Property crash, just maybe it really is different this time

[Bilbo]

Oh dear never mind.

https://www.telegraph.co.uk/property/house-prices/nowhere-house-prices-go/

 

[Noallegiance]

[Inque]

Housing crash called off

 

[HousePriceMania]

32 minutes ago, Inque said:

Housing crash called off

 

When was it called on? 

[Axeman123]

9 hours ago, Inque said:

Housing crash called off

 

No new funding, pilot schemes only. Just waffle to be quietly dropped later IMO.

[kibuc]

As a higher-rate taxpayer renting privately, sometimes I find myself thinking "why do they hate us so much?". It feels like my purpose on this earth is to support 2 or 3 families until I drop and shut the fuck up about everything in the meantime.

Don't get me wrong, life is still ok and we're getting by just fine but I believe it should be much better still, given my and my wife's skillset, years of experience, productivity and the resulting salary.

[Frank Hovis]

54 minutes ago, kibuc said:

As a higher-rate taxpayer renting privately, sometimes I find myself thinking "why do they hate us so much?". It feels like my purpose on this earth is to support 2 or 3 families until I drop and shut the fuck up about everything in the meantime.

Don't get me wrong, life is still ok and we're getting by just fine but I believe it should be much better still, given my and my wife's skillset, years of experience, productivity and the resulting salary.

 

As per my post on the HB thread it is private renters in work and not in receipt of benefits who are being shafted time and time again by government policy despite funding much of it.

They are the modern beast of burden and no policies are brought in to help them.

In nice coastal areas of the south they have been swept out over the last two years as rents rose by 30% - 40; this is economic cleansing of whole towns and the government couldn't give a stuff.  In large part I would suggest because they will be 95% white.

 

 

My only thought is to jump ship and buy because then you become part of the government's favoured demographic.

As a smaller scale parallel I was annoyed about the huge loading of electricity bills through the 2000s and 2010s to fund subsidies on solar and wind; then I accepeted that I couldn't change government policy so I might as well join the gravy train and installed solar panels to take my share of the troughing.

[sleepwello'nights]

3 minutes ago, Frank Hovis said:

As a smaller scale parallel I was annoyed about the huge loading of electricity bills through the 2000s and 2010s to fund subsidies on solar and wind; then I accepeted that I couldn't change government policy so I might as well join the gravy train and installed solar panels to take my share of the troughing.

You'ld have made a better return by joining the BTL brigade. 

[Frank Hovis]

8 minutes ago, sleepwello'nights said:

You'ld have made a better return by joining the BTL brigade. 

 

I wouldn't!  It's about 15% p.a. tax free, inflating with RPI, for twenty years.

I've also done better with global equities than have those with property investments; though I do have the house in which I live.

The reason that most people think that property has been a licence to print money is because most people only understand two classes of investment: cash and property.

And the governments have steadily chipped away at cash for decades by money printing / QE and leaving interest rates below inflation whilst taking action whenever the ongoing rise of house prices seems threatened.

People wanting to buy a house by saving cash have been rational and have lost as a consequence of multiple successive irrational governments.

[kibuc]

39 minutes ago, Frank Hovis said:

 

As per my post on the HB thread it is private renters in work and not in receipt of benefits who are being shafted time and time again by government policy despite funding much of it.

They are the modern beast of burden and no policies are brought in to help them.

In nice coastal areas of the south they have been swept out over the last two years as rents rose by 30% - 40; this is economic cleansing of whole towns and the government couldn't give a stuff.  In large part I would suggest because they will be 95% white.

 

 

My only thought is to jump ship and buy because then you become part of the government's favoured demographic.

As a smaller scale parallel I was annoyed about the huge loading of electricity bills through the 2000s and 2010s to fund subsidies on solar and wind; then I accepeted that I couldn't change government policy so I might as well join the gravy train and installed solar panels to take my share of the troughing.

That's certainly an option but I cannot stomach the idea of putting all my life savings into the deposit in addition to taking on close to half a million of Queen's finest pounds in debt. I like sleeping at night.

The equation will change once our kids go to the Uni and suddenly living 10 yards away from a good secondary won't be as important anymore. With both of us working remotely 90% of the time, we'll be able to fuck off to Norfolk and buy a cosy 2-bed cottage within a driving range from the station for under £250k. But that's still 10 years away, and even then my income will be an easy target.

