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Mark1973_5

It's Taken 18 Months To Sell A Flat In London - So No, It's Really Not Booming. ------ Merged

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Have been a lurker on this forum for quite a while now ... nervously hoping for my property nest egg to hatch and to extract myself out of the miserable situation of being an accidental landlord with a massive mortgage and no 'plan b' in an impending HPC scenario.

Thankfully, I finally completed this week on the sale of a one bed flat in London after having had it on the market, vacant, for 18 months, and having had 3 previous offers fall through - each time towards the end of a painfully slow conveyancing process. Is this a sign of a buoyant market? I think not. When I originally bought the place 15 years ago, the whole process only took 3 weeks, with a 95% mortgage at 4 times my salary, after only one 10-minute viewing and no face to face contact with anyone - no bank manager, no solicitor, no surveyor, nothing. All it took was about 7 or 8 mobile phone calls on a massive Nokia and bang - I was on the property ladder.

The price the flat eventually achieved was the target price the EA suggested in Feb 2014, which was already 50% higher than what I'd expected it to fetch, and to be honest, what I'd have happily accepted back in 2009/2010 when I originally wanted shot of the place. Back then, the EA advice was 'you'll never sell it in the current market - you're better off letting it'. In the end, I've realised a 200% nominal increase (not great over 15 years, I know) but I've also had 12 years' rental income. The last 18 months where it was void have been very expensive and nerve-racking, but overall it actually hasn't been a terrible investment. (For the record, it wasn't by design that I ended up as a landlord - work relocated me and I never got round to selling it and buying somewhere else. The flat was supposed to be my home and it sort of became my 'first rung on the ladder' and it wasn't until kids came along and I had a permanent job in a completely different part of the country that I realised I needed to settle down and that this meant ditching the millstone that is a BTL in lieu of a family home).

The three prospective buyers who dropped out were all eventually dissuaded by the lender-appointed licensed conveyancer, each time citing the same reason (an absentee freeholder might make it hard to sell on), despite that factor having been declared by me in the particulars, and always after them having spent several hundred quid on surveys and searches. All of them were young, wannabe property developers, and all were interested in the flat because it has access to a large unconverted roof space. Not one of them tried to barter down the price I'd originally agreed to (like I said - I wanted shot of the place, and I was nervous about the 2015 General Election (rightly) and the imminent HPC that still hasn't come (wrongly) - so my acceptance criteria was always to pick the offer most likely to proceed quickly and I accepted each buyer's first offer: the first one was £10k below asking price, the second one £5k over asking price, and the last two (including the eventual sale) were at asking price). It was like none of them could contemplate that prices might be negotiable downwards as well as upwards, or that I might be a bear who was desperate to sell. Each time it went back on the market I had several offers to chose from within a few days. There really is no shortage of greater fools - and if anything, by refusing to lend on a trivial technicality, the banks are actually protecting some of these people from their own folly (well - three of them at least. Not sure about the fourth one ...)

Which is why I find myself very conflicted. I think the HPC mindset is absolutely correct. There must be a correction, and it really can't be that far off any more. But, when it was my fortune that was being staked, I behaved like every other member of society who has an equity stake in a spare property: I bet on the ability of an EA to get the maximum price for what is truthfully a rather horrid flat in a part of London where the residents have a nasty predilection for beheading people in the street in broad daylight, and because of an utterly dysfunctional market riddled with all sorts of perverse incentives, that bet has sort of proven to be a good one. I feel like I've gotten away with daylight robbery - but I'm extremely grateful that I've been able to convert an unwanted high-risk asset class (liability?) into a substantially reduced mortgage on my family's home and have massively de-risked my life and financial future. I actually no longer care what anyone thinks that any house should be worth - and that is a great feeling. In the future, I may even find that I'm no longer spending quite so much time late at night reading up on such matters on this forum ... although I'm also slightly worried that complete disengagement would devalue my first actual post as hardly any more meaningful than trolling, which it really isn't my intention to do.

But - if I may be permitted two small observations about HPC dogma that have irritated me over the last year or two - I think that too many posters are unnecessarily mean about landlords. I was never unfair to any of my tenants - even though plenty of them were just as nasty, work-shy and entitled as the boomers many on here seem to hate so passionately (not me, by the way - my Mum is a boomer and she is lovely). Renting out my flat was a means to an end - it enabled me to pursue a career in different parts of the country. It should be possible for a sensibly functioning property market to have space for people who want to invest in property as an asset class and earn an income as a landlord that reflects the risks to which their capital is exposed. Those risks are very real - I paid 18 months of council tax, insurance and mortgage interest on a vacant flat and this wiped out any supposed profits going back 5 years. I consider myself extremely lucky that the pipes didn't burst or that squatters didn't occupy the place. Frankly, the real returns are so dreadful that I would never chose to invest in property myself, ever again. But I'm glad that others are prepared to let their properties - otherwise I'd not have had all that many places to live myself for over a decade or so.

