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House Price Crash Forum


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Everything posted by dgul

  1. The question is who holds the debt, who are indebted and who stand to benefit in the event of a) debts being repaid and debtors going bankrupt and there being an asset sale. If the world economy craters following the US increasing interest rates, but it is European pensioners (say) who don't get their pensions paid, and Wall Street (or the illuminati, or whoever...) get to buy lots of worldwide assets cheaply, even if the US economy has a couple of flat years - is this a good result for the USA (in isolation)? [i don't necessarily think this, but I do think it is more than an issue of the US being scared to increase interest rates because people in Germany (or, frankly, North Dakota) suffer a bit.]
  2. I think this means new lending. First time buyers take out 80% or greater LTV loans and make up about 40% of all house sales. OTH it is difficult to get a BTL at above 75%. So this is kind of an obvious statistic that isn't worth repeating. They should at least have had a LTV point which was more sensible for the comparison - say 69% for BTL. This might actually have been informative, as I reckon BTL are very likely to always go up to the maximum LTV they can get away with (about 70%), whereas for a new mortgage for a person trading up (or down) they might be happy with a lower LTV if it means lower repayments. Also, it would also be interesting to have statistics particularly biased towards BTL - the ability of the borrower to cope with stress interest rates of 7%, say (ie, would they be paying all their income on their mortgage (oo) or would they be bankrupted (btl). Or the ability of the borrower to retire if house prices go down 25% (irrelevant for oo, potentially massive for btl).
  3. That kind of makes sense - a person holding a single house might get into a bit of trouble (maybe lost their job, or divorce, say), but the numbers are such that they should be able to get themselves out of the hole with bit of effort. BTL is a bit more protected from these effects - if one property out of 4 in portfolio is empty for a couple of months then the other 3 + some owner contribution should be able to bridge the problem - but when it gets so that the mortgage company knows then it is much more likely to be terminal. The other thing I'd add is that these are with amazing levels of subsidy into asset ownership - very small changes in the £ environment (interest rates, say) could swing this massively the other way... Oh, maybe changing the tax relief on BTL, that might have an effect. Lets see what these numbers look like in 2020.
  4. No - worse than that - GDP of UK is about 2.7tr in US dollars . It is about £1.75tr - so BTL is over 11% of GDP. Not sure that it tells you much, though.
  5. Might have something to do with it - if you need engineers with 10+ years experience (and you're not large enough to wait for training to pull through) then it is no good there being enough recent graduate engineers, or lots of quants with engineering degrees and with 10+ years experience in finance. What makes it worse is that you have to compete with the finance world - and they have the effective government subsidy to bankroll larger salaries. But that is a bit of a moan about the finance industry - the problems run even deeper than that.
  6. Hmm. The people I was with were all relatively small high-tec players - so not really in the position to offer training / build up their staff base over time. All they really had was compensation, but they were more or less saying that no matter what you offer it is relatively difficult to get good staff - you can't just say "ok, lets make it £150k pa, that will get someone really special to come through the door". IMO It is a case of years of engineering being perceived as poorly paid (at least compared with, say, medicine, becoming an accountant or going into finance)... Just increasing incentives, motivation, training & compensation wouldn't improve things for some time (except for the current engineers - but they are already engineers, so don't need to be incentivised to become engineers)
  7. Indeed. And it isn't just slashdot - a couple of years ago I was part of a conversation with a junior minister at the DTI (long story) and the point was made (not by me I might add) "I can't get trained engineers, because young folk don't train because the pay isn't inviting enough" to which the reply was "well, pay them more" - seemingly avoiding the point that there actually aren't the engineers, rather than they are stubbornly working as insurance salesmen until the pay is increased... When it was pointed out that it was because of a lack of engineers the reply was "you'll find there are lots in Germany - go there and employ them". I found the whole conversation astounding.
  8. Apparently 129 units in the block - so you don't even get the whole block for your $$$.
  9. Maybe, but that money is completely recycled within the country, so just increases GDP. As opposed to, say, bailing out the banks, which only has the effect of continuing to send money out of the country in debt repayments - which only removes money from the greek economy and has no positive impact on GDP.
  10. Bit of a strange article - goes on about how dangerous the BTL bubble is to the economy, then moans about the actions the gov has put in place to take some of the pressure out of the BTL system - even though it is fairly modest and is to be slowly phased in. It would be more useful if the Mail had gone into the mistakes of the past which have led to this undesirable situation, and perhaps offered some ideas of it's own to sort out the problem - but that would be admitting that high house prices are de-facto the problem, which would logic too far for them.
