The Next Nail in the Coffin

economic

it feels like a buyers market to me. only reason prices havent fallen is that theres not much stock available.

MARTYM8`

In the end who else are landlords going to vote for - Corbyn with rent controls etc?

There are of course far more young people wanting to buy - with parents and grandparents who want them to be able to buy too.

There are far more votes to be gained from the latter than lost from the former.

economic

yes so i dont think politicians really care if prices fell a bit as long as it wasnt a complete crash.

MARTYM8`

westernpromise wrote: »

I thought this was interesting:

http://strategicsociety.org.uk/wp-content/uploads/2013/07/Lord-C-Lloyd-J-and-Barnes-M-2013-Understanding-Landlords.pdf

PRS Landlords have on average far higher financial assets than PRS Tenants. The median total financial assets of PRS Landlords are £20,500 compared to £398 for PRS Tenants.[/I]

Quite interesting really - the average tenant who can't afford to buy can't do so because he is younger than his landlord, earns less, hasn't saved, is less well educated and has minimal assets. Put bluntly, the typical tenant isn't financially equipped to be an owner-occupier, for which he blames his landlord,

Yes - but in London the position is different. There are two types of renters - those on low incomes claiming housing benefit - and a lot of young professionals on (above) average salaries (£80k for a single person or couple) who simply can't stretch to paying £400,000 for a one bed flat as they haven't saved a £100,000 deposit. The deposit they need for a one bed flat is the same as the average London house price just 15 years ago.

Would be useful to see the figures excluding tenants on housing benefit.

Saying that £20,000 in savings isn't much when you think about it - do they have pensions or are their homes their pensions?:D

padington

economic wrote: »

it feels like a buyers market to me. only reason prices havent fallen is that theres not much stock available.

Central London now has an unusual tax burden which has netted less tax because of the increase in stamp duties among other things for prime properties. This should really be repealed because it was an inefficient tax but it bought votes and changing it may lose votes.

So we are stuck with it, however this two tier tax system made a massive incentive to buy normal family homes well under a million quid around the greater Londom area and further out.

In these places, house prices have got rockets strapped to them.

See my link in my signature.

Generali

padington wrote: »

Central London now has an unusual tax burden which has netted less tax because of the increase in stamp duties among other things for prime properties. This should really be repealed because it was an inefficient tax but it bought votes and changing it may lose votes.

So we are stuck with it, however this two tier tax system made a massive incentive to buy normal family homes well under a million quid around the greater Londom area and further out.

In these places, house prices have got rockets strapped to them.

See my link in my signature.

It's hard to think of a tax much worse than SDLT and tiering it has just made it even less efficient.

If the Government wants to tax expensive houses then put a tax on expensive houses not on the purchase of houses.

padington

economic wrote: »

yes so i dont think politicians really care if prices fell a bit as long as it wasnt a complete crash.

At a hustings in haringey last year Boris said 'house prices do need to come down by 20% but they just can't, it could be a complete disaster if they did'. At the time people didn't understand why Boris said this.

My macro take is this ...

Our banking system almost completely collapsed and required us to bail them out by a fortune. Therefore more equity which people have in their property ( see banks property here), safer the whole UK banking system is.

This is really important for us because the UK banking system is more central to our survival than the U.S. For example because we rely on it as a major industry.

This is the economic reason Osbourne is stating he is shafting mom and pop BTL landlords, because he (and the Bank of England) are making out the BTL heard could go in one direction when spooked by an interest rate rise and this could snowball to create a period of house price deflation and wipe out any equity made by all the governments crazy schemes (really they should be called 'help the banks' not 'help to buy').

To stop this from happening ( or to collect a ton of tax) he's trying to move all BTL properties into strong hands ( and tax those that refuse ) over the three year period and why so many mortgage tests to make sure your hands are strong.

This is bad for mom and pop landlord yields and will subsequently push rents up quite significantly in the South East. However the ultimate government concern is to continue allowing the banks to grow lots and lots of equity to make sure they are safe whilst maximising returns. It's the equivalent of burning tree's to protect the forest whilst selling the ash. I think it's actually very bullish for UK property because I do think Osbourne and the Bank of England genuinely see a crash as a concern and the end goal is to stop house price deflation ( not just making a ton of cash from tax by raising rents by proxy). It's an either / or thing. A win win.

Another key reason the government is on this mission is because they own two massive UK Banks and they want to sell them at a good profit. To do this they need the ballance sheets to look as good as possible.

It's possible once this sale has happened things might change a bit, they might toy with raising interest rates a bit more seriously. However until then, the name of the game is to keep the deflationary wolf from the door.

Don't get me wrong, the government doesn't like this situation and they know it's better that people create the next Facebook or 3d printer or food sauce or virtual reality app and to do this they need to move us away from pouring our excess cash into property and into innovation instead.

Steps are being taken to incentivise doing this but these ships turn slowly and right now the wind is still blowing furiously in the sails of normal priced property in the South east and for very good reason.

So in my mind this explains why Boris said a 20% crash could be a disaster. Saying that we've seen 10% South East HPI since then so perhaps we should take it that a 30% crash could be a disaster now.

You are probably right, the government probably wouldn't mind a 5% dip much as long as this didn't become a regular thing, however just like every football team likes scoring as many goals as possible, the government and the banks probably secretly pop a Champaign cork every time HPI swings in the right direction.

If they really cared about having enough housing or bringing down the cost of housing, they would have changed planning laws to help do just that a long long time ago.

If when news comes in that the banks are going to get sold and when many many spades hit the ground to build many many new houses or when over indebted nations declare that large interests should be paid on large debts or rent caps are a real possibility, then it may be time to sell.

In my opinion, Not before.

cells

landlords are a risk because when rates go up their costs will go up which might make them sell, so lets put their costs up via the tax system so they sell now to avoid the problem of landlords selling....oh wait!?

chucknorris

Crashy_Time wrote: »

What I actually said was that FTB`ers won`t be lining up to pay half a million for an ex-council flat in Battersea.

I don't particularly care if the eventual buyer is a FTB or not, here are 3 flats in the block that have already sold for around £500k (500k, 495k and 552k):

http://houseprices.landregistry.gov.uk/price-paid-record/19465395/flat+133+goulden+house+bullen+street+london+wandsw orth+sw11+3hq

http://houseprices.landregistry.gov.uk/price-paid-record/21176176/flat+84+goulden+house+bullen+street+london+wandswo rth+sw11+3hq

http://houseprices.landregistry.gov.uk/price-paid-record/19711635/flat+225+goulden+house+bullen+street+london+wandsw orth+sw11+3hq

padington

cells wrote: »

landlords are a risk because when rates go up their costs will go up which might make them sell, so lets put their costs up via the tax system so they sell now to avoid the problem of landlords selling....oh wait!?

i think it's a shrewd move. The big growing criticism was about a large BtL bubble the government was failing to address. That critism has now been removed by incrementally forcing BTL portfolio's to unwind over a period of years.

So now there is no fear in the market and the market is back to a bull market again really quickly because of the obvious supply and demand situation leaving just global share prices the problem holding back the bank sales and keeping the UK in strong situation.

BTL landlords don't really do badly out of it, as capital appreciation is still great but landlordss do move out of the industry slowly and go elsewhere, maybe to Peer peer lending etc so we start actually investing in our geeks and daughters rather than bricks and mortars.

The people that do get stuffed are the renters, this isn't ideal and has a number of consenquesces but the very people that get harmed by this policy, actually celebrate it causing no backlash or loss of votes.