What’s wrong with this property

ReadySteadyPop

MeteredOut said:

ReadySteadyPop said:

GDB2222 said:

Maybe, we are at cross purposes? 

Earlier you said “Say you buy for a £400k and sell 10 years later for £400k. You've made nothing, right? No. Because in those 10 years your mortgage has probably been less than equivalent rent.”

 I don’t think that is a completely foregone conclusion. Does that mean landlords are making a loss? Not necessarily if, for example, they bought some time ago and don’t have much mortgage left. They may be reluctant to sell, as that could generate a large tax bill. 

I believe quite a lot of landlords are now making a loss, and a prolonged void period now means double council tax making the loss worse.

Do you have any data to back up this "belief"?

Your beliefs don't have a good track record.

I believed interest rates would rise, that worked out well in money market funds, just search for "landlord Losses" there are plenty of articles on selling at a loss, voids etc. rents are supposedly still gong up though, however not sure that helps much if you can`t find a tenant ?

RHemmings

MeteredOut said:

ReadySteadyPop said:

GDB2222 said:

Maybe, we are at cross purposes? 

Earlier you said “Say you buy for a £400k and sell 10 years later for £400k. You've made nothing, right? No. Because in those 10 years your mortgage has probably been less than equivalent rent.”

 I don’t think that is a completely foregone conclusion. Does that mean landlords are making a loss? Not necessarily if, for example, they bought some time ago and don’t have much mortgage left. They may be reluctant to sell, as that could generate a large tax bill. 

I believe quite a lot of landlords are now making a loss, and a prolonged void period now means double council tax making the loss worse.

Do you have any data to back up this "belief"?

Your beliefs don't have a good track record.

I was curious to see the actual figures.

According to this article, the proportion of landlords reporting making a loss is about 4% in Q3 2024, having dropped from 6% in Q3 2023. 

https://www.ukpropertyaccountants.co.uk/landlord-profits-surge-to-highest-levels-in-two-years/

That's a small percentage, but from 2024 there were estimated to be 2.82 million private landlords in the UK. And, 4% of that figure would still be 112,800.

There are articles with larger potential numbers of landlords (e.g. 225,000) making a loss after interest rate rises, but these were landlords potentially making a loss should they need to refinance. https://www.landlordzone.co.uk/news/almost-a-quarter-of-a-million-buy-to-let-landlords-are-facing-losses 

According to this link: https://www.money.co.uk/business/business-statistics  about 14% of UK businesses make a loss. Hence, being a landlord looks safer in comparison to this average. 

ReadySteadyPop

RHemmings said:

MeteredOut said:

ReadySteadyPop said:

GDB2222 said:

Maybe, we are at cross purposes? 

Earlier you said “Say you buy for a £400k and sell 10 years later for £400k. You've made nothing, right? No. Because in those 10 years your mortgage has probably been less than equivalent rent.”

 I don’t think that is a completely foregone conclusion. Does that mean landlords are making a loss? Not necessarily if, for example, they bought some time ago and don’t have much mortgage left. They may be reluctant to sell, as that could generate a large tax bill. 

I believe quite a lot of landlords are now making a loss, and a prolonged void period now means double council tax making the loss worse.

Do you have any data to back up this "belief"?

Your beliefs don't have a good track record.

I was curious to see the actual figures.

According to this article, the proportion of landlords reporting making a loss is about 4% in Q3 2024, having dropped from 6% in Q3 2023. 

https://www.ukpropertyaccountants.co.uk/landlord-profits-surge-to-highest-levels-in-two-years/

That's a small percentage, but from 2024 there were estimated to be 2.82 million private landlords in the UK. And, 4% of that figure would still be 112,800.

There are articles with larger potential numbers of landlords (e.g. 225,000) making a loss after interest rate rises, but these were landlords potentially making a loss should they need to refinance. https://www.landlordzone.co.uk/news/almost-a-quarter-of-a-million-buy-to-let-landlords-are-facing-losses 

According to this link: https://www.money.co.uk/business/business-statistics  about 14% of UK businesses make a loss. Hence, being a landlord looks safer in comparison to this average. 

Being in a money market fund (especially as I think yields are going to spike as the government fail to get a check on our spending) or even a savings account is safer still though, the average person doesn`t have the skill/knowledge to be a landlord. The thread is asking what is wrong with a property, and I think the OP was going BTL? What I think is wrong with the 400k flat that has reduced price by 75k is that it is still overpriced by about 100k.

Herzlos

OP is looking for a property to live in.

GDB2222 said:

Maybe, we are at cross purposes? 

