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silver surfer

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Everything posted by silver surfer

  1. Congratulations! I remember you from way back (I don't post much here anymore) so you can't be accused of rushing into this! All the best, I hope everything works out well for you.
  2. Yes, that's my recollection too. Although it might be that when the property market really takes a hit then the lowest layer of property becomes essentially unsaleable at any price. Why would anyone buy a bed sit for example if a two bed flat is suddenly within their budget? Consequently part of the dynamic might have been that during the 90's crash it was the least expensive properties dropping by far more than the average price decline. If that was true in the 90's then it will be even more the case now. Anywhere that's even half way prosperous will have plenty of what are basically "joke" properties, dingy flats above kebab shops for example. In normal times these become unsaleable, with zero potential buyers.
  3. Democracy has many weaknesses, the risk of a majority injuring a minority, acting in haste without due consideration, or emotions overcoming reason. So, for example, what if there were an instant vote on a horrible death for paedophiles and terrorists, a penal surtax on all annual incomes over say £50k, opening fire on foreign trawlers that refused to leave our waters, doubling old age pensions and reducing the pension age to 50, a knighthood for Wayne Rooney, excluding non property owners from ever voting, granting a new bank holiday to commemorate the Grenfell Tower victims, etc, etc. You may agree with some of these, but would anyone agree with all of them? Furthermore, would they be happy to bind themselves for all time to the capricious whims of the voting public?
  4. Maybe, maybe not. The net immigration figures are already dropping and many EU immigrants are reported to be considering a move back home or onto a different EU country. As the pound declines it makes British wages less and less attractive compared to Dutch or German wages. If the EU economy outperforms the UK economy over the next few years (and that'd be my guess) then there's every chance we'll see an exodus rather than an influx.
  5. Your money, your choice. But I knew plenty of people who bought immediately prior to the 1989/95 crash and then found themselves hogtied by debt and negative equity, plus they had the sobering experience of seeing others of their peers, ones who were slightly later to the market, buying much better properties at much lower prices only a few years later. None of us can see the future but my guess is anyone buying today, or in the next year or two, will then face a regretful decade ruing their decision.
  6. Yes it will. S24 won't show its teeth until 2020/21, the next interest rate movement will be up, earnings are lagging inflation. A regional upward blip in 2017 is neither here nor there in the scheme of things. By the end of 2020 it'll be crystal clear that nominal house prices are materially and inexorably heading down.
  7. It will be interesting. But if there's not much to report then it still won't change my views. I'm sensing a growing feeling on the forum that S24 has failed to deliver a meaningful fall in house prices, or at least a rising apprehension that all the hopes invested in S24 might not be realised. Personally I think that would be a premature conclusion. No landlord, no matter how overstretched and highly leveraged, has actually paid a penny in additional S24 taxation yet, and the landlords I talk to are generally deep in denial, and trusting that something will turn up to make the nightmare go away. Consequently I'm not expecting much impact from S24 until 2019 or 2020. But when that impact does arrive it'll be both substantial and rapid. It wouldn't be surprising to read a growing ground swell of opinion on this forum throughout 2017 and 2018 that S24 was a damp squib; and then see a game changing avalanche of BTL sales in 2019 and 2020. The blindingly obvious thing is that until real, actual tax demands start dropping onto landlord's door mats then we're still in a "phoney war". Many leveraged landlords are counting on growing house prices to sustain their entire house of cards lifestyles, so they'll cling to the current model until the taxman takes their legs from under them by demanding a cash fee, in the shape of S24 tax, to stay in the game. At that point their bluff will have been called and they'll fold in a chain reaction of distress selling. But that isn't a scenario that's going to happen this year or next, but happen in 2019 or 2020 it surely will.
  8. Interesting article. It well illustrates why S24 will drive down house prices materially, but not necessarily in 2017 or even 2018. The landlords I talk to are aware of S24, but they're still in the mindset of "something will turn up". I know one who was crestfallen after the recent budget as he'd convinced himself Hammond would abandon S24. So, instead of grabbing the chance of getting out from under a broken business model now, they'll hang on until the tax bills actually start landing on their doormats, at which point it'll be too late for most of them because house prices will be ticking down. Slowly at first, so many will delay further in expectation of brief dip followed by a price recovery, but then the declines will accelerate as the S24 tax bills get bigger and the more leveraged landlords simply run out of time.
  9. Mortgage rates (which are what really counts) are starting to move up, the very cheapest loans are currently being pulled right along the High Street. Don't necessarily expect price falls immediately, but looked at across say a three year horizon, they're now pretty much baked in.
