BTL's and renters

Graham_Devon

julieq wrote: »

then what do you think will happen when we get a little more optimistic next Spring?

You silly girl.

julieq

paulmapp8306 wrote: »

sound reasoning except - what makes you think were going to be more opimistic next spring Spring 2013 if you lucky.

There's a very good rule that when sentiment is poor, the tendency is to extrapolate downwards rather than to think things will turn up, i.e. we underestimate the upside and overestimate the downside. This is fairly obvious when you think about it.

Rationally, the euro crisis is fully understood and the consequences of, say, an Italian default are priced in within a narrow range. So my analysis would be that we've reached the nadir and things will turn up from here into the first half of next calendar year. It may even be that a return to the property market by those with a deposit saved will provide a strong economic stimulus here. If things turn out better in the eurozone than some of the worse cases suggest, then we could in fact see very strong recovery.

I posted last month very pessimistically about the eurozone crisis. In the event it seems that the right things are being done, including the UK contributing via the IMF and the Germans playing ball (in fact playing hardball). So I'm now cautiously optimistic. Though the next ogre waiting in the wings is the Far Eastern property crash, which I'd be perfectly happy to form a 70% club on. So definitely not out of the woods.

paulmapp8306

Indeed.

From the flat packed POV, I think it would fix the social housing issue in a matter of months. VAT wouldnt be an issue as the governemet would be funding the builds, while the inital costs would be recouped VERY quickly as the housing benefit currently paid would drop to a very small fraction of current levels (you'd only really need to charge for the maintenance of the home as the savings would cover the build costs).

Tell -Tescos are looknig at selling 5 room "cabins" for £10k and thats at proffit. Thats more than suitable as a 2 bed home for low income singles/couples. Even Ikea are to start doing them at £70k and there not small - so suitable for families.

The only issue is the room to build such places, but renevation of old industrial locations would provide some areas, as would opening up new locations of the outskirts of towns.

Your condo idea would also work well.

Once the Social housing issue is solved, then the rest of the housing issues almost solve themselves. Private renting would be restricted to those that could afford to, and chose to rent for other reasons which would reduce rental costs. Less people would need to buy, as social homes would be easy to get and private rent much cheaper - leading to lower house prices.

Of course you could still spend a lolt and get a nice house if you wish - but the pressures we have now that underpin both prices and rents would be gone.

Its just a matter of will as far as I can see.

julieq

Graham_Devon wrote: »

You silly girl.

Whereas you consistently make poor financial judgements on the basis of being incapable of analysing data and picking out real information from headlines.

So if we're trading insults you're not in the strongest of positions, are you? Certainly I'll take the outcome my "silliness" has given me over what your judgement has provided for you.

MrRee_2

Graham_Devon wrote: »

It's akin to suggesting paying money for food is a complete waste of money.

Expanding upon this analogy .....

Renting a property is like buying food, the packaging that food comes in is bought by someone else (the Landlord).

This packaging has a value - much like the drinks bottles of old which were returned for cash.

A buyer of property buys the food AND the packaging. Once the food is eaten the packaging can be sold - usually for far higher than it cost the consumer of the food therein.

A blind man can see that - at the same cost - it is far better to buy the food AND the packaging, than to let someone else buy the packaging, while you consume the food. As long as there is ANY value in that packaging.

And I don't think, even the most intellectually challenged, are declaring that property will have zero value in future ......

.... or are you, Graham_Devon?

julieq

Paul, I think the evidence is that you need mixed housing so you don't build ghettos which tend either to create knock on problems in terms of schools and other infrastructure, but done right the idea of a sustainable housing model based on prefab eco homes has a lot of potential.

The housing shortage is a solvable problem from top to bottom given the will to do it - there were some very good ideas earlier in the year about a self build finance deal actually from the bear side (I'm afraid I've forgotten who it was). But it will change how the planning process works, and that currrently is a hard political pill to swallow, given that policies in government on either side tend now to be based less on principle than on how the middle 20-30% of the electorate will react to them.

IronWolf

Noone ever factors in the opportunity cost of owning a house. Without HPI that cost is very real for anyone competant at investing.

julieq

IronWolf wrote: »

Noone ever factors in the opportunity cost of owning a house. Without HPI that cost is very real for anyone competant at investing.

Only if you can borrow 75% of what you invest - you're not risking much of your own capital.

BTL is a good stable investment with a high likelihood of capital growth. Part of a balanced portfolio.

Owning the house you live in is even better because it cuts a necessary cost over time.

I think you're on a very sticky wicket here.

IronWolf

julieq wrote: »

Only if you can borrow 75% of what you invest.

BTL is a good stable investment with a high likelihood of capital growth. Part of a balanced portfolio.

Owning the house you live in is even better because it cuts a necessary cost over time.

I think you're on a very sticky wicket here.

Capital growth over the long term is likely to be far lower than we've seen over the last 10 years, at best it might keep up with inflation which is what, 2-3% a year? Rental yield might be another what, 3-4% a year after reasonable expenses. Hardly breathtaking returns.

Also there's plenty of risk with BTL, void periods, problem tennants, hardly what Id call stable as if anything like that happens then it happens hard and fast, you suddenly have to cover extra repayments yourself.

For a competant investor there is an opportunity cost, and with interest rates going back to more normal levels in the future BTL will be a pretty mediocre investment.

IveSeenTheLight

IronWolf wrote: »

Well I can't be certain, but i reckon theres about £250k outstanding, bought in 2010 so most likely on a fixed. I pay about £1400 a month in rent, which I reckon covers repayments up to about a 4.5% interest rate. If the mortgage went to 7% the rent wouldn't even cover the interest.

You've answered your own point then.

the current forecast by most economists is that they don't expect rate rises for some time yet, least I've not seen any predictions for 7%.

But let's assume at some point they do rise to that levels.
what's likely to be the pressure on rents in the same time?