Jump to content
House Price Crash Forum

House price correction and rent correction


Freki
 Share

Recommended Posts

5 hours ago, 24gray24 said:

All you say is misleading. 

1. It's a falsehood to claim you've already paid it. A flat out falsehood. When you get a mortgage you have not paid the drop. You've just promised to pay in the future. 

2. Another flat out falsehood.  

Etc. 

The reality is if you buy now and prices drop - you're going to be paying an inflated price. 

The Unmoderateds of this world don't want you to wait 2 years until the prices have dropped to much lower levels. 

This is the top of the market.  Buy at the bottom of the market. Its simple: Just wait. They'll be talking recession in another month. 

You've borrowed money and paid the full price of the house. You're confusing a reduction in equity With making yet another payment. 

You can find your sentiments reiterated time and time again on this site. Last year was the year it was going to crash. Nope,  2017. Wait it was 2016 because of the referendum etc etc. 

In the long run prices may well fall but in the long run we're all dead. 

I would make the prediction that there is a food chance of a mild recession within the next 18 months and that would almost certainly guarantee loosening monetary policy. 

I've also made the prediction, with some long rants back from Venger, that the optimal way to deal with the current scenario is to have flat or very slightly increasing prices with much higher rates of inflation thus eroding the average house price in real terms. 

Your prediction is that today is the top of the market and 2021 is the bottom?

Link to comment
Share on other sites

  • Replies 154
  • Created
  • Last Reply

Top Posters In This Topic

1 hour ago, adarmo said:

 

I've also made the prediction, with some long rants back from Venger, that the optimal way to deal with the current scenario is to have flat or very slightly increasing prices with much higher rates of inflation thus eroding the average house price in real terms. 

 

Not much good if savings rates don't go up to counterbalance things.

Great for homeowners with current debt. I assume you fall in that bracket.

Personally I would like to see a big reset and rates rise up. 

Link to comment
Share on other sites

7 hours ago, adarmo said:

You've borrowed money and paid the full price of the house. 

In the long run prices may well fall but in the long run we're all dead. 

I would make the prediction that there is a food chance of a mild recession within the next 18 months and that would almost certainly guarantee loosening monetary policy. 

 

Your prediction is that today is the top of the market and 2021 is the bottom?

You have not paid you've just promised to pay. If it drops you've just lost. 

I think the slide in prices will take a while but is starting now. 

You're suggesting wages will go up substantially through government action (printing), I'm suggesting house prices have to go down substantially. 

One or the other or a combination is the nub of the problem. 

Question for you : what percentage is required to get incomes and house prices back in synch in your mind? 

 

Link to comment
Share on other sites

6 hours ago, longgone said:

Not much good if savings rates don't go up to counterbalance things.

Great for homeowners with current debt. I assume you fall in that bracket.

Personally I would like to see a big reset and rates rise up. 

 I don't think savings rates will rise too much. Best i get at the moment is 1.5% With Santander.

You should never assume ;). My arguments for this is the most likely scenario are all over this site but high level summary is because it's the only politically acceptable way of adjusting prices. 

You might well wish for that. I wish I'd win the lottery and while there's an extreme outside chance it's basically not going to happen. 

Link to comment
Share on other sites

38 minutes ago, 24gray24 said:

You have not paid you've just promised to pay. If it drops you've just lost. 

I think the slide in prices will take a while but is starting now. 

You're suggesting wages will go up substantially through government action (printing), I'm suggesting house prices have to go down substantially. 

One or the other or a combination is the nub of the problem. 

Question for you : what percentage is required to get incomes and house prices back in synch in your mind? 

 

 There's two things. You've paid for the house,  that is fixed. You've promised to pay back the mortgage, that too is fixed (the debt, not the interest). If prices fall you do not pay back more than you borrowed nor did you pay more for your house and if anything it's not a bad thing for people wanting to move up into something bigger/ Better. 

Not suggesting wages will shoot up but track CPI or so. If that runs at 2 to 3% and houses are flat or at 0.5% then there's a slow and relatively painless correction. Most importantly it's probably the only politically acceptable way of adjusting prices. 

Yes, those two numbers conflict to impact affordability. 

That's a good question. In my view there's three things to bear in mind, cheap/ easy credit, household income as a total and location. 

Cheap and easy credit has driven prices up and then even looser monetary policy has supported and inflated further. Every increase in rates or tightening of lending criteria would have some impact so let's assume it is fixed for now. 

