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Ologhai Jones

The Hpc.co.uk Effect

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Hello, everyone.

I thought that, having lurked around this forum for all of a fortnight, I would say 'hi' and tell you how HPC.co.uk has affected me during those couple of weeks.

Knowing nothing whatsoever about the potential future of house prices, I decided about a month ago that I'd quite like to live in a better house/location; what a naive might call 'moving up the ladder'. I'm presently living in a three-bed semi that I bought three or so years ago as a FTB. Presently, the amount outstanding on the mortgage is around two-thirds the current value of the house.

One of the two EAs I called in to do a valuation casually asked me if I'd considered letting my current place (rather than selling it) when I moved. Buying a property to let is something I'd thought of before, but it hasn't occurred to me to do it as part of this current plan to move.

I spoke to a letting agent (to get a rental valuation) and a couple of mortgage lenders to see if it was feasible given my finances to both let out my current place and to buy a new place as well. There was little resistance to this idea. (I have saved quite a bit of money in the last three years, so I don't need to use the equity in my current place as a deposit on a new place.)

Astoundingly (at least I was astounded), one of the lenders I spoke to was willing to lend me 8.6 times my average income over the last two tax years (I'm self-employed, hence the averaging thing). That isn't a typo -- eight point six times...

So, as you may expect (again, given my complete ignorance of the potential HPC at the time) I began looking for a new house, and, in fairly short order, I found one I really liked: better location; a bigger and nicer house all together (and incidentally, nowhere near costing 8.6 times my salary -- ignorant I may have been, but not totally reckless).

Then, just before I went for a viewing, I discovered HPC.co.uk.

I viewed the house, and thought it was great, but by now, I was having doubts about doing anything but sitting tight for the next umpty-ump years...

Still unsure, myself and my partner went for a second viewing last Sunday (a second viewing for me at least), and I guess I must've enthused about the house somewhat because my brother and his partner asked if they could come along. Everyone (except me by now) thought it was fabulous and that I should make them an offer right away!

I told the other three that I was nervous about the possibility of a HPC. They suggested steering a middle course -- i.e. don't let the current place; just buy and sell in the normal way. During most of Sunday, I was convinced that this was a good compromise, but then I didn't get much sleep on Sunday night, thinking about a crash, and about the extra financial responsibility and so on. Not to put too fine a point on it, I was frightened -- actually fearful -- of buying the new house.

Needless to say, come Monday morning, I rang the EA of the house we'd viewed and told them I wasn't interested in buying a house any more...

I really did/do like the house I went to see. I'm disappointed not to be buying it (or rather, not to be going to live in it -- the buying part is just a side-issue! ;) ) However, maybe there'll come a time when I'll be really glad of the decision I made on Monday. Let's hope so.

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Welcome Ologhai Jones,

It surprises me how many people consider BTL, either they keep their current house to let out, or they're priced out and decide to get a BTL. When I quickly realised I was priced out, I looked a BTL thinking I must get on the ladder. I looked at the figures, and being a spreadsheet man I created lots of adverse situations (higher interest rates, voids etc) and realised the figures were just short of all the costs (agents fees, mortgage interest, maintenance).

I started from the outset I shouldn't rely on capital gains, but everyone I spoke to justified the investment by quoting rising prices. After some research I found this site, and realised capital gains were unlikely medium term. What surprises me the most is prices have risen since mid 2004 (in the north where I consider a BTL), and rents have hardly risen for student digs - yet people keep investing...

Would the BTL investment on your current home stack up? What were your conclusions with regards to the finances (yields etc) at the time?

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Welcome aboard.

Good to see that this site is gettting to more people and having some influence. I STRed 18 months ago without the benefit of seeing this HPC.co.uk. It was a close call. But in retrospect I've done at least as well with equity in a regular savings account than in property.

I'm looking forward to the correction too.

And thanks for posting your story.

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The flip side of this touching story is that about 2 million properties have been bought/sold since mid 2004 and the vast majority of them are worth more now than they were then.

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...

Would the BTL investment on your current home stack up? What were your conclusions with regards to the finances (yields etc) at the time?

I was totally ignorant of the 'big picture' initially, and so, like many I imagine, I was willing to throw in a few pounds (or tens of pounds) to cover any shortfall each month in order to benefit from all the lovely capital gains I was assuming would come -- starting immediately.

The mortgage repayments and the rental valuation came out at about the same figure, but, as I'd probably want the letting agent to handle everything (lazy, lazy, lazy), I'd be effectively paying their 10% fee from my own pocket.

Obviously, in the event of a crash (if it was significant enough for me to lose the equity I already have), I'd be chucking in a few quid each month for negative equity.

Assuming a crash is going to happen, I guess one good strategy is to work towards paying off my mortgage as quickly as possible, then proceed with the let-and-move plan in a few years while we're at the bottom of some trough or other.

