Tonight Inside Out, Bbc 1 London-When Btl Goes Wrong

[Venger]

The problem with this line is that 66% of houses in the UK have no debt against them - and at a guess these are probably the large houses owned by the elderly. The hutches bought by the current generation of FTBs are indebted to the hilt.

Take my mother, 83, 5 bed house, absolutely zero intention of moving out (unless in a box). Her reaction to a severe HPC would be one of two options. Option 1 - buy another one. Option 2 - less IHT when her time comes. Both are good. Her house is worth some quantity of money, she doesn't really care what it is worth, and an HPC wouldn't make her sell.

Fully understand, but we don't need her to sell.

We just need a slight tilt of such owners in that situation (elderly/own outright/high value) who do begin looking to sell.

For example, those who don't also have good pensions and been looking to the value of their house... not downsizing yet - past few years - because of constant extra HPI.

Those who've have eaten into their cash savings during long period of low rates... attrition, and... well we will find out just how much a lot of them want to stay in their homes, when values begin to obviously begin falling.

Money/value is quite a focus, for many (not all) even those who now pledge they will not be moving/downsizing, stating they don't care what it's worth. The vast majority will probably do as your mother though... it doesn't matter - they don't set market values, only those transacting do (buyers and sellers). Just need enough to tilt the balance, and accept lower prices, against diminishing numbers of upsizers.

Or, others in your situation when markets begin to turn and realisation their inheritance in bricks and mortar value not all locked-in under forever HPI... more of them trying to convince (not forcing though) via logic to an elderly parent with luxury house (worth some quantity of money), ...downsize/STR to protect estate at maximum value... on the reasonable grounds of able to put big money in trust for grand-kids etc (an option not so much available after HPC, well not to super bubble extent cash-out). Reasonable for many older owners who actually care about situation; currently rattling around by themselves in family homes, no matter how much they love their £500K, 800K+ homes.

Only a very few owners of a collapsing financial asset trade it for money at 90 percent of peak value. Some others may get out at 80 percent, 50 percent or 30 percent of peak value. In each case, sellers are simply transforming the remaining future value losses to someone else. In a bear market, the vast, vast majority does nothing and gets stuck holding assets with low or non-existent valuations. -Elliotwave (Deflation).

[SE10]

I watched this, and felt really sorry for the landlords.

Oh no, wait, I didn't feel sorry for them in the slightest - bunch of greedy muppets!

Quite! It's their business model, and they should wallow in it.

[SE10]

Hahaha - the 'Lewisham penthouse' is in Hither Green and the '15 min transport time' to Canary Wharf is rubbish. There's no direct transport link between Hither Green and Canary Wharf. I live nearer Canary Wharf, on a direct link and I can't get there in 15mins.

So many kinds of stupid going on

Need to correct myself there, initially I thought that was Springbank Road, SE13 - but I'm now pretty sure it's roughly where Brookbank Road crosses Algernon Road.

This means it does have a direct link to Canary Wharf. It's not that far from me, so I speak from experience when I say that, door to door, it's 30mins to Canary Wharf.

[SE10]

All I can think is that the young people come election time need to get on twitter and start an i-volution, like we saw in Scotland.

Some HPC'ers are already there

[TheCountOfNowhere]

Some HPC'ers are already there

Good man. I'll be joining in soon.

[SE10]

Good man. I'll be joining in soon.

Would it be worth having a thread listing HPC tweeters, so we can all follow and retweet?

[TheCountOfNowhere]

Would it be worth having a thread listing HPC tweeters, so we can all follow and retweet?

Is there a HPC tweet account, maybe that's where people need to be listed ?

[Agentimmo]

The problem with this line is that 66% of houses in the UK have no debt against them - and at a guess these are probably the large houses owned by the elderly. The hutches bought by the current generation of FTBs are indebted to the hilt.

