Jump to content
House Price Crash Forum

Recommended Posts

Anecdote...

I wonder how many FTB's struggling to pay their huge mortgages may be forced into the same scenario as my colleage? My colleage has told me they are planning to put their house on the market, since they are fed up having to spend almost all their disposable income on their (shock horror) interest only mortgage! They have now decided to sell up and move into rented accomodation, once they've finished their last building jobs. I hinted out the other day, that by having an interest only mortgage, they are in effect renting from the bank. They now admit they may as well keep any additional cash they may gain from a house sale in a high interest account and rent. I'm just hoping they haven't missed the boat and they can sell in the next few months for at least a modest profit to cover their renovating costs etc. They would be happy with a £10K-£20K profit... What they are fed up with is not being able to save any money for unexpected outlays, repairs etc, and can only see themselves getting deeper into debt by having to borrow to pay for bills such as car repairs etc...

I wonder how many more families may find themselves in this situation and what impact this may have on the local market, if more decide to do the same??!!

:huh:

Share this post


Link to post
Share on other sites

An alternative to selling the property would have been to have rented the property out which would have covered the mortgage costs. In other words, they could have become a BTL landlord.

They should have waited until the spring bounce next year to sell their property and in particular should have waited for the boost in property prices next April resulting from the changes to pensions that will allow the inclusion of residential property.

Edited by Bill Gates

Share this post


Link to post
Share on other sites

Your colleague is just the tip of a massive submerged iceberg.

At least he has the good sense to realise that he is better off getting out of the housing market while he still can.

There are many thousands of others hanging on by their fingernails, every month sinking further into debt...

Share this post


Link to post
Share on other sites
An alternative to selling the property would have been to have rented the property out which would have covered the mortgage costs. In other words, they could have become a BTL landlord.

They should have waited until the spring bounce next year to sell their property and in particular should have waited for the boost in property prices next April resulting from the changes to pensions that will allow the inclusion of residential property.

Presumably you mean "let" the house out, rather than rent it. But the point is that they can't wait until next year as they are getting deep into debt now.

Share this post


Link to post
Share on other sites

the Prices going up...?

Well its a specualative market.. albeit a slow one..

Sorry, but the specualtors are gone..

The market is faltering..

and no item has ever trebbled in price.. faltered then kept going.

There has never been a debt to investment specualtive investment that has increased in values by over "7% over a ten year span that has not crashed.

not now.. not ever..

Share this post


Link to post
Share on other sites
Anecdote...

I wonder how many FTB's struggling to pay their huge mortgages may be forced into the same scenario as my colleage?  My colleage has told me they are planning to put their house on the market, since they are fed up having to spend almost all their disposable income on their (shock horror) interest only mortgage!  They have now decided to sell up and move into rented accomodation, once they've finished their last building jobs.  I hinted out the other day, that by having an interest only mortgage, they are in effect renting from the bank.  They now admit they may as well keep any additional cash they may gain from a house sale in a high interest account and rent.  I'm just hoping they haven't missed the boat and they can sell in the next few months for at least a modest profit to cover their renovating costs etc.  They would be happy with a £10K-£20K profit... What they are fed up with is not being able to save any money for unexpected outlays, repairs etc, and can only see themselves getting deeper into debt by having to borrow to pay for bills such as car repairs etc...

I wonder how many more families may find themselves in this situation and what impact this may have on the local market, if more decide to do the same??!!

:huh:

But if they can't sell, or can only sell at a loss, they may well decide to stay put and tough it out. Lots of people did that last time. Only if one of them loses their job - and is unable to get another one - will they be forced to sell.

I think we are still 6 months away from any real action. This will start when the national housebuilders stop, or dramatically cut back, their new build programs. When this happens lots of people are suddenly looking for work that is no longer there - and work which suddenly only pays half of what it used to. In the last crash bricklayers went from £80 a day to £40 a day over the course of about a year.