Any thoughts?

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The flip side of this touching story is that about 2 million properties have been bought/sold since mid 2004 and the vast majority of them are worth more now than they were then.

Oh whoopy-do.

It's all about making money isn't it? If you use houses to make cash and you're not out of it you'll get burned. Like all the stock pundits on 28th Oct 1929.

If the chap has been cautious with such a momentous financial decision then good for him.

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I was totally ignorant of the 'big picture' initially, and so, like many I imagine, I was willing to throw in a few pounds (or tens of pounds) to cover any shortfall each month in order to benefit from all the lovely capital gains I was assuming would come -- starting immediately.

Welcome to the site, Ologhai.

I think that this statement illustrates perfectly the sentiment that is still out there, amongst the uneducated public masses.

Capital appreciation is still an incentive to buy houses, because house prices are still seen to rise, and not fall.

Houses prices need to be SEEN TO FALL, in such a way that will verifiably register with the brain-cells of the public. Essentially, the knowledge of falling house prices needs to enter the public consciousness, in the same way that Wayne Rooney broke his metatarsle - i.e. everyone knows about it even if they only have a passing interest in the housing market.

Otherwise people just carry on believing mortgage lenders and even EAs, who carry on using the media to propagate their never-ending lies.

Edited by Warwickshire Lad

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Hello, everyone.

I thought that, having lurked around this forum for all of a fortnight, I would say 'hi' and tell you how HPC.co.uk has affected me during those couple of weeks.

Knowing nothing whatsoever about the potential future of house prices, I decided about a month ago that I'd quite like to live in a better house/location; what a naive might call 'moving up the ladder'. I'm presently living in a three-bed semi that I bought three or so years ago as a FTB. Presently, the amount outstanding on the mortgage is around two-thirds the current value of the house.

One of the two EAs I called in to do a valuation casually asked me if I'd considered letting my current place (rather than selling it) when I moved. Buying a property to let is something I'd thought of before, but it hasn't occurred to me to do it as part of this current plan to move.

I spoke to a letting agent (to get a rental valuation) and a couple of mortgage lenders to see if it was feasible given my finances to both let out my current place and to buy a new place as well. There was little resistance to this idea. (I have saved quite a bit of money in the last three years, so I don't need to use the equity in my current place as a deposit on a new place.)

Astoundingly (at least I was astounded), one of the lenders I spoke to was willing to lend me 8.6 times my average income over the last two tax years (I'm self-employed, hence the averaging thing). That isn't a typo -- eight point six times...

So, as you may expect (again, given my complete ignorance of the potential HPC at the time) I began looking for a new house, and, in fairly short order, I found one I really liked: better location; a bigger and nicer house all together (and incidentally, nowhere near costing 8.6 times my salary -- ignorant I may have been, but not totally reckless).

Then, just before I went for a viewing, I discovered HPC.co.uk.

I viewed the house, and thought it was great, but by now, I was having doubts about doing anything but sitting tight for the next umpty-ump years...

Still unsure, myself and my partner went for a second viewing last Sunday (a second viewing for me at least), and I guess I must've enthused about the house somewhat because my brother and his partner asked if they could come along. Everyone (except me by now) thought it was fabulous and that I should make them an offer right away!

I told the other three that I was nervous about the possibility of a HPC. They suggested steering a middle course -- i.e. don't let the current place; just buy and sell in the normal way. During most of Sunday, I was convinced that this was a good compromise, but then I didn't get much sleep on Sunday night, thinking about a crash, and about the extra financial responsibility and so on. Not to put too fine a point on it, I was frightened -- actually fearful -- of buying the new house.

Needless to say, come Monday morning, I rang the EA of the house we'd viewed and told them I wasn't interested in buying a house any more...

I really did/do like the house I went to see. I'm disappointed not to be buying it (or rather, not to be going to live in it -- the buying part is just a side-issue! ;) ) However, maybe there'll come a time when I'll be really glad of the decision I made on Monday. Let's hope so.

Couldn't you just sell the house you have got,buy the other house putting down the equity from the house you are selling,plus however much of your savings you are comfortable with using towards the new deposit as well.Then get like a current account mortgage where all the money in your savings/current account is taken off capital owed before interest is charged on your new mortgage(thereby paying off your mortgage quickly without having to put too much effort in).And then you could just enjoy living in your new house and forget about property prices and just concentrate on enjoying living in the house as a home as opposed to worrying about what it may or may not be worth.

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To really put it to the test, why not ask the owner if he or she will rent to you instead? Then fire up Excel . . .