Take my mother, 83, 5 bed house, absolutely zero intention of moving out (unless in a box). Her reaction to a severe HPC would be one of two options. Option 1 - buy another one. Option 2 - less IHT when her time comes. Both are good. Her house is worth some quantity of money, she doesn't really care what it is worth, and an HPC wouldn't make her sell.

If garnnies house loses 30% of its value v quickly, the family will soon move to have her removed and put away somewhere to allow them to sell asap and realise some value for their inheritance

If we get a full HPC, I can foresee quite a lot of the oldies watching out for dodgy cups of tea, stairways that give way or mystery cars running at them on the way to the bingo.....no doubt the family will be "horrified" (that they managed to botch the job) when the oldie survives

A number of people I know need their parents house to deliver a silly amount of money to them , as it's their way to riches. Take away 30-50% , and they will be livid !

[rxe]

For example, those who don't also have good pensions and been looking to the value of their house... not downsizing yet - past few years - because of constant extra HPI.

A lot of that demograhic has very good pensions. My mother is being paid well from my father's final salary scheme. No financial stress at all. Now her friends may be a somewhat strange demographic, but I don't see any of them in major trouble, all are in the same position, nice big houses, decent pensions, and very low outgoings with zero debt. It seems to be the following generation that spends it all on flash holidays and motors.

Now at some stage (hopefully a long way off), I will probably inherit the place. Honestly, I'd rather my mother did what she wanted to, rather than attempt to lock in some sort of asset. When the time comes, I will view it as a bonus, whatever the value. What would I do with it? I've got somewhere to live. If I sell it, I have to find somewhere else to put the money, and these days, that is pretty fraught. So, whatever it is worth, I'd probably keep it.

My point is that there are a very large number of people out there who are pretty immune to house price shifts. We focus on the ones who have cocked up and got themselves in trouble, but I think these are a minority - like the people on the TV last night who had a somewhat idealistic view of being a landlord.

If garnnies house loses 30% of its value v quickly, the family will soon move to have her removed and put away somewhere to allow them to sell asap and realise some value for their inheritance

I would view it as a once in a lifetime opportunity to transfer assets across 2 generations and not pay the government a vast amount to do so. I don't believe in this bubble, but I continue to believe in property as a long term investment. While the value of companies in stock markets may collapse, in local currency a decent house in a decent area will be worth having.

Edited February 3, 2015 by rxe

[SE10]

Is there a HPC tweet account, maybe that's where people need to be listed ?

There is, but Twitter doesn't work in such a way that HPC'ers can be listed, unless it's assumed that all HPC'ers follower HPC on twitter (I don't, I use RSS for things like that because it's harder to miss articles).

https://twitter.com/housepricecrash

[Venger]

A lot of that demograhic has very good pensions. My mother is being paid well from my father's final salary scheme. No financial stress at all. Now her friends may be a somewhat strange demographic, but I don't see any of them in major trouble, all are in the same position, nice big houses, decent pensions, and very low outgoings with zero debt. It seems to be the following generation that spends it all on flash holidays and motors.

Now at some stage (hopefully a long way off), I will probably inherit the place. Honestly, I'd rather my mother did what she wanted to, rather than attempt to lock in some sort of asset. When the time comes, I will view it as a bonus, whatever the value. What would I do with it? I've got somewhere to live. If I sell it, I have to find somewhere else to put the money, and these days, that is pretty fraught. So, whatever it is worth, I'd probably keep it.

My point is that there are a very large number of people out there who are pretty immune to house price shifts. We focus on the ones who have cocked up and got themselves in trouble, but I think these are a minority - like the people on the TV last night who had a somewhat idealistic view of being a landlord.

I would view it as a once in a lifetime opportunity to transfer assets across 2 generations and not pay the government a vast amount to do so. I don't believe in this bubble, but I continue to believe in property as a long term investment. While the value of companies in stock markets may collapse, in local currency a decent house in a decent area will be worth having.

Have she positioned herself to limit her/your IHT liability? (Assuming it applies - I recently found out just how generous that married-relief actually is, the survivor getting deceased husbands/wifes allowance to carry over on to theirs, in majority of cases? That's how I read it anyway)

If not, are you positioned to pay the IHT yourself.

