Gorgeous George's Autumn Statement

[Notters]

Maybe, but all signs point to the property market rapidly cooling over the last 6 months or so. Stuff isn't selling, and prices are being reduced. Sellers are having to be a bit more realistic on the valuations they believe they are selling at because, simply, they're not selling.

Through nothing but luck alone, it seems to be a pretty decent time for this change to come in and I don't think the jump in valuations around the prior band cut-offs is going to be too pronounced.

All signs? Everything I've read has suggested that price rises will continue, all be it at a slower rate.

https://www.economicvoice.com/house-prices-up-8-2-percent-in-last-year-says-the-halifax/

 

[Bozza]

All signs? Everything I've read has suggested that price rises will continue, all be it at a slower rate.

https://www.economicvoice.com/house-prices-up-8-2-percent-in-last-year-says-the-halifax/

There has been a very obvious bubble over the last couple of years which we've now come out of and price growth is slowing month on month. I didn't say we were going to enter a period of decreasing prices, but the market has definitely cooled compared to where it was. There are numerous quotes in the article you posted which reinforce that view...

"house prices have increased steadily since the start of 2013 until this summer when they have started to level off"
"The quarterly rate of increase has now declined for four consecutive months."
"Annual price growth in the three months to November slowed further,"
"contributed to the easing in house price growth since the summer."

We completed our purchase in August, having been actively looking for several months. I kept the Rightmove and Zoopla email alerts in place (through laziness as much as anything else) and as we approached completion, and since, it has become very evident that a lot of heat has come out of the market. Six months ago agents were really playing on buyers fearing they would miss out by hosting open houses (if you don't commit now, someone else will) and ultra-low fees for sellers (made up by buyers effectively covering the agency fees). Those tactics won't be working now.

I don't think people can pitch their properties anywhere near as high as they could knowing that if they had gone too high, the market would catch up soon enough.

 

[Herr Tubthumper]

BTL may have helped fuel a price increase but it is anything but the only or main cause. Property inflation was going on well before BTL became popular ( partly because of a certain Jock raiding pension pots ). Despite the stories that landlords are making filthy profits, BTL, as a income earner, isn't very profitable. Once you take into account mortgage interest, maintenance and insurance, there is little left. Unless you have a portfolio of dozens of properties there is no chance of living off the income.

The market inflation is primarily driven by the greed of home owners wanting a large 'profit' on their current property so they can upgrade to something well beyond their means if there wasn't such rampant property inflation.

As for stamp duty and CGT - BTL investors already pay this as well as income tax. Maybe CGT should be introduced on primary residences - that would kill off ridiculous hikes in prices.

This is simply not true. BTL was in place and popular before Labour were in power and therefore well before "a certain Jock raiding pension pots"

And if it very very profitable. Capital gains and the mortgage being paid off by someone else, you'd have to be pretty stupid not to make money. And it's a long term investment so whilst you might need many to live off the income now, when the loans are paid off you could easily live of 4-5.

 

[Herr Tubthumper]

I think we can all see who is " Getting On " , it's not the man in the street on stagnant wages with spiralling costs who is now shopping at Lidl and Aldi in order to stay afloat.

£5 lobsters, you've never has it so good.

 

[Lord Bracknell]

From the point of view of the purchaser, the distinction between the price of the house and the stamp duty payable has always been irrelevant. The price to be paid is the sum of both elements.

The stamp duty changes will surely have no effect on the market price of housing, since this is set in accordance with the TOTAL price of houses, not just one element in the price.

If the cut in stamp duty knocks a few thousand pounds off the cost of buying a house, why on earth wouldn't the seller seek to cash in on the willingness of buyers to pay the "old" price, by simply increasing the new price to the level that was previously being asked?

The net effect of the reform is simply that the government is giving a cash windfall to sellers and doing nothing for buyers. And, of course, they are further distorting an already crazy housing market.

 

[Westdene Seagull]

This is simply not true. BTL was in place and popular before Labour were in power and therefore well before "a certain Jock raiding pension pots"

And if it very very profitable. Capital gains and the mortgage being paid off by someone else, you'd have to be pretty stupid not to make money. And it's a long term investment so whilst you might need many to live off the income now, when the loans are paid off you could easily live of 4-5.

I can only assume you and [MENTION=232]Simster[/MENTION] have never attempted to run a BTL property if you think it is very profitable. As you say it is a long term investment but it only really becomes profitable at point of sale.

