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London Separates From The Uk (apparently)


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Yield means the return you get expressed as a percentage of the current value. Not a value x years ago. You cant make a statement that "London has the best yields in the country" if you base it on todays rental return compared to an arbitrary price in the past.

If you campare the rental return you would have got when you bought the flat with the price you paid for it, then that was the yield back then. In order to talk about the yield today, you have to compare the rental return today with todays "valuation".

If you do that you will see that the yield is much lower which is why, nohpcbrain, we are, like it or not, nearer to the crash today than we were when yields were higher.

I only bought a year ago. The development isn't finished. Currently being sold at around 10% higher than what I paid so not the huge London gains seen elsewhere but it is a new build. I wouldn't don't expect the price to fluctuate by more than -10 - 10% over the next few years from where it is now but I don't really care because I love the area and won't sell until I decide to move up the ladder (which won't happen unless we get a crash bringing my dream home into financial reach).

To be fair it is an unusually popular development for rentals and current high demand is probably driving rents up but that may not last if there is a recession. It does shock me when I hear about flats costing 300000 pounds renting for 800 pounds a month. I wonder if people that buy these actually are aware of that fact before they put their money on the table.

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What sort of level of rent would you consider 'middle earners level' in London?

About 1000 pounds a month not including council tax or bills. Of course varies hugely depending on the area.

Edited by nohpc
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Thats a bit on the low side. According to latest Arla report, average rent for a flat in prime London is £2185 and for the rest of london its £1404.

I was thinking £1500pcm month as a middle earner (combined/single income of 60-80k). You could comfortably rent a nice two bed in Fulham for that. Maybe even with a garden.

£1000 pcm is the bottom rung, even in Docklands, I'm afraid. The yields are a little better at this level. I suspect nohpc is probably purchasing at this price point.

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I was thinking £1500pcm month as a middle earner (combined/single income of 60-80k). You could comfortably rent a nice two bed in Fulham for that. Maybe even with a garden.

Thats the going rate for Islington too (though you can easily pay double that for the most desirable addresses)

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I only bought a year ago. The development isn't finished. Currently being sold at around 10% higher than what I paid so not the huge London gains seen elsewhere but it is a new build. I wouldn't don't expect the price to fluctuate by more than -10 - 10% over the next few years from where it is now but I don't really care because I love the area and won't sell until I decide to move up the ladder (which won't happen unless we get a crash bringing my dream home into financial reach).

To be fair it is an unusually popular development for rentals and current high demand is probably driving rents up but that may not last if there is a recession. It does shock me when I hear about flats costing 300000 pounds renting for 800 pounds a month. I wonder if people that buy these actually are aware of that fact before they put their money on the table.

So you bought offplan and it is nearly finished-what makes you so sure it is never going to drop by more than 20%? Sorry but it sounds like wishful thinking to me. From what I have read, newbuild flats are being hit badly already in London and elsewhere. Have a look at Propertysnake.

S.

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So you bought offplan and it is nearly finished-what makes you so sure it is never going to drop by more than 20%? Sorry but it sounds like wishful thinking to me. From what I have read, newbuild flats are being hit badly already in London and elsewhere. Have a look at Propertysnake.

S.

A 10% increase in asking price on a new build does sound precarious.

I don't know the area, I just hope you haven't bought it in the Docklands.

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I'm really starting to think London isn't going to crash. We've got a way to go yet. There are loads of pokey flats for sale for around the £300k mark even in reasonable parts of London (not 'North Greenwich' :lol: ).

It's not unrealistic to have a professional couple each earning £50k, and add to that their savings and Bank of Mum and Dad and you could have one-bed flats going for £400k without too much complaint.

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So you bought offplan and it is nearly finished-what makes you so sure it is never going to drop by more than 20%? Sorry but it sounds like wishful thinking to me. From what I have read, newbuild flats are being hit badly already in London and elsewhere. Have a look at Propertysnake.

S.

