The millionaire binman

the_flying_pig

wotsthat wrote: »

Could a refuse collector really afford to buy a £80k house in 1988.

£80k was some way above the average house price in 1988.

yeah, i doubt that many london binman earned much more say than £10k in 1988.

but there are certainly plausible examples... say:

1) a Kensington & Chelsea council flat worth say £40k [about the London average then so in K&C it'd have been a fairly grottty place] in 1984;
2) right to buy discount of 33% [very easy to get even if you'd not lived there long] bringing it down to £27k;
3) salary of about £7k would mean a mortgage of say 3.5 times one binman's salary with a small deposit.

i can very easily beleive that K&C HPs are now 25 times what they were in 1984, i.e. £1m now for a formerly £40k flat.

i doubt there are many thousands of peoplpe like this - a quick google suggeted that about 3,000 people in K&C bought under RTB and as we know more than half sold to landlords for quick [and with hindsight modest] gains.

but certainly i shoudl think there are dozens, even hundreds, of people in similar positions, most but by no means all of whom would have been doing somewhat betetr paid jobs than binman.

System

Did he have a wife also working?
No children?
No vices?
Was his only interest playing the stock market or the dogs?

wotsthat

the_flying_pig wrote: »

yeah, i doubt that many london binman earned much more than £10k in 1988.

but there are certainly plausible examples... say:

1) a Kensington & Chelsea council flat worth say £40k [about the London average then so in K&C it'd have been a fairly grottty place] in 1984;
2) right to buy discount of 33% [very easy to get even if you'd not lived there long] bringing it down to £27k;
3) salary of about £7k would mean a mortgage of say 3.5 times one binman's salary with a small deposit.

i can very easily beleive that K&C HPs are now 25 times what they were in 1984, i.e. £1m now for a formerly £40k flat.

Even in 1984 there was a commuter belt wasn't there? I'm sure some commuted because they didn't want to live in a grotty flat in London but a lot commuted because they couldn't afford to buy in London and they probably all earnt more than our binman.

I don't believe in pure blind luck. The reality (if he's real!) is probably more mundane. He got lucky with jam on for sure but he was probably willing to commit more of his earnings to housing than his peers, was less averse to looking for treasure in rubbish, went out less and so on.

lukeh23

Yep, these are people who benefited from a time and government who actually cared about building houses for the population. I won't knock them for taking the opportunity.

princeofpounds

This is not at all uncommon in London and to a lesser extent the rich parts of the commuter belt.

I have been driven by a minicab driver who got RTB on a 3 bed council flat with a river view in Pimlico. He reckons it's worth a couple of million these days.

Similarly there are plenty of old people knocking around places like Clapham who bought there when it was a no-go area in the 70s and now any 4 bed house is worth a million.

London house prices have more tripled just since 1993. If you bought with a 10% deposit at that point then through the magic of leverage your equity will be worth 21x the original amount. Plenty of people, even on modest wages, could have had access to £48k in equity in 1994, especially if they had access to right to buy and/or had already benefitted from the 1970-1988 property boom (or, to be more accurate, the wiping out of the value of their mortgage due to inflation, as the real terms increase of the property itself was less extreme).

Property is one of the few asset classes where the man on the street has access to eye-watering amounts of leverage. Add that to a bull market cycle (particularly one of unprecedented proportions in this country) and you are going to end up with many accidental millionaires.

the_flying_pig

wotsthat wrote: »

Even in 1984 there was a commuter belt wasn't there? I'm sure some commuted because they didn't want to live in a grotty flat in London but a lot commuted because they couldn't afford to buy in London and they probably all earnt more than our binman.

I don't believe in pure blind luck. The reality (if he's real!) is probably more mundane. He got lucky with jam on for sure but he was probably willing to commit more of his earnings to housing than his peers, was less averse to looking for treasure in rubbish, went out less and so on.

i've no idea what point you're making [or thought i was making in the earlier post], but as to whether he was lucky or not in benefiting from this opportunity, i suppose you could, crudely divide the UK population of c. 65m [yeah, i know that most households have a few peopple in them] into three groups:

A) people who didn't ever & won't ever get the opportunity to buy, with the state's help, an asset that'll super-duper inflate [i.e. a central london property via HTB] - there must be well north of 64m people in this group.

B1) people who had the opportunity but didn't take it.
B2) people who had the opportunity but sold up too soon.
B3) people who had the opportunity, held onto it, and are now quids in.

this guy was exceptionally lucky to be in group B. he was born at just the right time [say between about 1945 and 1965] and in just the right place [a part of London that was destined for super-gentrification].

you could argue that his being specifically in group B3 rather than B2 or B1 represents judgement rather than luck but being in B per se, nah, pure 100% lottery.

caronoel

princeofpounds wrote: »

Property is one of the few asset classes where the man on the street has access to eye-watering amounts of leverage. Add that to a bull market cycle (particularly one of unprecedented proportions in this country) and you are going to end up with many accidental millionaires.

And good luck to the risk takers, I say

:beer:

As the OP's envy of his binman shows, fortune favours the brave

ukcarper

the_flying_pig wrote: »

i've no idea what point you're making [or thought i was making in the earlier post], but as to whether he was lucky or not in benefiting from this opportunity, i suppose you could, crudely divide the UK population of c. 65m [yeah, i know that most households have a few peopple in them] into three groups:

A) people who didn't ever & won't ever get the opportunity to buy, with the state's help, an asset that'll super-duper inflate [i.e. a central london property via HTB] - there must be well north of 64m people in this group.

B1) people who had the opportunity but didn't take it.
B2) people who had the opportunity but sold up too soon.
B3) people who had the opportunity, held onto it, and are now quids in.

this guy was exceptionally lucky to be in group B. he was born at just the right time [say between about 1945 and 1965] and in just the right place [a part of London that was destined for super-gentrification].

you could argue that his being specifically in group B3 rather than B2 or B1 represents judgement rather than luck but being in B per se, nah, pure 100% lottery.

In real terms prices were very similar in the early 70s late 80s and mid 90s so you could argue that the people who have benefited the most are those that already own or were in a position to buy in the mid 90s. Also remember earnings have also outstripped inflation over that period.

Graham_Devon

caronoel wrote: »

And good luck to the risk takers, I say

:beer:

As the OP's envy of his binman shows, fortune favours the brave

Just for the record. Firstly I'm not "envious". I just thought it an interesting scenario.... one which can possibly never happen again.

Secondly, to be trying to make out this is some kind of heroism or bravery scenario is utterly ridiculous.

caronoel

Graham_Devon wrote: »

Just for the record. Firstly I'm not "envious". I just thought it an interesting scenario.... one which can possibly never happen again.

Secondly, to be trying to make out this is some kind of heroism or bravery scenario is utterly ridiculous.

It's very obvious that you are envious of this guy's good fortune and foresight in investing in his own home when he had the opportunity. Why else would you raise it?

As for bravery - if what he did was so easy, why don't you do it too, rather than coming on here complaining about how unfair life is?