  11. Clearly that is a growth industry. The people providing diabetes, dementia etc care will take the money that was going to go to the children. Note it isn't wiped out, just transferred to someone else.
  12. Hmm. A while ago Handelsbanken didn't do BTL except to business (at appropriate rates). Not sure if that is still the case. I moved out of NW about 18 months ago.
  13. Run a couple of businesses, mainly services (not going to go into details) Seems easier to get a business loan/investment (banks okay, but definitely more 'business angels' about) Services to 55+ static over 3 years. Services to <55 down Services to <30 dead (but wasn't good before. Probably my service offering, rather than anything else) B2B not that good. International dead (no change over 3 years. All Europe. Probably doesn't help that the only foreign language I speak is Greek...) Bit more competition over 3 years, but nothing significant. Government trying harder to help than 3 years ago (easier to get business support advice, etc) [again, I'd say that it might be my service area, but seeing as I'm not going to tell you what it is, that doesn't help. Oh - Nothing to do with housing!]
  14. I think that's right. With the addition that if your rental income is significant (irrespective of how much you actually receive after paying loans) then you might not actually be able to put much in your pension after all. And if you do have a well-paid job with occupational pension then it might restrict how much you can put in it. And if it is a non-contributory final-salary type affair then it might be that your rental income removes your ability to contribute to this pension. [but I can see that HMRC hasn't actually got a definitive statement on this, so it might turn out to be different. I suppose they've got a few months to sort it out.]
  15. The FT had a link to a piece on citizen's income today - here. It is an interesting piece, and put forward some arguments for a 'UBI'. A couple of points: (relevant to this thread) - the whole thing about a UBI providing support to entrepreneurs is relevant - the no questions asked part makes it very compatible with early stage business There are negative aspects of conventional benefits that UBI would overcome (eg, high marginal effective tax rates when you start employment) UBI effectively improves the bargaining power of workers UBI would almost certainly increase inflation - but that is what is required at the moment (says the central bank) UBI is a flexible way to solve a secular stagnation problem - ie, you can rapidly adjust the UBI according to the needs of the economy Anyway, the actual outcome of a UBI is possibly hidden in the middle of the piece: This obviously won’t work when serious market failures are present: [...] Monopoly power in the face of inelastic demand +For example in San Francisco, much of the benefit of a UBI might be captured by property owners as recipients use their augmented incomes to even further bid-up rents !!! - for San Francisco read 'the UK'
  16. I think this is a fair point. The government could do stuff to help (reduce red tape, give some funding), but they don't do that much. I'd add that it is much more difficult to get government to give you a £10k gift to start your business, than it is to get £10k from government to keep you in a low income job. [i set up my first business using using redundancy money. In the first 6 months I made just over minimum wage. No benefits as I was working, had savings (the redundancy + savings) and wife works. 2nd 6 months much better, but still less than benefits cap at that time, obviously still no benefits to be had. From that point it was fairly secure. But I had to have the funds to keep me going in the early stages]
  17. Quite healthy for there to be quite a few - remember, it mainly isn't the big successes we hear from over and over again. With these entrepreneurs comes a shake-up of the established players, it keeps everyone on their toes, stops margins getting too big, etc*. *Except where the 'entrepreneurship' is all about government largess (such as the UK solar industry, some NHS support contracts) where they will just reap whatever they can and then moan when the taps are cut off.
  18. That is a fair point. I'm more aware than I used to be of how people who come from a position of no risk actually do the entrepreneurship, and then make lots of money. It isn't being clever or skillfull or anything, it is just having the backing to do it. In fact, they often make many mistakes that a more rounded person might not make (well, someone who understands the real cost of doing something and doesn't just splash out on a new office and macs for everyone before having their first customer) - but they have the capital to survive. This is possibly depressing, but it is best to ignore it and just carry on trying to be productive as you can't do anything about it.
  19. That isn't the entrepreneurial safety net - that is society's safety net. I know people who choose to take risks, start a company, take training in a new job, whateer. When they lose their income they tend to be out of work for a good few months and then get a job before doing something entrepreneurial again, or sometimes go straight into the next project. Typically they don't take any benefits at all during the unemployed phase, I think because of a mix of having too much in savings, the low benefit compared with what their lifestyle costs anyway, other family income (spouse works usually) and the fact that they're often working on their next project and so ineligible for unemployment benefit anyway (even if it hasn't actually got to an income stage yet). the original post was about the cuts to the benefits system discouraging risk taking - I don't think the risk takers / entrepreneurs in our economy are close to the benefits economy at all, possibly for their entire lives (apart from the state pension, which IMO is usually a small fraction of their other pensions). [i don't necessarily disagree with having a decent benefits system, albeit with some rigorous controls. And I'm open to the suggestion of using citizen's income to support people, particularly in this current climate where there may no may not be enough jobs for everyone - I'm just pointing out that IMO the current/past benefits system does absolutely nothing to encourage risk taking / entrepreneurship. ] [That's also not to say that the government doesn't do stuff to encourage entrepreneurship - it just has nothing to do with benefits.]