Household income has been increasing generally since the 1950s largely due to greater female participation in the workplace. Ironically though this means that each household with two incomes can bid against another with two incomes and push prices higher so doesn't seem to have given a couple better housing in the long run, but there are other benefits of course. 

Location and this relates to rentals too. Take London,  people with no obligations and high disposable income can spend all but enough wages to sustain them on rent. They can do the same for a mortgage if a bank will lend it. Also places like London have huge levels of foreign ownership which is independent of wages in the UK.

To answer the question, i honestly don't know. Without insane interest rate rises the days of 3.5 times single earnings are long gone. 

I would love housing to be as cheap as possible and a land value tax might be a great way of rebalancing the economy. 

Link to comment
Share on other sites

33 minutes ago, adarmo said:

 I don't think savings rates will rise too much. Best i get at the moment is 1.5% With Santander.

You should never assume ;). My arguments for this is the most likely scenario are all over this site but high level summary is because it's the only politically acceptable way of adjusting prices. 

You might well wish for that. I wish I'd win the lottery and while there's an extreme outside chance it's basically not going to happen. 

Great so double digit inflation and savings  not going up will wipe out cash for most in an instant.  

You basically want the late 1970's again, I tend to agree though they will try to do this to try and rebalance things. 

Seems having lots of cash is a disaster waiting to happen.

24 minutes ago, adarmo said:

Instant withdrawal?

If so please let me know ?

Atom 2%

Link to comment
Share on other sites

10 minutes ago, adarmo said:

 If prices fall you do not pay back more than you borrowed 

Not suggesting wages will shoot up but track CPI or so. If that runs at 2 to 3% and houses are flat or at 0.5% then there's a slow and relatively painless correction. 

To answer the question, i honestly don't know. Without insane interest rate rises the days of 3.5 times single earnings are long gone. 

 

If prices fall,  you're the last fool that bought just before prices dropped. No one wants to be told to suck that drop up because they did borrow it. . 

This is your prediction : house prices rising half percent per year, wages rising 2-3% per year. Slow and painless correction.  

What's the time frame for getting wages and house prices back in synch in your view? 

Your not asking 28  year olds to wait another 10 or 20 years are you? 

Link to comment
Share on other sites

And that was exactly my point @24gray24

The only issue is you seem to attach too much value to the nominal amount you are paying and not comparing it to the pure cost of renting. Like I said earlier, in the current market conditions, if prices drop by 13% over the course of five years, you don't win or lose compared to placing the same money at 1.5%.

You make it sound like you would be in a losing position if the value of the house drops by even 1%

Edited by Freki
Link to comment
Share on other sites

Correct, and you seem to be using the tool right, Adarmo was talking about instant access accounts. The Atom (that I use) is a fixed, locked account. Two different products, that can be similar in use. But in my mind instant access is the first step/ fixed are the second/ share ISA the third.

Link to comment
Share on other sites

11 hours ago, adarmo said:

You've borrowed money and paid the full price of the house. You're confusing a reduction in equity With making yet another payment. 

You can find your sentiments reiterated time and time again on this site. Last year was the year it was going to crash. Nope,  2017. Wait it was 2016 because of the referendum etc etc. 

In the long run prices may well fall but in the long run we're all dead. 

I would make the prediction that there is a food chance of a mild recession within the next 18 months and that would almost certainly guarantee loosening monetary policy. 

I've also made the prediction, with some long rants back from Venger, that the optimal way to deal with the current scenario is to have flat or very slightly increasing prices with much higher rates of inflation thus eroding the average house price in real terms. 

Your prediction is that today is the top of the market and 2021 is the bottom?

Ironic that I was only renting in Oxford and Maidenhead because I believed house prices would crash "soon".

I spent about 6 or 7 years (and a lot of money, and a lot of stress) waiting for this to happen. Of course, the money and stress was exacerbated by blind bad luck with the landlords (in some cases their greed, in others simply changes in the landlords situations that whipped round and affected me too).

I have been here at HPC for years learning that the housing marketplace (lettings and purchased) is defunct, perverse, corrupt and endlessly pumped/bailed out.

Every time reality/honesty appears to be coming along another tranche of feckless bankers and politicians comes along and pumps away.

