How there haven't been more riots yet I don't know

System

Yeah. I'm not sure that people who are annoyed that they can't buy hundreds of thousands of pounds worth of flat in central london are the same demographic that tend to riot.

Private_Church

lisyloo wrote: »

Theres quite a bit of difference between a run down badly designed flat in a social tenant block and a newly designed, brand new luxury flat in a prestigious area.

I can guarantee both will be poorly constructed. The difference being gullible numpties will pay through the nose for a poor quality product.

lisyloo

Private_Church wrote: »

I can guarantee both will be poorly constructed. The difference being gullible numpties will pay through the nose for a poor quality product.

That may Be true.
Doesn't alter the fact that one is quite undesireable and the other highly desireable to a lot of people.

Windofchange

Joeskeppi wrote: »

Yeah. I'm not sure that people who are annoyed that they can't buy hundreds of thousands of pounds worth of flat in central london are the same demographic that tend to riot.

But that isn't what I am saying. I am saying it is those who have been compulsory purchased out of their homes who might be a little annoyed. The people who have been forced out of neighbourhoods are exactly those who may well be inclined to riot.

Look at it this way. Someone turns up on your doorstep tomorrow and orders you out of your home. You'll just say yup, off I go? Rubbish. You'll be livid. Someone then gives you a quarter market value. You think you'll be out celebrating? Now, you may not be out robbing the local Curries but that is because you have consequences. What if you are jobless and living off benefits?

economic

Windofchange wrote: »

But that isn't what I am saying. I am saying it is those who have been compulsory purchased out of their homes who might be a little annoyed. The people who have been forced out of neighbourhoods are exactly those who may well be inclined to riot.

Look at it this way. Someone turns up on your doorstep tomorrow and orders you out of your home. You'll just say yup, off I go? Rubbish. You'll be livid. Someone then gives you a quarter market value. You think you'll be out celebrating? Now, you may not be out robbing the local Curries but that is because you have consequences. What if you are jobless and living off benefits?

If you were jobless and living off benefits then of course you should be kicked out of your home that you didn't pay for!!!

Cornucopia

Windofchange wrote: »

Look at it this way. Someone turns up on your doorstep tomorrow and orders you out of your home. You'll just say yup, off I go? Rubbish. You'll be livid. Someone then gives you a quarter market value. You think you'll be out celebrating? Now, you may not be out robbing the local Curries but that is because you have consequences. What if you are jobless and living off benefits?

There is a whole lot of very questionable detail behind what you're saying there.

For a start, £320k for a one-bedroom flat was never a realistic value on the Heygate Estate. In that area (as is the case throughout London and probably elsewhere) ex-public housing has always carried a discounted value. At the time that we are talking about, a realistic value will have been £200-225k depending on size, condition and location on the estate.

I also feel the need to draw your attention to the weasel-wording of the article. In some areas, it talks about "offers", and in some areas it talks about sums paid. Your £80k is one of those offers. Perhaps the eventual payment was more than that. Perhaps the flat was worth £200K, the RTB incentive was £105k, and the owner eventually accepted £95k?

The nature of what is happening around London Z1 & 2 is that fashions have changed (and there is now a desire to live there long-term that wasn't there 30 years ago). There is also an issue with large run-down public housing estates that have been partially RTB'd leaving a mixed set of tenancy types and a long-term maintenance issue.

Either way, these areas have always had transient populations - the whole point was that the people who had reached a certain age and wealth would move out to leafier suburbs. Fashion, long working-hours and the costs of public transport and better schools have mitigated against that flow, with consequent high demand for good Z1/2 property and lower demand in outer areas with inevitable effects on the local communities there.

Even the issue about marketing the Elephant Park flats overseas is not quite right. The developers want to sell all the properties as quickly as possible, for the highest possible price, with the lowest marketing costs and the least risk of sales falling through. If that can be achieved by establishing their marketing operation overseas, then that is what they will do. UK buyers will not have an issue until every developer does that, and every estate agent (which seems wholly unlikely).

The only issue is that it might be embarrassing for Southwark Council, though they don't seem too perturbed by it.

westernpromise

The flaw in the thinking around housing is that there is some sort of shortage of it. I honestly don't see this. Even in London, none of the usual evidence of housing shortage is to be seen. We aren't seeing a huge increase in people sleeping on the street. We aren't reading constant horror stories of scores of people crammed into tiny properties. Yes, we do hear about houses in Hounslow with 30 people living in them but they're always illegally let and the occupants are illegals too.

All that has happened in London is what you'd expect to happen. Here's a thought experiment: what would happen to house prices in a market of 100 houses if you doubled everyone's income? How about if you doubled the income of only 10 per cent of those people? And how about if only one house trsded every other year?

It's commonly said that more housing is needed, but I am not sure this is true. If therr were more it would cost the same as all the rest, and there is no shortage. The issue is that it's expensive, which is the consequence of many factors but undersupply isn't one of them. It's just that the demand side is getting richer.

Windofchange

westernpromise wrote: »

The flaw in the thinking around housing is that there is some sort of shortage of it. I honestly don't see this. Even in London, none of the usual evidence of housing shortage is to be seen. We aren't seeing a huge increase in people sleeping on the street. We aren't reading constant horror stories of scores of people crammed into tiny properties. Yes, we do hear about houses in Hounslow with 30 people living in them but they're always illegally let and the occupants are illegals too.