And second - I think that those who post on here who claim there is no property ladder are also wrong - there is. Even if I'd sold at the same price I originally bought at, during those 15 years I'd paid off nearly 50% of the original mortgage balance and had therefore built up some equity. HPI definitely improved my actual returns, for sure, but it is the leverage that delivers the returns that the old-fashioned property ladder promises, not the HPI. (My £4k of savings in 2000, geared at ratio of 20:1 have delivered an outstanding return that the stock market would not have beaten). Whilst recent levels of HPI are clearly unsustainable, there is no reason why the gentler, more slowly-accruing growth in the equity stake that the original property ladder promised should be derided. This is basically the same phenomenon as compounding interest, just mathematical rearranged - and it has worked for generations. Indeed, it is perhaps the only hope for the current generation of millennials and their future offspring to accumulate anything for themselves, and we shouldn't discourage anyone from adopting a long-term prudent approach to wealth accumulation by flaming anyone who believes in it. You know what - if the person who bought my flat last week ends up owning it outright in 25 years and if by then it is nominally worth a million quid, I'll be absolutely delighted for them. Won't happen of course - they'll already be busily banging a Velux window into the loft space and will be looking to flip it as a two-bed flat for £300k within 6 months ... but believing that someone one day could buy it for themselves as a place to live with their family is also an important part of a decent, proper society and I sometimes feel that there is just a teensy bit too much enthusiasm for financial Armageddon and societal collapse on this forum, and that's not very nice ... my Mum may be a dreadful boomer who does not understand how lucky her generation is, but at least she doesn't actively want for anything bad to happen to anyone else.

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Wtf

Has your Willy been sufficiently waved to the tune of'isn't leverage amazing especially if you bought cheap and got zero interest rates and a massive bank bailout' yet?

Congratulations on your birth date by the way.

Edited by Si1

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Mods please merge with other threads by people born in 1973 who want to show off about how much richer they are than people born a few years later.

There was a virtually identical one to this called 'I've been on hpc for years and you should have bought I was born in 1973 by the way' I seem to recall.

Edited by Si1

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Whilst recent levels of HPI are clearly unsustainable, there is no reason why the gentler, more slowly-accruing growth in the equity stake that the original property ladder promised should be derided. This is basically the same phenomenon as compounding interest, just mathematical rearranged - and it has worked for generations. Indeed, it is perhaps the only hope for the current generation of millennials and their future offspring to accumulate anything for themselves, and we shouldn't discourage anyone from adopting a long-term prudent approach to wealth accumulation by flaming anyone who believes in it. You know what - if the person who bought my flat last week ends up owning it outright in 25 years and if by then it is nominally worth a million quid, I'll be absolutely delighted for them. Won't happen of course - they'll already be busily banging a Velux window into the loft space and will be looking to flip it as a two-bed flat for £300k within 6 months ... but believing that someone one day could buy it for themselves as a place to live with their family is also an important part of a decent, proper society and I sometimes feel that there is just a teensy bit too much enthusiasm for financial Armageddon and societal collapse on this forum, and that's not very nice ... my Mum may be a dreadful boomer who does not understand how lucky her generation is, but at least she doesn't actively want for anything bad to happen to anyone else.

It doesn't have to be via HPI and guaranteed HPI 'for those who believe in it and have taken on epic debt to outbid others to put claims on houses with their HPI++ spreadsheets for the future' - and tagging them up as victims. Wealth accumulation via productive investment/business, yes. Not sat on their **** counting and expecting HPI++++++, wealth on a river of red ink.

And I will be delighted when values converge more towards earnings.

My enthusiasm is for a rebalanced market.

Losing some value on her own property in markets subject to value change, which some think highly overpriced, is not wishing bad on her.

The fact you're still banging on about property at an investment...

