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North London Rent Girl

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https://www.bbc.co.uk/programmes/m000182g

A little early-winter cheer for hpc-ers in Manchester! And more generally a very interesting programme on R4 on Friday - Manhatten-chester, well worth a listen. It's about high-rise development in the city. Young man who has just bought a 3-bed flat in a block for 240 grand, "I think it's a steal" - not his fault but oh good lord.

Prof. Karel Williams of the Manchester Business School: "too much housing of the wrong sort in the wrong place... The capitalists never know when to stop, the problem is the local politicians didn't tell them to stop ... it's a kind of monoculture that's ... for 25-34 year olds and what happens when they grow up and they want to have children?... None of this kind of ecology of the city has been focussed on by the developers or the planners". Then, later: "The BTL landlords, many of them have factored in continuous rises in flat prices into their return. Now, capital appreciation can't go on forever. In the early 90s, if you factor in significant inflation at the time, house property fell by around 25%. Now, the great achievement* after 2008 was the Bank of England cut interest rates towards zero and they essentially prevented a collapse in house property prices, that's the great achievement of economic management. So all these BTL landlords have never been exposed to a downturn in the property market.  The typical BTL landlord is someone like a south of England dentist. Most of them have been bought by people whose propsects of retirement are tied up with the idea of investment in house property. Now, if this turns sour, nobody knows exactly how these BTL landlords will behave. They've never been exposed to a serious downturn, they don't remember the events of after 89 when there was a serious downturn in the property market and there's at least the prospect that some of them would panic and start to dump property on the market. And if individual BTL landlords start panicking in large numbers, then of course you get distress auctions and the price of every flat in the block is defined by the price that was reached in the last distress auction..."

Presenter: "So buyer beware?!".

Prof - "I think BTL landlord certainly beware".

 

* Can't read his tone here, not sure he really means this.

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Brilliant - thanks for posting!

While objectively we all know it's a massive unsustainable bubble, reinforcement of this belief from outside our own little echo chamber is of course always welcome. 

Roll on the BTL catastrophe :D

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30 minutes ago, North London Rent Girl said:

https://www.bbc.co.uk/programmes/m000182g

A little early-winter cheer for hpc-ers in Manchester! And more generally a very interesting programme on R4 on Friday - Manhatten-chester, well worth a listen. It's about high-rise development in the city. Young man who has just bought a 3-bed flat in a block for 240 grand, "I think it's a steal" - not his fault but oh good lord.

Prof. Karel Williams of the Manchester Business School: "too much housing of the wrong sort in the wrong place... The capitalists never know when to stop, the problem is the local politicians didn't tell them to stop ... it's a kind of monoculture that's ... for 25-34 year olds and what happens when they grow up and they want to have children?... None of this kind of ecology of the city has been focussed on by the developers or the planners". Then, later: "The BTL landlords, many of them have factored in continuous rises in flat prices into their return. Now, capital appreciation can't go on forever. In the early 90s, if you factor in significant inflation at the time, house property fell by around 25%. Now, the great achievement* after 2008 was the Bank of England cut interest rates towards zero and they essentially prevented a collapse in house property prices, that's the great achievement of economic management. So all these BTL landlords have never been exposed to a downturn in the property market.  The typical BTL landlord is someone like a south of England dentist. Most of them have been bought by people whose propsects of retirement are tied up with the idea of investment in house property. Now, if this turns sour, nobody knows exactly how these BTL landlords will behave. They've never been exposed to a serious downturn, they don't remember the events of after 89 when there was a serious downturn in the property market and there's at least the prospect that some of them would panic and start to dump property on the market. And if individual BTL landlords start panicking in large numbers, then of course you get distress auctions and the price of every flat in the block is defined by the price that was reached in the last distress auction..."

Presenter: "So buyer beware?!".

Prof - "I think BTL landlord certainly beware".

 

* Can't read his tone here, not sure he really means this.