Earlier you said “Say you buy for a £400k and sell 10 years later for £400k. You've made nothing, right? No. Because in those 10 years your mortgage has probably been less than equivalent rent.”

 I don’t think that is a completely foregone conclusion. Does that mean landlords are making a loss? Not necessarily if, for example, they bought some time ago and don’t have much mortgage left. They may be reluctant to sell, as that could generate a large tax bill. 

I think we are, and that we largely agree. 

It's possible (though unlikely) you'll be able to find a rental cheaper than equivalent rent. 
Though with any kind of middleman you'd expect them to take a cut that you can save by cutting them out. 

There are definitely merits to renting especially in the short term. 

Herzlos

ReadySteadyPop said:

 You are liable for your mortgage debt whether you find a buyer or not, increasingly people can`t find buyers willing or able to pay the price they need to get out from under their mortgage debt.

And your liable for your rental debt whether you can get the landlord to let you out of the lease or not. 

It's definitely easier to get out of a rental than a mortgage, and the total debt will be lower, but what you're ignoring is that most people aren't underwater on their mortgage and can safely downsize given enough time. 

It's a bigger risk for buyers using low deposits and early on in the ownership, but after say 10 years it's likely they'll have a combination of capital repayment and house price growth giving them some equity. By about 25 years (the length of your rental so far?) most people have it paid off completely and are at essentially no risk of losing the house. 

Using me as an example, I bought not long after you sold, and ended up at 110% LTV which gave me a bad mortgage rate for a while (still cheaper than my friends equivalent rent) but nearly 20 years later I'm sitting at about 63% LTV on a house that's worth twice as much. So house prices would need to drop 37% for me to lose out. 
In another 10 years, when you've bought your landlord another flat, I'll presumably be closer to 40% LTV and needing a 60% drop. 

RHemmings

ReadySteadyPop said:

RHemmings said:

MeteredOut said:

ReadySteadyPop said:

GDB2222 said:

Maybe, we are at cross purposes? 

Earlier you said “Say you buy for a £400k and sell 10 years later for £400k. You've made nothing, right? No. Because in those 10 years your mortgage has probably been less than equivalent rent.”

 I don’t think that is a completely foregone conclusion. Does that mean landlords are making a loss? Not necessarily if, for example, they bought some time ago and don’t have much mortgage left. They may be reluctant to sell, as that could generate a large tax bill. 

I believe quite a lot of landlords are now making a loss, and a prolonged void period now means double council tax making the loss worse.

Do you have any data to back up this "belief"?

Your beliefs don't have a good track record.

I was curious to see the actual figures.

According to this article, the proportion of landlords reporting making a loss is about 4% in Q3 2024, having dropped from 6% in Q3 2023. 

https://www.ukpropertyaccountants.co.uk/landlord-profits-surge-to-highest-levels-in-two-years/

That's a small percentage, but from 2024 there were estimated to be 2.82 million private landlords in the UK. And, 4% of that figure would still be 112,800.

There are articles with larger potential numbers of landlords (e.g. 225,000) making a loss after interest rate rises, but these were landlords potentially making a loss should they need to refinance. https://www.landlordzone.co.uk/news/almost-a-quarter-of-a-million-buy-to-let-landlords-are-facing-losses 

According to this link: https://www.money.co.uk/business/business-statistics  about 14% of UK businesses make a loss. Hence, being a landlord looks safer in comparison to this average. 

Being in a money market fund (especially as I think yields are going to spike as the government fail to get a check on our spending) or even a savings account is safer still though, the average person doesn`t have the skill/knowledge to be a landlord. The thread is asking what is wrong with a property, and I think the OP was going BTL? What I think is wrong with the 400k flat that has reduced price by 75k is that it is still overpriced by about 100k.

Your reply is not relevant to my post, as I was comparing businesses to businesses. And, in particular I wanted to put your claim 'I believe that quite a lot of landlords are making a loss' into context of the data. I believe that the figures I have provided show your statement to be misleading at best. There is no need for being a landlord to be the safest possible investment to show that your statement doesn't match up to the data. 

Where do you get your 'overpriced by about 100k' from? Just stating that with no reasoning or evidence is not useful. Particularly from someone wtih your track record of predicting the property market incorrectly. 

ReadySteadyPop

Herzlos said:

ReadySteadyPop said:

 You are liable for your mortgage debt whether you find a buyer or not, increasingly people can`t find buyers willing or able to pay the price they need to get out from under their mortgage debt.

And your liable for your rental debt whether you can get the landlord to let you out of the lease or not. 

