BCR approaching 100%

System

mayonnaise wrote: »

It's a hypothetical person who bought in Dalry in 2015.
I assume Dalry prices are flat or down, so this hypothetical person is the perfect illustration of how it makes sense not to buy in '98 and live until your 50's in HMO's, bedsits and flatshares.

That hypothetical person must feel really silly that they are around £5k down rather than £100k.

dktreesea

westernpromise wrote: »

I can remember the 1989-95 price crash and it was, frankly, horrific. It was the calibrating experience of my life. To this day, I use it to measure what economic despair without end in sight feels like. Whenever things have felt really bad moneywise, I have always been able to cheer myself up these last 25 years by asking myself, Are things as bad as 1990? and the answer has always been Nowhere near. I've spent the last 20 years insulating myself financially from having to care about another such episode.

The idea that millions of people stranded in negative equity and unabel to move for 10 years will somehow mean "flats and houses start changing hands more frequently again" is one so Corbynesque, so naive, that one doesn't really know where to start. The two really nasty shocks awaiting crash trolls, though, are when their rent goes up because renting's suddenly become desirable, and when their purchasing power - even if they keep their job - falls by more than house prices do, making houses less affordable after the crash than they were before. They tend to go into denial when either of these awkward facts is pointed out.

Crashy's BCR is above 100%, so of course he has to tell himself he doesn't want to buy. He needs the house to be free, with a pile of cash thrown in, in order for his decison to rent to pay off. And it is all about pay off, and it is all about other people's money, otherwise he wouldn't care what other people's house prices do.

This is two simplistic. there are, imho, two groups of renters, one enjoying a sizable subsidy from the tax payer and the other earning too much to get any subsidy.


For the first group, taking their £15,999 or whatever they are allowed to have in capital to maintain their benefits and using it as a house deposit may not be a good idea financially. Unless they buy a place which only has a mortgage equal or near enough to the portion of the rent they have to pay. Even then, they are buying themselves a huge headache cash flow wise. Houses have a way of absorbing money for the duration, until you sell them off, at which point hopefully you will recover those maintenance charges.


The other group, shelling out full on rent (so £1,100 for a renovated two bedroom flat in my neck of the woods) are completely nuts, should save like mad, buy a house even if it is just outside the city limits (so still only 7 to 10 miles from town with excellent transport links) and at least get some capital appreciation in exchange for their £1,100 a month. For that group, rent really is dead money. £1,100 monthly would get a £230k mortgage at 4% over 30 years. With a £50k deposit, that's enough to buy something pretty nice even within Edinburgh, let alone on the outskirts.

westernpromise

Joeskeppi wrote: »

That hypothetical person must feel really silly that they are around £5k down rather than £100k.

They've also got a huge but depleting mortgage balance hanging over them, unlike renters who only have a much huger amount of future rent to pay. Which is obviously better.

Conrad

mwpt wrote: »

Same behaviour in conspiracy theorists. The seductive power they feel from knowing something that the "sheeple do not know makes them superior. But deep down they realise their theories are void of evidence and most likely devoid of truth, so they need to vocalise them, as self reinforcement, in a certain style and manner that allows them to avoid being drawn into rational debate.

The original English Puritans were motivated by a sense of all consuming pious superiority, portending the day of judgement and it's consequences for those that had strayed from truth and wisdom.


I'd suggest it's an evolutionary survival imperative. Every tribe might sometimes benefit from those that endlessly warned of wolves over the hill.

Crashy_Time

mayonnaise wrote: »

It's a hypothetical person who bought in Dalry in 2015.
I assume Dalry prices are flat or down, so this hypothetical person is the perfect illustration of how it makes sense not to buy in '98 and live until your 50's in HMO's, bedsits and flatshares.

Didn`t you read the thread?

Crashy_Time

Conrad wrote: »

The original English Puritans were motivated by a sense of all consuming pious superiority, portending the day of judgement and it's consequences for those that had strayed from truth and wisdom.


I'd suggest it's an evolutionary survival imperative. Every tribe might sometimes benefit from those that endlessly warned of wolves over the hill.

http://news.sky.com/story/1666305/bank-of-england-set-for-new-buy-to-let-powers




WOLF! :rotfl:

chucknorris

Crashy_Time wrote: »

http://news.sky.com/story/1666305/bank-of-england-set-for-new-buy-to-let-powers




WOLF! :rotfl:

Sounds like excellent news (if anything comes of it) for those that have invested already, it is a pity that I'm getting out of the market soon.

EDIT: Although I suspect that the newly introduced restriction of mortgage tax relief rules, would tend to reduce the number of higher LTV loans anyway.

westernpromise

chucknorris wrote: »

Sounds like excellent news (if anything comes of it) for those that have invested already.

Indeed. The aim seems to be to squeeze out most new entrants and existing large amateurs. I don't know why they don't just ban BTL loans altogether. It is all making existing unleveraged holdings a lot more valuable though.

mwpt

chucknorris wrote: »

Sounds like excellent news (if anything comes of it) for those that have invested already, it is a pity that I'm getting out of the market soon.

Everything seems to be excellent news for landlords. I don't think I've seen a single item posted here that hasn't been framed as such.

westernpromise

Meanwhile, more bad news for tenants:

http://www.propertytribes.com/recycled-new-scheme-from-experian-t-127624349.html

A Credit Ladder spokesman said: “There are millions of private renters who pay their rent on time each month but don’t get the recognition they deserve on their credit report.”

In essence, what Experian are trying to say here is that by not having your rent registered alongside your credit report that it will now be detrimental to your credit score.

Between this and Osborne's squeeze on rental supply, it's not looking like a good time to be a renter.