The price the flat eventually achieved was the target price the EA suggested in Feb 2014, which was already 50% higher than what I'd expected it to fetch, and to be honest, what I'd have happily accepted back in 2009/2010 when I originally wanted shot of the place. Back then, the EA advice was 'you'll never sell it in the current market - you're better off letting it'.In the end, I've realised a 200% nominal increase (not great over 15 years, I know) but I've also had 12 years' rental income. The last 18 months where it was void have been very expensive and nerve-racking, but overall it actually hasn't been a terrible investment.

Also in my experience the opposite has been true 'wanting bad to happen to the owner/btl side'. Many hpcers have positioned themselves to lobby many owners/buyers and btlers as innocent - worried about their futures, worried about their debt, and not wanting them to suffer loss. Many have been so soft to the detriment of their own positions/other people positions / future generations positions. For me, it's a competitive market full of extremes. To want price of a house to be kept inflated so someone else is happy, when my family don't own and are severely priced out and have different measures of value, is anti-reality.

Edited by Venger

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Leveraging is neither good nor bad - it just is. Not sure how you can find reasons to get angry at maths, which has a pretty universal and democratic logic that is available to all. I'm also not sure why the power of compound annual growth rates, such that are chased by the super-frugal savers on this forum is somehow morally superior, either. They've just outsourced their rent-seeking behaviour via the stock market, that's all. Doesn't give them a moral shield - not in my book anyway.

PS - not born in 1973. My user name is a memorable date, but it is memorable for reasons other than it being my own birthday. I'm not all that much younger than that, though ... so I do take some umbrage with your opinion that my returns were entirely predictable and only the result of a simple accident of birth. Did you miss the part where my first mortgage was 4x salary? Or where I lived within my means for 15 years and paid down my mortgage? I took a huge risk - one that at times seemed foolish, and one that has caused me considerable angst and stress for long periods - and my point is simply that some on here are not prepared to take those risks - which is their prerogative. But taking risks is one of the factors that justifies earning a return. There's plenty who've done quite well out of property ownership who got in long after I did, plenty more who doubled down again and again and made more in a shorter time; there's also plenty who didn't, and plenty who are in it to the eyeballs and who never will. Maybe there's even some who will make a decent return in the future - who knows? That's the whole point. It is uncertain. It is a risk. To pretend it was all some kind of evil master plan that the few have inflicted on the many and which required nothing more than a lucky birth date is just petulant. Must suck to be you, Si 1.

Maybe it is those who only ever moan that they haven't made any winning bets (with 20:20 hindsight) and who lack any sort of courage to take any form of personal risk themselves who are the entitled ones, eh?

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"Or where I lived within my means for 15 years and paid down my mortgage"

You ddi not live within your means. You and Bank of England and the government took wealth from pensioners, savers and youth.

You got subsidised by the FLS of BOE and the HTB/SDLT reforms of the government which transferred wealth from the above elements of the society.

If it was not for the BoE/ Government you would have not made all that profit..

So have you paid your CGT?

Edited by AC44

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Based on the painfully plodding style and excessively laboured point making,I think someone may have created the first Trolbot (I assume this is the beta release).

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Leveraging is neither good nor bad - it just is.

Errr.... leverage is great when prices go up! As it multiples your returns by whatever factor you have leveraged by. But it also has a similar effect if prices fall. Leverage increases the risk and the possible reward. Of course, prices never fall over a long period (aka Japan!), so everyone is fine! :P

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Errr.... leverage is great when prices go up! As it multiples your returns by whatever factor you have leveraged by. But it also has a similar effect if prices fall. Leverage increases the risk and the possible reward. Of course, prices never fall over a long period (aka Japan!), so everyone is fine! :P

Leverage is fine because the government will bail you out. Lesson from recent history, sadly.

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Errr.... leverage is great when prices go up! As it multiples your returns by whatever factor you have leveraged by. But it also has a similar effect if prices fall. Leverage increases the risk and the possible reward. Of course, prices never fall over a long period (aka Japan!), so everyone is fine! :P

Leverage is fine because the government will bail you out. Lesson from recent history, sadly.

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Maybe it is those who only ever moan that they haven't made any winning bets (with 20:20 hindsight) and who lack any sort of courage to take any form of personal risk themselves who are the entitled ones, eh?

And so many on hpcer claimed victimhood for these types in 2008-2015.

Pay your CGT.

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And so many on hpcer claimed victimhood for these types in 2008-2015.

Pay your CGT.

Magical thinking again. If you don't take a random punt you exhibit moral weakness, and gamblers are deserving. Edited by Si1

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So have you paid your CGT?

The OP will be entitled to (some) principal private residents relief having used the property as his principal home for most of the 15 years of ownership (I gather)

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