BoE's ability to kill the housing market

MARTYM8`

mark5 wrote: »

Zoopla is way out where I live, always has been and probably always will be. I think anyone who looks at rightmove regularly and checks the sold prices can value most houses in their local area pretty accurately.

Surely the introduction of the 3% rate for investors and 2nd home buyers will cool the market by reducing the amount of buyers, it seems a good way of controlling house prices without increasing interest rates. It would be nice to see it go further.

Zoopla reflects asking prices of course - often based on estate agent speculation.

In some areas properties will go for way above - some way below.

Samsonite1

mark5 wrote: »

Zoopla is way out where I live, always has been and probably always will be. I think anyone who looks at rightmove regularly and checks the sold prices can value most houses in their local area pretty accurately.

Surely the introduction of the 3% rate for investors and 2nd home buyers will cool the market by reducing the amount of buyers, it seems a good way of controlling house prices without increasing interest rates. It would be nice to see it go further.

The market should cool after April, but there is a mad rush for second property buyers to avoid the extra stamp duty and so they are offering more to push the deal through quickly. Kind of daft because if they pay more than the 3% increase then they have not gained much!

Not sure how much the market will cool though because investors will not be too bothered by the stamp duty, more of an annoyance. It will hit people who want a second property, but the investors (what I call people owning many properties) will simply be able to buy these houses instead.

buglawton

Was reading an article about 'Singapore-on-Thames' in today's Sunday Times. Prices down, demand very seriously down. Osborne's Mansion Tax and Asian financial bad news perfect storm blamed. The author made a good case that the market for flats over £700k in London is a now a dead duck. Good analysis too of what, in central London new build, is/isn't still worth buying.

Rich2808

buglawton wrote: »

Was reading an article about 'Singapore-on-Thames' in today's Sunday Times. Prices down, demand very seriously down. Osborne's Mansion Tax and Asian financial bad news perfect storm blamed. The author made a good case that the market for flats over £700k in London is a now a dead duck. Good analysis too of what, in central London new build, is/isn't still worth buying.

The issue is London is not Singapore. In Singapore most live in high rise blocks - solid community spirit, anti social behaviour not tolerated, everyone pays their own way.

Londoners historically have an aversion to living in high rise blocks - they want to live in traditional low rise properties. And that is why these flats - and thousands and thousands are being built across London - May struggle. Clearly developers are getting concerned - hence the desperate 40 per cent help to buy equity loan. If it goes pear shaped the taxpayer takes the hit.

westernpromise

Actually, I wonder if this rush to buy at seemingly any price is a tax avoidance strategy by landlords.

If there is a place worth £350k and you pay £400k for it, you can then sell it on to a company - owned by yourself - shortly afterwards, at the lower, post-April, post-rush price; which might be the £350k to which its value shortly returns.

You as an individual would lose £50k on that sale, but if you also sell your 2 or 3 or 4 other properties into the same company at the same time, this loss probably cancels out your entire accumulated CGT bill to date. Then you’re ahead, because selling up and paying CGT is hard cash lost. Selling up, losing £50k to yourself but avoiding £50k in GCT is a transfer price book loss, which you’re on both sides of, and you still own the same properties at the same price.

That looks like quite a good trade to me: you flip all your properties into a company now, at the old SDLT rate. Before the CGT liability on those sales actually arises, you buy and sell on another property that reduces your CGT to nothing. You hence cease being an individual landlord, and become a corporate one, with your portfolio now sheltered from George’s tax raid.

There is a cash cost in the shape of the stamp duty you’ll pay doing this. So you do it before April to keep that down. Even the stamp duty cost isn’t fully real - for a house that’s worth £700k on which there’d be £20k stamp duty, you just sell it to yourself for £680k plus £20k stamp duty. CGT is levied on £680k rather than £700k, which lowers that bill, and the stamp duty is tax-deductible by the new company on disposal.

So what they’re paying up for is the ability to dodge a lot of CGT and to maintain the right to charge the whole mortgage off to tax. That’s worth a lot more than 3%.

londonTiger

the properties to buy are undervalued proerties with delapidated fittings, crappy boiler, radiators etc.

When people buy a house they will tend to remove all these baths and sinks and whatnot anwyay. Spend a tidy amount of money fitting their own stuff. So do away with this cost and buy a delapidated property without all that.

Pull out obselete radiators under windows that spend 50% of energy heating up windows and curtains and fit underfloor heating.

buglawton

Rich2808 wrote: »

The issue is London is not Singapore. In Singapore most live in high rise blocks - solid community spirit, anti social behaviour not tolerated, everyone pays their own way.

Londoners historically have an aversion to living in high rise blocks - they want to live in traditional low rise properties. And that is why these flats - and thousands and thousands are being built across London - May struggle. Clearly developers are getting concerned - hence the desperate 40 per cent help to buy equity loan. If it goes pear shaped the taxpayer takes the hit.

In the Far East, people consider themselves privileged to live in central high rises or even further out ones next to rail stations. Londons new normal is that Brits will have learned to love this way of living too.

londonTiger

Rich2808 wrote: »

The issue is London is not Singapore. In Singapore most live in high rise blocks - solid community spirit, anti social behaviour not tolerated, everyone pays their own way.

Londoners historically have an aversion to living in high rise blocks - they want to live in traditional low rise properties. And that is why these flats - and thousands and thousands are being built across London - May struggle. Clearly developers are getting concerned - hence the desperate 40 per cent help to buy equity loan. If it goes pear shaped the taxpayer takes the hit.

high rise buildings have been pretty common in he UK (look up brutalist architecture). They were used a lot in social housing and the prblem with them was that most of them were housed with low income people and the underclass who lived off benefits. There was a sense of dampness in the buildings, just looked dark and humid. Lifts smelt of urine and neighbours were always screaming at each other because the walls were so thin they could hear each others business.

They have been knocked down and made into more spacious apartments for working professional by private property developers.

padington

buglawton wrote: »

In the Far East, people consider themselves privileged to live in central high rises or even further out ones next to rail stations. Londons new normal is that Brits will have learned to love this way of living too.

A friend of our family always wanted to live in a high rise. Finally he managed to secure a decent sized flat with an amazing view. He didn't actually like it. The windows don't open properly. Getting anywhere requires a commute down the building before you start. Also people didn't become as good neighbours as they do when everyone can chat in the summer over the garden fence.

Saying that people near me pay 550k for a 2 bed flat new river mid rise that feels like it's part of an Eastern European block when they could get a sweet 2 bed cottage with nice garden. God knows why. Maybe they're mostly international students ?

mwpt

padington wrote: »

new river mid rise

What is a "new river" mid rise?