Reply With QuoteSome talk of restarting local authority building but sounds like empty promises. How do we pay for it?Originally Posted by Time Cat
Haha. Stuck at well over 3 times target, and wage inflation is running even hotter.
https://www.bbc.co.uk/news/live/business-67137477
More IR rises on the way.
Some talk of restarting local authority building but sounds like empty promises. How do we pay for it?
The 64, 000 dollar question, grrr inflation eh...exactly, how do we pay for it, I'm reading that Local Authorities are broke and central command have let the national debt balloon to match the size of the economy, a terrible time to try and borrow even more money...I'd say the promises are likely to hit the brick wall of reality.
Those covid highs were just silly, ludicrous bit of stoking by you know who, scotch mist that evaporated when something approaching normal conditions returned.
The sad part about it is that many FTBs with a high LTV were lured in.
That is sad but honestly they shouldn't have fallen for the lure of the siren song, learnt from history, both classical and housing market...hopefully many were assisted by Bank of Mum and Dad, who can maybe help them further if the need arises.
Last edited by Passenger; 18th October 2023 at 10:14.
Two of my daughters bought their first homes in 2020, both paying a little over £300k.
Both houses (one in Sussex, one in Nottingham) are now worth nearly £400k.
Not that it matters as neither have any plans to move at the moment.
Wow they've done great you must be chuffed, good to hear...just out of curiosity was it sweat equity, the market moving , or a bit of both that's added the notional 80 some K in 3 years ?
Hadn´t really appreciated that Notts was so desired, to command 400 large for house, all seemed a bit bleak when I was at Uni there, I don´t mean just the student accommodation...mind you it was a valuable life lesson, the handing over good money to grinning landlords for the pleasure of living in sub optimal housing.
Last edited by Passenger; 18th October 2023 at 14:16.
Nothing to do with me, I’m just pointing out that it’s not necessarily all doom and gloom for first time buyers who bought during covid. To be fair though, they were buying just ore covid and covid delayed the purchases slightly.
WRT house rises in Nottingham, there will always be good and bad areas/properties and I’m sure there are £1m+ houses in and around the city. Student property is usually at the cheaper, more rundown end of the property spectrum, as my daughter knows from experience.
Nice bit of timing. You're right re Notts and I was there a generation ago, bound to have changed.
More commentary from Lloyds.
https://www.bbc.co.uk/news/business-67214201
As the UKs largest provider of debt to the housing market, and where they make their own returns from, they are hardly the voice of impartiality.
They are hardly going to say it’s all going t1ts up, run for the hills, we don’t care about our mortgage book.
I have long since ignored commentary from the vested interests, whether housing or other areas where money can be made from their actions, or should I say words
Last edited by noTAGlove; 25th October 2023 at 17:54.
Feel free to post any links from sources you consider impartial or insightful.
Personally I think you’re getting into tinfoil hat territory with your conspiracy theories… they are a major player in the market so of course have a view, no doubt tinted by their own position but read with that in mind …
Funny how all the published press releases on the future of the housing market come from Nationwide, Lloyds, Zoopla, Rightmove, Savills etc. etc., and all predict a very shallow decline and then price rises soon after.
It is crystal ball stuff anyway and I have no idea why they press release this crap. Oh yes I do, all of their business are dependant on an upbeat housing market, so just pump good feeling upbeat statements to the masses.
I don’t have to, and haven’t even read the press releases. You just know exactly what they are going to say.
The longterm predictions are based on their knowledge of the industry. Such as there's a housing shortage in the UK, which isn't going to be solved any time soon. Supply and demand dictates that prices will rise until we have an over supply of housing stock. Any dip is relatively short term based on lack of confidence in the market. Confidence is low at the moment, but it won't last forever.
All very well to keep yelling conspiracy. There are many market commentators and media outlets so why not share some reporting you consider insightful and balanced? Or perhaps some YouTube talking head that shares your 30% decline predictions…
I make up my own mind on the matter. My rational has been explained numerous times, but I’ll go again.
House prices generally correlates with affordability.