I earnestly hope that this time they will stop - for my children's sake - but I cannot dismiss the lingering fear that our "friends" will find another way to pump it further.

Hopefully they will only pump it enough to maintain a HPI at slightly below inflation for a number of years - the folks at 28 today are still screwed over ... but at least by about 2030 there will be some return to normality.

If they turn all the taps off and let the market crash to a form of equilibrium (whether that is between the 35% and 60% falls) then yes I will have paid many many 1000s more for my home and I will be in serious trouble *if I lose my job in the next 5 years* ... and I have to accept the risk of that.

But the risk to my children's future of all the mess of landlordism, greed and the fact that changes/calamity/major events in the landlord's life spill over into affecting tenants ...

I had to choose which poison chalice I was going to drink. I chose the purchase poison chalice - financial poison with a sweetener of having some form of life and offering some stability to my children. The rental-wait-for-the-crash poison chalice doesn't work for me - even if it involves less (not 0!!!!) financial risk.

Link to comment
Share on other sites

21 hours ago, 24gray24 said:

All you say is misleading. 

1. It's a falsehood to claim you've already paid it. A flat out falsehood. When you get a mortgage you have not paid the drop. You've just promised to pay in the future. 

2. Another flat out falsehood.  

Etc. 

The reality is if you buy now and prices drop - you're going to be paying an inflated price. 

The Unmoderateds of this world don't want you to wait 2 years until the prices have dropped to much lower levels. 

This is the top of the market.  Buy at the bottom of the market. Its simple: Just wait. They'll be talking recession in another month. 

You've not paid the drop? You never pay the drop!

When you take out a mortgage you've not paid anything. 

When you buy the house you've paid for the house (with the funds provided by the mortgage). If the house drops in price the mortgage doesn't increase does it? You've already agreed the cost of the house. That doesn't change if prices move. Perhaps one day you'll grasp basic finance. 

How many other Undermoderateds are there in this world? Goldman Sachs is full of us all telling people not to wait two years because we all now that's going to the bottom. Best time to buy. It's been two years off for the last 15 years. Some people could have cleared their mortgage in that time. 

Link to comment
Share on other sites

10 hours ago, longgone said:

Great so double digit inflation and savings  not going up will wipe out cash for most in an instant.  

You basically want the late 1970's again, I tend to agree though they will try to do this to try and rebalance things. 

Seems having lots of cash is a disaster waiting to happen.

Atom 2%

I'm not saying that's what i want. I'm saying that's what i think will happen. 

I didn't say double digit inflation either. I said a 2% differential between inflation on the higher end and house prices on the lower end. I think that scenario would cause the least overall pain and win the most votes. The reality though is that it would take quite some engineering to pull off. Who knows eh?

Thanks for the bank info But that appears not to be instant access. I use the 123 with Santander which pays 1.5%. It used to pay 3%. You get cash back for stuff which all contributes but mostly just covers the 5 quid monthly account fees.

If i was going to lock money away for 12-36 months I'd probably be looking at structured products. 

Link to comment
Share on other sites

10 hours ago, 24gray24 said:

If prices fall,  you're the last fool that bought just before prices dropped. No one wants to be told to suck that drop up because they did borrow it. . 

This is your prediction : house prices rising half percent per year, wages rising 2-3% per year. Slow and painless correction.  

What's the time frame for getting wages and house prices back in synch in your view? 

Your not asking 28  year olds to wait another 10 or 20 years are you? 

Did i buy at the peak? Oh where were you Oracle of knowledge when i bought my home those years ago?

That's what i think is the most likely and least painful correction route. There's a chance Brexit is a disaster, inflation rockets etc. 

There's also a risk tptb pull even more support out of their asses and ramp prices a bit more. 

No idea on time frame. Which direction are they travelling in at the moment?

They can do what they like. If real prices fall over 20 years are they better off buying today or renting for 20 years and then buying.

If i wanted prices to be cheap i wouldn't be starting from here. 

Link to comment
Share on other sites

15 hours ago, adarmo said:

I'm not saying that's what i want. I'm saying that's what i think will happen. 

I didn't say double digit inflation either. I said a 2% differential between inflation on the higher end and house prices on the lower end. I think that scenario would cause the least overall pain and win the most votes. The reality though is that it would take quite some engineering to pull off. Who knows eh?

