Sunday, Sep 17, 2006

Are first time buyers being prudent, or are they succumbing to a collective madness that will end in tears?

Firstrung: Something strange is happening to the price of houses

Excellent article from the Telegraph, please click the link at the foot of this introduction to take you to the full article where you will also find the reader comments. You could be mistaken for thinking you have found such is the quality of the reasoned and well argued points made in relation to run away house price inflation

Posted by converted lurker @ 09:09 AM (518 views)
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1. markd said...

Yes, great article-so good in fact that it has already been posted here twice in the last couple of days (its a shame we keep getting multiple posts because other equally interesting items get knocked off the main news blog window faster than they otherwise would)

Sunday, September 17, 2006 02:19PM Report Comment

2. inbreda said...

Agreed Markd - mid-conversation-blog the damn things disappear. The Webmaster should at least extend the number of articles allowed in the list, or the time they are allowed to stay there. HPC is getting a bit boring when you don't actually have time to discuss an article properly.

Sunday, September 17, 2006 04:39PM Report Comment

3. paolo88888 said...

What worries me is the new development of parents helping out with deposits. Can anyone help me to understand the flaw in the following argument?

Property is not like a resource such as grain or steel which has to be manufactured and has the concept of supply and demand. Residential property lasts 100 years and with newbuild being minimal compared to the existing housing stock, property transactions are about passing the same houses around amongst the population. It follows that prices can increase arbitrarily, because when the buyer pays more the seller gets more, and each man in his turn plays many parts.

Suppose Mrs. X dies leaving her retirement flat to Mr. A who uses to pay the deposits on his Son's FTB. There is a chain of property leading from the FTB up to large detached and down to retirement flats. If 50000 is added to the price of each property along the way, then, at first sight, noone loses, and all feel richer.

The one catch is tax, inheritance and stamp duty. But these act as fairly weak brakes and both the Tories and the Liberal Democrats are proposing to reduce them. Isn't this the basic reason why property romps ahead?

Sunday, September 17, 2006 06:03PM Report Comment

4. Sovietuk said...

The middle class parents and grandparents thing is certainly helping to keep prices up, but long term probably still unsustainable

Sunday, September 17, 2006 06:35PM Report Comment

5. uncle tom said...

An aside - I was talking to friend who has rental property (unmortgaged) in the Gloucester area. The house (built in the 60's) has been rented for the last fifteen years by a single mother who gets her rent paid by social security - social housing lets are common amongst the BTL brigade.

He has recently been told by the council that in addition to getting the gas checked every year, he must now get the electrics checked as well. He has then discovered that although the house is only 40 years old, no electrician will sign off the electrics unless the place is completely re-wired.

Is this a maverick local council, conniving electricians - or a fat expense in waiting for thousands of BTL'ers?

Anyone know??

Sunday, September 17, 2006 09:05PM Report Comment

6. bidin'matime said...

Paolo - your logic assumes that all of the money from sales of property get reinvested in property, which is by no means the case. Also, if as is usually the case, the proceeds of the old dear's house is split between a number of beneficiaries, they dont all get 50k. And each will probably have more than one offspring themselves. So the amount available to boost the price of starter homes is much less. But I agree that, while the bubble continues to expand, it is a factor.

Sunday, September 17, 2006 09:42PM Report Comment

7. indiablue19 said...

Uncle Tom,
We had a lot of problems with the operation of electrics and heating system in the last home we rented here in Edinburgh. The landlord was an outright criminal in relation to the risks he imposed on his tenants, although on the surface the property looked quite attractive. We gradually discovered these "life threatening" liabilities -- especially in the age of heating and electrical systems and exhaust ventilation from the gas heating flu which was spewing carbon monixide into the house. After this experience I think it essential that these inspections be stringently applied to older homes especially. Forty six year old electrical work could be on an entirely different standard from the standard applied today; especially since the calibre of equipment has changed substantially in some cases and electrical supply needs to be upgraded to accomodate so many additional uses of electric appliances in the home. The electrical circuit board where we were renting was just twenty years old, but the installation was appalling with the circuit breakers practically rattling in the box. The upgrade to the home service at the time this new box was installed -- whilst adding outlets and so forth -- was poorly done, even though it was said to have been inspected on installation. It is my impression that standards are much different now than before. Inspections must now be performed by CORGI registered electricians every three years. I don't think they want to risk their license and reputation on old and inept work. Your friend should be receiving a full report from the inspectors on exactly why they would require a rewiring of the property. If he asked more than one and their assessments don't match nor represent the CORGI standard [which you can buy and read for a few pounds] then perhaps there is some fraud or collusion involved. It is my experience that Councils are cracking down on negligent landlords in general and poor maintenance in particular -- as in anti-social behavior control statutes. Most likely, this sort of sweeping programme to force the negligent into compliance will penalize some landlords and homes that weren't a problem.

Monday, September 18, 2006 01:46AM Report Comment

8. Iguana said...

Uncle Tom
The Housing Act 2004 has a huge range of entertaining requirements for BTL operators, over and above the existing gas/electrical safety requirements. The new rules coming in October apply the 'health and safety' type of review to a domestic property that formerly only appled to commercial property.

Monday, September 18, 2006 06:34PM Report Comment

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