Repayment example (average punter and FTB)
A £100k repayment mortgage @ 1.5% IR (2010-2022) = £400 pcm
A £100k repayment mortgage @ 6% IR (2022-?) = £644 pcm
Cost of servicing mortgage debt for your average punter and new FTB has increased by 61%
Interest only example (investor)
A £100k repayment mortgage @ 1.5% IR (2010-2022) = £125 pcm
A £100k repayment mortgage @ 6% IR (2022-?) = £500 pcm
Cost of servicing mortgage debt has increase by 300%
This is my reason I expect 30% house price falls. It took 6 years to play out in the last falling house price cycle (1989-1995), and house prices drops rapidly accelerated after year 3, i.e. in 1992.
We are currently one year in to a house price falling cycle. Very early days.
Plus the economy is finally slowing down and unemployment is increasing.
Almost everything eventually returns to the mean. History does not repeat itself, but it rhymes.
I think house prices have been unaffordable for decades yet prices have continued to rise so I don't see the correlation you speak of.
Property has been moving out of reach for first time buyers for years ... and now it's really getting out of hand with rates returning to historical averages.
We need a major building plan in the UK and a significant amount of local authority building to address the supply side of the market; until we get there I don't see a major drop as the shortage continues ...
House prices have been exceptionally expensive, but rock bottom interest rates have kept them just about (on average) affordable.
House prices are still exceptionally expensive, but rocketing interest rates have now made them completely unaffordable.
There is a big difference regarding what has happened over the last 12 months.
So an inverse correlation between affordability and price …
Changing attitudes too, both lenders and buyers, increased salary multiples, softening of lending criteris, buyers shouldering more debt and accepting a larger proportion of income spent on mortgage...back in the day it was broadly the conservative financial view you don't wanna spend more than 25/ 30 per cent of net on your housing costs but at a certain point it went out the window partly cos everyone saw the potential for roi/ wealth out of their home. Also housing/ renting costs were removed from the basket of variables they formerly used to track inflation...hmm, under Blair/ Brown iirc, though I could be wrong.
Rates'll come down again a bit, eventually.
Last edited by Passenger; 27th October 2023 at 09:27.
Agreed. But those attitudes are easy to conform to in a rising market. Let’s see if those attitudes hold in a falling market.
The 1989 to ‘95 decline didn’t include vast amounts of BTL and 2nd home investors in the mix. A massive difference to this time round.
Some investors are selling but only a pretty small percentage of the total.
I don’t know about that. If I go to Zoopla in my area there are dozens of unfurnished vacant flats stacked up which all smell of BtL offload. None of them are selling, and they are chasing the market down.
House prices are as unaffordable now as they were in 1992 even at half the interest rates. Difference is there was a massive recession in 1992.
When in work, people will just skimp and save to get by with housing costs. It is when unemployment sets in all hope is lost.
Labour market is currently good but anecdotally softening by the day. If somehow they can control inflation without significant unemployment, then it will be a softer landing for the housing market.
But, if we go into a proper recession then all bets are off IMO.
We haven’t had a proper extended multi-year recession for 30 years so anyone less than 45 has no idea what they are like, or even if they exist.
I think that’s because Gordon Brown put an end to Boom and Bust, didn’t he?
As long as there is greed and fear, there will never be an end to boom and bust.I think that’s because Gordon Brown put an end to Boom and Bust, didn’t he?
I'd have thought rather than unfurnished, loads of furnished flats for sale would smell of BtL offload? Otherwise the vendors only have to find somewhere for what is basically valueless used furniture if they are getting out of the game.
I suspect your area is perhaps more volatile and investment driven than other areas of the UK; which maybe makes you think that what you see locally is reflective of the situation UK wide.
I think any new BTLs are dead ... no one is buying.
Many (most) BTL investors have little or no borrowings so are not distressed sellers.
Yes a few Insta/YT BTL gurus with massive borrowings maybe in trouble and that is a situation of their own making, they likely took on too much risk and are now finding out that being leveraged works both ways ...
I'm sure we will continue to see flat and declining markets until we see some lowering of rates and improvement in stability both nationally and globally.
All my investments are doing poorly at the moment ... it is not just property going sideways ... at least I still get the same rents each month ...
There is no public housing anymore. It is all private rental these days.
My area is no different than anywhere in the country as BtL is omnipresent, and after 30 years of rampant investment is saturated in all UK towns and cities.
BTL is just 17% of UK stock ...
Local authority used to be 31% ... it is now 0% ... in that period of change private BTL ticked up from 11% to 17% ... that happened over a 40 year period.
I wouldn't say BTL is a particularly significant sector of the UK housing market...