I didn't buy offplan for starter. 20% drops are not impossible anywhere I just don't think it'll happen I was pointing out the prices that the developer is selling the last phase for. They seem to be selling pretty well. As I said before, I don't really care if prices drop because I have no intention to sell and I have enough equity to ride out many years of bust whilst waiting for a good market again. If the market tanks I may take the opportunity to upscale or build up a portfolio if it stagnates and booms I will just carry on enjoying the equity in my property.

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A 10% increase in asking price on a new build does sound precarious.

I don't know the area, I just hope you haven't bought it in the Docklands.

It's not in docklands. It's north London.

Edited by nohpc
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I was saying this would happen and was derided for it - London is just breaking away from the rest of the country that had caught it up. If it all goes wrong, then prime London will still be safe - I don't think the same for 'edgy' new bits.

You all seem to forget the people outside London crowing between 2001 and 2004 when London was basically flat. then it was, you have no idea, all you in London, we'll be worth more than you, the London thing is over, why would people be in London when they could be in Leeds, yeah right....

I had a house up north then - paid £140K in 2000, worth £320K in 2004, still worth £320K in 2007.

I have a flat in Fulham - value was about £320K in 2000, £370K in 2004 and about £450K now.

I have a house in commuter belt Surrey - price in 2004 (when I bought) was exactly the same as in 2001. Now it's realistically 'worth' double (admittedly I have spent a fair bit on it but less than 20% of the purchase cost). I decided it was cheap and had to go up as it had been stagnant - I made a call and seem at this point, to have been right (not that it makes any odds, as to move to the next rung will cost me about another 80% again on top of the current house value).

Those of you who are waiting for Eaton Square and the Boltons to fall to £250K etc. are away with the fairies. There's very little supply of good property, so the price is for the sellers to name.

I was chewing the cud with OH's father (who has interests in property in London), he shares my view, that there is still room to make 'money' in prime areas and it's less risky than if you chase bigger returns trying to spot the next Notting Hill, BUT neither of us think that buying in dodgy areas on the basis that a few latte shops will automatically gentrify the place is a good idea - stick with the better bits and you might make less, but you'll also risk a lot less.

[i am still intending to clear my mortgage in another 5 years though, it will mean I don't HAVE to work like I do, it will then be my choice]

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Guest Cletus VanDamme
No I'm calculating on what I paid for it. Haven't had any voids. I suppose voids are possible but I don't think I would have a problem finding new tenants if the current ones move out. You are correct I didn't include fees in my calculation but these could technically be factored out if I chose to not rent out through an estate agent and I can't really be bothered with the hassle.

Have you included the service charge in your calculation? Those New River Village charges are pretty steep, around 2K per year I seem to recall.

Actually, that was a funny thing. We went to look at the development before it had even started. Was shown around the show flat by a keen youngster. At the end, he was waffling on about it being a great investment (270K for a 2-bed, this was in 2003, off-plan, yeah right!), and that all the directors were buying flats there.

Then he suddenly blurted out 'Of course, it's in the first phase that the money's made'. We just looked at each other, realised he'd made a massive faux-pas in admitting that all the off-plan buyers were being taken for a huge ride, and we made our excuses and left.

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Have you included the service charge in your calculation? Those New River Village charges are pretty steep, around 2K per year I seem to recall.

Actually, that was a funny thing. We went to look at the development before it had even started. Was shown around the show flat by a keen youngster. At the end, he was waffling on about it being a great investment (270K for a 2-bed, this was in 2003, off-plan, yeah right!), and that all the directors were buying flats there.

Then he suddenly blurted out 'Of course, it's in the first phase that the money's made'. We just looked at each other, realised he'd made a massive faux-pas in admitting that all the off-plan buyers were being taken for a huge ride, and we made our excuses and left.

:lol:

I had a similar experience looking around some flats in the stratford area. One of the new flats had a massive crack running along the ceiling. When I pointed it out, the young salesman replied "well, they do put these things up so quickly."

Edited by thedebtisreal
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