Interest rate rise likely this year

antrobus

Bantex wrote: »

You are right, but I believe that a fair amount of land already has PP and the developers are waiting for the right time to "pull the trigger" whilst the land remains undeveloped.
http://www.bovishomesgroup.co.uk/about-us/our-business-strategy/

PP lasts for three years. Not that long to decide when to 'pull the trigger', especially if you are a bulder, and have to build something in order to generate the revenue to cover your overheads.

Bantex wrote: »

...May find this of interest, the line about managing plots with selective use to maximise profits. (or something like that).

So a builder has a policy for managing it's land bank?

Bantex_2

antrobus wrote: »

PP lasts for three years. Not that long to decide when to 'pull the trigger', especially if you are a bulder, and have to build something in order to generate the revenue to cover your overheads.



So a builder has a policy for managing it's land bank?

Which could be defined as hoarding.

wotsthat

Bantex wrote: »

You are right, but I believe that a fair amount of land already has PP and the developers are waiting for the right time to "pull the trigger" whilst the land remains undeveloped.
http://www.bovishomesgroup.co.uk/about-us/our-business-strategy/

May find this of interest, the line about managing plots with selective use to maximise profits. (or something like that).

In any business there's bound to be an element of timing. The link is really saying that they will sell land rather than build on it if they think it's more profitable to do so. In most building company accounts these trading activities only a small contribution compared to selling finished houses.

I might buy a few tonnes of steel because I make nuts and bolts for a living. It doesn't mean I won't consider selling that steel on if I think it improves my overall margin and I'm still able to fill customer orders.

Bantex_2

wotsthat wrote: »

In any business there's bound to be an element of timing. The link is really saying that they will sell land rather than build on it if they think it's more profitable to do so. In most building company accounts these trading activities only a small contribution compared to selling finished houses.

I might buy a few tonnes of steel because I make nuts and bolts for a living. It doesn't mean I won't consider selling that steel on if I think it improves my overall margin and I'm still able to fill customer orders.

The difference is that land (in a lot of the UK) is a limited resource. Unlike steel.

antrobus

Bantex wrote: »

Which could be defined as hoarding.

Well if you 'defined' any particular practice as being 'hoarding', then it would be hoarding, wouldn't it?

On the other hand PP lasts for three years. It can take over a year to get PP. And so oddly enough most builders have a land bank that is equivalent to about 4 years worth of building.

If you want to define that as 'hoarding', then so be it. To me it looks like a sensible business practice.

antrobus

Bantex wrote: »

The difference is that land (in a lot of the UK) is a limited resource. Unlike steel.

Which possibly explains why its price appears to be on an upward trend? At least, it appears a more likely explanation that believing that someone is 'hoarding' it.:)

kwmlondon

Bantex wrote: »

Anyone who cannot handle a quarter or half percent rise on their mortgage, should never have taken out a mortgage in the first place.

I'm on a fixed rate until Jan 2016 with a hefty penalty if I pay it off early.

My rate until then is 4.1%.

I could get another fixed rate now for about 3.1%.

If you were me what would you do?

I can probably manage an interest rate of about 10%, worst case scenario, but I'm guessing if interest rates went up that high the whole country would go bust.

Bantex_2

kwmlondon wrote: »

I'm on a fixed rate until Jan 2016 with a hefty penalty if I pay it off early.

My rate until then is 4.1%.

I could get another fixed rate now for about 3.1%.

If you were me what would you do?

I can probably manage an interest rate of about 10%, worst case scenario, but I'm guessing if interest rates went up that high the whole country would go bust.

My rate went up to something like 13% in the mid 90s. The whole country did not go bust though.

AndyGuil

Bantex wrote: »

Happens all the time in many industries where one company can make money out of something that another cannot.

It does happen in other industries. If it was the best option then they would do it. Clearly it isn't.

Bantex_2

AndyGuil wrote: »

It does happen in other industries. If it was the best option then they would do it. Clearly it isn't.

Best option for who?