  10. It's just short term noise. Look further out and the picture's clearer. S24 fully implemented by 2020/21 means the current equilibrium can't survive. Add in the strong likelihood that the interest rate trend will soon be ticking up, slowly at first but inching up none the less, and there's an overwhelming probability of materially lower house prices across the next few years. I strongly suspect BTL landlords will hang on too long before selling their property. Not because they've the steely resolve of a band of Trojans, simply because they don't have a plan B. So they'd rather pretend something will turn up and keep the Range Rover (and the BTL that supposedly will pay for it) for another year or two, before reality becomes inescapable. Net result is price falls won't be quick, but they will be sure.
  11. This is becoming clearer by the day. There was always a chance that Hammond would undo S24, but that's becoming a vanishingly small possibility. As far as I'm concerned that means a significant decline in nominal UK house prices is pretty much baked in. I still guess the declines will be back end weighted (i.e. more towards the 2020 full S24 implementation date rather than in 2017 or 2018) but that's just conjecture based on how many leveraged BTL landlords really don't have a plan B, so they'll likely hang on in denial until they can no longer support their after tax monthly losses. What's less conjecture and more evidence based is the conclusion that many thousands of panicked BTL landlords heading for the exit must drive down house prices.
  12. Here's some of the media coverage when it almost happened in 2015, http://citywire.co.uk/new-model-adviser/news/tories-revisit-income-tax-and-national-insurance-merger-plans/a828296 Dig back further and you can see it's been considered many times. As I said earlier, my guess would be the next time a government is confident of re-election they'll press the button and merge NI and income tax.
  13. Apparently Osborne came within a whisker of folding NI into income tax, and it's come close several times before. I guess it'll happen before too long, you just need a government confident of re-election and that'll be one of a slew of tax clean ups. A strong Corbyn win over Smith probably brings the end of NI that bit closer.
  14. I agree. It's a deposit account, an annuity, or a BTL. And BTL enjoys special status because you can't really leverage the other two and become an "esteemed shrewd player" in the eyes of friends and family. I'm pretty confident S24 will pummel leveraged BTL landlords sufficiently that we'll see a meaningful drop in nominal house prices. But for the reasons you state, i.e. the lack of alternatives, I think the main declines won't be until 2020 when S24 is finally fully implemented.
  15. The killer with fees isn't the cost in any one year. It's the compounding effect over your investing lifetime. The pensions landscape is a lot grimmer now than, say, in the 1980's. But at least nowadays there's an abundance of good value options like trackers and trading only stock brokers, which at least allow an investor to clear almost all fees out of the equation. Not to take advantage of those just cuts you off at the knees.
  16. 2% employer contribution isn't unknown, but it's a bit stingey. I know quite a few DC schemes where the employer contribution, even for new joiners to the scheme, is 6-8%, and where a company has closed a DB scheme their new DC contributions to prior DB members can be quite a bit higher than that. As a very rough rule of thumb you should aim to have total saving (employee plus employer contribution) in the region of 12-15%, so you're doing pretty well. Easy enough to talk percentages I know, ignoring rent/mortgages and uni fees, but the fact remains that's about the shape of it.
  17. http://gawker.com/tiny-toilet-room-with-partial-wall-for-rent-in-hong-kon-1784890327
  18. Carney has the brake and accelerator, Teresa May has the steering wheel and ignition key, and Hammond has the clutch and gearbox. Carney's done about as much as he can with his controls, it's time that May and Hammond did something with theirs to get this car moving in the right direction.
