FTB expectations too high?

daveb975

Maisie11 wrote: »

What is the obsession with 2004 prices. What if the house was a wreck and someone did it up. Surely it wouldnt go back to 2004 prices.

2004 price is the level that a lot of areas are back to now, so I guess it is being used as a benchmark.

If someone bought a wreck of a house in 2004 and renovated, it is likely that it is now back to the value that it would have been in 2004 if it had been renovated.

The danger for sellers now, though, is that buyers can see the Land Registry figures on actual sold prices. This type of information was not available in the last crash. So, if someone buys a house in 2004 for £200k and spends £50k on it it may genuinely be worth £250k, but if no one else buys an equivalent one then £200k is the number that buyers have to judge the current value by.

EdInvestor

carolt wrote: »

Actually, my parents both grew up in privately rented flats in this country - security of tenure, low fixed rents - until they bought their own 3 bed semi at 2.5 times the wage of the sole earner (my mother worked but her salary wasn't allowed to be counted) - and my father was a manual worker, so it's not as though we're talking a great salary here.

Ahh, that rare but very fortunate group - the sitting tenants. These were the lucky people who caused life to be so ghastly for the rest of us renters in those days.The legislation that allowed trhe sitting tenant to stay put forever in flats paying peanut rents which didn't even cover maintenance costs, caused decent private landlords to desert the sector. By the 1970s, all you could rent was a bedsit room in a house, (not covered by the tenancy laws) and prices were very high for substandard accom because of the shortage..

Of course the sitting tenants benefited doubly as their low non-market rents enabled them to save up deposits to buy their own homes - while everyone else's money went on the sky high prices charged by the other landlords.

I'd be more than happy to go back to either of those earlier situations, frankly - low, secure private rentals, or cheap homebuying.

I'm sure you would.But you would be a member of a very small and privileged group. Less than half the population owned their hoime on the 1970s, many were unable to get mortgages, including most women, many single people, anyone who wanted to buy a flat, or a period property.

Were you even alive 40 years ago?You seem to have only the sketchiest idea of what life was actually like then.

I certainly was, as an adult (FTB 1975).It seems you were a child, and thus your understanding is based on one example - that of your parents.Believe me, their experience was not mainstream.You can see this was the case by the explosion of new BTL investment when the law was changed in the late 1990s.There was massive pent-up demand.

daveb975

EdInvestor wrote: »

Ahh, that rare but very fortunate group - the sitting tenants. These were the lucky people who caused life to be so ghastly for the rest of us renters in those days.The legislation that allowed trhe sitting tenant to stay put forever in flats paying peanut rents which didn't even cover maintenance costs, caused decent private landlords to desert the sector. By the 1970s, all you could rent was a bedsit room in a house, (not covered by the tenancy laws) and prices were very high for substandard accom because of the shortage..

Of course the sitting tenants benefited doubly as their low non-market rents enabled them to save up deposits to buy their own homes - while everyone else's money went on the sky high prices charged by the other landlords.

I was surprised to see how often this still goes on. A lot of auction properties are sold with a sitting tenant and the rental prices are really low - often well under 50% of the equivalent market rate. You can understand why a lot of people stay in them forever.

[Deleted User]

EdInvestor wrote: »

Good example of inflated expectations of an FTB who has been able to live in a comfortable flat provided by a BTL investor.

Forty years ago an FTB would be grateful to have the chance of living in a 1 bed flat of his own - the alternative was to live at home with parents (and you certainly didn't get to sleep with your girlfriend there in those days!) or in an extortionately- priced fleapit owned by the likes of Rachman.

It is ironic that there is so much FTB anger directed at private landlords when they provide a service which would have been welcomed with open arms, had it been available when their parents were the same age.

Sorry Ed, im not sure if that was a dig at me or just a random quote.

I dont know if youve noticed but a lot of things have changed in 40 years, i dont rent a comfortable flat provided by a BTL 'investor' and i am definately not your average FTB.

The anger directed at BTL 'Investors' is due that exactly, they bought property on the belief that its value would always increase, therefore creating a bubble and pricing out the FTB's.

Though I still dont quite understand your last statement, whats Ironic about it? What would seem Ironic is your use of the words "extortionately- priced" in relation to the rental market you are seemingly trying to defend, when now what is extortionately- priced is the Property price itself.