I remember blokes on the site I was on - as each trade finishes and moves on you might have a chat about which site they were going onto next. But instead of having the next job lined up they were being told by the sub-contractor - 'when this job finishes I haven't got any more work for you'. So they were taking the odd morning or afternoon off and going scouting for work. You'd here lots of things like:

'How did you get on?'

'B@stard offered me £55 a day. I told him I was on £75 at the moment. He told me I could take it or leave it.'

A site manager building a warehouse next to the job I was on went for an interview at a national housebuilder's office in Toddington or Hockliffe - that neck of the woods - I was working in Aylesbury at the time. His job was drawing to an end and the contractor he was working for told him he would be laid off when it was finished.

He was really fed up when he got back to his site. I went over for a natter and a cup of tea. He was actually bloody furious. He had been kept waiting one and a half hours by some ignorant git of a project manager.

As soon as he sat down the project manager said to him 'Before we get on with the interview, how much are looking for?'. The site manager said 'I'm on 18k at the moment'. Matey said 'We're offering 13k and if you don't like it I've got a list of applicants here as long as my arm - you interested or not?'

He was told he could poke his job up his bottom and the bloke in question was out of work a couple of months later. No idea what happened to him. Like me, no doubt, he left the industry vowing never to return.

I don't think we have reached this brutal level yet. When we do, house prices will crash as forced sellers enter the market.

Share this post


Link to post
Share on other sites
I don't think we have reached this brutal level yet. When we do, house prices will crash as forced sellers enter the market.

I think you may be right. Would you say people in the construction industry are proportionally over-represented in the ranks of BTL? If so, it will be a double whammy as they are particularly vulnerable to a downturn in house building and house prices.

Share this post


Link to post
Share on other sites
But if they can't sell, or can only sell at a loss, they may well decide to stay put and tough it out. Lots of people did that last time. Only if one of them loses their job - and is unable to get another one - will they be forced to sell.

I guess in the very long term it might be best to stay put ...

Thing is, they're struggling now at present interest rates, and are absolutely terrified of rates going up, they would be forced to sell then regardless.

I really do hope they can sell quickly... Only one of them is working full time anyway as they've just had a baby!

We may see a lot more of this in the future. Young families forced to sell and entering the rented sector to survive.

Share this post


Link to post
Share on other sites

The key words in the whole sorry situation are "INTEREST ONLY MORTGAGE".

It is conceivable that house prices will not now go above the high of last year for over 10 years. So during this period not only will your friend be renting from the bank but they won't even have the renting-benefit of being able to move around.

IO mortgages really do make people slaves. And we are told that "renting is dead money". :blink:

So selling now for cost-price may be the best decision your friend will ever make. Certainly better than the original decision to buy, anyway.

Edited by Starcrossed

Share this post


Link to post
Share on other sites
An alternative to selling the property would have been to have rented the property out which would have covered the mortgage costs. In other words, they could have become a BTL landlord.

They should have waited until the spring bounce next year to sell their property and in particular should have waited for the boost in property prices next April resulting from the changes to pensions that will allow the inclusion of residential property.

You are joking right?

There is no way they could get enough rent to cover the mortgage, let alone cover continued maintanace costs.

You are kidding yourself if you think house prices will go up in the next year!

Share this post


Link to post
Share on other sites
They should have waited until the spring bounce next year to sell their property and in particular should have waited for the boost in property prices next April resulting from the changes to pensions that will allow the inclusion of residential property.

This is complete c4ap.

SIPPS will have next to NO effect on the market. You need a 50% mortgage to reverse into a SIPP for nominal tax advantages. The ONLY effect this will have is for large corporate buyers - it is designed for pension schemes, not BTLs.

This is one of the most moronic posts I've seen on here.

BTW - BTL < 14% of total market which is why the uber-bears have it wrong on the downside too. About 10% of the market needs to be BTL even when house prices are low to service those between home and buying. So only 4% of the entire market is "surplus".