BTL started really in the late eighties after the property crash but I hate to tell you that BTL became properly popular as a investment vehicle under one of your beloved Labour governments and for two reasons :

1. The change is law in 1997 to make it easier to evict tenants. This persuaded mainstream lenders to lend to BTL investors.
2. When Brown raided pension pots and so many people saw property as a safer investment for later in life.

Wasn't it nice of Labour to help their BTL buddies ?

 

[Simster]

I can only assume you and [MENTION=232]Simster[/MENTION] have never attempted to run a BTL property if you think it is very profitable. As you say it is a long term investment but it only really becomes profitable at point of sale.

BTL started really in the late eighties after the property crash but I hate to tell you that BTL became properly popular as a investment vehicle under one of your beloved Labour governments and for two reasons :

1. The change is law in 1997 to make it easier to evict tenants. This persuaded mainstream lenders to lend to BTL investors.
2. When Brown raided pension pots and so many people saw property as a safer investment for later in life.

Wasn't it nice of Labour to help their BTL buddies ?

Ah so you agree it IS currently very profitable, albeit at point of sale? DO you want me to agree with you that it isn't profitable until then? Fine, I have no problem with that - because I wasn't actually arguing that point. But overall it is massively profitable, and comes with low risk. How can you possibly argue?

And your last paragraph:
1) Definitely true. Again, an example of a sensible overhaul that fixes an issue that needed fixing, but also exposed flaws elsewhere in the economy. Rather like these stamp duty reforms.
2) Not so much. People started seeing property as safer than pensions LONG before Brown took the piss. Maxwell was nicking from pensions in 1989. We've seen poorly performing pension funds with high fees. We saw annuity costs soar, and the problems caused by inflexibility of when you could actually go to the market for the annuity. And all of this happened FAR earlier than Brown's tax dip into pensions, and all of which led many people to question the value they offered. Your dig at Brown is partly fair, but it is only one of many reasons why pensions are so unattractive.

 

[Lord Bracknell]

Maybe, but all signs point to the property market rapidly cooling over the last 6 months or so. Stuff isn't selling, and prices are being reduced. Sellers are having to be a bit more realistic on the valuations they believe they are selling at because, simply, they're not selling.

Through nothing but luck alone, it seems to be a pretty decent time for this change to come in and I don't think the jump in valuations around the prior band cut-offs is going to be too pronounced.

Rightmove are reporting an 11 per cent increase in Brighton house prices (sold prices) over the past year. Zoopla's "zed index" is +7.67 per cent.

 

[Bozza]

But overall it is massively profitable, and comes with low risk. How can you possibly argue?

Because it is not always massively profitable. At best it can be massively profitable, and most long-term landlords in the UK have, or would, enjoy decent returns if and when they liquidate their property assets.

However if someone bought at the very top of the last price boom (and you only know it's the top with hindsight) and was, for whatever reason, required to sell before this year may well have had to crystallise a capital loss. The house I had last in Somerset, which we sold about a year ago, was sold well below what we had paid for it five years before.

It's simply not the 100% nailed on guarantee that you are representing.

 

[Bozza]

Rightmove are reporting an 11 per cent increase in Brighton house prices (sold prices) over the past year. Zoopla's "zed index" is +7.67 per cent.

I'm not sure what your point is. At no point have I said prices are not going up. I have said they are going up more slowly than was the case recently and the rate of price growth is still continuing to slow.

Beyond that, I was talking very broadly. There is always likely to be areas that buck general trends - London generally being one and Brighton also likely to out-perform the market due to scarce supply.

 

[Simster]

Because it is not always massively profitable. At best it can be massively profitable, and most long-term landlords in the UK have, or would, enjoy decent returns if and when they liquidate their property assets.

However if someone bought at the very top of the last price boom (and you only know it's the top with hindsight) and was, for whatever reason, required to sell before this year may well have had to crystallise a capital loss. The house I had last in Somerset, which we sold about a year ago, was sold well below what we had paid for it five years before.

It's simply not the 100% nailed on guarantee that you are representing.

If not 100%. it's certainly a far higher % than shares. Your example was over 5 years? That's not really "long term" is it? Most mortgages are for 20-25 years aren't they? What percentage of houses lose value over 20-25 years then?

 

[Bozza]

Your example was over 5 years? That's not really "long term" is it? Most mortgages are for 20-25 years aren't they? What percentage of houses lose value over 20-25 years then?