Thanks for the bank info But that appears not to be instant access. I use the 123 with Santander which pays 1.5%. It used to pay 3%. You get cash back for stuff which all contributes but mostly just covers the 5 quid monthly account fees.

If i was going to lock money away for 12-36 months I'd probably be looking at structured products. 

well pain is determined by what circumstances you are under personally, in terms of mortgage holders with debt and high multiples your scenario is probably the one of least pain for them.  To me it makes no difference as i hold no debt high rates and a crash would suit me. 

i guess there best effort is how to keep the plates spinning and not alienate future buyers hence chucking BTL under the bus as no one gives a toss about them and their corporate multi home owner landlords are not affected by policy. 

But defiantly, Who knows eh?

no idea 

Link to comment
Share on other sites

17 minutes ago, longgone said:

well pain is determined by what circumstances you are under personally, in terms of mortgage holders with debt and high multiples your scenario is probably the one of least pain for them.  To me it makes no difference as i hold no debt high rates and a crash would suit me. 

i guess there best effort is how to keep the plates spinning and not alienate future buyers hence chucking BTL under the bus as no one gives a toss about them and their corporate multi home owner landlords are not affected by policy. 

But defiantly, Who knows eh?

no idea 

Im not sure of anything until it happens. I was sure prices were going to keep falling in 2008 and so on but now look where we are. 

Would love BTL to get thrown under a bus and said bus reverses back over it just to make sure :). 

One statistic has always amazed me. 1 in 10 people own more than one property in the UK. 

Land Value Tax would be great. 

 

Link to comment
Share on other sites

1 minute ago, adarmo said:

Im not sure of anything until it happens. I was sure prices were going to keep falling in 2008 and so on but now look where we are. 

Would love BTL to get thrown under a bus and said bus reverses back over it just to make sure :). 

One statistic has always amazed me. 1 in 10 people own more than one property in the UK. 

Land Value Tax would be great. 

 

well the only thing i was sure about was when HTB was announced.  i tried to buy then but got trampled by dodgy agents with preferred buyers for the interesting stuff (cough).  

https://www.ethnicity-facts-figures.service.gov.uk/british-population/demographics/age-groups/latest

seems around 81% may potentially own more than one property then more than likely those that own more than one are 50 plus. 

if millions of people own more than one, then an awful lot of property is not up for sale for someone to buy and live in that does not have one. 

i want to find one where there is space to build another one sell the old one move into new one then a tiny or non existent mortgage to worry about.  do that 3 times never work again.  no tax to pay as main home. 

Link to comment
Share on other sites

Sounds like we're pees in a pod when it comes to housing goals. I plan on developing our current place and then doing another one or two and finishing up mortgage free.

Buying a semi or end of terrace with space on the side isn't impossible but the downside is the value impairment suffered by the end of terrace becoming mid terrace but it's not a bad idea. 

Where we are the average cost of adding a square metre is less than half the finished sale price so you get about 2 quid back for each quid you spend adding space. 

Even just getting planning can boost the value. We're toying with the idea of applying to knock down a single dwelling and replacing with at least two, possibly might even get to build 5 apartments. If that came off we'd sell on to a developer if there was enough there to get us onto our next project. Most likely though we will dramatically extend this place and enjoy it for a couple of years and then dispose of it when something else comes along. 

Agreed on HTB inflating things further but i remember thinking it would backfire and presented that opinion to some friends who were buying a flat in Reading at an insane price. They sold it last year for an even more insane price.

Link to comment
Share on other sites

1 hour ago, adarmo said:

Sounds like we're pees in a pod when it comes to housing goals. I plan on developing our current place and then doing another one or two and finishing up mortgage free.

Buying a semi or end of terrace with space on the side isn't impossible but the downside is the value impairment suffered by the end of terrace becoming mid terrace but it's not a bad idea. 

Where we are the average cost of adding a square metre is less than half the finished sale price so you get about 2 quid back for each quid you spend adding space. 

Even just getting planning can boost the value. We're toying with the idea of applying to knock down a single dwelling and replacing with at least two, possibly might even get to build 5 apartments. If that came off we'd sell on to a developer if there was enough there to get us onto our next project. Most likely though we will dramatically extend this place and enjoy it for a couple of years and then dispose of it when something else comes along. 