The UK housing market is driven by a shortage of supply, the stopping of local authority building being a big factor plus a range of daft tax incentives that have revved up the market.
I know the media is whipping up an anti-landlord storm to blame for the condition of the UK market but it's really a distraction strategy ... it is the lack of building that is the problem.
Sophie Siangolis, buy-to-let borrower
Siangolis, who owns 16 rental flats with her husband in her home town of Weston-super-Mare, Bristol and Highbridge in Somerset, says relentless interest rate increases this year will almost certainly force them to sell their properties.
“The rents are no longer covering our mortgages; we’ve had a shortfall every month of between £2,500 and £3,500 for the past six months. We’re on SVR and the payments have doubled. I tried a couple of days ago to talk with some lenders about switching to a fixed rate, but they wanted to charge a fee of £3,000 for each property to go on a fixed deal, so it’s not worth it.
“We’re now in arrears of around £900 with service charges that we can’t pay. We’re panicking because we’ve got no money left, and can maximally carry on for another three months.”
https://www.theguardian.com/money/20...-rates-arrears
Well that's what happens when you take on too much leverage on a single asset class ...
The typical UK landlord is often accidental with 2-3 units. These landlords exampled above are not typical and will be bust in due course; not sure what happens to the tenants when the properties get repossessed; I guess they get evicted by the mortgage company and the property sold, no winners there ...
The vast majority of rented accommodation in my area is private rental sector and any available social housing is as rare as hens teeth
I would say that for anyone under 35 or generally disadvantaged in life, BtL is pretty much the only sector of the U.K. housing market.
Well social housing is also about 17-18% of the market and they fill the gap by the sector once filled by local authority; so anyone disadvantaged should have access to social housing.
I know plenty of under 35s that have purchased their own homes so I think that view is not correct.
Clearly affordability is a major issue and if the BTL sector shrinks due to political change how is that going to work out for those people you reference? Answer is more expensive rents as the sector shrinks.
It all points back to increased house building being the key priority.
That and a reversal to the rule saying that people running a BTL as a private business can’t offset their costs against profits.
That would reset the problem with the rental sector, reduce rents and increase supply for those who want to rent or have cheaper rents so they can save more to put towards a house.
The biggest single issue that’s screwed the UK housing/rental markets over the last few years, is the rule change to no longer being allowed to offset mortgage costs against rental profits.
The deletion of section 24 was an odd policy as every other business can offset the costs of borrowing against tax.
Many people have transferred ownership into a limited company to avoid this but that’s not simple for landlords who have owned properties for a long time in their own names due to CGT liabilities and stamp duty. It really was an odd policy decision.
I don't think it was odd at all, and it was all thoughtful planning. The system had got out of whack and it was a very crude way for HMG to try to rebalance it.
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Did it work? I see no change in the price of property as a result of the deletion of section 24 in 2018.
Well it swelled the Chancellor coffers.
It was odd by definition - no interpretation / opinion necessary. There is no other taxation scheme in the UK where tax is on income rather than profit. On the other hand the extent of planning is open to interpretation.
Don’t take your own personal BtL taxation woes out on me. I didn’t do anything.
There was a gravy train for 30 years and now I understand you are all a bit p1ssed off.
No woes from me. However, I simply prefer to stick to facts.
The facts are that HMG are the villains as they effectively privatised social housing from the 90s onwards. The smart investors piled in and made out like billy-o for 25 years.
The villains, HMG, thought after 25 years that this is ripping social fabric apart, so we are going to screw the landlords over. The smart money got out and now the bagholders are quite rightly whinging.
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PAYE?
I think you will find it’s the tenants that are whinging as they can’t find anywhere to live and if they can the rent is sky high.
Last edited by Montello; 28th October 2023 at 09:29.
It did, directly from those who could least afford it, the tenants.
Trickle down economics?
No whinging here, just for the record.
Silly Soph didn´t do her sums. Also sixteen possibly sub par flats and/or sub par locations, sounds like a recipe for hassle, ball ache.
Last edited by Passenger; 28th October 2023 at 12:13.
Likewise. No borrowings so section 24 deletion was irrelevant to me and many other landlords.
It didn’t have the, I assume, intended effect of cooling the market it has just ended up hurting tenants.
If HMG wants to fix the market they need to incentivise building and investing in property, deleting tax allowances does the opposite.
Last edited by Montello; 28th October 2023 at 12:37.
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