Saturday, Nov 21, 2009

How many will be tempted?

Moneyweek: Don't jump aboard new property funds

This article is for subscribers only, (not a subscriber), are they talking about rmbs? Will lenders be able to raise money on the wholesale markets to fuel this bubble?

Posted by sybil13 @ 07:54 AM (895 views)
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1. drewster said...

Sybil,

You'll find your answer here:

FT via Yahoo: Flurry of funds target residential property
"The Candy & Candy Growth Fund is seeking properties of up to £10m in value in central London. [....] The fund hasn't ruled out buying in stock from current Candy & Candy developments, including its flagship Knightsbridge scheme, One Hyde Park."

I find that quite shocking. Could Bovis, Redrow, or Persimmon launch a fund to buy up the pokey flats that they otherwise can't sell?

"At the other end of the market, the Residential Property Recovery Fund is chasing £25m of discounted property in the Midlands and northern England, which it will lease to students and housing associations before selling in seven years. Any rise in capital values is likely to be less dramatic than London prices, but the current postcode lottery of how housing benefit rents are calculated could boost rental yields."

You'll get better yields in this fund. Benefit levels are set over a large area, in which there can be a huge variation in house prices. You could buy a cheap house on the fringes of an area where benefit levels are high. It's not without risk though. The next government could change the benefit rules though, or cut the amounts paid - they desperately need to cut costs. Capital gains are unlikely to be particularly strong either.

Saturday, November 21, 2009 12:34PM Report Comment
 

2. drewster said...

BTW a subscription to MoneyWeek is well worth it! I pay £17 a quarter - £1.30 per issue - and they post me a nice magazine every week. You can also find it in a handful of newsagents for £2.50 an issue.
The FT Weekend is also a good read, if a little dry. It costs about £2 every Saturday, expensive but it weighs a ton.

Saturday, November 21, 2009 12:41PM Report Comment
 

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