Oh, by the way, I really would not advise you to base important decisions solely on this website, most of the posters of which predicted (and hoped in some cases), this time last year, that by now the whole of the US would be wiped out by hurricanes or bird flu. Retailing and banks in the UK were going to disappear, while immigrant hordes would storm the last bastions of British industry and ship the remains home. A doublet of gold would buy the only detached house in Chelsea. We'd be down to our last half pint of oil with the landlord calling last orders, and Iran would have got off its lazy **** and taught tony Bliar a lesson or two. Every single Monday there would have a been a stock market crash, a depression and a Kondriateff Wave. Not to mention the end of the carry trade. Whatever relevance that has. Or hasn't.

They posters here are like sheep. 'Sheeple' I call them: apparently, it means easily led.

That's not to say they're wrong.

But they might be.

Edited by BoredTrainBuilder

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To really put it to the test, why not ask the owner if he or she will rent to you instead? Then fire up Excel . . .

Oh, by the way, I really would not advise you to base important decisions solely on this website, most of the posters of which predicted (and hoped in some cases), this time last year, that by now the whole of the US would be wiped out by hurricanes or bird flu. Retailing and banks in the UK were going to disappear, while immigrant hordes would storm the last bastions of British industry and ship the remains home. A doublet of gold would buy the only detached house in Chelsea. We'd be down to our last half pint of oil with the landlord calling last orders, and Iran would have got off its lazy **** and taught tony Bliar a lesson or two. Every single Monday there would have a been a stock market crash, a depression and a Kondriateff Wave. Not to mention the end of the carry trade. Whatever relevance that has. Or hasn't.

They posters here are like sheep. 'Sheeple' I call them: apparently, it means easily led.

That's not to say they're wrong.

But they might be.

The renting proposal is excellent lateral thinking - to the OP would you consider that? In a couple of years you may be in the best position to buy the place off them, stranger things have happened.

I discovered this site after STR decision, not before. I've since moved on and bought, but not in the UK. There is a lot of noise on this site, but the signal is loud and clear for anyone patient enough to monitor it.

JY

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Couldn't you just sell the house you have got,buy the other house putting down the equity from the house you are selling,plus however much of your savings you are comfortable with using towards the new deposit as well.Then get like a current account mortgage where all the money in your savings/current account is taken off capital owed before interest is charged on your new mortgage(thereby paying off your mortgage quickly without having to put too much effort in).And then you could just enjoy living in your new house and forget about property prices and just concentrate on enjoying living in the house as a home as opposed to worrying about what it may or may not be worth.

My current mortgage is of the offset type. Assuming that I can maintain my current rate of saving, I have high hopes of having sufficient savings to offset all of the remaining balance within three years (in my current house). If I were to move, my estimation is that it would take me around ten years to be in the same position. (Of course, predictions over ten years are inherently more tentative and all together fuzzier than those over three.)

Assuming my plans work out, being in the position of owning my (albeit rather modest) house within three years while I watch what happens in the housing market feels like a pretty safe position to be in.

House prices would have to crash pretty significantly for me to go into negative equity in the current house. On the other hand, if house prices remain stable (and even grow a bit) over the next three years, I'm actually in a property that will experience that stability/growth (although not as much as the other property would, it having a £100k or so larger price-tag.)

Yes, I would like to live in the other house, and I would love to let my current house. If only it was 1995. ;-)

...

Oh, by the way, I really would not advise you to base important decisions solely on this website, most of the posters of which predicted (and hoped in some cases), this time last year, that by now the whole of the US would be wiped out by hurricanes or bird flu. Retailing and banks in the UK were going to disappear, while immigrant hordes would storm the last bastions of British industry and ship the remains home. A doublet of gold would buy the only detached house in Chelsea. We'd be down to our last half pint of oil with the landlord calling last orders, and Iran would have got off its lazy **** and taught tony Bliar a lesson or two. Every single Monday there would have a been a stock market crash, a depression and a Kondriateff Wave. Not to mention the end of the carry trade. Whatever relevance that has. Or hasn't.

They posters here are like sheep. 'Sheeple' I call them: apparently, it means easily led.

That's not to say they're wrong.

But they might be.

I have certainly been strongly influenced by this site (and particularly this forum) in that it opened my previously-firmly-closed eyes to the possibility of a crash of which I was unaware.

Deciding not to move house is a much more temporary decision than deciding to move, i.e. I can change my mind next week and go house-hunting again (or just buy The House if it's still available).

Although I'm a little disappointed not to be moving into a better house right now, if this site has influenced me into making a decision, it is at least one that's relatively safe as well as being easy to change my mind about at any time.

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Welcome and enjoy the site.

I take it you viewed the RBS report posted yesterday?

As I speak, I'm in the process of distributing it around our office.

But will it turn out to be true? :unsure:

Financially, I've always been a person to do the right things at all the wrong times. It'd be nice to get the timing right for a change.