I wasn't suggesting 5 years was long term. I was indicating that there will be examples where people enter BTL and then may have to get out. If the market has moved against them they may make a loss. Or only break even. Certainly not experience what you are suggesting is available to all.

 

[Simster]

I wasn't suggesting 5 years was long term. I was indicating that there will be examples where people enter BTL and then may have to get out. If the market has moved against them they may make a loss. Or only break even. Certainly not experience what you are suggesting is available to all.

But you're picking a specific situation (one where someone is "forced" to get out AND the market has moved against them). You could apply specific situations to any form of investment that will make it seem like a bad investment.

But my point remains - it's still relatively low risk with a likely huge upside at point of sale, unless you've been very unlucky.

 

[Westdene Seagull]

If not 100%. it's certainly a far higher % than shares. Your example was over 5 years? That's not really "long term" is it? Most mortgages are for 20-25 years aren't they? What percentage of houses lose value over 20-25 years then?

The length of mortgage is pretty much irrelevant in BTL as virtually all BTL mortgages are interest only.

 

[Bozza]

But my point remains - it's still relatively low risk with a likely huge upside at point of sale, unless you've been very unlucky.

That wasn't your point. Your point was that it was irrevocably massively profitable. You now concede that might not always be the case. We agree.

 

[Simster]

The length of mortgage is pretty much irrelevant in BTL as virtually all BTL mortgages are interest only.

Not really, as this is collaterized by an asset elsewhere, usually your own house, so you have to factor in the cost of that. Meanwhile the length of mortgage is a sensible indicator of what long-term really means.

That wasn't your point. Your point was that it was irrevocably massively profitable. You now concede that might not always be the case. We agree.

Nope, please re-read my original point on the subject which was that going buy-to-let is a complete no brainer. I later "agreed" with [MENTION=1365]Westdene Seagull[/MENTION] that it IS profitable afterall, when he pounded out "it only really becomes profitable at point of sale", as if a profit at point of sale doesn't count.

Of course there is a risk - it's just that the risk is minimal compared to investments in shares. And the likelihood is that you'll seen a huge return on your investment after 20 years if the past 60 years are anything to go by.

 

[Westdene Seagull]

Not really, as this is collaterized by an asset elsewhere, usually your own house

No it's not - only an idiot would risk their own home like that.

 

[Pavilionaire]

The signs are that the spending proposals (eg stamp duty, new roads, flood defences) are being specifically targeted at voters who might waver towards UKIP. This may not be enough.

If they are going to win, Gideon and Dave need to pitch their messages much more towards voters in the cities of northern England. Achieving "English votes for English issues" is a useless strategy, if all it offers is the right of MPs in the south east to decide what will happen in Newcastle, Leeds and Manchester.

I disagree. The Tories will defeat Labour if they can convince enough UKIP voters to return to the Tory fold, particularly in the marginal seats of "Middle England". Cutting benefits for EU immigrants appeals to these people, as does shipping them out if they haven't got employment after a period of time. These are also the sort of voters that will appreciate the cut in stamp duty and making the Googles of this world pay their fair share of corporation tax.

I'm sure the Tories would love to do better in the North of England and the HS2, road building, mayors and emphasis on making the northern cities a powerhouse won't do them any harm. That said, those northern seats are more 'desirable' than 'essential'.

 

[Vegas Seagull]

I can only assume you and [MENTION=232]Simster[/MENTION] have never attempted to run a BTL property if you think it is very profitable. As you say it is a long term investment but it only really becomes profitable at point of sale.

BTL started really in the late eighties after the property crash but I hate to tell you that BTL became properly popular as a investment vehicle under one of your beloved Labour governments and for two reasons :

1. The change is law in 1997 to make it easier to evict tenants. This persuaded mainstream lenders to lend to BTL investors.
2. When Brown raided pension pots and so many people saw property as a safer investment for later in life.

Wasn't it nice of Labour to help their BTL buddies ?

Earlier. My dads friend had 100 properties in Hove in the 70's, Hoogstraten had 3X as many & Rachmann had dozens of blocks of flats earlier in London. 'Law' was irrelevant, there have always been various ways to get people to move on, should you wish

 

[Uncle Spielberg]

I think Simster is bang on the money with his comments. It will only get worse next April for ftb's and movers when pension pots can be drawn in full as I believe there will be 5 btl investors offering on properties to build up portfolio's and it will get very hard for your " hard working family " let alone a ftb to get on the ladder or move up the ladder, a situation created by Osborne and now fuelled with the much lower stamp duty for most property purchases