I think very well put - those dentists from Surrey also ride Harleys's!! If you have ever negotiated a commercial lease for a business you will know how professional (I use the term loosely and with be grudging respect because currently in the middle of a deal with a three hundred year old family trust in London) operate they will actually do rent free periods help with dilapidations etc but will never change their target rent. Because they know very well this could as the Prof says define the discussions with the next tenant or the next block (strangely all our access to digital  info probably hasn't helped in that with more secrecy deals were probably done  years ago)

I can't see thousand of small minded professionals who don't know anything about business acting like that 

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17 minutes ago, ftb_fml said:

Brilliant - thanks for posting!

While objectively we all know it's a massive unsustainable bubble, reinforcement of this belief from outside our own little echo chamber is of course always welcome. 

Roll on the BTL catastrophe :D

Absolutely, not news to hpc-ers but great to see msm giving room for crazy notions like house prices going up as well as down and prices being set at the margin!

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15 minutes ago, GregBowman said:

I think very well put - those dentists from Surrey also ride Harleys's!! If you have ever negotiated a commercial lease for a business you will know how professional (I use the term loosely and with be grudging respect because currently in the middle of a deal with a three hundred year old family trust in London) operate they will actually do rent free periods help with dilapidations etc but will never change their target rent. Because they know very well this could as the Prof says define the discussions with the next tenant or the next block (strangely all our access to digital  info probably hasn't helped in that with more secrecy deals were probably done  years ago)

I can't see thousand of small minded professionals who don't know anything about business acting like that 

Bloody hell, a three hundred year old trust, isn't that where it's really at?! Old wealth and power reproducing itself largely outside the tax system, their kids have got it made in the shade! But yes, have to give it to them for long-term thinking, that's how you do it, the rest of us can't remember 30 years back.

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27 minutes ago, North London Rent Girl said:

Bloody hell, a three hundred year old trust, isn't that where it's really at?! Old wealth and power reproducing itself largely outside the tax system, their kids have got it made in the shade! But yes, have to give it to them for long-term thinking, that's how you do it, the rest of us can't remember 30 years back.

Exactly my friend it's only when you actually the edges of multi generational extreme wealth that you realise how powerful the vested interests are. The bit that made me laugh was buried in the lease somewhere that mentions the magic and mystery of the trust I kid you not it's like frigging Harry Potter!!

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18 hours ago, iamnumerate said:

In the past (no idea about now) you could not get mortgages on high rise flats, so unless that has changed only cash buyers can buy these.

Pretty sure that's changed - a friend bought a 200K flat, sorry luxury apartment 😂, several floors up in a central Manchester development, with a mortgage. Not a specialist lender either.

This was about 4 years ago.

Edited by dpg50000

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3 hours ago, dpg50000 said:

Pretty sure that's changed - a friend bought a 200K flat, sorry luxury apartment 😂, several floors up in a central Manchester development, with a mortgage. Not a specialist lender either.

This was about 4 years ago.

Interesting, of course if they ever change their policies he would have problems.

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On 25/11/2018 at 11:49, GregBowman said:

Exactly my friend it's only when you actually the edges of multi generational extreme wealth that you realise how powerful the vested interests are. The bit that made me laugh was buried in the lease somewhere that mentions the magic and mystery of the trust I kid you not it's like frigging Harry Potter!!

verbatim ?

a one size fits all cloak with many pockets to hide the wealth with locked zips and unfastenable buttons. 

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8 hours ago, iamnumerate said:
12 hours ago, dpg50000 said:

Pretty sure that's changed - a friend bought a 200K flat, sorry luxury apartment 😂, several floors up in a central Manchester development, with a mortgage. Not a specialist lender either.

This was about 4 years ago.

Interesting, of course if they ever change their policies he would have problems.

That's the thing though - there's literally thousands of City Centre high rise flats in Manchester, and they aren't all BTL. Even allowing for off-plan foreign investors that are allegedly common, there still must be a shedload of ordinary (mostly young) people with mortgages on these places. Assuming these are spread out amongst lots of different banks and building societies, presumably it's commonplace to lend against these properties nowadays?

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  • 245 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%



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