UK property - overvalued and poised for a correction soon?

furndire

To all of you bitter people out there, I am not faking feeling sympathy for FTB.
Several years ago, we had a choice whether to spend money on new cars, flash holidays, pension funds etc. It so happened we bought property, which at that time was cheap, and needed work doing on it. All our married life we had bought lived in & renovated properties, it wasn't called property developing in those days.
In the road we bought, there were a lot of run down houses, and a lot of shark landlords, who put people in them and charged the earth.
Three of our tenants are DoHSS, single parents, and are have been in our properties for quite a long while - we have been told we could get more rent, but are happy to have long term decent tenants. Our other working tenant has just moved out, and is buying her own home, she recommended a friend to move into our property as she knew that the house was a good standard, we are decent landlords, and the rent is affordable.
Our properties are not worth a huge amount - were we live, property is still affordable, but there are not the well paid jobs that so many people seek.
We have been self employed for over 30 years, and last year had to give up our business, because some hotshot London landlords doubled our rent - making it unviable for us to carry on. If we hadn't got these properties, we would be now on the DoHSS, instead of which, we just get by like a lot more.
The council round our way is just selling all the propeties to a consortium, so there soon will be no affordable houses to rent - and if we sell ours they would go the same way.

Mrs_pbradley936

Furndire I really do not think you need to justify your investments. For those of you who do not know which appear to be a few, BTL is heavily taxed the property via Capital Gains Tax and the rent is subject to income tax. Did any of you honestly think that the government would not tax this? Where is your reasoning?

Mrs_pbradley936

There is another thread on here about Right to Buy (and you can vote on it if you want). I cannot post a link to it for some reason but do a search. I have made a couple of posts there and this is the last one:-

There are two strands to this debate. The first that we need social housing for poorer people. The second that we make poor people history by allowing them to buy an asset at a knockdown price. Government policy seems to see saw between making people self reliant and making them dependant on handouts and subsidies. We do not seem to be able to keep a government in place long enough to let one method dominate so that we all know where we stand. Fireman and nurses should not need subsidized housing and would not if we paid them a proper wage – but to do that we would all have to pay higher taxes and who is going to vote for that?

meanmachine_2

pbradley936 wrote:

Fireman and nurses should not need subsidized housing and would not if we paid them a proper wage – but to do that we would all have to pay higher taxes and who is going to vote for that?

That's probably the most c0ck-eyed thinking I've encountered yet.

Government could easily limit BTL, but rather than do this and choke property inflation, you'd rather we ALL paid more in tax - which is at an all-time record, by the way - and give pay rises to public sector workers to help them chase the market up.

That's lunacy.

How about the government makes property a free market, like in the States, where property is half the price it is here?

ManAtHome

Yes, lets tax the all the low wage-earners in retail and distribution (who bring the cash/tax in), so public-sector workers can have subsidised housing - sounds fair to me...

cloud_dog

MM - Quick question, are you blaming the current housing availability / prices on BLT's?

Mrs_pbradley936

meanmachine wrote:

How about the government makes property a free market, like in the States, where property is half the price it is here?

Could you explain please?

Mrs_pbradley936

House price inflation is not as rampant in the USA (I used to live there) but they have a 10% tax on any gain including your home ( here your home is tax free but additional property is taxed at 40%). They also have something called a “Jumbo loan” which is anything over and above an amount set by some sort of government backed committee I think it is called Fannie Mae. So that if you have a jumbo loan you pay a lot more for it. So a penalty for borrowing more coupled with tax on any profit seems to keep prices in check.

Also the US government do not pay nurses because health care is not publicly funded. That means nurses there earn far more than nurses here.

There are basically two ways to govern, pay higher taxes and let the government spend on behalf of the public OR pay lower taxes and let people spend their own money. Those who favour the socialist/left ideas of letting the government spend never have a problem in dividing up the pie. But when the pie is gone they are unable to get another one!

Cook_County

The last post is factually incorrect:
1. In the US gains on sales of main residences are entirely tax-free (just like the UK) except that the exemption is limited to $250,000 (or $500,000 if filing a joint tax return). Any gain above the $250,000/$500,000 exemption is taxed at your marginal US tax rate of up to 35% (certainly not 10% which is only a withholding rate).
2. The Jumbo loan discussed is also inaccurate. One can pay an additional for borrowing more than a lender is willing to lend in the US, but the UK does the same with mortgage insurance premiums.
The facts are that house prices in the United States are currently deflating again.

meanmachine_2

pbradley936 wrote:

Could you explain please?

In the States planning laws are a lot freer.

Where there is a lack of land, like in NY, yes, prices are high.

But because of our national planning system, we have NY-style prices across the country.

It's a nonsense.

I was driving through Essex the other day. I've never seen so much fallow land in my life.

If the South East is covered in concrete, I'm a banana.