Halifax Figs for May -2.4%

clobber_2

PasturesNew wrote: »

OK. I can play this game:

House round the corner from me has gone (since Jan/property bee start):
http://www.rightmove.co.uk/viewdetails-9884502.rsp?pa_n=1&tr_t=buy
Jan: £850,000
Feb: £825,000
Apr: £799,950
May: £750,000
May: £725,000

It's also up for rent with four agents at £2,250/month

Still sat there.

And that village is one of the top wanted spots in Cardiff.

I'll give em 50p if they throw in the teddy bears.

baby_boomer

A suppose a 3.5% yield could be OK for an investment - but only from a rising asset and not one that needed maintenance, insurance and agency fees.

hostman

baby_boomer wrote: »

A suppose a 3.5% yield could be OK for an investment - but only from a rising asset and not one that needed maintenance, insurance and agency fees.

Why bother? Just shove the cash in a bank and get 6% for doing nothing.

PasturesNew

A 3.5% yield on an illiquid investment, with randomly high running costs (broken boiler, voids, tenant from hell) costing them 6-7-8% to borrow the money.

Brilliant strategy.

Paul_N_4

hostman wrote: »

Why bother? Just shove the cash in a bank and get 6% for doing nothing.

Property investers use leverage to make their gains. For example, have £10,000 deposit, get a mortgage of 120,000, buy a flat, it appreciates by 10% a year later, they sell, they make £14,000.

That is obviously a lot more than £10,000 would get you in a bank account at 6%. But without the capital gains, you're right, BTL is pointless in this climate, and in most cases, will cost a small fortune in the short term.

WTF?_2

Paul_N wrote: »

Property investers use leverage to make their gains. For example, have £10,000 deposit, get a mortgage of 120,000, buy a flat, it appreciates by 10% a year later, they sell, they make £14,000.

That is obviously a lot more than £10,000 would get you in a bank account at 6%. But without the capital gains, you're right, BTL is pointless in this climate, and in most cases, will cost a small fortune in the short term.

Given current prices, BTL is near pointless for anyone thinking of buying in now, and has been for a few years. Falling asset prices are just the final nail in the coffin for anyone too dumb to get the message.

But you don't need to rely on capital gains to make your cash. Given that you can get some useful tax breaks and interest relief then it's perfectly possible to foresee a situation where BTL would make financial sense giving you a return in excess of what you could have made by putting your cash into a bank. Any capital gain would be an extra bonus which you could cash in when you decided to stop letting the property and sell it. Kind of like 'redundancy money'. CGT on it is only 18% (currently, could change over the years) which could make it very tax efficient.

m00m00

Given that BTL is likely to get the blame politically (whether true or not) for a large chunk of the house price falls etc, I would not be surprised at all to see the tax breaks on it removed at some point in the near/medium future

phil_b_2

PasturesNew wrote: »

OK. I can play this game:

House round the corner from me has gone (since Jan/property bee start):
http://www.rightmove.co.uk/viewdetails-9884502.rsp?pa_n=1&tr_t=buy
Jan: £850,000
Feb: £825,000
Apr: £799,950
May: £750,000
May: £725,000

It's also up for rent with four agents at £2,250/month

Still sat there.

And that village is one of the top wanted spots in Cardiff.

LMAO!!!! That house is OUTRAGEOUSLY over priced to start with. It's one of the worst examples of optimism ive seen. I dont even think it is worth half of that.

Have a look at it on the aboutmyplace.co.uk map:
http://www.aboutmyplace.co.uk/showmap?id=9884502&type=property&poi=property

click on the 'house prices' tab. No house on that part of road has ever sold for more than 350k... and only a few in the whole area have sold for above 400k (all next to each other).

That is a pretty terrible example to use for demonstrating falling prices. There are a lot of these about which do skew the picture somewhat.

PasturesNew

phil_b wrote: »

LMAO!!!! That house is OUTRAGEOUSLY over priced to start with. It's one of the worst examples of optimism ive seen. I dont even think it is worth half of that.

Have a look at it on the aboutmyplace.co.uk map:
http://www.aboutmyplace.co.uk/showmap?id=9884502&type=property&poi=property

click on the 'house prices' tab. No house on that part of road has ever sold for more than 350k... and only a few in the whole area have sold for above 400k (all next to each other).

That is a pretty terrible example to use for demonstrating falling prices. There are a lot of these about which do skew the picture somewhat.

I think it's got some historical importance. It might have been the original gatehouse to the Roald Dahl Estate or something. All the other houses on that road are "normal houses" and look nothing like it.

It is certainly THE most striking house as you drive through ... but it is on a corner, on the main road through (rush hour traffic/rat run) and is on a small plot.

I know the area, clicked on that link ... and after 10 minutes' close up searching/starting again a few times, I still can't find it on the map. So the link to the property is probably the worst ever as it isn't findable.

Ah, found it. Didn't recognise it from that angle... I'd dismissed it on my investigations as it looked not quite right.

baby_boomer

hostman wrote: »

Why bother [with a 3.5% rental yield]? Just shove the cash in a bank and get 6% for doing nothing.

I tend to agree.

But rental yields are likely to be pretty good hedges against inflation and/or falling interest rates in the long term.

As long as you don't make a capital loss in the meantime . As Paul says, leverage is currently working against, rather than with, buy-to-letters - which is why there is a risk that some may panic.