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Posts posted by Wad

  1. I recently asked a very serious commercial property investor that I know to answer a hypothetical question.

    I asked him to imagine that a large portfolio of say 10,000 houses had come up for sale, say from a building society that was looking to unload a massive book of reposessions. I then asked him what would one of the very large UK commercial property firms reaction be to that proposition and what rental yield would they be looking for. He said 4.5 - 5% net (i.e the occupiers carry all the costs of repair and maintaining and insuring the property).

    At present, residential property is yielding 2.00 - 2.5% net of expenses. That means a commercial property investor looking only at a yield comparison with commercial property would demand a 50% reduction on the current market price of residential property before they would consider investing in it.

    What this article suggests is that even that comparative valuation might be over optimistic if commerical property really is beginning to get overvalued.

  2. The theory is that the trillions upon trillions of dollars that the US has spent on building its nuclear stockpile for the last 60 years is perhaps seen as somewhat of a toothless deterrent because nobody in the West or East would ever believe that the US would use them in war. There are planners in the US would like to reclaim some of its deterrent value and the only way to do that is to use one of them in an open conflict. Let's hope that the Democrats can now stop them now that they have won both houses in the mid-term elections



    I put this very point to a young but very ambitious and bright Democrat candidate a few months ago. He looked at me as if I was mad. So maybe the Democrats will stop it happening.

  3. This article is timely one and makes a serious point.

    It echoes the main issue highlighted in the book by Bradford Plummer The Two Income Trap which is reviewd here:


    I posted a few days the preliminary results of my own time series analysis of wages and house prices which suggests that the the ratio of house prices to the average male full time wage has remained stable and very close to 3.0 over the seventy year period form 1930 - 1999. However over the last seven years 2000 - 2006 the ratio has rocketed to 5.5 - 6.0 depending on which measure of average male earnings you use. That means in an average two parent family with young kids both parents absolutely have to work.

    As Bradford Plummer puts it in her book, the old fashioned idea of a stay at home mother used to also be the family 'safety net'. If the husband lost his job or became ill then the 'homemaker' could switch roles and go out to work to provide an income. The homemaker was also traditionally there as an unpaid resource to bring up kids and hold the home together. Now both parents have to work to be able to meet the 6 x multiples that houses now sell at. The mathematics are that simple.

    I see the impact myself almost every day with kids from nice middle class families walking home alone from their nice private school at the age of 8 (or even younger) letting themselves in with their own key into a dark house and waiting around for a parent to get home from work. Yet what choice do their parents have? They are under massive pressure to live the middle class dream and this is impacting their kids directly.

  4. I don't see anything other than a declining market overall in the OX2 area (North Oxford).

    Average prices for OX2

    The Berkley homes development seems even worse overall:


    Not surprising as it was completely overpriced. Still as most of Oxford is a dump, it's perhaps not surprising that prices were pushed up in Summertown. :)

    I come into Oxford fairly regularly and I notice that the Queens Gate development of 16 x 2 bed flats at the top end of the Woodstock Road (North Oxford in OX2 postcode) near the BP garage has been showing 'over 50% sold' for about a year now. Fact is that about two weeks ago a whole flock of letting signs appeared (about 6 I think) so that is obviously the developer. I notice that some are being let on 'short let' terms. In other words more or less renting out on a week-to-week basis.

    On the other hand sales of family sized houses in that area are as strong as ever with absolutely staggering prices being paid in the Staverton Road area £1.4 million is typical for something that needs some work:


    Mainly people from London coming up for the very good state and private schools nearby I think pushing the family sized house prices. Larger family property is still in very short supply. However, looks like two bedrooms flat BTL type property is struggling as there is over supply of Berkeley homes flats nearby in Waterways both to rent and buy.

    On the other hand in the rental market for family homes a very nice new build 5 bed has struggled for ages to rent out at £3,000 p.c.m even though it is now showing Let Agreed.


    Seems like families are willing to pay way over the odds if they can get a mortgage or release equity from a London home sale but not willing to take £3,000 out of current earnings for rent. But then rent is dead money! Bizarre behaviour.

  5. Looks like the US housing market crash has just claimed its first major lender in California. Expect to see the same in the UK soon.

    "The failure of a small Californian mortgage lender on Thursrday increased nervousness in the credit derivatives market about the large number of US “subprime” mortgages extended this year."

    "There has been a sharp rise in the number of borrowers behind on their payments. The loans are often packaged into securities and sold to investors to help lenders reduce risk."


    Apologies if this has been posted previously.

