nicko75

My last sentence regarding treating earned money the same was designed to clarify that I agree with the points you are asserting?..

There is something wrong with the contractor thing when every expense under the sun is put through the 'business' and the exchequer is defrauded ... I am not calling for high taxes all round - merely that 100k earned is a 100k earned and taxed the same way...

I can identify with the themes in this thread. I have lived in London / South East for 15 years and worked every day since I was 21 paying tax under PAYE. I am currently surrounded by people at work who operate on contracts and pay themselves through shell companies. I know a multitude of amateur BTL landlords. I have watched the place first be dominated by the fraudulent banksters and now by an influx of crooked foreign money. Through some significant hard work and effort I recently scored a promotion which has taken my salary from 90k to 104k. I discovered yesterday that the marginal tax rate on this is somewhere between 50 & 60%. Any pay rises I receive in the coming 2-3 years will now effectively be taxed at around 66%. My wife is pregnant with our first child due in June and we have just bought a house. She will obviously not be able to work for a while. We have cut out the gym membership, sky tv, expensive phones and I will be downgrading my car. I have also stopped (for now) paying AVC's on my pension and another £200 on a share save scheme. In other words, I am doing all the 'right things'. I discovered on Thursday that we will not receive any child benefit which was in my budget and we could have done with. So 100k sounds a lot but in the South East it's probably 'about right' to live as a family in a half decent place on one income under PAYE. It's also a pretty typical salary for a 'striver' as opposed to 'mega-money' and so to disincentivise hard work through the tax & benefits system seems wrong. So - I don't want sympathy - and I certainly don't want to appear as if I am 'showing off' but we are probably a good example of what some of the posts on this thread are about. They have to go after the contractor / shell company thing. That is a complete open goal. If they don't, I will join them. If you pay higher rate tax through PAYE you are effectively subsidising everyone else at the moment.

Me & the wife need to buy somewhere now - i'm nearly 37 and she's pregnant. And we have both been living here (London) a while. Currently in Kingston / Surbiton as I have posted elsewhere. Have been looking for a few weeks now and the market is crazy. I have not managed 2 or 3 of my viewings because the property has been sold before my time came up. I looked at a place in Hampton the other day @ 450 which sold for 293 only 3 years ago - it will go for asking price too (ok so they have done a nice loft converstion but +157k!?). I spoke to my landlord last night over a beer (a decent guy to be fair) but his property advice scared me - borrow as much as you can from wherever - loans, mortgages, wherever, go interest only and buy a place for 600/700 (our budget is 500 tops) - prices are only going up.... i cant and wont do that - i am planning for one income only plus some contingency - the problem is that you cannot compete on that basis in London now it strikes me that there is a massive bubble blowing up in London from leveraged BTL empires, heavy equity gains and big BoMD deposits [which includes me to be honest] allowing access to the 3% and below rates. but its become irrational... and that is why i am thinking of getting out. You can buy a 4 bed house 5 minutes from the station in Staines or Egham for 400k and its 35 minutes into Waterloo whilst - at a similar distance to the station - you can buy a 3 bed converted 2up 2down in Hampton for 450k - which is 43 minutes into Waterloo! .... ok so Hampton is nicer but there aint much there apart from a new 'Little Waitrose' - always the give away! So London is either heading for a permanency of 10% of people owning 90% of the property - or it is heading for one almighty crash when reality sets in. Either way I think I am better on the sidelies so I can get on with having a family. I have just put an offer in on a place in Surbiton but I am expecting it to go to some stupid dutch auction and i wont get involved with that so assuming we wont get it. If that is the case then it's really time to think about getting out of here.

Money from parents is either given... (i) Now = makes mortgage cheaper than equivalent renting - house market stays flat (down in real terms) for a decade thus meaning initial deposit money is "lost" or.... (ii) via bequeath of home to children in x years time = flood of properties on the market as kids dont want them / think they can "cash in" / need to pay inheritance tax bill = price reductions in real terms due to increased supply of properties at this time. In either situation we end up in the same place in x years time - everyone agrees housing market is 20-40 % overvalued - cash being passed down is just an "enabler" for some right now and enables people to get on with their lives. We will all end up at the same bus stop in 20 years time, there are just different ways of getting there.. (I am not trying to defend the status quo btw) That said, i do wonder what happens in the next 2-3 years - apparently there is a load more cheap money about to flood the system from this Government "Funding for Lending" scheme...

But the market basically recognises this right?... Decent mortgage rates & lending only available for 25 - 40% deposits because the bank's long term value of property is 25 - 40% less than current prices. So the market is basically saying - if somebody is willing to bung you a 3 figure fee now (ie your parents) you can buy somewhere now - or you can wait 10-15 years when people are going to start dying thus triggering a mass sell off thus returning prices back to real terms 'normal' levels [either to pay for care or to pay IHT bills] or you inherit.... thats kinda my simple view of the macro situation...... basically there needs to be a wealth transfer from the boomer generation - it either happens now through cash transfer or in 10 to 20 years time through death.... unbelievable the extent to which one generation has stolen from another (two) - i'm not bitter enough to suggest that this was all some deliberate consipiracy and - as i've said to my parents - you can only play the cards your dealt and good luck to them. i just think now when you look back at the property and stock market gains they have made and the final salary pensions etc, it now seems obvious you can only really do that by mortgaging off the future generations...