It's definitely easier to get out of a rental than a mortgage, and the total debt will be lower, but what you're ignoring is that most people aren't underwater on their mortgage and can safely downsize given enough time. 

It's a bigger risk for buyers using low deposits and early on in the ownership, but after say 10 years it's likely they'll have a combination of capital repayment and house price growth giving them some equity. By about 25 years (the length of your rental so far?) most people have it paid off completely and are at essentially no risk of losing the house. 

Using me as an example, I bought not long after you sold, and ended up at 110% LTV which gave me a bad mortgage rate for a while (still cheaper than my friends equivalent rent) but nearly 20 years later I'm sitting at about 63% LTV on a house that's worth twice as much. So house prices would need to drop 37% for me to lose out. 
In another 10 years, when you've bought your landlord another flat, I'll presumably be closer to 40% LTV and needing a 60% drop. 

 People can`t "safely downsize" unless they bought 40 years ago, that is what bubbles do, people are on the hook now for 35 years debt on basic one and two bed properties in some parts of the country.

RHemmings

ReadySteadyPop said:

Herzlos said:

ReadySteadyPop said:

 You are liable for your mortgage debt whether you find a buyer or not, increasingly people can`t find buyers willing or able to pay the price they need to get out from under their mortgage debt.

And your liable for your rental debt whether you can get the landlord to let you out of the lease or not. 

It's definitely easier to get out of a rental than a mortgage, and the total debt will be lower, but what you're ignoring is that most people aren't underwater on their mortgage and can safely downsize given enough time. 

It's a bigger risk for buyers using low deposits and early on in the ownership, but after say 10 years it's likely they'll have a combination of capital repayment and house price growth giving them some equity. By about 25 years (the length of your rental so far?) most people have it paid off completely and are at essentially no risk of losing the house. 

Using me as an example, I bought not long after you sold, and ended up at 110% LTV which gave me a bad mortgage rate for a while (still cheaper than my friends equivalent rent) but nearly 20 years later I'm sitting at about 63% LTV on a house that's worth twice as much. So house prices would need to drop 37% for me to lose out. 
In another 10 years, when you've bought your landlord another flat, I'll presumably be closer to 40% LTV and needing a 60% drop. 

 People can`t "safely downsize" unless they bought 40 years ago, that is what bubbles do, people are on the hook now for 35 years debt on basic one and two bed properties in some parts of the country.

It's bad enough that you're 'debating house prices and the economy' rather than trying to write anything relevant to the OP. But, you're debating house prices and the economy without even giving any facts, figures, and sources to back up your claims. 

itsthelittlethings

What's wrong with it is that it's 10 x a solid salary for someone buying their first property aged 35.

RHemmings

Returning to the actual property, rather than 'debating house prices and the economy', if I have the right flat on Zoopla:

https://www.zoopla.co.uk/for-sale/details/69980351/

then, it sold for £308k in July 2019. 

Looking at my oft-quoted Plumplot graphs, nominal (not just real) house prices in North-West London are actually lower than they were in 2019. Hence, that individual property looks significantly overpriced by that measure. But, the above is a very crude method of working out the value of the flat.

Looking at sales in Adastra House itself, it appears that the price of £308k in 2019 is unusually low. 

https://www.zoopla.co.uk/house-prices/london/nether-street-n3/?beds_max=1&beds_min=1&new_homes=include&q=nether+street+finchley+n3&propertyTypeCode=F&identifier=london/nether-street-n3&view_type=list

There will be a reason for that unusually low price. Not necessarily because something is wrong with the flat. But, is it for example smaller than other one bed flats in the same building. 

However, it seems that the flats in that building that sold in May 2019 (presumably, new) went for a LOT more than those that sold in July 2019. E.g. No. 5 sold for £304k + change in July. https://www.zoopla.co.uk/property/uprn/10093993116/  But, flat 20 sold for £425k in May 2019. https://www.zoopla.co.uk/property/uprn/10093993131/  And then, Flat 14 sold for £447k in September 2019. 

So, without inside (literally) knowledge of the flats and how they differ (if they do), then it's very hard to work out the current value of the flat, and to know what it should sell for. 

Again, going to a cruder measure, the last 1 bed flat that sold in that building was Flat 13 https://www.zoopla.co.uk/property/uprn/10093993124/  which sold for £358k in August 2024. So, assuming those are like and similar flats, then at £365k, the current flat is a bit overpriced. But, not hugely. 

There is only one flat in that building for sale currently, on Rightmove. So, it's not like some buildings I could name where there are lots of near identical flats for sale, creating competition.