  6. Average earnings nearly £35k,I thought it was mid £20's !!

    I think the Earnings data I have is for Male Earnings but one of the things I still have to do is check exactly how the different sources calculate 'Average' Earnings and what sectors they include. As long as the data is consistent throughout the entire history then the ratio is comparable across time...but how it is weighted, what sectors it includes and whether bonus and overtime is included are also important in making sense of the ratios too.

    IDS reports average full time employed male earnings at about £31,500 for April 2005 but the DWP Abstract of Statistics suggests it is was about £29,000

  7. I am pulling together a history of Average House Price and Average Annual Earnings data for the period 1930 - 2006. When I have the full 2006 data I will post the data file, data sources and charts but the edited highlight is as follows:

    1930 Average Earnings = £ 195.80 Average House Price = £ 590 Ratio HP/E = 3.01

    2006 Average Earnings = £34,957.80 Average House Price = £198,552 Ratio HP/E = 5.68 (based on September values)

    Astonishingly the long run ratio of house prices to earnings FOR THE 70 YEARS between 1930 - 1999 = 3.05

    The ratio has also been remakably stable around the 3.0 level for those 70 years and then rocketed to almost double that in the last 7 years (2000 - 2006). At no time in living memory has the ratio of house price to earnings been anywhere near today's bubble level of 5.68. This is surely is the most likley cause of social strife we have. Even right after World War 2 when many houses had been bombed and people wanted to start families the average house price still only reach 4 x average earnings. How on earth did we get here?

    If anyone can let me know how to paste a chart directly into a post I am happy to give you the full time line.

  8. Iran pricing and selling its spot oil in Euro is a meaningless piece of politics as the Euro and US$ are fully convertible.

    Iran could just as easily sell its oil in exchange for gold bars, copper cathodes or £ sterling but because thay are all interchangeable mediums of exchange priced in terms of each other (as indeed are different grades of oil from different ends of the same oil field) it does not matter which bit of paper or metal Iran actually gets in exchange for its oil because either it or or its customer can quickly exchange those for US$ or any other commodity or currency either party prefers.

    Oil traders will still hedge and trade in US$ and just buy the Euro at the last moment before payment is made. It does not mean the end of the US$. The reason that US$ is used to price so many commodities is because it is the biggest consumer on the planet and the US has a well regulated banking system and sophisticated capital market. When China's economy gets big enough it wil be able to demand pricing in Remimbi as indeed the UK used to demand pricing in £ sterling.

    That said, if the US$ tried to move to a fixed exchange rate during some financial crisis or had hyper inflation then it would undoubtedly also quickly fall out of favour because it would no longer be an interchangeable commodity - but we are a very long way from that yet.

  9. The natural outcome of this is a return to Victorian society where we become a nation of tenants renting of the 2% of homeowners.

    Interesting point. I have felt for some time that the workplace is also becoming a lot like a Victorian hiring fair where people would turn up in the local market square every six or twelve months carrying a tool of their trade signifying they were available to hire (those without a skill would carry a mop and the fairs were also often called 'mop' fairs). Local landlords and businessmen would then subject workers to a physical examination and offer to hire at a rate negotiated on the spot. The old, infirm, injured, etc were usually left unhired and ended up in the workhouse while hired labour went off to live in the master's house or in tied tenanted accomadation. If the job was lost the labourer would become homeless (evicted). Workers had few rights and owned very little of their own property. In many rural areas this tradition carried on until World War 2.

    A lot of people have employment contracts that increasingly resemble these conditions now and many more will be forced to 'reapply' for their job with the threat of losing the job if hey do not accept a lower rate of pay in exactly same way as people did at hiring fairs.

    Under these conditions of very short term risky labour contracts it is hard to see how mass ownership of housing financed with long term mortgage debt can continue. It was essentially a phenomenon that only came about as a result of mass unionised labour and the rise of professional middle classes in a largely protected UK labour market.

  10. A holding fee is a deposit. Rent is rent. Which one have you paid?

    Naturally I wait until the last months rent has been paid before I enforce the ability to conduct viewings as stiplulated and AGREED to in the tenancy agreement. No use trying to enfore something with the tenant being able to try the no last months rent thing on as well.

    What's wrong with tenants, don't you people honour what you agree with?

    It's all about you isn't it, you have no regard for anything but your few pounds deposit and your picky little arguments. Just be nice, allow the viewings and you'll leave on good terms with a good reference. It's not that hard is it!

    No wonder you don't want to be LL's yourselves either, imagine dealing with people like you.

