Babyboomers buying up property and renting back to the young

PasturesNew

Looking at Homes Under the Hammer there are more younger people buying/renting them out than boomers. Very few boomers are on there doing it.

Loughton_Monkey

wotsthat wrote: »

What seems odd to me is the amount of effort being put into 'proving' such an economic shift has taken place rather than reacting to it. There are numerous threads where someone will moan loudly about houses being more expensive that they used to be but still think they should be able to swan out of school with no qualifications 'like their dad did' and buy a house.

If the housing market has changed then, to buy a house, behaviours need to change too. This suggestion seems to cause great offence and I've no idea why.

A candidate for post of the month!

Slightly more diplomatic than some of my own posts.

I cannot stress more strongly that the economic climate goes in cycles and us 'oldies' have seen and experienced most of them.

Starting economic life on the top floor of a dusky 1930's house in the form of a 1-bed furnished flat, we did not need to be Einstein to work out that (a) houses were a brilliant investment, (b) were very expensive and rising by the hour, and (c) that investing 25% of our income in buying a property rather than spending 30% of our income on renting a house (as opposed to a cheap flat) made economic sense.

I would have liked a three bed semi or even detached. I would have liked a car. But all we could buy was a 2½-bed mid terrace in a very cheap area of Nottingham. That's all we could get. If I could only have got a 1 bed flat, then that's what we would have bought. No car for another 7 or 8 years!

When we moved to London, we had built up a modicum of equity, and I would have liked to have bought closer to work. But we couldn't and so lived in the A[5e end of Romford (Rainham) breathing in the fumes of the A13.

OK, a bit of commuting, but London wages, London HPI, but 'affordable' housing. Same can be said of today (almost) but maybe in today's climate people have to compromise just an inch or two more.

We didn't have the Internet in those days over which to compare notes, whinge, complain, or share ideas. We just used common sense and got on with it.

Graham_Devon

Loughton_Monkey wrote: »

We didn't have the Internet in those days over which to compare notes, whinge, complain, or share ideas. .

Making up for it now though...

Loughton_Monkey

Graham_Devon wrote: »

Making up for it now though...

:T

.... large gin & tonics all round.... :rotfl:

MrRee_2

Whatever is happening it is basic economics.

Take a 60 year old who is retiring today on a Pension of £25,000 a year and a lump sum of £150,000. What does that pensioner do with the £150,000? Bearing in mind that they will have savings amounting to at least that amount anyway.

They stick it in the Bank at 1.5%?

Or do they buy a nice 2 bedroom semi for £175,000 and rent it out at a 7% yield?

Of course, they buy and let ..... only a mad person would do anything else! They receive a decent income at a time they are expected to live on £25,000 - and, they see their capital grow faster than any other risk free investment could ever hope to!

The oldies are not 'stealing' properties from the young - they are just putting our money into an investment vehicle which is proven.

Now, hike Interest Rates up to 6% and then the swings will change into roundabouts. The oldies will sell up their properties and bank the money. Property will drop in value and the young will mop up.

Until that day comes, the boomers will continue to buy property to let ................ and absolutely no-one can dispute their wisdom in doing it.

lisyloo

The only issue with is that a £25k pension requires a £500k pot and that's without the lump sum.
The average pot is currently £36k not £500k.
Annuity rates might vary slightly but those are facts.

MrRee_2

Final Salary Pension pots where I am working are around the £600k ... and are delivering £28k a year (average final salary of £56k).

Of course, 25% can be taken as a tax free lump sum - that's £150,000 ..... enough to very nearly buy a small 2 bed semi for the rental market.

To do anything else with that lump sum would strike me as folly.

lisyloo

As I said, a long way from the average although I don't doubt it will work for some.
Median salary putside london is £27k - fact.

Personally I can't think of anything worse than being a landlord especially when retired. It's risky and it's work.
To call anyone else's choices that are different to yours as "folly" is arrogant.
One could say it's folly to take on a big risk in one property and a part time job when you could get the same returns in equities with much greater diversity, liquidity and zero work, however I would never be so arrogant sd to knock other people's choices which may be perfectly valid for their circumstances and willingness to take risk.

Are you assuming all 60 year olds are active, handy and healthy?

Also what makes you think most of the population are savvy with money when ther's plenty of evidence to the contrary (wonga as an example)

Loughton_Monkey

MrRee wrote: »

Final Salary Pension pots where I am working are around the £600k ... and are delivering £28k a year (average final salary of £56k)...

It has, for some while, been quite unusual for individuals to retire with full 40 years service in the same FS pension scheme.

I was not untypical (I think) in having periods of service of 9 year, 6 years, and another 6 years for my first 3 employers - all with FS. Had I been like 'most' people, and left it like that, the combination of those three FS pensions would be little more than 21 years' GMP. I was canny enough to make transferring 'back years' a condition of each move. Even then, my 21/60th FS pension is 'useful' and not to be sneezed at, but only a small proportion of total income.

MrRee wrote: »

Whatever is happening it is basic economics.

Take a 60 year old who is retiring today on a Pension of £25,000 a year and a lump sum of £150,000. What does that pensioner do with the £150,000? Bearing in mind that they will have savings amounting to at least that amount anyway.

They stick it in the Bank at 1.5%?

Or do they buy a nice 2 bedroom semi for £175,000 and rent it out at a 7% yield?

Of course, they buy and let ..... only a mad person would do anything else! ..

I was very much in this position, albeit larger figures, but buying a BTL was the furthest thing from my mind. I can get 7% yield than you very much by shielding it in tax efficient ISA's and pensions. Plus (unlike a BTL) I can more easily 'time' the income and tax treatment of it - using my wife - and don't have the hassle of 'managing' an extra property.

It certainly seems to be the 'buzzword' in the blue-rinse brigade to use the new pension freedom to buy a BTL which they seem to think will make them 'loadsamoney'. Just like they did in the 90's when they thought the Spanish Villa would do the same trick. It will surely come to grief before long.

I'm not sure some of these people understand the rules. They want their tax free lump sum for a cruise or whatever, and seem to think they can draw down the rest of the pot and bang it in the BTL. They fail to note the 40% or more tax rate on the drawdown and up to 28% CGT when they sell.

Graham_Devon

purch wrote: »

It's Deja-Vu all over again :eek:

If in doubt, repeat same thread with different title ad nauseum

Thankfully, I'm not in doubt

Just posting up the issues which some seem to be doing their very best to suggest do not exist.

To be fair, it's quite a charitable deed. I mean, why sit back and let people assume something doesn't exist, when quite clearly, it does..it's so easy to help out and point them in the direction of reality...