apom Posted May 17, 2007 Share Posted May 17, 2007 6:30 Tonight: MAJOR PROGRAM BBC News Investigates the London House Market Over the next two days the news programme will investigate if the housing bubble is set to burst. Now I don’t hold out much hope for the BBC, the same people who didn’t even bother to report Lord Edwards George’s recent admissions. The program could very easily be filled with reassuring platitudes from various estate agents, there could be talk of the ongoing resilience to rate changes et, etc. But they called it a bubble, and all bubbles burst so have they changed perspective? Will they show that BTL properties in London can struggle to cover half of a 75% mortgage and that this can only get worse as prices climb? Will they show that this can only be price speculation based on capital growth and not on any return that the property can generate as an income? Will they show the predicted long term price cycle drop and drop as the boomer generation fades away and the current plummeting birth rates take effect? Or will they show some guy from the Halifax telling us all what a spiffing idea it is to borrow a staggering amount of money from him? Answers on a postcard. Has to be watched though: Quote Link to comment Share on other sites More sharing options...
Guest d23 Posted May 17, 2007 Share Posted May 17, 2007 Will they show that BTL properties in London can struggle to cover half of a 75% mortgage and that this can only get worse as prices climb? really? whereabouts? anywhere worth living in because if so I'd consider moving somewhere where a 250K property could be rented out for anything like less than 110 quid a week; I very, very much doubt such a property exists tho Quote Link to comment Share on other sites More sharing options...
apom Posted May 17, 2007 Author Share Posted May 17, 2007 (edited) really? whereabouts? anywhere worth living in because if so I'd consider moving somewhere where a 250K property could be rented out for anything like less than 110 quid a week; I very, very much doubt such a property exists tho £400,000 Is the cost of a two bed flat in London (some sort of average fulham is over £500,000 now) That would be a monthly interest payment of £1500 at 5.5% against 75% of the properties value. Now factor in 12% agent fees and 10% voids Factor in insurance and then factor in repairs against the property. Your maths sucks This was with NO CAPITAL REPAYMENT AGAINST THE LOAN. So, it is speculation on capital gains then as I said Edited May 17, 2007 by apom Quote Link to comment Share on other sites More sharing options...
Guest d23 Posted May 17, 2007 Share Posted May 17, 2007 £400,000Is the cost of a two bed flat in London (very bottom) bollo*ks do you even live in London? Quote Link to comment Share on other sites More sharing options...
apom Posted May 17, 2007 Author Share Posted May 17, 2007 really? whereabouts? anywhere worth living in because if so I'd consider moving somewhere where a 250K property could be rented out for anything like less than 110 quid a week; I very, very much doubt such a property exists tho That would be £207.33 a week. £900 a month. before repairs, fees, innsurance, voids......etc.....etc... Quote Link to comment Share on other sites More sharing options...
apom Posted May 17, 2007 Author Share Posted May 17, 2007 (edited) bollo*ksdo you even live in London? Kennsington, renting happily. £400,000 is bottom for central, I edited it to say average. 2 bed in Fulham is over £500,000 aggressive for your level of maths arent we Edited May 17, 2007 by apom Quote Link to comment Share on other sites More sharing options...
Guest d23 Posted May 17, 2007 Share Posted May 17, 2007 That would be£207.33 a week. £900 a month. before repairs, fees, innsurance, voids......etc.....etc... hmmmmm you said "struggle to cover half of a 75% mortgage" 75% mortgage on a 250K property = 200K monthly IO payments on 200K @ 5.5% = 916 half of that would be 458, i.e. less than 110 a week my maths suck? Quote Link to comment Share on other sites More sharing options...
apom Posted May 17, 2007 Author Share Posted May 17, 2007 hmmmmmyou said "struggle to cover half of a 75% mortgage" 75% mortgage on a 250K property = 200K monthly IO payments on 200K @ 5.5% = 916 half of that would be 458, i.e. less than 110 a week my maths suck? I said could, and in some areas they really do. This would struggle when you factor in 10% voids, 15% fees and also maintainence. It would cover it in your example (50%, not full cost of course) but there are also examples where it would not.. People do make the mistake of looking at a rental, and thinking that the only cost is the interest, its not. Classic mistake.. My point was that as prices climb this gets worse and worse. Are you going to watch the program? Read my links in my signiture, the federal reserve is intersting. Quote Link to comment Share on other sites More sharing options...