    I agree. Providing the landlord agrees to let you know 24 hours ahead of time and does not bring people round late at night or on Sunday I do not see what the problem is. Every tenancy I have ever has stipulated that both parties had to give two months notice of their intention to terminate the tenancy and during that two months the landlord had the right to bring people for viewings providing he or the agent came with them and the visiting times were agreed by both sides.

    I know it sounds mad but I also try to keep the place tidier than normal and let the landlord know the days that I intend to move out and do the final clean so he does not arrange viewings for those days. I always get good references that way.

    Why do so many people feel thay have to get one over on their landlord? Yes, tenants should be firm, and protect their rights but also professional and courteous. A tenancy is a business deal and does not have to be conducted like open warfare.

  11. Relax everyone. The planning system is never going to be reformed to the point that large numbers of houses can be built wherever people really need them. If that happened there would be a really serious HPC that we would never ever recover from. Negative equity would be a way of life for millions, the economy would go into depression and governments would be voted out of office. The banks would eventually have to be bailed out and the best way to avoid all that would be to errr......restrict the amount of planning permission being granted. Which means we would be back to where we are now.

    By the way, no need to worry about a nuclear power plant being built near you either. There are dozens of massive LNG tankers scheduled for completion in shipyards across the world right now and when they arrive here with their cargoes of liquified natural gas from places like Egypt on top of new pipeline gas from Norway coming on stream next year then there will be so much gas that no one will ever again find it economic to bring it thousands of miles by pipe from Russia. No one will find it economic to build nuclear plants either.

  12. So what? If a person doesn't want to negotiate on the price of something they are selling, they can just say so. It's not a big deal. There's no need to get annoyed about it. They're in a market, and that's the way markets work. If they can't tolerate a bit of price negotation, even if it is just to say firmly but politely "no", then that's just too bad. Sparing them their annoyance is hardly likely to be a driver in such a straightforward situation. I wouldn't hestitate to negotiate on the price of a house or anything else just because I thought the seller might get slightly irritated. Big deal!

    Interesting psychology in your answer (and from Barrelshifter). I dont want to take over the thread with this debate but all I can say is that, without exception over nearly 20 years, my experience is that:

    a) When I paid the asking price on a rented property in perfect condition with a financially sound landlord using a professional agent I have always had long and happy tenancies; but

    B) When I have haggled a lower rent and especially on a property in less than perfect condition I have always had problems.

    All I really said in my original post was always take situation a) and always avoid B). That does not mean I go and pay more than a fair market rent of course. The fair market rent is usually pretty obvious in any given area for a particular type of property both to the agents and to you too if you do a bit of homework. In my experience, professional landlords who know their target market well and present their property immaculatley always set their asking price slightly below the highest alternative asking price in the market which is almost always set by an amateur who is hoping to overprice in order to cover their mortgage. Guess which landlord has less voids, higher yields and better tenants!

  13. Not good news for the bears in North Oxford.

    I just heard from a very reliable source that someone just managed to sell their 4 bed house on Waterways (fairly recent new build estate down by the canal by Berkeley Homes) in three days for a £120k profit. Admiitedly they had done a loft conversion but that much of an uplift after just two years is pretty staggering. They cannot believe they got it sold so quick and at a profit too. They expected to struggle to sell.

  14. I dont agree with the content or offensive tone of the comments in some of the posts above.

    Rosie Millard' piece in the is always one of the first things I turn to in the Sunday Times as I think it gives insight into the state of the rental market. She has castigated bad landlords in previous articles for not looking after tenants and explained in that she does not use a managing agent because she thinks they charge too much for the service they offer and instead she employs her own "little man" to go and do repairs when things go wrong. She has been a landlord for quite a while and I suspect she is actually a very good landlord to her tenants.

    That said, I have been a tenant longer than she has been a landlord and I often disagree with what she says but I do think that she gives good advice to landlords in this article about not just relying on references on tenants. I have never trashed a property and I dont know anyone that has and she does not say all tenants are bad but just a few are and landlords need to be savvy to protect themselves.

    That said, I also think tenants need to be savvy about landlords too so to add a little balance here is my Top Ten Tips for finding a good landlord and a hassle free tenancy.

    [Moderators: Maybe this should be in the All About Renting Forum so please feel free to move it and put a new title on as other posters might want to add their tips as well]

    1. DONT rent a property that is in less than perfect (or at least near perfect) condition because a landlord that has not looked after a property so far is not suddenly going to start doing so when you move in.

    2. DONT rent a property with a mortgage on it without seeing a letter from the lender confirming that they are happy for the property to be rented out and that the proposed rent cover the interest payments. A good agent should have organised this before taking the property on their books.