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To really put it to the test, why not ask the owner if he or she will rent to you instead? Then fire up Excel . . .

Oh, by the way, I really would not advise you to base important decisions solely on this website, most of the posters of which predicted (and hoped in some cases), this time last year, that by now the whole of the US would be wiped out by hurricanes or bird flu. Retailing and banks in the UK were going to disappear, while immigrant hordes would storm the last bastions of British industry and ship the remains home. A doublet of gold would buy the only detached house in Chelsea. We'd be down to our last half pint of oil with the landlord calling last orders, and Iran would have got off its lazy **** and taught tony Bliar a lesson or two. Every single Monday there would have a been a stock market crash, a depression and a Kondriateff Wave. Not to mention the end of the carry trade. Whatever relevance that has. Or hasn't.

They posters here are like sheep. 'Sheeple' I call them: apparently, it means easily led.

That's not to say they're wrong.

But they might be.

They've been wrong for the better part of three years now. But, to be fair, who knew that bird flu wasn't going to be the end of us all? Or immigrants, terrorist plots, Diana crashes ...

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My current mortgage is of the offset type. Assuming that I can maintain my current rate of saving, I have high hopes of having sufficient savings to offset all of the remaining balance within three years (in my current house). If I were to move, my estimation is that it would take me around ten years to be in the same position. (Of course, predictions over ten years are inherently more tentative and all together fuzzier than those over three.)

Assuming my plans work out, being in the position of owning my (albeit rather modest) house within three years while I watch what happens in the housing market feels like a pretty safe position to be in.

House prices would have to crash pretty significantly for me to go into negative equity in the current house. On the other hand, if house prices remain stable (and even grow a bit) over the next three years, I'm actually in a property that will experience that stability/growth (although not as much as the other property would, it having a £100k or so larger price-tag.)

Yes, I would like to live in the other house, and I would love to let my current house. If only it was 1995. ;-)

I have certainly been strongly influenced by this site (and particularly this forum) in that it opened my previously-firmly-closed eyes to the possibility of a crash of which I was unaware.

Deciding not to move house is a much more temporary decision than deciding to move, i.e. I can change my mind next week and go house-hunting again (or just buy The House if it's still available).

Although I'm a little disappointed not to be moving into a better house right now, if this site has influenced me into making a decision, it is at least one that's relatively safe as well as being easy to change my mind about at any time.

I can empathise with your outlook. I have been on a not too dissimilar path.

In 2002 I independently decided that property prices in London were very high and decided to sell a flat (We had 2) rather than rent it out. Paid off most of mortgage on our other flat with the proceeds.

Found various house price forums in 2003. Mainly FT forum. And was swaying towards a bearish view.

Decided to move out of London (for family reasons) in 2004. Failed to sell for a whole year and was now convinced that bears were right. Put flat back on market early spring 2005 and got 3 offers within a week. Sold above asking price. However I was still heavily persuaded by my daily perusals of these forums to still think that prices were about to crash. Relieved to be an STR. (I now think I was wrong and should have placed more emphasis on the fact that we sold within a week).

Found renting with family awkward. Not impossible, but didn't really enjoy the temporary feeling.

Decided to take a step back from forums June / July last year and get a clear independent understanding of how I felt the various outcomes of a crash, plateau might affect me. Decided that buying end of last year, though not good, might be OK so long as we weren't financially stretched. Assumed that in the winter there'd be a lot less demand and therefore more bargains. Nothing decent on the market in Sept / Oct.

Found the perfect house, marketted for the first time Nov, and bought (above asking price after 3 weeks of negotiation).

We have approx 50% equity and plenty of reserve capital to cover the mortgage. I feel very relaxed both with the decision and with life.

If you find the perfect house, and to me it sounds like you might have, the it's worth a lot more than just money.

I still remain bearish about the property market and fully expect prices to drop between 20 and 70%.

Good luck with your decision making.

Edited by Ignorant Steve

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Greetings Ologhai Jones.

..........One of the two EAs I called in to do a valuation casually asked me if I'd considered letting my current place (rather than selling it) when I moved.......

This bit from your post has me a-wondering. EA gets commission on the sale of your house, so why suggest you let it out?

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Greetings Ologhai Jones.

This bit from your post has me a-wondering. EA gets commission on the sale of your house, so why suggest you let it out?

The EA in question is also a letting agent. In addition, he has a couple of people operating a mortgage brokerage from the same outlet that (no surprises) he also recommended I call to chat over the numbers.

I suppose he could claim to be a concerned enough service provider that he's not just trying to sell a service that his potential customer thinks he wants, but to ascertain what his customer actually wants -- and, as he could offer services to support other ways forward, why not?

Unless I change my mind about staying put, though, I don't suppose he has any way of making money out of me just now. :)

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  • 302 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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