Pete95 Posted May 17, 2007 Share Posted May 17, 2007 6:30 Tonight: MAJOR PROGRAMBBC News Investigates the London House Market Over the next two days the news programme will investigate if the housing bubble is set to burst. Well this is the BBC remember, so of course the answer will be NO!! I expect they'll rope in that evil looking women from that FTB programme the BBC put out a year or two ago "there's never been a better time to buy, prices will probably double in the next 5 years" etc etc Quote Link to comment Share on other sites More sharing options...
adibrown Posted May 17, 2007 Share Posted May 17, 2007 really? whereabouts? anywhere worth living in because if so I'd consider moving somewhere where a 250K property could be rented out for anything like less than 110 quid a week; I very, very much doubt such a property exists tho There are loads of £300k properties rented out for £750pcm in London. Quite a few of these are rented out by landlords who bought 10 years ago when the price was more like £100k so £750pcm covers their costs. The problem is that the guys who buy now for £300k are having to compete with the landlords covering costs a third of theirs. One of the major expenses for a landlord are Service Charges. These usually come in at around £150 - £450 pcm especially for flats in developments with lifts and large communal areas/gardens. I went to look at a development in Haywards Heath which is an old hospital. The service charges were £350 pcm and the flats were renting for between £700pcm - £900pcm and were £300k+ to buy. With minimal Capital growth these flats are a suicidal BTL investment. Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted May 17, 2007 Share Posted May 17, 2007 You know the score... Quote Link to comment Share on other sites More sharing options...
Guest d23 Posted May 17, 2007 Share Posted May 17, 2007 There are loads of £300k properties rented out for £750pcm in London. Quite a few of these are rented out by landlords who bought 10 years ago when the price was more like £100k so £750pcm covers their costs. The problem is that the guys who buy now for £300k are having to compete with the landlords covering costs a third of theirs. One of the major expenses for a landlord are Service Charges. These usually come in at around £150 - £450 pcm especially for flats in developments with lifts and large communal areas/gardens. I went to look at a development in Haywards Heath which is an old hospital. The service charges were £350 pcm and the flats were renting for between £700pcm - £900pcm and were £300k+ to buy. With minimal Capital growth these flats are a suicidal BTL investment. fair enough i guess; I don't know Heywards Heath at all in terms of rental prices I think I'm getting myopic in my view of London property market as around where I live and have lived for many years (Shoreditch / Stoke Newington / Spitalfields) I have been unable find a Landlord willing to subsidise my lifestyle to the extent that many claim on here. I cannot find a 300K flat renting for anything even remotely near 750pcm round here, not even close, in fact I defy anyone to find something like this (theres several drinks in it for them if they do tho!) as for fulham average price for a 2 bed is 439K, average rent is 1741 which even with hideous expenses is covering way more than 50% of a 75% mortgage I'm not denying BTL is now a ridiculous investment (someone would need rocks in their head to get involved now) but overhyping the figures isn't helpful, especially when they're pretty bad to start off with. I'm desperately looking for signs of a downturn in London but my brain switches off when I hear people say that they're renting for 50% BMV (or less!) in London as it just isn't my experience; even if someone has some good info, following a statement like that I'm immediately in sceptical mode. I am of course going to watch this program but have a horrible feeling it'll end on a ramping note after giving some bears a cursory bit of screen time; I hope I'm wrong. Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted May 17, 2007 Share Posted May 17, 2007 Has to be watched though: For more reasons than you might suspect... Watch and see... Quote Link to comment Share on other sites More sharing options...
Guest d23 Posted May 17, 2007 Share Posted May 17, 2007 For more reasons than you might suspect... Watch and see... nice one; so are you on it? If so I hope you tore right into the unsustainability of the London market; judging by your previous appearances I'm sure you'll present a rational and well informed argument. I'm going to be at work late both nights; can anyone capture it on youtube? Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted May 17, 2007 Share Posted May 17, 2007 I'm going to be at work late both nights; can anyone capture it on youtube? Fubra has it under control. Tonight and tomorrow. Quote Link to comment Share on other sites More sharing options...
nohpc Posted May 17, 2007 Share Posted May 17, 2007 Will they show that BTL properties in London can struggle to cover half of a 75% mortgage and that this can only get worse as prices climb? Did you pluck that from thin air? In general a 300000 flat (average 2 bedroom) in London will rent for 1400 pounds a month. That is more than the IO on a 7% mortgage covering 75% of the value. Quote Link to comment Share on other sites More sharing options...