  19. Well, something will have to change, that's for sure. Firstly, let's remember that a significant part of the pension benefit was means tested until very recently, the means tested pension credit was introduced in 1970 and lasted for over 40 years until the introduction of the "flat rate" pension. Furthermore, it's difficult to talk about pensions without also introducing nursing home care into the discussion (after all nearly 1 in 3 people will need some later life care, and that's rising fast, both in terms of numbers but more ominously in terms of the costs), and nursing home care is rigorously means tested and will likely remain so. The problem for ambitious politicians is that pensioners actually get out and vote, I think in most general elections over 60% of pensioners vote compared to less than 40% of under 24's. Consequently pensioners have had a bigger and bigger slice of the benefits pie, until we reached the unsustainable position in 2013/14 where the average pensioner had an income of £394 per week, while the average worker got just £385. The problem is that in 1990 there was one pensioner for every four workers, by 2030 it'll be two pensioners for every five workers. And it just gets worse from there on out. How much of a tax burden will younger workers carry to support pensioners who are increasingly better-off than them? Up until now the preferred mechanism in the UK for postponing armageddon has been increasing the age of pension entitlement. Sweden went a similar route, but with added transparency, they said that collectively as a population they were entitled to no more than fifteen years of retirement. Unfortunately there are many problems with this approach and it's difficult to see how it can be extended much further than the 67/68 already in place. There's the issue of simple fairness, for example a bin man or a builder has a much shorter life expectancy than a clerical worker or a teacher. The father out retirement ages are pushed the more inequitable those discrepancies become. Then there's the issue of total life expectancy versus healthy life expectancy. Price Waterhouse estimates someone born today won't be eligible for a state pension until they're 76 years old. For a country to keep working until 76 will require big medical breakthroughs in dementia, diabetes, and many other age related illnesses. Maybe this will be achieved, but maybe it won't. The pensions can (and the care home can) keep getting kicked down the road, but there seems to be a growing awareness in Westminster that a reckoning is fast approaching. What form this will take, and when it will happen, is anyone's guess. Personally, I guess sooner rather than later, and I guess it will include components like merging NI into general taxation, means tested state pensions, higher employee contribution rates for employer managed private pensions, the Australian "super pot" scheme for private pensions, and replacing the triple lock with a simple CPI adjustment. But that's just my guess. What I am clear about is the steady rise in pensioner affluence that began in about 1980 must now be very close to the end of the road.
  20. Many countries means test state pensions, and they've figured out a mechanism to deter people from upsizing their property in order to qualify. Take the Australian example previously mentioned. If you're a homeowner, to receive a full state pension your other assets can't exceed A$296k. If you're not a homeowner, to receive a full state pension your assets can't exceed A$448k. It's reasonable to assume that if means testing the state pension was introduced in the UK there'd be a similar mechanism, which means the great majority of citizens would automatically qualify for the full state pension, and the vast majority would qualify for at least some state pension. Going back to the Australian example, to be fully excluded from receiving any state pension a non homeowner would need assets of A$1,326,500.
  21. Don't forget that scrapping NI has been seriously considered at least twice in the recent past by both Labour and Conservative administrations. It would have resulted in a slightly higher rate of income tax so would have been a net advantage to working people and a net disadvantage to pensioners. On both occasions it was the risk of alienating the pensioner vote during what were felt to be close elections that turned politicians away from the idea. There was a long article on the Guido Fawkes blog a while back that concluded it's on the agenda for both major parties, it's just a question of timing. Going forward imagine if Labour doesn't recover from Corbyn chaos, that the Lib Dems have all but melted away, and UKIP is a rebel without a cause. Then under those, entirely plausible, circumstances you could see a confident Conservative government with a large majority unveiling a root and branch reform of benefits and taxation, I doubt NI would endure past that.
  22. So in other words the date has been set when we can expect a major pensions shake up. 2020 it is then!
  23. I couldn't agree more, it's something I've seen first hand. Some time ago I took over as the MD of a company with an astonishingly generous pension scheme. I set up several presentations and took people through the benefit both collectively and individually. The general response was one giant yawn, if something's not paying out right now then it might as well not exist, the future is just a different planet for most people. The only thing I'd add to your list is the performance of pension fund trustees back in the golden era of the 80's and early 90's. That was a time when DC schemes were actually outperforming DB schemes, and investment returns were so high many companies requested a holiday from paying in pension contributions. I'm a pension trustee now, but when I look back to some of the negotiations that my predecessors made during that time I realise what astute and far sighted negotiators they were. They agreed to contribution holidays, but in return they negotiated additional powers to actually set contributions in the future. That simple principle of demanding something in return has placed my scheme in a superb position, we've been first in the queue during any good years expecting our share of the bounty. When I talk to scheme actuaries they agree that many more company pension schemes could have negotiated better deals, but failed to do so in a period when they held all the cards.
  24. I hear that argument. But from a practical perspective I think means testing is the more efficient mechanism. The problem is that pensioners have proved themselves to be a uniquely mobile group, after all there's over a million of them sunning themselves in Spain even as we speak. And the wealthier the pensioner the more mobile they are. So they have the means and motivation to keep the state pension benefit but escape the tax penalty by simply relocating to a more benign jurisdiction. And that's before you add in all those, like myself, with duel nationality and multiple passports. That's why I believe the cleaner way is means testing the state pension to progressively exclude all those above a certain income. If you don't receive the benefit in the first place you can't then trouser it and carry it overseas.
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