London Has Peaked

padington

chewmylegoff wrote: »

If you had £1m in cash and no house or other assets and were about to die and were worried about IHT then buying a £1m house would make sense.

I predict that scenario will apply to approximately 0 people a year plus or minus 0.

For most people the practical situation will be that they have a mixture of assets including a residential property that they already live in, the "family home" if you like. If the total of those assets exceeds £650k in value then they will be able to shield up to an extra £350k from IHT by selling their house and buying a more expensive house.

I should think the number of people who decide they are going to sell the house they are living in in order to buy a more expensive one in order to take advantage of this change in the law (which may just be repealed in 5 years if labour were to get back in) will be similar to the number above.

The change will result in a reduction in IHT revenues and not much else. I suppose there will be a trickle down effect in time as people will inherit a bit more money and possibly use it to buy a house with (although presuming most estates are split between two or three children, they would have been able to do this already with a £650k-£1m inheritance so it won't make much of a difference) but there isn't going to be a rush of people seeking to buy a house that they think will be worth £1m by the time they die.

Sorry but your 2 up 2 down terrace in ally pally is not going to become worth £1m overnight as a result of this change.

It's another poker up the back door of the housing market if you ask me but I guess we'll have to agree to disagree.

chucknorris

padington wrote: »

It's another poker up the back door of the housing market if you ask me but I guess we'll have to agree to disagree.

Although I'm not personally buying into the 'doubling in 15 years' it is nevertheless good news for me that others think that it is possible, like you and cells. Because obviously sentiment plays its part, so the more that think that they will go up the better. My best interests are served by being slightly bearish from now on though, I want to protect what I have, not so much with property, but more with other assets.

HAMISH_MCTAVISH

London house prices were up 11.2 per cent in the year to March 2015 according to the ONS.

It seems the instigators of this thread have disappeared back up Bear Mountain in embarrassment.

chucknorris

HAMISH_MCTAVISH wrote: »

It seems the instigators of this thread have disappeared back up Bear Mountain in embarrassment.

It is either the hibernation period for bears, or they are doing what they do best in the woods.

mayonnaise

HAMISH_MCTAVISH wrote: »

It seems the instigators of this thread have disappeared back up Bear Mountain in embarrassment.

It's a pity.
I quite enjoyed watching them squirm.

Jason74

HAMISH_MCTAVISH wrote: »

It seems the instigators of this thread have disappeared back up Bear Mountain in embarrassment.

Well yes, they certainly got it wrong, there's no arguing with that. But in terms of London as a place to live, things would be a lot better if they had been proved right. The cost of housing is imho the number 1 problem in London these days, and no single change would make the city better more than cheaper housing. Imho it's why London swung to Labour in a way that the rest of the country didn't.

So yes, you and others predicting gains have sadly been proven right, but a little more acknowledgement of the social consequences of that rather than just gloating wouldn't be a bad thing.

wotsthat

Jason74 wrote: »

So yes, you and others predicting gains have sadly been proven right, but a little more acknowledgement of the social consequences of that rather than just gloating wouldn't be a bad thing.

I told the OP not that his prediction was wrong but that he had no reason to be confident in his predictive abilities and should therefore base his decision to buy (or not) on the same things as normal human beings i.e. how much rent to I pay?, do I like renting?, do I want to buy?, can I afford to buy?, can I get finance?, Do I like the area?, Can I buy it cheaper etc. etc.

I think his budget was £300k and he could've bought a 3 bed in his target area 12 months ago. That same house is now £330k and, last time I looked, only 2 beds could be bought in-budget. 12 months rent invested in waiting for the crash has delivered a really poor return. Say he's paying £1000/ month rent he's £42k down.

Of course there's some hindsight happening here. What would've happened if prices had fallen 10% - he'd be £18k up.

I've discounted stamp duty etc. because Bubble's determined to buy at some point and will incur these costs anyway. What it shows, and what the crashers never see, is that there's an asymmetric return for the renter waiting for the crash - prices rises are worse for them than price falls are better because the bet has a monthly cost to keep in play.

The longer they play the bet the less likely it is to pay off. Bubble's hero, Crashy Time (also sadly departed), is a good example because he's played the bet so long he'll be out of pocket even if he gets a house for nothing.

A little gloating seems entirely appropriate.

setmefree2

chewmylegoff wrote: »

Why would being able to avoid a bit more of a tax that is only payable on death make people more likely to buy more expensive houses to live in? Are you suggesting that granny and grandpa will upsize when they think they are about to pop her clogs in the name of tax efficiency?

It will almost certainly make empty nesters less likely to sell to down size. This must have an impact on the market since the problem seems to be one of shortage in London.

It might make people upsize if it's more tax efficient than keeping money in shares or cash.

This won't just effect Grannys and Grandpas - but also Mums and Dads.

mayonnaise

brit1234 wrote: »

Every thing points to a downturn round the election, either just before or just after.

You mean around now?

billywilly

Have you any idea how much money is being funneled into London by Asian and Chinese residents?

Property being built/converted in London is not being advertised here as there is so much more demand from those countries. They are buying up entire blocks of properties without even seeing them. Prices are hiked. The people doing well out of the current market are the builders & developers together with the London lawyers that regularly travel over there to advise on UK tax minimization methods and conveyancing.