    3. DONT rent a property that someone has been trying to sell or where the landlord will not agree to a minimum guaranteed length that suits your needs. If a landlord has a contractual option to kick you out early in order to make a sale they will do so no matter what they said about wanting a long term tenancy at the beginning.

    4. DONT try and haggle the rent down below the fair market price it just annoys the agent and landlord. If something is priced above the market dont go and see it and if it is not up to scratch when you get there just thank the agent and tell them you need something in better condition. Renting a perfect property from a good landlord at the asking price is better than getting a few quid off one that is not right.

    5. DONT hand over any money to anyone without seeing a copy of the lease you will be expected to sign, a schedule of the charges that will be levied and the safety certificates for boiler etc.

    6. DONT hand over the deposit to your landlord. Insist the agent holds it in a properly protected and approved Tenant Deposit Scheme.

    7. DO check out your landlord by downloading the Title Deeds and other information from the Land Registry (costs £3.00). Make sure the landlord really owns the property and if they have a mortgage or any covenants that may affect you.

    8. DO insist on a proper inventory and within the first 2 days of the tenancy go through it meticulously annotating any (even very slight) damage or deviations from the description. Send a copy to the agent of your annotated version and take photos of everything.

    9. DO invite the landlord/agent to come and do an inspection every 3 - 4 months on a day that is convenient to you. Give the place a really thorough clean and report any damage early and offer to pay to get it fixed or do it yourself rather than letting it build up and hoping to get away with it.

    10. DONT try and get your own back on a landlord if something goes wrong (e.g. by leaving the place in a bad state, witholding the final months rent or taking things with you) it will put you in a bad light if the issue comes to court.

    I have more but I think I will let others have a go at adding theirs. This post is long enough already.

  15. ...and media, lenders, parents/collegues/'friends' (fed the same diet through the same channels) etc etc...

    Overheard the two deputy managers at my gym today talking about buying a flat together (as sharers not as cohabitees). One was pretty sceptical and told the other one who was very enthusuastic that he would think about it once he had seen how much the morgage was going to be. He then walked away looking uninterested.

    Anyway, I thought I would do my bit for HPC and told the remaining enthusiastic one who was now sulking behind the desk that he should not even think about taking out a mortgage because it was utter madness given the price of houses, rising interest rates, etc. He replied "yeah but a mortgage will only cost the same as the rent". I told him a mortgage would be double the rent if he was lucky and then he had all the other bills on top and the risk of a drop in price too.

    It went over his head. I just know he will find someone mug enough to buy with him. Sad really - he is about 25 and just about to throw away the best ten years of his life struggling to buy a horrible little new build flat with a friend who he will hate by the time they escape from negative equity.

  16. Been in a similar situation myself once and told the landlord we were prepared to let in agents with viewers but that we required 24 hour notice of any visits by phone or email. Visits allowed on all days except Sundays and nothing before 9.00 a.m or after 5.00 p.m. Got it in writing with a copy to his agent and were very strict indeed with agents and even just people off the street who attempted to try and turn up on spec. We further got the LL to agree that we could leave whenever we wanted without notice.

    This way you get the freedom to move as and when you want and the LL will be reasonable as he is getting rent during the selling period.

  17. "A GERMAN footballer has breached the England defence — well, the inner sanctum of the Bank of England at least.

    Thomas Hitzlsperger, 24, a midfielder likely to be in Jürgen Klinsmann’s squad for the World Cup finals, has disclosed that he regularly visited Threadneedle Street to discuss high finance with Mervyn King, the bank’s governor. "


    This may just be the explanation we have all been looking for!

  18. From what I can remember lending back then was nowhere near as lax.

    They where still sticking to the 3.5 x single salary, 4 x couple salary lending criteria or whatever it was.

    I remember applying for a loan of £400 for a scooter, and it not being easy.

    Dont be so sure that lending practices were always tighter back then. Me and my wife went into the Halifax back in 1991 just for a laugh to see how big a mortgage we could get. We explained were both about to give up work and borrow £30k each to do an MBA over two years. The salesperson said borrowing 3 x out existing joint salary (which was just about to stop flowing in) was no problem even if we had no guaranteed future earnings.

    The salesperson also said we should take out an endowment mortgage because the stockmarket would pay it off. We asked what would happen if the stockmarket crashed like it had done just a few years earlier in 1987 and our endowment fund turned out to be too small to pay off the mortage. The salesperson said "that was never going to happen".

    We could not believe what we were hearing and came out of the building quite literally petrified that anyone would consider putting us in that much debt with no earnings. We also had several pairs of friends buying flats in awful parts of London just to get double Miras. They all ended up in negative equity and we carried on renting. Thank God.

