him with a bill from his solicitor. The reasons why I didn't try to "win" any money from the situation were twofold: 1. It was the principle of how ridiculous some of the deductions were, not about trying to take money. Then it became the principle of how he protected the deposit 13 months late to try and cover his tracks AND was expecting to get rent without bothering to do the slightest bit of reading as to his legal obligations/how wear and tear works 2. There was a case for some deposit deduction due to damage caused by my puppy. If you go to court, that sort of thing can be offset against the claim and if I only got paid 1x deposit for each individual tenancy, by settling early I was settling for a reasonable percentage of what I could have been awarded without having any of the stress Also, on "wear and tear"...basically the value of all fittings/carpets would be assessed as £0 after 5 years...so if you know he hasn't had them replaced in that time, he cannot be entitled to anything even if you've destroyed them. The deposit protection scheme assesses the cost of like-for-like replacements by value. Hold firm and you'll definitely get the deposit back.
  7. This new furlough scheme is genius by the Treasury If someone is on £27k, the employer could pay £15k, government £6k at most. I calculate income tax and national insurance (employer and employee) for the employee at £4.7k. So the government spends £100/month on someone who'd otherwise be on JSA. It would appear there is no money left!
  8. The Guayas region of Ecuador had 10,000 excess deaths last month...that's 0.25% of the total population dying extra in a month. No country is claiming 2,500 deaths per million. Adjusted for the demography of the place, it's the worst affected place in the world (Bergamo did worse but has a lot more elderly). Unless you think the fatality rate of the disease is over 10%, that's a huge amount of spread in a tropical climate.
  9. https://twitter.com/J_CD_T/status/1245739661449977867/photo/1 A credible source on excess mortality. The figures are that 0.45% of the total population of Bergamo died last month. I find it inconceivable that April won't see similar figures as they only locked down on the 9th March AND household spread would continue even after a perfect lockdown. You've got 1% of people dying over 2 months. So even if everyone in Bergamo has already caught the disease (which I'm sure they haven't), that's a massive excess mortality.
  10. The LSL method for calculating the London average looks to have averaged the change in price in every borough. This magnifies the effective weight of the priciest boroughs; and with Kensington and Chelsea/City of London rising 11.5/20.9%, you get a nonsense figure out. It's even worse than that because they also have lower transaction levels than some of the other boroughs (no surprise because they're the biggest outliers) If you take the Land Registry figures for transaction by borough (it's similar data to the data they've used) and work out the average change per house sold, the figure you get it -2.3%, which makes a lot more sense sitting alongside their figures for the South East/East of England. Also, 21 of 33 boroughs have seen falls...London isn't going to be rising faster than the rest of the country!
  11. In the example, the rent for 2 years will be over £25,000 (assuming CPI over 1%) so, on a £250k house, that's a 5% rental yield which I'd say is very high for non-housing benefit rentals High enough that it isn't overly generous to 'give' 5% back after 2 years (leaving aside the fact your house is probably over-priced by people using HTB round the corner) The only thing I wonder though is whether independent valuations would factor in any damage done to the property; if so, that could be one way of securing a bigger discount. As the builder has already established the couple in question don't have any savings, they wouldn't have much recourse against a 'bad tenant'. If there is a garden, it certainly wouldn't be worth mowing the lawn!
  12. I notice Taylor Wimpey are offering would-be buyers with no deposit, the following... https://www.taylorwimpey.co.uk/buying-with-us/special-offers/springboard ...it seems as though they gift the home-buyer a 5% deposit after 2 years 'renting' the property, enabling the buyer to buy the property I imagine the process is legitimate (and not mortgage fraud) because Taylor Wimpey aren't a normal 'landlord' and can claim they're effectively giving you the house 'for free' for 2 years and keeping the money in trust for you as a buyer (just like people living rent-free with their parents). Within 2 years, the prospective buyer will have paid 5% of the house's value in 'rent' and it's perfectly possible this goes straight into an escrow account to which a mortgage from the bank can be added should the purchaser sign on the dotted line after a couple of years. It's certainly intended to allow buyers to buy with no deposit as it appears thus in the corporate presentation: Employment Mr Smith – Trainee doctor current salary - £30,000 Mrs Smith – Legal graduate - £25,000 Financial situation The customers have no savings Customers renting a property for £1,025 Monthly income Mr - £1,750 Monthly income Mrs - £1,500 Other outgoings - £1,600 Surplus income - £625 Income required to purchase a £250k property with a 95% mortgage is £55,000 (jointly) Note the 4.5x salary mortgage. On the plus side, it does say it can't be used in conjunction with Help-to-Buy...
  13. I believe the 26% is of all house purchases (298,000 is 26% of about 1.15 million which sounds like the annual sales volume for all houses, not just FTB). So, assuming that at these bubble prices 'second-steppers' are generally using equity to trade up (if they're moving at all), that's going to be the majority of FTB
  14. I found this yesterday... https://www.zoopla.co.uk/for-sale/details/45809148 (nr Cambridge) Price reduced 4 times in just over 6 months. Was £475k...now £325k...presumably the same agent has talked them down the whole way...
  15. If most FTB-ers were buying new homes in which the sold price were being artificially inflated like this AND most other house sales are in chains of OOs (trade-ins effectively), that would explain how none of the house price indexes seem to bear any resemblance to what people can afford. Maybe the strength of HtB in inflating house prices is that it has deliberately pushed FTB-ers to new homes, removing the awkward problem of having to write down the amount of money they can actually borrow. I was assuming the current house price bubble was based on the same frauds as the first e.g. self-cert...maybe it doesn't have to be...
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