  20. There are safety nets and there are safety nets. Consider several forms of safety net: On losing your job you get 6 months full pay (whatever your pay), 6 months 2/3rd pay (with a minimum), 6 months 1/3rd pay (with a minimum), then nothing . Then it takes 18 months working to reset back to full benefits again. On losing your job you immediately get a minimum benefit (much less than your old pay), but forever. On losing your job you get a minimum benefit forever, unless you've got savings in which case you get nothing until you've spent your savings. On losing your job you get a minimum benefit forever, unless you've got savings in which case you get noting until you've spent your savings, and also unless you're a small business really struggling to get by in which case you also get nothing until the business actually folds completely Similar to above but with a complex set of rules which makes it unclear whether you can get it at all, but which after spending many, many hours studying the rules, and after many, many discussions with 'subject matter experts' about different behaviours (children, hours worked, etc) you might actually understand how to get the best benefit for you. Which type of system would encourage entrepreneurial risk taking? Which type of system is closest to what we have now? [note that there is also a society safety net, which kicks in if you suffer a devastating injury/condition/disability in which case society looks after you - but this is unrelated to the the entrepreneurial safety net]
  21. Ok. Read Europe after the Minotaur. Good read, even if it is clearly an advert for 'the global minotaur'. The premise of the book is something like: Years ago America drove the world economy More recently, America changed to be a debt based economy, recycling the savings of the world economy (the global minatour) In 2008 it all collapsed, and the minatour was wounded and eventually died. America is still going, but it isn't recycling the savings of the world economy. Because of this, the world will be in depression for a while Eventually China will take it's place, but it isn't ready yet. Possibly China will side with the BRICS to do savings recycling, which will leave the west cold. All this while, Europe hasn't been able to do savings recycling because Germany is too dominant. What they really need to do is issue euro bonds, but Germany won't let them. So Europe is doomed. It isn't clear how this applies to the UK. Maybe we're lumped in with America and will suffer the same fate. His thing is that the world economy is broken, so I'm not sure how the UK can do anything. Perhaps think internally, and make/encourage the surplus parts of the economy (SE, London, financial sector, housing) stimulate the rest of the economy, rather than just save / inflate assets / consume overseas stuff (not sure about this, how do others interpret his work?) This might well be a rubbish interpretation, in which case I'd be very happy to be educated on the premise... I'll read the global minatour next, but from that introduction I think YV would give sensibleish advice to the UK - probably not so much outright debt reduction (maybe some in targeted sectors), but perhaps some debt relief along with targeted stimulus (non financial-sector). But I think he'd say something quite specific to the problems in the UK economy, and wouldn't advocate the path recommended for Greece (say). Well, other than move away from austerity (actually, to drive specific investment in the economy, as the UK doesn't actually do austerity well). I'll bump these two while I'm here. The second is a bit long, but is worth it. Well, it wasn't as much of a waste of an evening as watching that dire Walliams Agatha Christie thing on TV - I'll never get that time back.
  22. Exactly - and for those in receipt of wtc it is 'worse' than normal - the income for benefits is the income before any interest (not just the 20% base rate allowance). The 20% tax relief is of the form of a tax rebate, and doesn't lower income. eg,work income £20k, BTL rent £15k, BTL costs £1k, interest £10k Now - total income = £24k. Maybe eligible for some benefits... 2020 - total income for benefits purposes = £34k (but they do get a £2k reduction on their tax bill because of the interest they pay) (in the example, tax wise they are the same in 2020 as now - it doesn't matter if the tax on the interest is deducted before profits are calculated or if it is offered as a reduction on their tax bill - but there might be a big impact on benefits.) Edit - ha! we're all saying the same thing!
  23. None of it suits me. I just try to keep on working, try to get a holiday once a year, that sort of thing. Doesn't mean that I can't try to analyse what is going on and what the outcomes might be.
  24. The pig's ear was made well before YV came along. It is difficult to know if he made it any worse.
  25. Has anyone read any of YV's books - any recommendations? I thought of getting 'the global minotaur' - is that okay? Edit - He's got a free e-book - 'Europe after the Minotaur' - I've downloaded it and will see how it goes.
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