Any landlords?

WiresDreamDisasters

robgilmo said:

Barnezy said:

RaymondLin said:

Question, just this point... why single out a specific age of 22/out of uni age?  I know he said youngsters but we all know he meant people younger than him, anyone up to mid 30’s not just 22 year olds. 

OK, my brother is 27, earns £130k a year. He has no interest in buying a property yet. He's lived in Clapham, Wimbledon and now Putney. Just moved in with his girlfriend who makes simular money. Either see the benefit in buying yet, despite being able to afford to if they want. Also they are not serious enough yet to buy together. So for him renting is great. Lives in an £800K flat overlooking the Thames fot £2100pm. 

Opposite side of the spectrum I have a friend who is a barman in a top London hotel. Him and his Mrs earn maybe £80k pa combined. They are both 34. They rent in Angel because they want to live in zone 1. They get to live in a flat they could never afford, even at half its value. If they couldnt rent or they were competing with bankers to rent the same property, they'd need to live outside London and the commute would consume 35% of their earnings. 

Let's say for arguments sake landlords were made to sell their properties... that is only c20% of homes in the UK. Do people really think that is going to make homes more affordable? What are all the renters with no savings going to do? What are people with terrible control over finances and poor credit ratings going to do? 

Home ownership is at an all time high at the moment  c74%. Private landlords are at a 7yr low.

It's not landlords that are the cause of the high cost of ownership, its the number of people in the UK and therefore demand and low interest rates. 

BTW I'm renting our current place so we could get my son in to the school we wanted and decided exactly where we want to buy our family home. I pay less in rent than the mortgage on this place would be, can move whenever we want and haven't had to layout anymore savings. Washing machine broke this morning, WhatsApp the landlord to fix, not my problem. Its great! 

Our freezer broke a while back, landlord told us to dispose of it and they wouldn't replace it because they were doing us a favour by leaving it in the house for us to use, their broken dishwasher is now sitting in the garden beside their broken freezer, along with their broken shower door that they didn't want to fix.

Nice civics you got there.

Tex Mexico

crunchman said:

Barnezy said:

crunchman said:

High prices are bad for everyone except city fat cat bankers who make money off the ridiculous amounts people have to borrow to buy.

That's not true. 

High house prices are good for anyone who owns their home, which today represents are the majority c70% of homes. It also benefits people who will inherit property.

Wrong.

Most of them are paying out a huge chunk of their income on their mortgage.  They would have far more disposable income, and a better quality of life, if prices were lower.

If they were spending their disposable income, then they would be paying VAT, which would help everyone given the state of government finances.  They would also be creating jobs for the people who make and sell the products they are buying.

Everyone wins except the bankers who are getting fat raking in the interest on their mortgages.

I echo this.

High house prices now are good for anyone who bought a house then. If like me you bought recently, you're paying a big mortgage on an asset that may or may not appreciate in value. If like me you weren't all that wealthy when you bought so had a smaller deposit and an only okay-ish CR, you're paying it off at a high interest rate, the accrual of which might not be offset even if it does appreciate. 

I make more (adjusted for inflation) than my father did when he was my age, and yet then (in 1985) he was supporting a family of four on his own while paying a mortgage on a house in Maidstone that he bought for less than half of what my house is worth. The average house price on that street in Maidstone now is more than twice what my house is worth. It's true that salaries in his bracket have also increased since then - by about 100%, which doesn't begin to cover the 300%+ increase in property values. Put it this way: I doubt any single-income schoolteachers have bought any of those houses recently.

Barnezy

crunchman said:

Barnezy said:

crunchman said:

High prices are bad for everyone except city fat cat bankers who make money off the ridiculous amounts people have to borrow to buy.

That's not true. 

High house prices are good for anyone who owns their home, which today represents are the majority c70% of homes. It also benefits people who will inherit property.

Wrong.

Most of them are paying out a huge chunk of their income on their mortgage.  They would have far more disposable income, and a better quality of life, if prices were lower.

If they were spending their disposable income, then they would be paying VAT, which would help everyone given the state of government finances.  They would also be creating jobs for the people who make and sell the products they are buying.

Everyone wins except the bankers who are getting fat raking in the interest on their mortgages.

"most of them".....I could send you ONS reports that proves people have more disposable income now than ever before and that a lower percentage of income goes towards mortgage payments now than in the last 30 years. But I'm sure no one wants to get embroiled in an online stat off.