[sleepwello'nights]

31 minutes ago, Frank Hovis said:

 

I wouldn't!  It's about 15% p.a. tax free, inflating with RPI, for twenty years.

 

I wonder. Haven't got time to work through it but a client bought a house to rent out in 2000. The price of the house was IIRC £85k, deposit 10% so say £10k with purchase costs. Rental income is now £1500 per month, mortgage was paid off after 15 years and market? value of house is now around £450k. Maintenance costs have been minimal. 

The yield on that £10k outlay is what the return should be based on not the yield based on market value. I've ignored the mortgage principal and interest payments because that was paid from rental income. 

Perhaps I'm cherry picking the numbers to give a positive bias but the reality is the initial outlay was the investment, everything else has been paid from the rental income.  

Currently the rental income, before tax, is £18k on an outlay of £10k. Even with my dodgy mental arithmetic I reckon that's more than 15%. Ignoring compounding of course, even so. 

Edited June 9, 2022 by sleepwello'nights
current rental yield

[Frank Hovis]

4 minutes ago, kibuc said:

That's certainly an option but I cannot stomach the idea of putting all my life savings into the deposit in addition to taking on close to half a million of Queen's finest pounds in debt. I like sleeping at night.

The equation will change once our kids go to the Uni and suddenly living 10 yards away from a good secondary won't be as important anymore. With both of us working remotely 90% of the time, we'll be able to fuck off to Norfolk and buy a cosy 2-bed cottage within a driving range from the station for under £250k. But that's still 10 years away, and even then my income will be an easy target.

 

Fair enough.

Personal requirements are often the blocker. 

As a single bloke I could buy a cheap studio flat and rough it for ten years whilst accumulating all of the money saved on rent, plus other savings, in order to then sell the flat and use the savings to buy somewhere where I would actually want to live.

I expect that you would soon also be a single bloke if you took that strategy!

[Frank Hovis]

3 minutes ago, sleepwello'nights said:

I wonder. Haven't got time to work through it but a client bought a house to rent out in 2000. The price of the house was IIRC £85k, deposit 10% so say £10k with purchase costs. Rental income is now £1500 per month, mortgage was paid off after 15 years and market? value of house is now around £450k. Maintenance costs have been minimal. 

The yield on that £10k outlay is what the return should be based on not the yield based on market value. I've ignored the mortgage principal and interest payments because that was paid from rental income. 

Perhaps I'm cherry picking the numbers to give a positive bias but the reality is the initial outlay was the investment, everything else has been paid from the rental income.  

 

Yes.  I took it as going into BTL today where the yields are low.

My house would maybe yield 4% gross rental and after the last two years of price rises I can't see anything beyond inflationary rises in the medium term so no real capital gain.

[sleepwello'nights]

2 minutes ago, Frank Hovis said:

 

Yes.  I took it as going into BTL today where the yields are low.

 

Fair enough. 

It also raises another question in my mind. The ITV news started a campaign on the appalling housing conditions some tenants have to endure. All the examples they've broadcast are of property rented from local authorities and housing associations. 

The examples they show are really bad conditions, like rooms black with mould, water pouring through ceilings and the like. Even though the tenants must be paying low rents compared to the private rental sector the rental income must be enough to provide proper maintenance. How they have left essential repairs to become so bad beggars belief. 

These are the social organisations that are meant to provide decent housing and the type of organisation many posters feel should displace private landlords. With their economies of scale and property professionals on their payrolls how can they neglect essential maintenance. 

 

[Axeman123]

1 minute ago, sleepwello'nights said:

With their economies of scale and property professionals on their payrolls how can they neglect essential maintenance. 

Six figure salaries for the people at the top of the totem pole.

[apples]

11 minutes ago, sleepwello'nights said:

Fair enough. 

It also raises another question in my mind. The ITV news started a campaign on the appalling housing conditions some tenants have to endure. All the examples they've broadcast are of property rented from local authorities and housing associations. 

The examples they show are really bad conditions, like rooms black with mould, water pouring through ceilings and the like. Even though the tenants must be paying low rents compared to the private rental sector the rental income must be enough to provide proper maintenance. How they have left essential repairs to become so bad beggars belief. 

