The Next Nail in the Coffin

cells

Jason74 wrote: »

This is of course not what I said at all. you have (probably rightly) picked up on the idea that there is a mismatch between how potential owner occupiers can fund purchases relative to how potential BTL purchasers, and that this mismatch is driving the move from owners to renters.

However, you appear to take the view that the only way to solve this mismatch is to loosen lending for owner occupiers until the gap disappears. This is simply not the case. You can equally address the mismatch by effectively dampening BTL demand through tax and regulation. The last three budgets have all announced measures that could be seen as a start on this journey, and the idea of more regulation of BTL mortgages continues the process.

Whether the above will dampen BTL demand enough to level the playing field is doubtful, and imho there is likely be a limit to how far Government and regulators will go to do so. But to suggest that it isn't at least possible to reduce the attractiveness of BTL to the point where landlords are effectively dissuaded from entering the market is simply wrong.

you may be right but I simply dont see how you can take renters living at 30 sqm per head and turn them into owners at 40 sqm per head without building 10 sqm of new floorspace

No amount of anything gets around that math.

Even if you literally made BTL illegal and put into place a law which said all landlords must sell within 10 years or the penalty is death the equation says its not possible.

The landlords would sell for fear of the death penalty but we would find ten million renters currently occupying 300 million square meters become 7.5 million renters occupying 300 million square meters. So you would be left with 2.5 million current renters with no where to go. There are no rentals for them to go to. All the owner and social stock is full. its literally under a park bench for them (or if they have the option, its moving back in with mom and pop forever.

cells

chucknorris wrote: »

That simply isn't true, variable mortgage rates won't be that much higher when the base rate reaches 2.5% (certainly not 2% higher than they are now) but mine will, because I am only paying an additional 0.5% over base the base rate.

If you do a search for variable mortgages (ignoring a period discount rate) based on a £500k property with an 85% loan:

http://moneyfacts.co.uk/mortgages/mortgage-calculator/

You will find that current variable mortgage rates have a margin of about 3.6% (ignoring an introductory discount). Lenders are now charging decent margins over the 0.5% base rate to protect themselves, those margins would not be maintained as the base rate rises.

at low base rates the depositors of all the banks are like very good MSEs. Even if they dont bother looking for a good savings rate or even if they keep their money in a zero rate account they are not doing too bad they get just 0.5% less than the base rate.

If the base rate goes up to say 3% then a lot of lazy or silly depositors still stay with 0% rate accounts or poor low rate savings accounts. This means although the base rate has gone up the banks borrowing costs not so much

So at higher BOE rates the banks can offer lower spreads between BOE and mortgage rates and still maintain their internal margins

So lazy depositors is why when rates do go up, mortgage rates wont go up as much

cells

padington wrote: »

What's busted about London being the worlds favourite capital city once again? It's a bloody spectacular success. An all out royal straight flush.

Literally.

As the world gets richer capital grows and capital and asset managers will earn more. As the world gets richer they will consume more software more film more advertising more fashion and they will want to travail the world more and visit tourist locations and spend lots of money all of which will benefit London and none of which will benefit stoke-on-trent.

London has already gone from 20% of the UK economy to 30%. If it goes from 30% to 40% what will London be like? Not cheap that is for sure!

The people of the UK should realise this and support and encourage it as the taxes paid in London will make life better in stoke. We will see more inequality but of the good type the type where everyone gets richer because a few billionaires and lots of millionaires move into town.


Political and tax policies should not strangle the golden egg laying goose.
The stamp duty is one potential noose around its neck. If a multimillionaire decides paying £1.5 million in stamp taxes to buy a home in London is silly and they decide to go to NY or Dubai or HK or elsewhere we will lose out in the short medium and long term.

westernpromise

economic wrote: »

yeh screw it, im buying. need a place to live and i can see myself living in highgate for a very very long time.

Very few people can ever have regretted buying in Highgate.

westernpromise

Crashy_Time wrote: »

Not so sure about that, he seems to have bought some BTL`s in the 90`s and rode the recent credit boom to the point where he can`t really decide what to do from one day to the next, stay in, cash out, stay in, cash out, depends on this depends on that etc. Hardly Warren Buffet like timing skills IMO (No offence Chuck) My opinion is that he hit the Mother lode kind of by accident but somewhere along the way got gold fever, he thinks the mine might keep producing, but I think he should get out before all the other little "market timers" start to doubt their own financial genius.


Of course if there is some posted evidence of his real market timing genius that I have missed I will take all that back...:rotfl:

And still the advice on "timing" keeps coming, from the man with a BCR of 125%.

Prices need to fall by 125% for you to approach looking smart Crashy. And the NPV of your unfunded future rent is £115k, at the end of which you'll own nothing.

Think about that.

economic

yeh i think its a good move even with the high prices.

im glad to have sold my kilburn flat.

chucknorris

economic wrote: »

i think theres a lot of luck involved with what Chuck did. nothing smart about buying properties to let at the start and during the biggest real estate boom in uk modern history.

There is luck involved in just about every success story, but it isn't as if I found the properties under a bush is it? I bought them in the early 90's when people were posting keys back through estate agents letterboxes, and most of my work colleagues (fellow chartered surveyors) were saying that I was mad for investing in property against the tide of sentiment.

economic

yes but i think the true test is when it comes time to sell.

chucknorris

Crashy_Time wrote: »

where he can`t really decide what to do from one day to the next, stay in, cash out, stay in, cash out, depends on this depends on that etc.

What are you talking about, I have been saying for ages that I will sell when the base rate gets to around 2% to 2.5%. It all depends on the income profitability rather than capital values, no one can calculate what will happen with capital values, but the income from property versus shares is easily calculable. But it is no surprise to me that you don't understand the logic behind this reasoning.

Look at what I said here, it doesn't exactly look mlike uncertainty does it:

chucknorris wrote: »

I'm probably going to sell a few in 2-4 years, but I'll be in my early 60's then, and it was always part of my plan to start selling at about that age.

economic

when people talk about london prices falling or rising they really ar missing the fact that it is highly location dependent.

prices in different areas in london go up or down at different rates at any one time.

central prime london has now stagnated or is falling. inner london has cooled down and is flat lining. outer london is rising. this is all in general still.

my view is prices in inner london has now peaked in real terms. outer may peak this year soon.

so i dont think london is a good invesment anymore for property both short term and perhaps even long term (but who knows).