Guest_northshore_* Posted July 11, 2015 Share Posted July 11, 2015 Couple of quick points about the 1989 HPC - it did not even happen, when you talk revisionist history with many people - how much had they risen just 10 years later? I want the next HPC to re-align average HP to average earnings and STAY THERE. The only way to do this is to avoid whacky financing, artificially low IR, nutjob buyer help schemes, uncontrolled immigration, planning restrictions, etc Government and self-interest aren't going away but my simple dream is for 0% tax on working vs. 100% on free-riding. Land and housing and financing are the significant factors of free-riding, so pragmatically I care less about the path than the outcome. I even briefly buried disdain and hypocrisy (because OO is more heavily subsidised) and emailed my MP to compliment them on the proposed changes. Then I wondered how naive I might still prove to be. Quote Link to comment Share on other sites More sharing options...
frederico Posted July 11, 2015 Share Posted July 11, 2015 The 89 crash was about 25% I sold my house and moved to rented, the problem then was they gave 6 months notice so loads more bought to get the joint tax relief. That sucked a load of demand from the future and the negative publicity did the rest. My impression is that the BTL bubble is a whole lot bigger, combined with ridiculous salary multiples for oo and low rates this is a whole new game. This appears to be the first sign that they have twigged what a mess it is. In this situation, if you are one of the ones that comes out bad, they leave you to sort yourself out. Fortunately I now am relatively financially secure and my kids are grown up (still at home though) so the worded that can am is I will be relatively poor. Ever since 1989, I have fought to keep my mortgage as low as possible and save as much as reasonable. If you owe money and you can't pay it back they will take everything. Unfortunately your not much better of renting at the moment, keep paying that £800 a month or your out. I mean, I know someone looking to buy now at maybe 5 times salary and 35 years, he might get some pay rises, but then rates will go up, other expenses will come along. If prices do drop, people like that are going to have a long time to think about it. I also know one person with one BTL and one with 2 or 3, neither had any idea about the new rules. Both are highly leveraged. Quote Link to comment Share on other sites More sharing options...
pipllman Posted July 11, 2015 Share Posted July 11, 2015 I want the next HPC to re-align average HP to average earnings and STAY THERE. The only way to do this is to avoid whacky financing, artificially low IR, nutjob buyer help schemes, uncontrolled immigration, planning restrictions, etc unlikely imo but the good news is that prices can gyrate massively on both sides of a long term average after a period with prices so far above the average for so long, it is perfectly possible that prices will overshoot on the way down too and stay below the long run average for some time the average line on the graph can even turn down it maybe that enough of the housing stock is 'investment property' now rather than homes that we could see this happen it won't be quick, but it could happen Quote Link to comment Share on other sites More sharing options...
bubbleturbo Posted July 11, 2015 Share Posted July 11, 2015 george.osborne.mp@parliament.uk Get writing Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted July 11, 2015 Share Posted July 11, 2015 george.osborne.mp@parliament.uk Get writing Done. Quote Link to comment Share on other sites More sharing options...
Venger Posted July 11, 2015 Share Posted July 11, 2015 No real institutional investor is going to offer more than adjusted NPV anyway, whether the change occurs tomorrow or later, because the numbers need to actually add up. I don't know what price change assumptions they'd use, but if this hypothetical interest was an actual then given the circular nature of what they might pay vs what might happen it would be sensible to bid low before getting involved in the market. There's always demand, just met at a lower price. Yes; institutional money is not going to relieve private landlords at super high prices. There's an FT article talking about an immediate 20%-30% mark down in values in social housing sector... concerns about many going bust, from Osborne's 1% rental cut per year (Budget). Search words: social landlords; then news Robert Grundy, head of housing at property advisers Savills, said the value of landlords’ homes — based on the most common methodology used by auditors — would fall 25 to 30 per cent immediately, and by as much as 40 per cent over four years. Valuations for lending purposes would not be quite so badly hit, he added. If there's tightening elsewhere in the world - and I'm reading grumbles of increased housing taxes (named a few US areas - can't find the article)... if the liquidity illusion changes.. There's a few 'HPCers' who've not been posting so much in recent days, lol. Quote Link to comment Share on other sites More sharing options...
bubbleturbo Posted July 11, 2015 Share Posted July 11, 2015 george.osborne.mp@parliament.uk Get writing Sensible opinions and feedback though. Whatever the wrongs of the past, this was a brave decision and is AT LAST going in the right direction to address the issues. If you mail him, think it through, make it succinct and make it count. Quote Link to comment Share on other sites More sharing options...
