Can you imagine the destruction in the UK if the property market crashed

Crashy_Time

Herzlos wrote: »

They may not be doing it individually, but they could easily be investing in UK based property management companies who'll buy up whatever stock they feel is worthwhile. If such things don't exist yet they will at some point.

1`m invested in UK based property management companies, still doesn`t mean the market can`t crash?

lisyloo

qwert_yuiop wrote: »

This does not make sense. A foreign investor would be gambling on some future recovery in the British economy and a rise in the value of the pound against their own currency. And of course the rent matters.

Why does gambling on sterling in a currency crisis not make sense to you?
This is what investors do, buy cheap.
Many property investors in London prefer to keep their properties empty although it is of course up to them.

lisyloo

Crashy_Time wrote: »

Lets hope increasing interest rates (they will increase due to currency crisis, no way the PTB will voluntarily raise) don`t increase those fees too much.

The thing is nobody can take away decades of mortgage free living.
That significant value is there whatever happens to the market.
This is why long term buying a home makes sense (I’m not referring to investments).

I’ve asked before but If you know another way of having a comfortable retirement apart from being mortgage free then let us know as we’re all ears.
Personally I don’t see how it’s possible as it’s quite hard to save for a comfortable retirement theses days (between £400k and £1million and personally I think £400k is pushing it) and those figures are without paying rent/mortgage.

Herzlos

To get an investment to do you if you aren't mortgage/rent free means you'll need something that's going to pay out an extra <rent payment> per month. Sounds like it'd be cheaper to just pay off a mortgage than get a mortgage sized multiple of the payments into a fund.

Crashy_Time wrote: »

1`m invested in UK based property management companies, still doesn`t mean the market can`t crash?

You'll make more money in a market crash if you can capitalize on it - buy the properties up cheaper (thus better yields and more equity when it recovers). A property crash caused by a recession, in combination with the £ dropping means UK property is extra cheap and for foreign investors it'll be a lot harder to lose money.

Malthusian

lisyloo wrote: »

Personally I don’t see how it’s possible as it’s quite hard to save for a comfortable retirement theses days (between £400k and £1million and personally I think £400k is pushing it) and those figures are without paying rent/mortgage.

Having between £16,000 and £40,000 of income (using þe olde 4% rule) plus State Pensions, so minimum £33,000 annual gross income for a couple, plus being rent-free, is a very demanding definition of "comfortable".

It is well above the median household income and the median household has rent to pay, children to raise, work-related costs, etc.

If your living standards are such that you need £33,000 gross annual income to live on, rent-free, or if you want to retire before late middle age (i.e. you have to wait for State Pensions), then it's a free country. But it's much higher than what the majority consider "comfortable".

lisyloo

so minimum £33,000

You've included max state pension.
Thats not the case for everyone.
Plus 4% is on the high side.



Most people discussing this (on the pension forums) are also looking to retire way before SPA, so for example 55 instead of 67.

But it's much higher than what the majority consider "comfortable".

These figures are taken from several threads on the pension forum.

Ok, so the pensions forum isn't representative and generally people looking to retire way before SPA (most people find 67 difficult to imagine as most 67 year old I know are not fit for full time work).



I would still maintain that having rent free living is a very good element to comfortable retirement provision.


You can disagree withe figures (it's a matter of what each individual wants) but are you claiming long term renting makes more sense?


If you just want to disagree with the figures then that's absolutely fine.
It's still difficult/very difficult for most people without generous employment scehems to attain.

Herzlos

Assuming for simplicity that rent is £500/month (£6k/year) and applying the 4% rule means boosting your pension pot by £150k just to cover the rent. I can't help but think you'd have been better putting that £150k into a mortgage instead and aimed to be mortgage free, but then again with tax relief on pensions that's potentially only £100k cash.


Over a 50 year working career you're talking about putting another £2k/year (£166/month) into a pension pot to account for continuing to pay rent.



It just doesn't seem to make any sense. I guess if you think property is too volatile you could put that £2k/year into some kind of stock based ISA fund and cash it out to purchase a home to live rent free on retirement, but you'd need to be getting a great rate to beat house price inflation over those 50 years.

lisyloo

Pension pot needed £452k, average pot £35k
https://www.express.co.uk/finance/retirement/960313/pension-savings-million-pounds-retirement

£447k
https://www.ftadviser.com/pensions/2019/06/27/pension-pot-of-447k-needed-to-retire-well/

Herzlos

I've seen a few articles posting about £260k being what's needed for a modest income of about £25k (but that assumes state pension which isn't going to exist in 20 years).

lisyloo

Herzlos wrote: »

I've seen a few articles posting about £260k being what's needed for a modest income of about £25k (but that assumes state pension which isn't going to exist in 20 years).

Excluding £8.5 state pension, i make that a withdrawal rate of 6.3%.
That’s not what would be considered a safe withdrawal rate.

It would be interesting to see what assumptions there are in that calc but safe withdrawal rates are discussed a lot on the pensions forums and Max is considered to be 4% and thats including from IFAs.

Do you have any links as I’d like to try and work it out.

https://www.theguardian.com/money/2018/may/16/average-person-will-need-260000-for-retirement-says-report

Here is £260k relating to a basic £9k income, which is about 3.5%.
I could live off £9k including travel but no discretionary spending, new car or holidays, so literally subsistence.
Are you sure you didn’t mix up the figures?