Yes; it's a double whammy - so many not just got hyper HPI, but generous pensions too. However my view is there could be enough sellers to still overwhelm and tilt the market into big HPC.... for you have to look at the buyer side too. Who will be the upsizers. My brothers and sister find it hard to save, whilst paying rent too. £1,000 per month (couple) into savings is where they're at, and a hard slog at that, against what has been more years of chronic hyperinflation in house prices.

I believe you honestly would prefer to do what your mother is happiest with; end of days in her luxury HPI high-value home. We can't project same goodness for all kids. Wonderful story (in a way that would never cross my mind, but shows me what people are capable of) I heard last year, of a girl in her 30s, visiting her mum (alone in 4 bed house, worth £420K-ish). Neighbour told my relative the girl had been pressuring her mother to sell up, downsize, so she could have a deposit on a home, and 'promises that she'll be visiting all the time' to look after her mum in her new downsize home..

Apparently the daughter then took to removing, in batches, items/possessions from the house, and trying to convince her mother she was losing her mind. Just goes to show eh. The mother did go on to sell and fulfil her daughters wishes - don't know what the outcome was as we don't know where they moved to (well my spy-report doesn't go that far).

Just be careful not to project too much. Also, people die off as well.... about that IHT again? Some inheritors will have to sell even if IHT not an issue to cover their own debts on other houses. Houses come to market... and do we have enough upsizers....? There could be a tilt toward HPC.

A house can be worse than stockmarket. You can go into the red in a house (as you can with more exotic financial trading), with house worth less than what you owe. I don't believe in the bubble either; want HPC. I don't believe in sense of long-term holding into bubble-into-HPC either, for your worth having - and I hope a tilt in other owners willing to sell, will see it that way too. Opportunity costs of wasting many £100Ks of not selling, into HPC, which may not see such values come back for a very very long time.

[RIP]

"While the value of companies in stock markets may collapse, in local currency a decent house in a decent area will be worth having".

swap the "may" and "will" round and that sentence has no more substantiation in that order. What facts are you backing that statement up with? Utter waffle.

[silver surfer]

I continue to believe in property as a long term investment. While the value of companies in stock markets may collapse, in local currency a decent house in a decent area will be worth having.

I understand how daunting it is for a prudent and responsible person to try and safeguard their capital. Pension funds dry up and disappear, the world is full of charlatans, and global events can conspire to leave any plans in shreds.

It's understandable why in these circumstances many people feel most secure with property, it's had a great run for the past thirty odd years and, if nothing else, you can at least reach out and touch it!

But I still believe there are risks to property that deserve some serious reflection.

Firstly, unless you have a huge property portfolio spread throughout the country, you have to distinguish between the security of the entire property market and the security of an individual property. Even though the past thirty years have been kind to property owners in general they haven't always been kind to each individual owner. A major employer can fold or relocate, like Pfizer did in 2011 in Kent, leaving the local Sandwich property market marooned, or as might be playing out right now in Aberdeen with the collapse in oil industry investment. You can suffer planning blight, such as the Heathrow runway or the HS2 rail line. Or you might encounter financial loss from a very small disturbance, the house next door gets turned into flats, you find the ceilings are insulated with asbestos, Japanese knotweed takes a hold in your garden. There are more ways to render a property unsaleable than you can shake a stick at!

Secondly, even though I'm not one those HPC forumites expecting an imminent crash in prices, I still struggle to see a plausible route where the next thirty years will be as remotely as kind to property owners as the past thirty. If I had to point to one single argument it would be this. Interest rates peaked in the 1980's, and the trend has been downward ever since. I doubt interest rates will leap up anytime soon, but over the coming decades they will almost certainly trend upwards. And that one conclusion alone will probably be sufficient to remove the prospect of material capital gains for the best part of a generation to come.

