worrying news this morning

peanutnboo

Moodys have downgraded 12 UK Banks and Building societies credit ratings some by upto 2 points.

What significance does this have to UK savers ?

I am responsible for a large investment which is currently in the NAtionwide My Save account.

Should I be thinking of buying a property to safeguard this money ?

My thinking is I could either have the hassle of opening 4x new accounts and spreading the money over 5x different banks and waiting for one of them to fail or I could invest the money in a property.

At least whatever happened I'd have a roof over my head and a property that I could sell or raise money on.

All my friends are buying investment properties. What is your advice and thinking on this

luvpump

I think Merv must have got wind of this a few days ago, hence the extra QE, fat chance that this new money will find its way into the normal Economy ! With Banks so in debt ..

lisyloo

If you buy property you have to be prepared to be a landlord.
That is not the same as putting money into a bank account.
I know that's plainly obvious but I don't think a lot of people necessarily think through that they might get calls from tenants at 4am in an emergency or they might have troublesome tenants/voids.
There is some work involved e.g. maintenance - decorating, repairs, replacement etc. and also risks e.g. tenants don't pay, tenants do damage, no tenants, house prices go down.

Overall I think you can make money income property especially if you pick up a bargain or pick up the type of property with a good yield (tend to be the smaller ones).
There has to be a capital risk at the moment with public sector cuts yet to bite and the general state of the economy.
Also take account of the costs - income tad, BTL mortgage, BTL insurance, gas certificate, legal fees for contracts, agent/advertising etc.

I'm putting some of the worse case scenario here, but you have to be prepared for the work,risks and costs.
I don't think it's as simple as some people think.

Do you want to be a landlord? Do you enjoy DIY/decorating?
Personally I like a simple hssle free life so I don't want to be a landlord. Also I'm no good at DIY jobs and if you pay someone then clearly that eats into your profits. I'm not saying that can't be done, but the people who make most money are the people that decorate and repair in their spare time for free.

Considering the good side, property has gone down and also interest rates are at historic lows so you can egt a great fix.
If you can cover a repayment mortgage with the rent then even if you get no profit, you still have a house after 25 years, so long term it can still work out well if you are up for it. Remember there will be CGT when you sell.

The main thing I think you need to ask is - Do you want to become a landlord with all that entails? as I think it becomes a part of your lifestyle (unless you outsource most of it to agents).

Personally I wouldn't invest in property right now as I think employment will go up when public sector cuts bite and prices will come down.
If I wanted to be a landlord I'd sit on the sidelines and research good areas, property prices, agents and do a business model and wait for prices to come down and if you have mates, I'd buy them pints and pick their brains.

Loopgames

peanutnboo wrote: »

Moodys have downgraded 12 UK Banks and Building societies credit ratings some by upto 2 points.

What significance does this have to UK savers ?

I am responsible for a large investment which is currently in the NAtionwide My Save account.

Should I be thinking of buying a property to safeguard this money ?

My thinking is I could either have the hassle of opening 4x new accounts and spreading the money over 5x different banks and waiting for one of them to fail or I could invest the money in a property.

At least whatever happened I'd have a roof over my head and a property that I could sell or raise money on.

All my friends are buying investment properties. What is your advice and thinking on this

I would agree with your way of thinking. In such an economy though one of the best performing investments is debt leveraged property (fixed rate). So you could buy your properties and take a mortgage out on each of them. Do your research carefully as a landlord so take calculated risks and be aware of them. That is not the same as saying don't do it because it's a hassle - I'm saying do it and be aware of the 'hassles' they will be worth it if you do things with a solid plan.

Thrugelmir

peanutnboo wrote: »

At least whatever happened I'd have a roof over my head and a property that I could sell or raise money on.

Then you'd still need the services of the same organisations that you are trying to escape from.

thenudeone

peanutnboo wrote: »

Should I be thinking of buying a property to safeguard this money ?

:rotfl:

That's a good one. I'll go back in time and tell several of my friends who ended up with negative equity during the 1980s and 1990s, unable even to move house to get a better job or to a cheaper area to reduce their housing costs.

Here's some news: House prices go down as well as up!

peanutnboo

lisyloo wrote: »

If you buy property you have to be prepared to be a landlord.
.

thats very good advice indeed Lisyloo . As an Architect and former builder/ developer I'm only too well aware of the pitfalls of being a Landlord . Costs can easily outstrip profit and the stress damage and loss of rent etc can make it a nightmare .

I should have said we currently rent and so this property would be our primary home as well as a safe investment.

Linton

The downgrading by Moodys has no significance to savers. The credit rating is simply taking into account the plans of the government not to have to bail out the banks in the future.

Your savings are as safe as they were last week.

Just think about it . If you decided to invest in property and the banks collapsed what would your property be worth? Who would have the money to buy it ? Though I suppose you could exchange it for a large pack of baked beans.

peanutnboo

Loopgames wrote: »

I would agree with your way of thinking.

thank you for your sensible and considered response which is appreciated. (This forum seems to be full of out of work, disaffected trolls who spend all day trying to wind people up.) :mad:
This property would be our home. Whilst property prices go down as well as up the market is at pretty much rock bottom now so this should be the best time to invest for long term investment plus it gives us a rent free home !
After a week of weighing up all the options and making various finacial projections and budgets etc I think its a no-brainer myself .

We will be putting an offer in on an adjacent property this weekend.;)

lewistye

Look at a graph of house prices over any timescale more than 5 years... we are NOT at rock bottom.

lisyloo

I should have said we currently rent and so this property would be our primary home as well as a safe investment.

Sorry, because you were talking about it as an investment I assumed BTL.
If you are buying, well finance is cheap and you could find a bargain although I reckon it's a two tier market right now.
Nice stuff still has bidding wars going on whilst more "distressed" sales can be acheived for a bargain.
Head would tell me to wait, although long term I definitely believe buying is better than renting.