Agreed on HTB inflating things further but i remember thinking it would backfire and presented that opinion to some friends who were buying a flat in Reading at an insane price. They sold it last year for an even more insane price.

yes seems to be the way to do it , i don`t believe in property ladders and all that krap that was sprouted 20 years plus ago, we are a long way from how it was in the 70`s and 80`s and even the 90`s.  keep moving house to get rid of the debt. 

The biggest hurdle is going to be finding things to turn over and flip, i have seen plenty of people flipping houses buying one knocking and putting two in its place near me. 

jammy sod bought a detached place backing onto the rail lines which had worthless inaccessible land other than from the rail lines or from the garden of the house, the guy picked it up for a song knocked the old place down and made a roadway through where the house was and got planning for 5 detached houses 1.3 million each sale price. he auctioned the land off for just over 3.6 million not bad from a 700k house 8 years prior. 

i have let far too many things slip through my fingers, even bloody google i remember using it in the late 90`s when no one had even heard of it. told myself i would buy shares if it went public ? what a mug.

Not that i am working but surely there is an easier way to live than the 9-5  poison of choice. 

 

 

Link to comment
Share on other sites

10 hours ago, longgone said:

yes seems to be the way to do it , i don`t believe in property ladders and all that krap that was sprouted 20 years plus ago, we are a long way from how it was in the 70`s and 80`s and even the 90`s.  keep moving house to get rid of the debt. 

The biggest hurdle is going to be finding things to turn over and flip, i have seen plenty of people flipping houses buying one knocking and putting two in its place near me. 

jammy sod bought a detached place backing onto the rail lines which had worthless inaccessible land other than from the rail lines or from the garden of the house, the guy picked it up for a song knocked the old place down and made a roadway through where the house was and got planning for 5 detached houses 1.3 million each sale price. he auctioned the land off for just over 3.6 million not bad from a 700k house 8 years prior. 

i have let far too many things slip through my fingers, even bloody google i remember using it in the late 90`s when no one had even heard of it. told myself i would buy shares if it went public ? what a mug.

Not that i am working but surely there is an easier way to live than the 9-5  poison of choice. 

*Peas lol

Yep, it really is about seeing something that the others don't, or being able to move quickly. We bought our place from an old couple who were struggling to live here tbh. They needed a quick sale too so ideal for us with no chain. Place was very tired but not demolition (the fabric of the building is a rock solid 50s construction with suspended floors so we can access everything re plumbing without too much bother). Second I walked in I was converting the bungalow into a 4 bed detached. The other other might be semis. Would be tight on the plot and not really sure of finished value (which we'd work backwards from to get a sale price). Flogging on to a developer though might make me a quick buck but then I have to go and find somewhere else to live. I think deep down I'd rather go through the process of the conversion to a family home.

My goal is not to make loads of money but to complete a few transactions and end up with a fairly modest (or even brand new self built) detached house somewhere near a nice town and no mortgage. Then I can focus on the more important things in life like learning to distill gin and cooking great food :).

From my persespective the best way to achieve this isn't by slogging your guts out in a job to earn more and pay more tax (which perversely is then used against teh hapless renters to keep them priced out) but to renovate and improve your primary residence and take advantage of that tax break. You're getting one over on the BTL brigade and not contributing to the government's coffers to maintain the status quo. In addition I've already learned a lot of pretty handy skills, tiling, plumbing, plastering even installing solid fuel appliances. I actually really like it and if my job ever ends up being automated (which I could see happening one day) I have some other skills I've at least some experience doing. Much better than being in an office all day. 

Once planning is granted I propose on taking a period of unpaid leave from my job to work on site and learn even more. Considering what I need to earn before tax to pay someone after tax I think I'm around a bricklayer in cost. I won't be as good or as fast as an experienced brickie to start with but I can practice on garden walls etc and more importantly oversee everything going on on site AND gain experience on other areas so that my next project will be more successful and potentially more self developed. 

In the long run the absolute dream is to do this mortgage free and move over few years and simply live off the increased value. Given the current tax favourable status it enjoys I would look to make £100k on each project with a three year turnaround although I could probably live on about £60k/three years with no mortgage to bother about). Around here £100k is a good quality refurbishment on a family home or a nice extension on a semi. Can't think of anything better than waking up in the morning, having a coffee and walking out into your garden and laying block work and bricks, or roofing it etc. Knowing that you have no boss and every hour you're working is contributing to a tax free gain on your personal balance sheet.