House prices are complex and there isn't one factor that contributes to them. One factor not mentioned so far is increasing equal pay between genders and the fact there is a growing number of households that contain two incomes, which I'm sure no one will argue against. People are also having less kids and having them later. 

To purely blame landlord's, is denying the reality that the housing market is driven by multiple market factors and therefore prices are correct, at whatever price they are at. 

Jalapeno

We're accidental debt free landlords, thinking of jacking it in because of arsehole tenants and forthcoming tax changes.

I'm not convinced that investing the proceeds will generate significantly better income given income tax on unearned income and CGT - but at least we can stop being referees in neighbour disputes !

Barnezy

This is an interesting graph. when house prices are mapped against inflation, they were more expensive in 1975 than in 2015. Massively undervalued in the 90's which is possibly what has given the perception they are way out now.

To me this shows how people's brains process information. Saying my dad bought a house in 1980 for £50k and now it's £200k, automatically makes people this, oh he's made £150k or that it's increased 400%, when that's not actually true. Any worthwhile investment tracks inflation at a minimum. The benefit of property, is it is one of the only investments as a private individual, where you can utilise leverage. 



Just for all those who think they are missing out by not being in the property market and getting screwed over by greedy landlords, watch the below video regarding investment returns based on renting and investing in the stock market vs buying a property. Might give you a different perspective. I follow this guy and his advice is great. 

Tex Mexico

Barnezy said:

This is an interesting graph. when house prices are mapped against inflation, they were more expensive in 1975 than in 2015. Massively undervalued in the 90's which is possibly what has given the perception they are way out now.

To me this shows how people's brains process information. Saying my dad bought a house in 1980 for £50k and now it's £200k, automatically makes people this, oh he's made £150k or that it's increased 400%, when that's not actually true. Any worthwhile investment tracks inflation at a minimum. The benefit of property, is it is one of the only investments as a private individual, where you can utilise leverage. 

Just so we're clear, is that graph not already adjusted for inflation, as indicated on the left? That would mean that adjusted for inflation 2015 houses are over twice the price of 1975 houses.

Tex Mexico

https://www.economicshelp.org/blog/5709/housing/market/#:~:text=In%201975%2C%20average%20house%20prices%20were%3A%20%C2%A310%2C388.&text=In%202016%2C%20average%20house%20prices%20%E2%80%93%20%C2%A3198%2C564.

There you go. Average house price in 1975 was about £10k unadjusted. About £80k adjusted. 2015 about £200k.

How do you get from that that they were more expensive in 1975? The very page you took the graph from says they've gone up 126%.

stickyfiddle

Tex Mexico said:

Barnezy said:

This is an interesting graph. when house prices are mapped against inflation, they were more expensive in 1975 than in 2015. Massively undervalued in the 90's which is possibly what has given the perception they are way out now.

To me this shows how people's brains process information. Saying my dad bought a house in 1980 for £50k and now it's £200k, automatically makes people this, oh he's made £150k or that it's increased 400%, when that's not actually true. Any worthwhile investment tracks inflation at a minimum. The benefit of property, is it is one of the only investments as a private individual, where you can utilise leverage. 

Just so we're clear, is that graph not already adjusted for inflation, as indicated on the left? That would mean that adjusted for inflation 2015 houses are over twice the price of 1975 houses.

Yes precisely. So the average house now costs 2.5x what it did in 1975, after adjusting for inflation.

Google tells me the average house price in 1975 was £10,388. That's roughly £84,000 in today's money, while the average house price in 2020 in £231k, almost 3x as much. 

Wages are harder to cross-ref as there's much less data, but google suggests someone doing manual work would get about 3k per year (24k today). Let's be hugely conservative and assume the median wage was that same figure. So you needed ~3.5 years of salary to earn enough to pay for that house. 

In 2020, the median wage is £585 per week (£30,420 p.a.). So now you need 8 years of average salary to buy that same average house. And you have to save a deposit while renting at rates that have also tripled, so you have much less money available to save. Yes, the cost of mortgage payments are very low, because interest rates are minuscule compared with the 70's and 80's (because the government is desperate to prop up the housing market...), but for those renting it's a nightmare.

Tex Mexico

Yes, it does rather undercut the argument of someone who claims that renting is a choice when they admit to thinking houses have somehow gotten cheaper in the past 45 years.

The APR on mortgages might be comparatively low but it evens out when the gaff is so pricey you have to take the maximum available duration to be able to afford the principal.