As i said though, as lot has changed in 40 years.

EdInvestor

daveb975 wrote: »

I was surprised to see how often this still goes on. A lot of auction properties are sold with a sitting tenant and the rental prices are really low - often well under 50% of the equivalent market rate. You can understand why a lot of people stay in them forever.

Not only did the law allow the sitting tenant to pay a guaranteed very low rent forever, the children of the tenant could inherit the tenancy.:eek:

So you still get people (now sometimes quite elderly) paying very little and occupying flats where the original tenants back in the 1950s were their parents.

Combined with the rise of council estates after the second world war, it's easy to see why the private rented market in the UK almost died out. This combined with mortgage rationing (sound familiar?) forced around a third of the population into social housing, half into owner occupation, with the remainder either young people at home saving up money for a deposit so they could get their first flat (after they had got married of course as otherwise they wouldn't be able to get a mortgage) or forced into appalling accommodation by slum landlords..

Anybody who thinks this was a good arrangement should really check what century we are living in IMHO..

neas

my parents first purchase was a 3 bedroom terrace house after they got married... it was 2 bedroom +1 attic room... and quite small..

But most certainly not a 1 bed flat... This was the norm as there were no flats then in my home town (Yorkshire town)

hardworking_bob

A major reason for the housing boom is that people were given up to 5 times their annual salary. If it remained at the traditional 3 times (or 2.5 times for a joint application) then house pricess would have remained in line with income. The unfortunate thing is that people took on massive mortgages and fuelled their shortfall in disposable income with CC's...

Also as a bank manager for NatWest about 5 years ago it was clear that we were expected to sell mortgages. We often gave customers more than they asked for when they came in for mortgages...as ALL bank staff are incentivised to meet their targets etc. Only did it for 2 years as I really had to get out as I did not agree with it anymore...so the banks have 'helped' in other ways to contribute to this mess beyond buying toxic debt within the USA!

daveb975

EdInvestor wrote: »

Not only did the law allow the sitting tenant to pay a guaranteed very low rent forever, the children of the tenant could inherit the tenancy.:eek:

So you still get people (now sometimes quite elderly) paying very little and occupying flats where the original tenants back in the 1950s were their parents.

Combined with the rise of council estates after the second world war, it's easy to see why the private rented market in the UK almost died out. This combined with mortgage rationing (sound familiar?) forced around a third of the population into social housing, half into owner occupation, with the remainder either young people at home saving up money for a deposit so they could get their first flat (after they had got married of course as otherwise they wouldn't be able to get a mortgage) or forced into appalling accommodation by slum landlords..

Anybody who thinks this was a good arrangement should really check what century we are living in IMHO..

I agree. It must be a massive problem if you own one of these properties, but is not always great for the tenant. These properties are more likely to fall into disrepair than others offered at a proper market rate. After all, why would the landlord want to spend lots of money maintaining a property that he/she is getting very little income from?

LittleMissAspie

EdInvestor wrote: »

Good example of inflated expectations of an FTB who has been able to live in a comfortable flat provided by a BTL investor.

Forty years ago an FTB would be grateful to have the chance of living in a 1 bed flat of his own - the alternative was to live at home with parents (and you certainly didn't get to sleep with your girlfriend there in those days!) or in an extortionately- priced fleapit owned by the likes of Rachman.

It is ironic that there is so much FTB anger directed at private landlords when they provide a service which would have been welcomed with open arms, had it been available when their parents were the same age.

Of course there were flats to rent in the past. My parents rented a 1-bed flat at first and then bought a 3-bed terrace. They were not well off in any way; my dad has a very working class background, grew up in Brixton with an outside toilet and has no formal qualifications. If he could do it, anyone could.

I just looked on houseprices.co.uk to see what their first house would be worth now, out of interest. Last sold in 2005 but next door is more recent, sold in May 2008 for £320k. That's 10 times my dad's salary when he retired, yet he bought it as an FTB.

teaspoon1

Maisie11 wrote: »

What is the obsession with 2004 prices. What if the house was a wreck and someone did it up. Surely it wouldnt go back to 2004 prices.

House prices will go back to what people are prepared to pay (and can borrow) for them. Looks like sensible prices will return, thank goodness. :beer:

Prices fell 34.2% in Northern Ireland in 2008 and show no signs of stopping. The rest of the UK is just playing catch-up.