My former landlord was a semi retired builder and had got a few BTLs owned outright. The one we lived in was a large family home converted into five flats each paying around £1,000/month. I would probably have sold them after the conversion and just placed the money in nice easy tracker funds or income funds but circa £5k/month isn't a bad retirement after taxes and maintenance deducted. He was also the best landlord we'd ever had. Everything fixed within a couple of days, even external lights. Sewer got blocked due to those 'flushable' wipes and he rodded it out for no charge. All round sound bloke too - gave me lots of advice on where to buy and what to look for (I had a sound idea already but nice to hear it corroborated from someone with a lifetime of experience).

As for past chances missed we all have those sadly.  The mind is a real git at reminding you of the great ones you've missed and very good at forgetting all the mediocre or bad ones you avoided. I've made money in shares and had really bad losses. My own fault on the losses. I took punts on long shot outcomes where the gains could have been really quite good, but they are the ones I really remember! I now focus on what I can control and starting from where I am today. I find that is much healthier for the mind and helps me focus on moving forwards. 

Link to comment
Share on other sites

2 hours ago, adarmo said:

*Peas lol

Yep, it really is about seeing something that the others don't, or being able to move quickly. We bought our place from an old couple who were struggling to live here tbh. They needed a quick sale too so ideal for us with no chain. Place was very tired but not demolition (the fabric of the building is a rock solid 50s construction with suspended floors so we can access everything re plumbing without too much bother). Second I walked in I was converting the bungalow into a 4 bed detached. The other other might be semis. Would be tight on the plot and not really sure of finished value (which we'd work backwards from to get a sale price). Flogging on to a developer though might make me a quick buck but then I have to go and find somewhere else to live. I think deep down I'd rather go through the process of the conversion to a family home.

My goal is not to make loads of money but to complete a few transactions and end up with a fairly modest (or even brand new self built) detached house somewhere near a nice town and no mortgage. Then I can focus on the more important things in life like learning to distill gin and cooking great food :).

From my persespective the best way to achieve this isn't by slogging your guts out in a job to earn more and pay more tax (which perversely is then used against teh hapless renters to keep them priced out) but to renovate and improve your primary residence and take advantage of that tax break. You're getting one over on the BTL brigade and not contributing to the government's coffers to maintain the status quo. In addition I've already learned a lot of pretty handy skills, tiling, plumbing, plastering even installing solid fuel appliances. I actually really like it and if my job ever ends up being automated (which I could see happening one day) I have some other skills I've at least some experience doing. Much better than being in an office all day. 

Once planning is granted I propose on taking a period of unpaid leave from my job to work on site and learn even more. Considering what I need to earn before tax to pay someone after tax I think I'm around a bricklayer in cost. I won't be as good or as fast as an experienced brickie to start with but I can practice on garden walls etc and more importantly oversee everything going on on site AND gain experience on other areas so that my next project will be more successful and potentially more self developed. 

In the long run the absolute dream is to do this mortgage free and move over few years and simply live off the increased value. Given the current tax favourable status it enjoys I would look to make £100k on each project with a three year turnaround although I could probably live on about £60k/three years with no mortgage to bother about). Around here £100k is a good quality refurbishment on a family home or a nice extension on a semi. Can't think of anything better than waking up in the morning, having a coffee and walking out into your garden and laying block work and bricks, or roofing it etc. Knowing that you have no boss and every hour you're working is contributing to a tax free gain on your personal balance sheet.

My former landlord was a semi retired builder and had got a few BTLs owned outright. The one we lived in was a large family home converted into five flats each paying around £1,000/month. I would probably have sold them after the conversion and just placed the money in nice easy tracker funds or income funds but circa £5k/month isn't a bad retirement after taxes and maintenance deducted. He was also the best landlord we'd ever had. Everything fixed within a couple of days, even external lights. Sewer got blocked due to those 'flushable' wipes and he rodded it out for no charge. All round sound bloke too - gave me lots of advice on where to buy and what to look for (I had a sound idea already but nice to hear it corroborated from someone with a lifetime of experience).

