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Anecdotals

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Not really much point to this thread but figured I'd share my conversations over the last week.

One work colleague, “bought my house for £65,000 and sold it for £225k!”. He’s this mid-50s guy who barely speaks English, has earned historically about £18k in London at least since I’ve been working with him (5 years) but recently bumped up to maybe £25k when we filled a couple of spots. He’s desperate to get into BTL and has spent a good few hours over the last couple of months telling me how he can rent an HMO to students and bring in £1600 with only a £500 payment each month. I asked him if he took into account student lets being 10 months of the year. "No but it’s not much of a difference”. I asked him if he took into account potential rate rises. “Yes but I’ll still make a profit”. I asked him if he took into account the (admittedly poor at the moment) amount he’d lose from savings interest. “No.” So we eventually worked out that between refurbishment, letting fees etc he’s probably looking at around £5k a year profit off of £100k cash (and of course losing out on £2.5k)

“Yes but the house will go up in value”.

I then asked him what low interest rates have done to house prices. “They’ve made them rise”. So I asked what will happen to house prices when rates rise. “Well they [house prices] won’t fall”.

I did have a more indepth conversation about ethics of HPI, BTL, that I don’t want to spend the rest of my 20s stuck in one place but I won’t bore you.

Another work colleague has one flat but is renting it out. His now wife has a flat and is renting it out. They’ve recently conceived a kidlet and so they’ve bought a house, their “forever house”. This guys on £30k or so, she is very well paid. Trouble is she’s going to have to leave work soon, so the only way they can afford it is… Interest Only. Rather than sell up and buy something nicer or more affordable or reduce their payments, we’ve two accidental landlords on our hands.

Sorry to be the bearer of bad news this close to Christmas but I can’t see sentiment changing in that age group any time soon.

Luckily though, I sat down and said to the other 20-somethings “I don’t want to get too political here lads but… Don’t ever buy a house”. “Nah mate, it’s all a scam, I’m happy with my landlord fixing stuff for me while I’m out on the p*ss”.

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The change in sentiment is in the young on the whole but they are the ones that are desperately need by the boomers as they are the future base of the pyramid and will be needed in ever growing numbers ,without them there is only one outcome hence HTB/HTB2 /shared ownership and god knows how many other schemes

Edited by long time lurking

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Luckily though, I sat down and said to the other 20-somethings "I don't want to get too political here lads but… Don't ever buy a house". "Nah mate, it's all a scam, I'm happy with my landlord fixing stuff for me while I'm out on the p*ss".

Way back in my 20's when I bought my first house (not flat), interest rates were around 6-7%, and it was easy. Anyone that says otherwise is just trying to play the "it's always been hard to buy a house you know" card. Don't get me wrong, we saved hard for our £4,000/5% deposit, plus the other fees and costs, but it wasn't some insurmountable task. Since then it has got harder and harder, to the point where I elected to remove myself from the housing market and invest my money in other ways. I might not be 20 something anymore but I completely agree with your sentiment and would much rather be having a good time with someone else fixing everything and have them worry when TSHTF.

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Sadly, as ever, I am seeing early 30 somethings somehow scraping the means to buy a ridiculously priced flat or house. Another 30ish colleague bit the bullet this week. They'll likely be screwed if they want to reproduce/interest rates go up/one of them is made unemployed or goes sick.

Renting is kind of fun, maybe even recommended, in your 20s. By the time you hit your mid 30s though, you'll likely have had your fair share of forced moves, stolen deposits, scummy behaviour by agents and/or landlords over the 15 years or so of renting. You do build the life experience to avoid getting conned and find a decent rental, but equally many just decide they are sick of it.

Pity the poor renter on the receiving end of the landlords mentioned by the OP. Financial and other kinds of ignorance seems to go hand in hand with landlording.

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Another work colleague has one flat but is renting it out. His now wife has a flat and is renting it out. They've recently conceived a kidlet and so they've bought a house, their "forever house". This guys on £30k or so, she is very well paid. Trouble is she's going to have to leave work soon, so the only way they can afford it is… Interest Only. Rather than sell up and buy something nicer or more affordable or reduce their payments, we've two accidental landlords on our hands.

The only way they can afford it whilst keeping her flat, you mean!

Secondly, Interest Only is supposed to be in very strict supply now with conditions like 50% deposit, proof required of savings plan (which isn't allowed to include HPI), etc. So who is this IO mortgage with? Unless they have illegally got a BTL IO mortgage...?

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The only way they can afford it whilst keeping her flat, you mean!

Secondly, Interest Only is supposed to be in very strict supply now with conditions like 50% deposit, proof required of savings plan (which isn't allowed to include HPI), etc. So who is this IO mortgage with? Unless they have illegally got a BTL IO mortgage...?

I would guess its because the bank takes the equity and income of their current properties into consideration.

Got to love a leveraged bet! :P

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I would guess its because the bank takes the equity and income of their current properties into consideration.

Got to love a leveraged bet! :P

Maybe I don't quite grasp it but I would have thought that a mortgage applicant without other previous mortgages would be a better risk? That's quite a juggling act to be getting on with.

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Maybe I don't quite grasp it but I would have thought that a mortgage applicant without other previous mortgages would be a better risk? That's quite a juggling act to be getting on with.

Not really, the banks are happier leading to people with assets they can take off you if you default. A building can't be hidden or moved very easily.

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