Smell the Fear Posted May 17, 2007 Share Posted May 17, 2007 Kennsington, renting happily. Can you clarify whether you have put an extra "n" or an extra "s" in there? There is quite a difference between Kensington and Kennington! Quote Link to comment Share on other sites More sharing options...
red Posted May 17, 2007 Share Posted May 17, 2007 6:30 Tonight: MAJOR PROGRAMBBC News Investigates the London House Market Over the next two days the news programme will investigate if the housing bubble is set to burst. Now I don’t hold out much hope for the BBC, the same people who didn’t even bother to report Lord Edwards George’s recent admissions. The program could very easily be filled with reassuring platitudes from various estate agents, there could be talk of the ongoing resilience to rate changes et, etc. But they called it a bubble, and all bubbles burst so have they changed perspective? Will they show that BTL properties in London can struggle to cover half of a 75% mortgage and that this can only get worse as prices climb? Will they show that this can only be price speculation based on capital growth and not on any return that the property can generate as an income? Will they show the predicted long term price cycle drop and drop as the boomer generation fades away and the current plummeting birth rates take effect? Or will they show some guy from the Halifax telling us all what a spiffing idea it is to borrow a staggering amount of money from him? Answers on a postcard. Has to be watched though: OK, here's my prediction for the show: 2 resident 'experts' in the studio - one a mortgage broker (Ray Bulger type), the other an EA from Savills or Fuxtons. Slightly bearish reporter trolls the streets and visits houses that are 'worth' 3 times what they were in 1995 - talk to smug homeowners, one of whom may be trying to move up ladder but slowly realising they can't afford it. Also interview a BTL getting out of a Porsche asking him if he's worried about a crash. Reporter doesn't convince. Cut back to studio, whereupon experts claim foreign investment is 'holding the market up from the top' and that with rates still relatively low and prices unlikely to drop too much, we should buy. If anything less bullish, I will be pleasantly surprised. Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted May 17, 2007 Share Posted May 17, 2007 In general a 300000 flat (average 2 bedroom) in London will rent for 1400 pounds a month. That is more than the IO on a 7% mortgage covering 75% of the value. If rented 365 days a year with zero voids and no repair and maintenance bills, and what about LA fees? Never mind the hassle - for what? The (incorrect) expectation of continuing capital gains (taxed). HAHAHAHAHAHA 5.5% in the buildo with zero capital risk. Sweet! Quote Link to comment Share on other sites More sharing options...
Wad Posted May 17, 2007 Share Posted May 17, 2007 There are loads of £300k properties rented out for £750pcm in London. Quite a few of these are rented out by landlords who bought 10 years ago when the price was more like £100k so £750pcm covers their costs. The problem is that the guys who buy now for £300k are having to compete with the landlords covering costs a third of theirs. One of the major expenses for a landlord are Service Charges. These usually come in at around £150 - £450 pcm especially for flats in developments with lifts and large communal areas/gardens. I went to look at a development in Haywards Heath which is an old hospital. The service charges were £350 pcm and the flats were renting for between £700pcm - £900pcm and were £300k+ to buy. With minimal Capital growth these flats are a suicidal BTL investment. Not having a go at you adibrown but surely the price that a LL bought at is irrelevant to his/her decision to carry on renting it out. Surely it is all about return on capital? If a flat can be sold for £600k that was bought at £300k five years ago and the rent has not really gone up much in that time surely it would be better to sell, put the money in the bank and go on holiday until it all calms down? Quote Link to comment Share on other sites More sharing options...
ae589 Posted May 17, 2007 Share Posted May 17, 2007 75% mortgage on a 250K property = 200Kmy maths suck? 250 * 0.75 = 187.5 Quote Link to comment Share on other sites More sharing options...
Guest grumpy-old-man Posted May 17, 2007 Share Posted May 17, 2007 (edited) 250 * 0.75 = 187.5 d23, your not allowed to use the edit button. Don't worry I've done it as well, although not in the simple maths section, I try to stay clear of "inflation" talks. edited for spelling not maths. Edited May 17, 2007 by grumpy-old-man Quote Link to comment Share on other sites More sharing options...
Smell the Fear Posted May 17, 2007 Share Posted May 17, 2007 This is being shown on London news at around 1.30pm this afternoon if anyone else is interested. Quote Link to comment Share on other sites More sharing options...
Jason Posted May 17, 2007 Share Posted May 17, 2007 Can anyone record? I don't get BBC London. Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted May 17, 2007 Share Posted May 17, 2007 Can anyone record? I don't get BBC London. Fubra have it in hand, tonight and tomorrow. Quote Link to comment Share on other sites More sharing options...
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