As for past chances missed we all have those sadly.  The mind is a real git at reminding you of the great ones you've missed and very good at forgetting all the mediocre or bad ones you avoided. I've made money in shares and had really bad losses. My own fault on the losses. I took punts on long shot outcomes where the gains could have been really quite good, but they are the ones I really remember! I now focus on what I can control and starting from where I am today. I find that is much healthier for the mind and helps me focus on moving forwards. 

indeed. moving up the employment food chain seems to be a soulless pointless process when so much tax and Ni is taken add in the extra responsibility and you are only a few hundred up over the month and of course when a higher salary is paid you will be expected to work overtime or homework unpaid? .  When AI really takes off i do think the bean counters days are numbered  never mind when a computer can physically read papers email and spreadsheets and make informed rational decisions. I reckon low level  paralegals and middle office admin will be first to go.  plenty of pointless admin office functions can be streamlined or removed. 

actually creating something with your hands is satisfying work i give you that, however i could never work for someone else and do that and get the same accomplishment as you get from looking at your hard work in your own place.

No benefit from it other than monetary improving other people homes. 

The big question is though will future governments allow tax free capital gains from your main home though. i would be happy flipping houses every 18-24 months for the next 10-15 years. make pocket money on ebay to pay bills maybe even the mortgage a reasonable job with low stress  and just work  away on the house and keep moving till mortgage free taking advantage of that tax free break. 

 

Link to comment
Share on other sites

On 27/01/2019 at 13:06, longgone said:

indeed. moving up the employment food chain seems to be a soulless pointless process when so much tax and Ni is taken add in the extra responsibility and you are only a few hundred up over the month and of course when a higher salary is paid you will be expected to work overtime or homework unpaid?When AI really takes off i do think the bean counters days are numbered  never mind when a computer can physically read papers email and spreadsheets and make informed rational decisions. I reckon low level  paralegals and middle office admin will be first to go.  plenty of pointless admin office functions can be streamlined or removed. 

actually creating something with your hands is satisfying work i give you that, however i could never work for someone else and do that and get the same accomplishment as you get from looking at your hard work in your own place.

No benefit from it other than monetary improving other people homes. 

The big question is though will future governments allow tax free capital gains from your main home though. i would be happy flipping houses every 18-24 months for the next 10-15 years. make pocket money on ebay to pay bills maybe even the mortgage a reasonable job with low stress  and just work  away on the house and keep moving till mortgage free taking advantage of that tax free break. 

 

Pun intended? Technical accounting would I think be fairly tricky to automate but basic stuff not so much and certainly data reports and business information is well on the way. Computers even write their own code these days. 

Definitely get a much higher level of satisfaction working on your own place but I have always got a buzz out of doing something for a client to a high level and getting positive feedback. However, nothing beats the feedback you get time and time again when you do something to your own place and people comment on it when they come over. 

That is the big question re capital gains. However, if they did go down that route let's say you spend £100k on works and make £200k overall, you'd have CGT at £100k. If you're married you can use both CGT allowances of £12k each so only pay cgt at 18% (assuming both lower rate tax payers) on £76k = £13.68k which is not an awful effective rate on £100k. If you actually got out of bed every morning to go an earn that money you'd be time poor AND suffering an average rate 33.5%. In addition I'd be much more relaxed about flipping houses. However, being married may frustrate this strategy since married couples only qualify for PRR on their marital (single) home. If you are unmarried you can buy a property each and provided you meet the criteria enjoy two lots of PRR. 

But, if your sole objective is renovating to sell on for profit then HMRC would determine that as a trade and the profit as income and expect you to pay income tax on that as a sole trader, or corporation tax if the property had been purchased in a company. The later may be useful since you can obtain capital allowances for plant and equipment relating to the work but even a tax efficient cost is a cost.

As things stand you are fine so long as HMRC do not determine that you are trading. It is therefore important to have some means of supporting yourself other than selling on a completed property and be able to justify the purchase and subsequent sale. Flipping property every couple of years might well attract their attention, particularly if there are large gains. This is detectable because all property is within the scope of CGT in the UK. Upon a sale the appropriate tax reliefs are applied and therefore HMRC can clearly see how much relief you've been benefiting from. They do have other stuff to do and bigger fish to fry of course but I could imagine few things worse than an HMRC tax investigation. There's no hard and fast test really to determine what is trading in this scenario but if the intention is to purchase and sell on for profit that would tick the box. The alternative here might be to let the property and then it could be determined as an investment property and therefore subjected to the CGT framework and not the trading one. Obviously the rental income could be taxed as income under section 24.

Ultimately you should take professional advice but I would be interested to hear how you get on :) 

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    No registered users viewing this page.





×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.