At this level you simply cannot hang your hat on huge price falls.

Edited by needle

Share this post


Link to post
Share on other sites
So selling now for cost-price may be the best decision your friend will ever make. Certainly better than the original decision to buy, anyway.

I agree they could do very well by doing this. They will possibly make a profit on the sale of the house but even if they do not they will save a lot of money by renting instead of paying interest, maintence and buildings insurance for the next few years.

Share this post


Link to post
Share on other sites
I think you may be right. Would you say people in the construction industry are proportionally over-represented in the ranks of BTL? If so, it will be a double whammy as they are particularly vulnerable to a downturn in house building and house prices.

Too right, wages (and jobs) start to evaporate in a downturn.Interestingly, although Marina was quoting wage figures for the last crash, wages have been frozen in time for both labourers and tradesmen.I know a guy who's a foreman at a medium sized company who isn't on much more than 18k today.And many labourers work for little more than early 90's wages.There's been a slow-down for a while now in terms of available jobs, and with agencies becoming more and more an integral part of the industry, they're savaging peoples' pay packets.The days when you turned up on site and asked for (and got) a job are disappearing, they point you in the direction of the agency now.

As far as BTL's go, I'm not aware of a huge amount of this going on amongst people I know who work in the industry.They're probably more canny than people who've watched an 'inspiring' programme showing how 'easy' this is.

Edited by Homebird

Share this post


Link to post
Share on other sites

Just an extra thought.

By the time people are forced to STR they will probably have arrears on their mortgage.

This means that their options are very limited. As long as people dont have negative equity they can sell their property and avoid repossession.

As soon as people have negative equity there will be lots more repossessions.

Share this post


Link to post
Share on other sites
An alternative to selling the property would have been to have rented the property out which would have covered the mortgage costs. In other words, they could have become a BTL landlord.

They should have waited until the spring bounce next year to sell their property and in particular should have waited for the boost in property prices next April resulting from the changes to pensions that will allow the inclusion of residential property.

If they can't afford the interest payments how are tenants expected to be able to afford to pay him the same amount of money in rent?

You need to take advice on the limitation of the SIPPS scheme!

Share this post


Link to post
Share on other sites
Too right, wages (and jobs) start to evaporate in a downturn.Interestingly, although Marina was quoting wage figures for the last crash, wages have been frozen in time for both labourers and tradesmen.I know a guy who's a foreman at a medium sized company who isn't on much more than 18k today.And many labourers work for little more than early 90's wages.There's been a slow-down for a while now in terms of available jobs, and with agencies becoming more and more an integral part of the industry, they're savaging peoples' pay packets.The days when you turned up on site and asked for (and got) a job are disappearing, they point you in the direction of the agency now.

Not according to the spinmeisters...

A SHORTAGE of skilled builders and a boom in Government spending on construction have ushered in the era of the £70,000-a-year bricklayer.

A jump in public-sector building work has triggered a scramble for craft workers that has sent pay spiralling.

Earnings could get another hefty upward shove when building work starts on the 2012 London Olympics complex, say industry sources.

Government figures due this week are expected to show strong growth in construction, which is creating labour shortages and piling up pressure on wage costs.

According to Barry Stephens, chief executive of the National Federation of Builders, the industry needs 80,000 new recruits every year during the next five years, but the Construction Industry Training Board says that only 30,000 apprentices are being signed up annually.

http://www.thisismoney.co.uk/news/article....83&in_page_id=2

Share this post


Link to post
Share on other sites
An alternative to selling the property would have been to have rented the property out which would have covered the mortgage costs. In other words, they could have become a BTL landlord.

They should have waited until the spring bounce next year to sell their property and in particular should have waited for the boost in property prices next April resulting from the changes to pensions that will allow the inclusion of residential property.

:lol::lol::lol::lol::lol::lol::lol:

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.