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About westlondon

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  1. Much of the HPI we have experienced is exactly because the UK economy via London is in turn exposed to many other economies - the Chinese and oil-producer economies. When you host an international city its economy is going to mirror that of other international cities; Dubai, Singapore, Hong Kong, New York. I do not see what else explains how house prices can rise when average wages do not. The rise in prices must be in consequence of rising bids, either because credit is cheap or because sterling is.
  2. BTL developed much earlier than that. People who couldn't sell in the early 90s because of negative equity let their houses out instead, and rented themselves. Most mortgage lenders at that time let you do this for some period - mine allowed 2 x 2 years, others allowed more. When the period was up, they offered you a landlord mortgage (mine did, anyway - Halifax). Why not? Secured loan, rent exceeded the mortgage cost because tenants were still afraid of negative equity. Nice safe business for them, which they developed into their BTL books. AIUI they remain keen to offer low-geared landlords
  3. Indeed. They found out what happens when an underpinning assumption gets proven invalid. The thing is, though, that like a lot of homeowners in the early 1990s, they could be technically bankrupt but just about able to trade. If their ownership costs are £5000 a year, but they can also let for £5000 a year - or close enough to it that they can cover any shortfall - then it doesn't matter from one week to the next what the value of the house is.
  4. This. Check what your agreement says about landlord's responsibilities but this totally looks like his job to me. If it were me I would send him estimates for the work of an extraction and redecoration and say you're going to proceed deduct the cost plus 5% management fee from the next month's rent. As has been noted, all he can do is give you notice which he won't because he'll then have to spend the money anyway.
  5. What have Edinburgh property prices done meanwhile? Presumably the cost of ownership has fallen too? If a house in Edinburgh was £100,000 in 1998 and the interest rate was 7%, and it's now worth £250,000 and the interest rate (still on £100,000) is 3%, most landlords are probably even happier than their tenants.
  6. No, he doesn't. You cannot increase the mortgage, spend the equity you take out, and charge the extra interest off to tax. What you can do is extract equity and then use that to buy another property or fund another business. Incidentally, the games hinted at above, where you put property into a company, don't work. The company has to buy the property off the individual at its current market value, and pay stamp duty on that value to register the change of title. This costs large sums of hard cash. As the individual selling the property is also the one capitalising the company to effect the b
  7. The BTL payoff comes over the longer term. Very roughly, rents are about the same as what the mortgage interest payments would be, had the owner bought the place today, with a conjectural 100% mortgage*. Hence rents vary over time roughly in line with the formula market value x interest rates plus a bit of margin, and are initially less than a repayment mortgage would cost per month. If you had bought a £100,000 house 25 years ago, it would now be worth £400,000. So its average value has been £250,000, and that's what rent would have been based on. Interest rates have averaged about 7% ove
  8. My wider point is that at the moment banks are risk averse and have no special interest in offering mortgage finance at attractive rates. They can demand low LTVs and load up a huge ultra-low-risk margin relative to their own cost. To lend at 3% against a base of 2.5 is far nicer business than lending at 10 while borrowing at 7.5. Same spread, enormously higher margin. In the late 80s, they had to absorb a lot of the interest rate increases from 6 to 15%. It was all very well base rates going up to 15%, but nobody would borrow at 17.5. So they loaned at 15.1 and whatnot. I can see the sam
  9. What does your letting agreement say about the landlord's responsibilities? It might be argued that keeping it clean and tidy is supposedly yours. I have rented places before where it was my responsibility to mastic around the bath. Supposedly this was because if it were the landlord's I'd have to let him in to inspect and do it. If the room is inadequately ventilated, mould buildup like this is inevitable.Opening the window isn't going to do a lot because there is no circulation out of the window. The only real solution to this is to have an extractor fitted that is operated by the light
  10. The trouble with or indeed the attraction of London is that the average wage in the City is probably about £60,000 a year. A couple on those salaries can raise a mortgage of £480,000 without much difficulty. Add in a deposit in the form of a few years' bonuses and they can get to £600k total buying fund without a problem. This represents little long term risk because salaries will rise nicely The dump in E-whatever it was probably went to a singleton with a bigger deposit than that.
  11. This - margin reduction by lenders on their loans - strikes me as quite a likely middle term outcome for residential lending too. Base rates will probably increase by 2016, but it doesn't follow IMO that retail mortgage rates must go up too. At the moment, the Bank rate is 0.5% and you can borrow at that plus 2.5% (i.e. a 500% markup for the bank) without even trying. If we see base rates go to 1.5%, it seems plausible to me that mortgage rates could go down, as banks try to find people prepared to take on secured debt in a climate of rising base rates. There is plenty of room in banks' lan
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