This could be a monster boom ...

lisyloo

didn't the MMR already have banks only give out mortgages that would be affordable at 8% so it wont matter if rates go up as the banks are already only giving out loans as if rates are that high now

For mortgages (where MMR applied) after April 2014, I agree.
I would guess that's a fairly small proportion? i.e. there's a lot more mortgages out there where MMR was not applied and few Carol Vorderman specials.

depends on what the alternative is

Absolutely. For me personally it's 40% tax reflief on my income and a diversified portfolio with no-one calling at 4am about a leak :-)
but generally I get your point - thanks.

buglawton

lisyloo wrote: »

Won't even small increases in interest rates make it increasingly unaffordable for buyers to buy.
BTL is now less attactive at todays prices (it doesn't stack up on some central London flat for income, only if there's capital gain).
So most BTLers and foreign investors are only getting in whilst there's capital gain.
I know there's a element of safe haven money but enough to keep the market going indefinitely?

When you buy anything in London that has 'visibility' to investors, you are not buying living space but a slot in the money park that is London property. To buy a property - i.e. to park your money there -, you need to put in a bid that's big enough to dislodge the current slot occupier. Nothing to do with somewhere to live or even return on investment any more. Surreal.

lisyloo

Anecdotally I'm being told that the chinese are buying property in Sydney, Vancouver, London, Manchester etc. so UK mortgage policy would be irrelevant.
That would explain our 2 tier housing market where many people outside major cities are not seeing gains at all.

Conrad

lisyloo wrote: »

Absolutely. For me personally it's 40% tax reflief on my income and a diversified portfolio with no-one calling at 4am about a leak :-)
but generally I get your point - thanks.

Bare in mind many LL's have had / do have pensions and ISA's, me included, but actually I found the thought of relying on 'bits of paper' in retirement too much to stomach. Imagine a truly long and deep recession / technical meltdown (induced by a solar flare for example), Spanish flu pandemic, those bits of paper shares in BT or whatever could become worthless whereas real people will always need shelter. I could envisage a pension fund in extremis vastly cutting back the incomes paid out saying it's for the good of the fund as a whole. American Banks and others went pop last time, imagine a depression twice as bad where it all went wrong.


Even back in grim medieval times people still found the rent. It's so much more real than the floating notional value of bits of paper.

lisyloo

those bits of paper shares in BT or whatever could become worthless

Individual companies can become worthless even in good times as can individual homes (there's 1 or 2 in St Albans near sink holes that might lose their entire value).
One benefit of funds (including cash, bonds, gilts, property and equities) is the ability to diversify across hundreds or thousands of investments as opposed to 1 or 2 properties.

I could envisage a pension fund in extremis vastly cutting back the incomes paid out

Currently there are no restrictions after age 55.
Obviously in practice we will choose to be savvy about the tax rules, so in practice there are restrictions - just like there would be liquidating an asset such as a property with tenants.
Government rules can of course change - as they can with housing and a very good example is tax change to amateur BTL.

It's so much more real than the floating notional value of bits of paper.

Are you confusing equities with a pension wrapper?
The underlying investments can be invested in whatever I choose including property funds.

The safest bet I think is not to rely on one asset type for your retirement and have equities, property and cash.
I think we agree on that even if we might choose different allocations.

buglawton

lisyloo wrote: »

Anecdotally I'm being told that the chinese are buying property in Sydney, Vancouver, London, Manchester etc. so UK mortgage policy would be irrelevant.
That would explain our 2 tier housing market where many people outside major cities are not seeing gains at all.

Only anecdotally?

I could post a list of the Asian websites where the UK developers are actively promoting the sale of off-plan property with dates set for the marketing open days in Singapore or HK. Actually, a UK property developer would not be doing 'due diligence' for his backers if he didn't do this. Though to be fair, many developments would not have been built in the first place without the off-plan money stream existing.

wotsthat

Conrad wrote: »

Bare in mind many LL's have had / do have pensions and ISA's, me included, but actually I found the thought of relying on 'bits of paper' in retirement too much to stomach. Imagine a truly long and deep recession / technical meltdown (induced by a solar flare for example), Spanish flu pandemic, those bits of paper shares in BT or whatever could become worthless whereas real people will always need shelter. I could envisage a pension fund in extremis vastly cutting back the incomes paid out saying it's for the good of the fund as a whole. American Banks and others went pop last time, imagine a depression twice as bad where it all went wrong.

Your current income is 100% reliant on the UK housing market and 100% of your retirement planning will be reliant on the UK housing market.

You might not be the best person to explain the risks of owning companies.

lisyloo

You might not be the best person to explain the risks of owning companies.

Or even understand that a pension wrapper does not necessarily equal investment in companies.

cells

wotsthat wrote: »

Your current income is 100% reliant on the UK housing market and 100% of your retirement planning will be reliant on the UK housing market.

You might not be the best person to explain the risks of owning companies.

that is so silly

the only time house prices fall is in a recession and then not by much

equities lost what 50% in the recession while house prices went down ~15%. Equities have recovered to what they were at and house prices in London are twice what they were in 07

lisyloo

the only time house prices fall is in a recession and then not by much

Unless of course a sink hole opens up - Oh don't be so silly, that could never happen, there's ZERO risk with property.
Your retirement fund in property could NEVER just fall down a hole.