Thirdly, for me the abiding puzzle of placing all your faith in property, in particular in just one or two properties, is that in flies in the face of diversifying your risk. I used to receive share options, and even though I thought they were a pretty good long term bet I always sold them as soon as they'd vested because I didn't want to be doubly exposed to one company as both my employer and my investment. Spreading your risk should be the bedrock of any wealth preservation strategy, but the cost of a property relative to the wealth of the great majority of individuals means it's inevitably a huge number of eggs in one or two baskets.

It's your money and your decisions, and if your analysis leeds you to a different conclusion then I respect that. All I would say is never, ever let property become the default choice without investigating all the other options out there, and always try to hedge your bets so that when the inevitable upset occurs you can at least have something in your portfolio that holds its value or even grows.

Good luck!

[@contradevian]

My God, some tenants might be dodgier than the parasites who rent the houses. Who knew?

[renting til I die]

Hahaha - the 'Lewisham penthouse' is in Hither Green and the '15 min transport time' to Canary Wharf is rubbish. There's no direct transport link between Hither Green and Canary Wharf. I live nearer Canary Wharf, on a direct link and I can't get there in 15mins.

So many kinds of stupid going on

I found that funny too. Nice view from his, ahem, top floor flat (I always thought that a penthouse was a small addition constructed on the roof of an apartment building, oh here is a Wikipedia entry that confirms what I thought! http://en.wikipedia.org/wiki/Penthouse_apartment).

Edited February 3, 2015 by renting til I die

[Eddie_George]

Is there a HPC tweet account, maybe that's where people need to be listed ?

Yes, just look at the followers here, we are all there

[Mrs Bear]

If garnnies house loses 30% of its value v quickly, the family will soon move to have her removed and put away somewhere to allow them to sell asap and realise some value for their inheritance

If we get a full HPC, I can foresee quite a lot of the oldies watching out for dodgy cups of tea, stairways that give way or mystery cars running at them on the way to the bingo.....no doubt the family will be "horrified" (that they managed to botch the job) when the oldie survives

A number of people I know need their parents house to deliver a silly amount of money to them , as it's their way to riches. Take away 30-50% , and they will be livid !

Heard just the other day of someone insisting that his sibling either sell or 'equity release' their mother's house, because his IO mortgage comes up soon and he's got no cash. The sibling has power of attorney since the mother has dementia. He actually said he would get a 'retired' (struck off more like) lawyer friend' to 'mediate' in his own best interests. I've heard of a few similar vultures, apparently under the impression that P of A gives carte Blanche to dish out other people's money ad lib.

Needless to say the sibling has told him to go and pleasure himself with the rough end of a pineapple.

[rxe]

ave she positioned herself to limit her/your IHT liability?

Pretty much everything that can be done, has been done. I drew the line at anything involving risk taking on her behalf. There are all sort of complex schemes involving sale and lease back of primary residence, but there are a lot of pitfalls too. (E.g I go under a bus, Mrs rxe marries a psycho, mum is on the street). Not worth it.

I didn't say property is the only choice of investment - every possible store of capital has weaknesses, especially over the long term. You need diversity of asset classes and diversity of geography. My point is that if I had a property, I wouldn't be in a desperate rush to sell it - where would you put the money? Everything has risk. Politically, there is far more support for property than pretty much anything else. Yes, there a growing group of people who don't support it, but remember that 66% of homeowners who will punish any government who tries to do anything radical. That is of course, a completely different position to those people in the film who have effectively put everything on red, and seem a bit gutted with the results.

[Blod]

For inheritance purposes, it is now better leaving a £1 million pension pot than a £1 million house.

That's just plain logic, after 20-30 bull run any invest type is going to be best avoided.

Now the only "investors" appear to be of the "shoe shine boy" type.

[Si1]

That's just plain logic, after 20-30 bull run any invest type is going to be best avoided.

Now the only "investors" appear to be of the "shoe shine boy" type.

Indeed

The long term average returns of property, including rent costs and capital gains, are the same as for assets in general, so one would expect a reversion to the mean