sleepwello'nights Posted July 11, 2015 Share Posted July 11, 2015 And because I can't resist my 2,500th post being an attempt to have a dig at you, who on Earth creates what evidently should have been done in a spreadsheet in a Word table. What are your other lines of business, the manufacture of papyrus and the sharpening of flints? Now that the forum supports images pasted in, why not just print screen and crop in a suitable application. Job done. Trying to mock me for not being able to parse your table is an odd choice, given that the 'table'as it stands is effectively an act of absurdist satire in and of itself . Anyways - I'm out. No serious offence meant. Thanks to you and Neverwhere for pointing out that I could have saved a spreadsheet as an image and pasted the image in. I'll know if I need to paste a table in future. I only saw the paste from Word icon, so I used that. By the way BU are you as didactic on the other "fora" you inhabit. I much prefer to use the english plural form "forums". But then I'm not a pretentious teacher. Quote Link to comment Share on other sites More sharing options...
pipllman Posted July 11, 2015 Share Posted July 11, 2015 (edited) What about Rosie Millard? http://www.thisismoney.co.uk/money/mortgageshome/article-2923547/Easy-way-buy-let-Rosie-Millard-says-new-build-flat-winner.html Another unqualified and unregulated charlatan purporting to offer financial advice. Why doesn't the FCA's remit cover this? Anyone that acts on this sort of advice is bonkers "Calculating the ‘yield’ - in other words, the rental income as a percentage of the property price - is critical. A good annual rental yield is about 5 per cent." 5% gross doesn't sound very good to me. It sounds treacherously close to going skint to me. Especially on a new build 1 bed flat with plenty of leverage. Not to mention having had 10% of the purchase price tied up for no return whilst the off plan development becomes reality. Also, in the how to make it work pink box is this gem "Ensure your tenant pays two months’ deposit, and don’t spend it" ​Not a word about the tenancy deposit protection requirements Rosie - and the editor of the rag that allows this gammon to be published - should be in prison Edited July 11, 2015 by pipllman Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted July 11, 2015 Share Posted July 11, 2015 (edited) Thanks to you and Neverwhere for pointing out that I could have saved a spreadsheet as an image and pasted the image in. I'll know if I need to paste a table in future. I only saw the paste from Word icon, so I used that. By the way BU are you as didactic on the other "fora" you inhabit. I much prefer to use the english plural form "forums". But then I'm not a pretentious teacher. I read that and I want to reach out and give you a great big hug. I love you, sleeps. Regarding being a pretentious teacher on other forums, no, it's here only for The Dude. Gros bissous! (That's French) Edited July 11, 2015 by bland unsight Quote Link to comment Share on other sites More sharing options...
Neverwhere Posted July 11, 2015 Share Posted July 11, 2015 Thanks to you and Neverwhere for pointing out that I could have saved a spreadsheet as an image and pasted the image in. I'll know if I need to paste a table in future. I only saw the paste from Word icon, so I used that... I'm pretty sure I pointed out some other stuff as well! ...Before you guys injure yourselves from over salivating you need to look at the overall effect which will depend on the typical size of a buy to let portfolio. I would think that most of renters anger is directed at overstretched landlords who cannot afford to properly maintain their properties. The example of the larger portfolio would indicate that the owners have given some thought to running it on a business footing with good contacts with local tradesmen for repairs. The example I've given is based on the more modest portfolio I held. The difference it would have made to me would have been insignificant. In a year or so as I step back from my businesses and indulge in retirement then the income would provide a nice supplement to my pensions and savings. Perhaps I'll snap up some of the bargains that you hope will result from the budget changes!... http://www.housepricecrash.co.uk/forum/index.php?/topic/205534-tax-relief-on-buy-to-let-mortgage-interest/?p=1102752073 ...In terms of considering the overall effect that is exactly what we are doing: prices move at the margins, not all BTLers need to be adversely affected, just enough to outstrip willing buyers at these prices. Some landlords have minimal leverage or no leverage at all and they will help to prevent the over-leveraged from raising rents to cover their shortfall. That this will only affect some and not all landlords is therefore a good thing from our perspective. If you're planning on snapping up some of the resultant 'bargains' on credit then you're probably going to be out of luck. By the time this plays out significantly increased risk weighting for buy-to-let loans are highly likely to be in place courtesy of Basel and are liable to cause a significant rise in interest rates for buy-to-let (i.e. a marked increase in the spread between market rates and base rates for this type of financing, so the base rate could stay static or even fall and buy-to-let interest rates would still rise because lender's costs will have increased in relation to these loans). Even your numbers would become much less favourable, potentially even totally inviable, under those circumstances. And that's without even considering what tools the Bank of England might bring in to regulate the sector, which is something that they've been looking to do recently. This isn't the end of the buy-to-let sector as we know it. It's simply the beginning of the end. Lots more fun to come http://www.housepricecrash.co.uk/forum/index.php?/topic/205534-tax-relief-on-buy-to-let-mortgage-interest/?p=1102752262 Quote Link to comment Share on other sites More sharing options...