All that has happened in London is what you'd expect to happen. Here's a thought experiment: what would happen to house prices in a market of 100 houses if you doubled everyone's income? How about if you doubled the income of only 10 per cent of those people? And how about if only one house trsded every other year?

It's commonly said that more housing is needed, but I am not sure this is true. If therr were more it would cost the same as all the rest, and there is no shortage. The issue is that it's expensive, which is the consequence of many factors but undersupply isn't one of them. It's just that the demand side is getting richer.

Yup, this is pretty much what I said in another thread - there isn't a housing shortage, there is a shortage of affordable housing. The demand side is getting richer because of lax lending criteria and incredibly cheap credit. There will be some who have 500k in cash, but I would say they are not the majority.

I used an example of a couple of colleagues in the other thread. One has brought a 2 bed new build for somewhere around £550k with help to buy. If help to buy and emergency interest rates weren't available, would she have been able to borrow £500k? That's a huge sum of money for a 25 year old. She earns in the region of £35k a year, so she certainly wouldn't fit 4 x salary requirements.

At the moment, high prices are supported by cheap credit. Same with new cars - lots of cheap PCP deals around. Same with loans and credit cards - lots of cheap money around. As soon as this starts to change then a lot of people will be in a lot of bother. Not everyone, but certainly enough to cause a substantial ripple.

Windofchange

Cornucopia wrote: »

There is a whole lot of very questionable detail behind what you're saying there.

For a start, £320k for a one-bedroom flat was never a realistic value on the Heygate Estate. In that area (as is the case throughout London and probably elsewhere) ex-public housing has always carried a discounted value. At the time that we are talking about, a realistic value will have been £200-225k depending on size, condition and location on the estate.

I also feel the need to draw your attention to the weasel-wording of the article. In some areas, it talks about "offers", and in some areas it talks about sums paid. Your £80k is one of those offers. Perhaps the eventual payment was more than that. Perhaps the flat was worth £200K, the RTB incentive was £105k, and the owner eventually accepted £95k?

The nature of what is happening around London Z1 & 2 is that fashions have changed (and there is now a desire to live there long-term that wasn't there 30 years ago). There is also an issue with large run-down public housing estates that have been partially RTB'd leaving a mixed set of tenancy types and a long-term maintenance issue.

Either way, these areas have always had transient populations - the whole point was that the people who had reached a certain age and wealth would move out to leafier suburbs. Fashion, long working-hours and the costs of public transport and better schools have mitigated against that flow, with consequent high demand for good Z1/2 property and lower demand in outer areas with inevitable effects on the local communities there.

Even the issue about marketing the Elephant Park flats overseas is not quite right. The developers want to sell all the properties as quickly as possible, for the highest possible price, with the lowest marketing costs and the least risk of sales falling through. If that can be achieved by establishing their marketing operation overseas, then that is what they will do. UK buyers will not have an issue until every developer does that, and every estate agent (which seems wholly unlikely).

The only issue is that it might be embarrassing for Southwark Council, though they don't seem too perturbed by it.

So, I can accept some of those points, but not all. The way right to buy works as far as I can see is that if you sell there is a sliding scale of repayment. If you sell in the first year, you repay 100% of the discount and this decreases by 20% each year until after the 5th year there is no repayment. So, if the tenants had lived there for more than 5 years after buying then they would have been entitled to the full amount. The has not happened for any of them it would appear.

Maybe these particular flats weren't worth 300k, but I can certainly find you examples of zone 1 / 2 ex council flats in run down areas that are going for these sums. There's a studio for sale near me on an estate with all sorts of problems for £220k. It looks like someone's gran died there and her corpse is probably still under the sofa it is that grim.

As for marketing abroad, fine, but would you concede that putting the flats up for sale 2 years before UK buyers have access to them is a bit shady to say the least? Given the gloss about regeneration and creating a new community in London, it seems disingenuous to me that you sell the lot to foreign companies to use as investment vehicles. Wonder how many of these will be rented, and how many will sit empty with the lights out?

Cornucopia

Windofchange wrote: »

So, I can accept some of those points, but not all. The way right to buy works as far as I can see is that if you sell there is a sliding scale of repayment. If you sell in the first year, you repay 100% of the discount and this decreases by 20% each year until after the 5th year there is no repayment. So, if the tenants had lived there for more than 5 years after buying then they would have been entitled to the full amount. The has not happened for any of them it would appear.

We simply don't have that detail.

Maybe these particular flats weren't worth 300k, but I can certainly find you examples of zone 1 / 2 ex council flats in run down areas that are going for these sums. There's a studio for sale near me on an estate with all sorts of problems for £220k. It looks like someone's gran died there and her corpse is probably still under the sofa it is that grim.

£220k now, is not £220k 2-3 years ago.

As for marketing abroad, fine, but would you concede that putting the flats up for sale 2 years before UK buyers have access to them is a bit shady to say the least?

In what way "shady"? I can see that marketing them abroad is politically embarrassing, but shady is stretching the point, I think.

Wonder how many of these will be rented, and how many will sit empty with the lights out?

No idea. As a Landlord, it makes no sense to me to keep property empty, but other people's mileage may vary.