The WFH one is a real interesting one - I am almost certain that BOTH my productivity and quality of life would be better if I worked from home 2 days a week (head down, quiet, sorting stuff efficiently) with maybe 3 days in the office - meetings, sharing context, networking etc.... but there is the crux - i would fear (in my company at least due to it's sheer size) that if I was out of the office more than in, I would become invisible and my career would suffer as a result - missing opportunities, missing context, miss building relationships etc etc. It makes you wonder what on earth "work" is at all - when an increase in my productivity means I likely lose out in the long run.

I can almost feel any goodwill I may have generated on this thread, rapidly slipping away...

Thanks mate - hopefully its even better than that... ie. Housing costs covered and paid by work while we are out there so no housing cost basically. I have spent some time in Houston lately - the market there is totally different - there is so much space that they just keep building out and out - whole new communities spring up out of nowhere - 5 bed massive houses, swimming pools etc for naff all - ok, you lose some of our "character" but it's safe, family friendly and a good place to spend a few years with a very young one whilst saving some good money....... I suppose if we did manage to buy a place here and then move US ex-pat we would just rent out our UK place...... which would then make me the bad guy.... :-s

That's not even half of it though is it.... and you know it... It is maddening that people who made blindly stupid financial decisions 5-10 years ago now think they are investment genius' because the government has intervened on their behalf to manipulate the interest rate (thus losing the taxpayer billions as they also own said banks) because to allow people to face the consequences of the risk they actually took on at the time would bring the country to its knees. Do it I say, the slow death is worse if you ask me... There is a strong chance of an ex pat opportunity in the States with my current job - if that comes along I will bite their arm off and can stop worrying about how I might be able to house my fledgling family in a shoebox after 16 years in the workforce...

See my earlier response also - I agree. It is wrong to build your "base case" on two people working permanently on high salaries. Miserable.

Thanks all for feedback (including alternative property suggestions, its good to get an external view, my property searches have become a bit myopic)... ... another thing I have noticed is that both my current and previous Surbiton landlords have moved out of the property they subsequently let to me and now both live in houses on river roads themselves. (I lived a most enjoyable 4 years as a bachelor in Avante Court in Kingston inbetween!). Reckon there must be a few btl locals in those river road houses... I think the area is unique in that there is a really hotly contested square half-mile which ticks all the boxes - well maintained period properties, access to a superfast mainline service, great shopping nearby, river, good high street & sense of community - but you don't have to go very far to get to dull & uninspiring followed soon after by downright rotten. So there is a real spike in prices in the centre of Surbiton - I can't see the "ripple effect" ever moving too far down the Ewell Road to be honest. We went for a drive the other day to look at some alternatives - Worcester Park has some potential.. drove through South Merton, West Sutton & North Cheam (endless grey housing estates which looked like the end of the world) and then Cheam villiage (nice but doubtless expensive). Finally we got to Belmont (which i had never heard of until my mate bought a house there the other week) which was very nice but very quiet. We were certainly of the view that if we cannot live in one of the nicer areas then we would rather not live in London at all and will just move much further out - that is why I think they may always be some wild variations in prices accross London.

Interesting to hear you are in the same boat - you have hit on the problem - there is a lot of property about but EVERYBODY wants to live in the same quarter mile of Surbiton... We currently live on St Phillips Road in a period flat so we are "in the zone" - the thought of moving to Berrylands is depressing and Tolworth is just nasty, full stop. Have resigned myself to the fact that we will not compete for a good river road property, shoudl one come on - I am more hopeful that something on the edge of Kingston or maybe the other side of Surbiton station (not as far as Tolworth) could yet be achievable. It's been referenced elsewhere but Kingston / Surbiton has almost certainly been hit by a bow-wave of people coming from Clapham / Fulham / Wimbledon - previously the domain of the high earning City worker, now pushed out to Zone 6. We really enjoy our life here - I really don't want to leave London - but maybe we will have to admit defeat, time will tell... Glad we agree on the lunacy of asking £700k for that house - location wise, it's rubbish and I reckon £650k would get a better or similar hourse with less than 5 minutes walk to Surbiton High Street, station and the river....

Thanks for your analysis FreeTrader - can i ask a dumb question? What do we mean by repeat sales? And what is the significance of general sales..?

But when push comes to shove and children are in the offering, you have to discount your wife's salary to nothing [or I do anyway - she earns about £40k] (potential illness & complications / wanting to spend time bonding with children / opportunity cost of childcare)...... so you are down to 1 salary - and happy to take your base example of £100k plus bonuses etc. To buy said £700,000 house would therefore require a deposit of £140,000 and a mortgage payment of around £3,000 a month which is laughable. I do realise that the property example I gave is one of the extremes..... but, yes, if a couple want to work themselves both into the ground, never find the time to have and bring up children, never go on holiday, never save anything for a rainy day or retirement - then yes... i suppose those sort of places are affordable... There are plenty of sub 500k places but they are normally a long long way from any public transport (esp trains). Sadly, I have found it doesn't get much better if you go further out - anywhere in Guildord, Dorking, Walton, Weybridge etc near the station command top end prices also. I was hoping that a lot of these places were not actually selling but noticed this morning that a 4 bed house in Surbiton went for £1.1m a few weeks ago so there goes that theory!...