spyguy Posted July 11, 2015 Share Posted July 11, 2015 Another unqualified and unregulated charlatan purporting to offer financial advice. Why doesn't the FCA's remit cover this? Anyone that acts on this sort of advice is bonkers "Calculating the ‘yield’ - in other words, the rental income as a percentage of the property price - is critical. A good annual rental yield is about 5 per cent." 5% gross doesn't sound very good to me. It sounds treacherously close to going skint to me. Especially on a new build 1 bed flat with plenty of leverage. Not to mention having had 10% of the purchase price tied up for no return whilst the off plan development becomes reality. Also, in the how to make it work pink box is this gem "Ensure your tenant pays two months’ deposit, and don’t spend it" ​Not a word about the tenancy deposit protection requirements Rosie - and the editor of the rag that allows this gammon to be published - should be in prison Houses are let 12 months of the year. Each month gives you 8% of your income. One month void - poof! - thats two years profit gone. Quote Link to comment Share on other sites More sharing options...
sleepwello'nights Posted July 11, 2015 Share Posted July 11, 2015 Merci, ma petite Cherie. Quote Link to comment Share on other sites More sharing options...
spyguy Posted July 11, 2015 Share Posted July 11, 2015 Yes; institutional money is not going to relieve private landlords at super high prices. There's an FT article talking about an immediate 20%-30% mark down in values in social housing sector... concerns about many going bust, from Osborne's 1% rental cut per year (Budget). Search words: social landlords; then news If there's tightening elsewhere in the world - and I'm reading grumbles of increased housing taxes (named a few US areas - can't find the article)... if the liquidity illusion changes.. There's a few 'HPCers' who've not been posting so much in recent days, lol. The FT article was more about the reduction in benefits rather than the removal of allowing individuals to offset mortgage IR payments against rental income. The problems with LHA are a whole different nightmare. Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted July 11, 2015 Share Posted July 11, 2015 5% yield on a new-build could be very low as service charges can easily consume two months rent, so you are down to a return of 4.1% and then add in letting agent costs and mortgage interest ... with the new non-tax relief and you are straight into negative territory .... and the odd void ..... and LL insurance ..... and safety checks. Still there is always the HPI ... oh forgot buying and selling costs ... and stamp duty. Apologies, satch - not replying to your quote directly. Being a tad pretentious I can't bring myself to use the word yield in the BTL context without putting it in inverted commas or using a qualifier like "so called". If things work out the way they look like they will, I think think the sensible way to react to a BTLer talking about "yields" will be the same way the cop in The Big Lebowski responds to The Dude's question about leads in the investigation into the theft of his car. Quote Link to comment Share on other sites More sharing options...
Venger Posted July 11, 2015 Share Posted July 11, 2015 Another unqualified and unregulated charlatan purporting to offer financial advice. Why doesn't the FCA's remit cover this? Anyone that acts on this sort of advice is bonkers...Rosie - and the editor of the rag that allows this gammon to be published - should be in prison I can't see any difference in that and the advice from nearly every other owner (dead money renting / forever HPI) - each of us has responsibility to engage our own minds. Besides; if the investors have misfortune, it's likely to be fee-paying work for my renter-saver relatives. I've not come this far to have Massive-Breakdown/Bailout 2.0 for the owner/investor side, from these prices. We've warned and warned, something will come along. It's a HPI world; until it isn't. Oh I never can quite rememberWas it June, July or September? That you sold your soul to me, to me That you sold your soul to me, to me Quote Link to comment Share on other sites More sharing options...
spyguy Posted July 11, 2015 Share Posted July 11, 2015 Just a thought but what if the BTL tax relief reduction is the Tories way of starting to slowly move the whole economy away from house prices and getting people to invest in the stock market/other things? The reduction of tax relief is happening slowly so highly leveraged landlords have time to move out of the sector and invest in something else. The whole "housing as an investment" really started in the late nineties (yes it did exist before then but not with so much fervour) so although this feels like forever if one has been renting it has only really been 15-20 years. That is enough time for things to radically change and move out of housing. What if the Government have realised that they need to deflate housing as the main source of economic growth and redirect it into a place that actually fuels the economy in a practical way for the future (such as investing via the stock market/P2P in real companies that produce things) as well as creating jobs and minimising the massive negative effects that high house prices are going to cause the economy in the years to come? I would not read too much in it. The govnrment wants to patch a large whole in the deficit without upsetting too many voters. A quick look at the number of BTLers and the tax relief they were getting ... Quote Link to comment Share on other sites More sharing options...