Barnezy

Yes sorry... read that chart wrong. 

WiresDreamDisasters

In London we used to pay just shy of £1000 for a very poor 2 bedroom flat. Paper thin walls, draughty, proper Withnail and I living lol. Then we bought a brand new 2-bed flat using the governments help to buy scheme and my wife's savings that she'd been saving since she was 16 (we were both 30 at the time we bought) and the mortgage was £1350 a month.

5 years later we were able to sell that flat and get a 3 bedroom house and the mortgage is now £1200 a month.

From a month to month basis, I'd rather pay the extra and own the property. But I was totally ill prepared money-wise. I had no savings and spaffed my money away on frivolous things like booze and guitar amps. The wife thought ahead and pocketed her money for a rainy day.

Anyway... moral of the story I suppose is... she did the forward thinking clever thing and was able to make it feasible for us to buy a house. She earns less than £30K and always has done. I've earned over £30K for a good few years now. So it's been manageable.

She has been on furlough for months now, and right when I got a 20% payrise, she got a 20% paycut. So we're still in the same position money-wise, more or less.

ToneControl

when looking at the house price increase in the 70s, few people remember that this was when most single-income families became dual-income families, and also food and consumer goods got much much cheaper. AFAIK this is the main reason house prices went up, because people bought what they could afford, and so competed with more cash for houses.

Also, it was extremely difficult to get a mortgage in the 60s compared to later decades

Barnezy

Looks like all this COVID stuff is actually going to benefit landlords. 

https://www.thisismoney.co.uk/money/mortgageshome/article-8569453/Buy-let-thrown-lifeline-coronavirus.html

robgilmo

Barnezy said:

This is an interesting graph. when house prices are mapped against inflation, they were more expensive in 1975 than in 2015. Massively undervalued in the 90's which is possibly what has given the perception they are way out now.

To me this shows how people's brains process information. Saying my dad bought a house in 1980 for £50k and now it's £200k, automatically makes people this, oh he's made £150k or that it's increased 400%, when that's not actually true. Any worthwhile investment tracks inflation at a minimum. The benefit of property, is it is one of the only investments as a private individual, where you can utilise leverage. 



Just for all those who think they are missing out by not being in the property market and getting screwed over by greedy landlords, watch the below video regarding investment returns based on renting and investing in the stock market vs buying a property. Might give you a different perspective. I follow this guy and his advice is great. 

I dont buy that, at all, old man across the road was a farm hand when he bought his house, Mrs parents worked in a factory when they bought theirs, they could also afford to buy a second property.
Factory workers and farm hands buying houses today? It simply doesnt happen, not around here it doesnt.

Tex Mexico

ToneControl said:

when looking at the house price increase in the 70s, few people remember that this was when most single-income families became dual-income families, and also food and consumer goods got much much cheaper. AFAIK this is the main reason house prices went up, because people bought what they could afford, and so competed with more cash for houses.

Also, it was extremely difficult to get a mortgage in the 60s compared to later decades

There's lots of reasons house prices have more than doubled in the past forty to fifty years, and yes some of them are to do with family incomes and therefore demand increasing. However the bulk of the increase took place in the decade between 1996 and 2006, and it's well-documented that very little of it was down to the middle-class becoming more affluent.

The 2008 crash was caused by a massive increase in sub-prime mortgages over the previous years. Property prices were artificially inflated by buyers being lent far more money than they could afford. Compound that with deregulation, which allowed foreign investors to buy huge swathes of London property to capitalise on the bubble, further jacking up local prices to the point where my house in Preston is worth less than 1/10th of what it would be in Battersea. Throughout that period, average wages just about kept up with inflation.

The huge distance between average earnings and average house prices can't be explained away by better credit availability or the average worker's increasing wealth over the years, not when there's so much evidence of market manipulation by the super-rich and corrupt financial institutions.

Bowks

spark240 said:

Bowks said:

I let my flat in West London when I moved in with my partner 5 years back and I've just sold it, following a shitty experience with tenants and the fact that the area is going downhill, plus the fact the location isn't terribly good for commuting.

My last tenant was in contract until May this yer, but fucked off in December owing me 5 months worth of rent. The letting agent struggled with finding new tenants based on the scum that the council had moved into the adjacent flats. The tenant they did find wanted a rent reduction and the whole place redecorating, as the previous tenant had not looked after the place.