  19. I got a quote for a German Huf Haus last year - yes the ones that were featured on Grand Designs a while back.

    They quoted me £450k for 300 square metre of living space. That was on top of the cost of buying the land, getting planning permission and utilities etc brought to the property as well kitchens and bathroom fittings and appliances etc.

    Admittedly, Huf houses are beautifully appointed inside but at that price I decided to just keep renting. These Ikea ones will probably never take off for the same reason. Even if you could get a cheap piece of farmland everyone would object for all the usual NIMBY reasons.

  20. Totaly agree with duke of hazzard on this point in particular:

    "Again, that's never happened to me - I've always had my deposit back in full. You've got to vet your landlord, just like you'd get a survey done when buying a house."

    Absolutely right. Landlords vet tenants all the time and take credit references so why should tenants not be similalrly choosey. A tenancy is a contract and it has two parties who have to get along together for a long time. This is why we avoid private landlords who have had their house up for sale because we know that whatever they say they are really only interested in renting it out over the winter until they can flip it back on the market. They have also often moved somewhere and bought another family house so they are cash strapped and have no real desire to do any repairs if anything goes wrong.

    Avoiding insecurity is a big issue for us too as we have young children but we have found that its really all about making sure that the landlord has the right circumstances and the financial wherewithall to stick with a tenancy until you want to move.

    We used to rent furnished which does get you down after a while but we now have our own furniture and it really is not so bad moving into a totally empty, thoroughly clean, fresh neutral painted house with appliances that still have the plastic wrapper as we did last time. Compared to how my parents found the house thay just bought with the owner leaving a blocked sewer and a kitchen that had to be professionally degreased as well as over a year of painting and repairs I have to say I think we got the better deal by renting.

  21. Me and my wife have never owned a house but have been renting privately for almost 20 years now in London and South East. Never had a depost witheld but one landlord did default on his mortgage (we got out before the baliff got in) but otherwise its been a good experience.

    One of the main reasons we like renting is that we have always lived in far better houses than we could have afforded to buy on longish leases (2-6 years). We also have had quite risky jobs so we could always move out somewhere cheaper if the economy went pear shaped or our employers started treating us badly.

    Somewhat surprisingly, we have found that the best value to be had in the rental market is in the most desirable Grade I and II listed country properties. Currently we are working on locking in 4/5 year rent deal on a nice Grade II listed property in the Midlands at a net rental yield of less than 2% to the landlord. Last year I was offered a large historic house on a long term rental in the South East of England and the landlord basically told me over the phone that he was happy to let it out to anyone that would promise to pay enough rent to keep the roof on. He did not expect to make any yield at all and he said that restrictive covenants meant he could never sell it. Sadly the area was not quite right for us but we repeatedly find that at the upper end of the country rental market (over £2k per month) there are some amazing deals to be had. There are quite a lot of large institutional landlords (i.e country estates, charities, educational establishments and of course the Church) like this that have property they can never sell because of restrictive covenants. On the other hand there are private owner occupiers who for one reason or another need to rent out large country properties - often because they are going abroad for a while and have little mortgage or it is being paid by their company. They also tend to have a managing agent. These types of owner occupiers and institutions make great landlords because they are not always penny pinching like many new BTL landlords.

    Most people who want to live in large listed country properties would never dream of renting so we find there are very few long term tenants like us at that end of the market. We get on really well with our current institutional landlord and because they have a big endowment behind them they always do repairs on time with their own staff and with absolutley no risk of defaulting on a mortgage. We always pay the market rent but we get a lot in return.

    I accept that not everyone on HPC is at this end of the rental market but if you are then at net rental yields of between 0% - 2% I can't think of a good reason to buy unless the country house markets drops 50%. Saving money and living in a nice house maintained by someone else and without having to take on a massive mortgage is about as good as it gets.

  22. The idea of Scottish independence has been rumbling since they became part of the union. It's only this government with its wilful disregard for our sovereign status that has promoted the idea of full independence; this government's paymasters in Brussels would love an independent Scotland since, in the words of Normal Tebbit they would "carve the UK up into bite size chunks" ready for direct rule from Brussels. We should resist any attempt to break up the UK and view it as a cynical manoeuvre by the super elite in Brussels to make the renegade wing of the EU (UK) more manageable. Long live the United Kingdom and down with the EU! Divide and conquer I believe is the age old adage to be used to describe the treacherous intentions of Brussels and it would be no less than an act of treason on the part of this EU quango of a government.

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