Venger Posted July 11, 2015 Share Posted July 11, 2015 The FT article was more about the reduction in benefits rather than the removal of allowing individuals to offset mortgage IR payments against rental income. The problems with LHA are a whole different nightmare. Perhaps so, but if social-provider housing (apparently 50% of rental stock) sees big falls in value.... then I can't see Insurers coming along to pay top whack to private landlords with portfolios affected by relief squeeze on rental income... the private landlords where both they and media are coo-ing that it will be ok because they can sell to insurance companies. Quote Link to comment Share on other sites More sharing options...
shindigger Posted July 11, 2015 Share Posted July 11, 2015 Party of the land. Rising demographic of renters work against them. Esp in London. Low hanging fruit/ Soft, plump,ripe, juicy, target with NO negative PR. Quote Link to comment Share on other sites More sharing options...
sleepwello'nights Posted July 11, 2015 Share Posted July 11, 2015 In reply to fru-gal, I echo your sentiments about this budget. It does seem to me that Osborne has used a tax increasing budget to start removing some of the complexities introduced by Brown and even out the playing field. Changes to taxation of dividends, simplification of VED, with a few sops like increasing IHT that probably didn't raise much tax in any case. He certainly seems to have gained some kudos as a political operator. I'm sure future budgets, in the run up to the next election, will be "give away" budgets. Quote Link to comment Share on other sites More sharing options...
spyguy Posted July 11, 2015 Share Posted July 11, 2015 Perhaps so, but if social-provider housing (apparently 50% of rental stock) sees big falls in value.... then I can't see Insurers coming along to pay top whack to private landlords with portfolios affected by relief squeeze on rental income... the private landlords where both they and media are coo-ing that it will be ok because they can sell to insurance companies. My local council is staffed full of lazy, useless, thick , ideological, professional sickies. And thats the top performers. However, compared to my local HA .... the council looks like Goldman Sachs. HAs have spent an absolute fortune on overstaffing. And they have made some very very stupid funding decisions. Quote Link to comment Share on other sites More sharing options...
Guest_northshore_* Posted July 11, 2015 Share Posted July 11, 2015 Yes; institutional money is not going to relieve private landlords at super high prices. There's an FT article talking about an immediate 20%-30% mark down in values in social housing sector... concerns about many going bust, from Osborne's 1% rental cut per year (Budget). Search words: social landlords; then news If there's tightening elsewhere in the world - and I'm reading grumbles of increased housing taxes (named a few US areas - can't find the article)... if the liquidity illusion changes.. There's a few 'HPCers' who've not been posting so much in recent days, lol. I'm not supportive of the social housing measures because they're not consistent with lower costs and greater net productive opportunity (some other sector - private - will absorb higher rents inc profit instead). While the sector's not perfect the objective should be more supply at running rather than rentier cost. Thus the gun should be aimed at the top of the rent-seeker tree and work down, not vice versa. Any perceived unfairness of social would then resolve itself. Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted July 11, 2015 Share Posted July 11, 2015 (edited) I would not read too much in it. The govnrment wants to patch a large whole in the deficit without upsetting too many voters. A quick look at the number of BTLers and the tax relief they were getting ... Maybe, but maybe not. Apologies for posting this again, Cameron in the Commons, January 2013: My hon. Friend makes a very good point. The fact is that the economy that we inherited was completely unbalanced. It was based on housing, it was based-on finance, it was based on Government spending and it was based on immigration. Those were four incredibly unstable pillars for sustained economic growth, and what we have had to do is a major recovery operation. That operation is still under way, but given the new jobs created, the private sector businesses that are expanding, the new people setting up their businesses, we are making progress. Source: Hansard The possibility exists that Cameron and Osborne are trying to do exactly what fru-gal suggests - it's just that it is hard to engender some real vigour in an economy which has grown sclerotic clinging to these pillars for decades. Time will tell. Edited July 11, 2015 by bland unsight Quote Link to comment Share on other sites More sharing options...
Venger Posted July 11, 2015 Share Posted July 11, 2015 Perhaps the IHT changes are precisely because they want/think house prices will fall - it is a vote winner for a large demographic and they can blame any house price falls on global uncertainty. So IHT changes in a falling market makes no difference except in terms of sentiment - it gives those with expensive homes the impression that the Tories are on their side. Yes. Agreed. Feel good winner today at no cost, or very little cost, into the HPC. Quote Link to comment Share on other sites More sharing options...
Neverwhere Posted July 11, 2015 Share Posted July 11, 2015 Merci, ma petite Cherie. No thoughts on Basel then? Quote Link to comment Share on other sites More sharing options...
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