As the property was ex local authority, I managed to find the details of their property procurement team and we agreed a sale, at market value, back to them, which was approved in very early March. Unfortunately, COVID 19 put this on hold, but it all went through a few weeks back, I have my money and no more headaches!

Just the Capital Gains clobbering to come!

The rent was halved after tax and letting agency fees, the subsequent sum was halved again once I paid the mortgage and the profit was just sitting there as a slush fund. Not worth doing IMO as a private landlord. It might well be different if it is run as a business.

I have to wonder what you thought was going to happen?

I thought I wouldn't get fucked over by a cunt of a tenant.

Barnezy

Tex Mexico said:

ToneControl said:

when looking at the house price increase in the 70s, few people remember that this was when most single-income families became dual-income families, and also food and consumer goods got much much cheaper. AFAIK this is the main reason house prices went up, because people bought what they could afford, and so competed with more cash for houses.

Also, it was extremely difficult to get a mortgage in the 60s compared to later decades

There's lots of reasons house prices have more than doubled in the past forty to fifty years, and yes some of them are to do with family incomes and therefore demand increasing. However the bulk of the increase took place in the decade between 1996 and 2006, and it's well-documented that very little of it was down to the middle-class becoming more affluent.

The 2008 crash was caused by a massive increase in sub-prime mortgages over the previous years. Property prices were artificially inflated by buyers being lent far more money than they could afford. Compound that with deregulation, which allowed foreign investors to buy huge swathes of London property to capitalise on the bubble, further jacking up local prices to the point where my house in Preston is worth less than 1/10th of what it would be in Battersea. Throughout that period, average wages just about kept up with inflation.

The huge distance between average earnings and average house prices can't be explained away by better credit availability or the average worker's increasing wealth over the years, not when there's so much evidence of market manipulation by the super-rich and corrupt financial institutions.

And this was all allowed to happen under a Labour government, who was voted in by and meant to represent the working classes. There is some irony in this. 

Tex Mexico

Barnezy said:

Tex Mexico said:

ToneControl said:

when looking at the house price increase in the 70s, few people remember that this was when most single-income families became dual-income families, and also food and consumer goods got much much cheaper. AFAIK this is the main reason house prices went up, because people bought what they could afford, and so competed with more cash for houses.

Also, it was extremely difficult to get a mortgage in the 60s compared to later decades

There's lots of reasons house prices have more than doubled in the past forty to fifty years, and yes some of them are to do with family incomes and therefore demand increasing. However the bulk of the increase took place in the decade between 1996 and 2006, and it's well-documented that very little of it was down to the middle-class becoming more affluent.

The 2008 crash was caused by a massive increase in sub-prime mortgages over the previous years. Property prices were artificially inflated by buyers being lent far more money than they could afford. Compound that with deregulation, which allowed foreign investors to buy huge swathes of London property to capitalise on the bubble, further jacking up local prices to the point where my house in Preston is worth less than 1/10th of what it would be in Battersea. Throughout that period, average wages just about kept up with inflation.

The huge distance between average earnings and average house prices can't be explained away by better credit availability or the average worker's increasing wealth over the years, not when there's so much evidence of market manipulation by the super-rich and corrupt financial institutions.

And this was all allowed to happen under a Labour government, who was voted in by and meant to represent the working classes. There is some irony in this. 

This is true, but another subject entirely. One of democracy's fundamental flaws is that it assumes both that the people know what's good for them and that this option exists to be voted for.

crunchman

Tex Mexico said:

This is true, but another subject entirely. One of democracy's fundamental flaws is that it assumes both that the people know what's good for them and that this option exists to be voted for.

We're stuffed on both counts then.

I honestly believe that a benevolent dictatorship is the best form of government.  The problem is finding a benevolent dictator, and making sure that the power doesn't go to his/her head.

midlifecrisis

forget about all the financial figures for a moment. Your house is your home. Renters always have that possibility (in this country UK) of being given very short notice to move out at the LL wim, imagine young families with young kids having to uproot quickly. Renters are subject to the rent just going up and up. Have to have LL approval to do any major decorating.
Owning a house gives security, worse comes to worse you may sell it and downsize. You may pass it on to your children, you can rent it out if you want.  Ive been fortunate in that ive never had to rent and hope i never will.  Ive paid off my mortgage 5 years ago so im more relaxed, can work easier hours .
Whats going to happen when a renter wants to retire but the pension wont cover the rent? This is a timebomb.