These are the social organisations that are meant to provide decent housing and the type of organisation many posters feel should displace private landlords. With their economies of scale and property professionals on their payrolls how can they neglect essential maintenance.

Obvious questions:

What proportion of property rented from local authorities and housing associations is like that?

Is ITV cherry picking the worst cases for its program, or are the examples it shows typical?

What proportion of privately rented property would be like that if ITV wanted to campaign about that instead?

[Frank Hovis]

Just now, sleepwello'nights said:

Fair enough. 

It also raises another question in my mind. The ITV news started a campaign on the appalling housing conditions some tenants have to endure. All the examples they've broadcast are of property rented from local authorities and housing associations. 

The examples they show are really bad conditions, like rooms black with mould, water pouring through ceilings and the like. Even though the tenants must be paying low rents compared to the private rental sector the rental income must be enough to provide proper maintenance. How they have left essential repairs to become so bad beggars belief. 

These are the social organisations that are meant to provide decent housing and the type of organisation many posters feel should displace private landlords. With their economies of scale and property professionals on their payrolls how can they neglect essential maintenance. 

 

 

There is a specific Decent Homes Standard.

Here are the most recent figures I can find for this; from 2018, the link is to a pdf:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/898172/2018-19_EHS_Stock_Profile_and_Condition.pdf

 

The poor quality of council homes was the main driver for the creation of Housing Associations and the mass stock transfer.

Council (specifically) houses had been in steady decline from about the 1970s because there was not enough money spent on thier upkeep.  The main reason IMO was the councils were nabbing money that should have been spent upon refurbishment programmes on other areas of council business - kicking the can down the road because they could and patching up holes in roofs rather than replacing the failing roofs.

Tenants had to vote to approve a transfer to a HA who would then make promises to bring homes up to standard; unlike government promises these were usually fulfilled to 90%+.  These typically run for five years so there will be a big chunk of non-decent during taht five year period.

Generally it was the tenants of the worst stock that voted for transfer so a lot of that council improvement is actually taking the worst stock out of the council line and adding it to the HA line.

A lot of HAs are 99% compliant; councils are materially lower.  I would note on the curve how the HA line falls every year but the council line shows rises.

When local newspaper stories about poor conditions / state of repair in the local paper they are usually one of two providers: Cornwall Housing, the council body, or Sanctuary Housing which is a national HA but has very thinly spread stock which is very different from most HAs who work in a particular area. 

 

And the most salient point of the graph, though because you were expecting it you haven't really noticed it, is that private rented houses are far and away in the worst condition with a third deemed to be non-decent.

And they have the highest rents.

[sleepwello'nights]

17 minutes ago, apples said:

Obvious questions:

What proportion of property rented from local authorities and housing associations is like that?

Is ITV cherry picking the worst cases for its program, or are the examples it shows typical?

What proportion of privately rented property would be like that if ITV wanted to campaign about that instead?

To respond to your points:

1. No idea. Have a look at the campaign and see what is reported. https://www.itv.com/news/2021-09-12/britains-housing-shame-shocking-conditions-and-despair-at-a-lack-of-action

2. I suspect that the most newsworthy are the cases reported as they serve to highlight the problem.

3. I doubt a private landlord would let the property they own fall into the disrepair of the reported cases. A property belonging to a private landlord would represent a larger proportion of his assets than a property belonging to a local authority or housing association. If a private landlord purchases a property in disrepair it is likely it will be brought into a reasonable condition before it can be let, even beofre recent legislative changes. Watch Homes under the hammer to see how proerty is regenerated by private landlords. It makes you wonder why the previous occupant allowed their home to get into the conditions some examples are. The houses I've owned and rented in the past were always in a good condition when they were let. They were mostly returned in good condition. One or two notable exceptions were not. 

[sleepwello'nights]

25 minutes ago, Frank Hovis said:

 

 

And the most salient point of the graph, though because you were expecting it you haven't really noticed it, is that private rented houses are far and away in the worst condition with a third deemed to be non-decent.

 

It also demonstrates how the condition of housing stock is improving. 

[Frank Hovis]

Just now, sleepwello'nights said:

It also demonstrates how the condition of housing stock is improving. 

It does.

Although Decent Homes 2 is on the way which will raise the bar and increase the numbers of non-decent.

 

 

A solution floated in the Green Paper is to place obligations on landlords for installation of smoke alarms and carbon monoxide detectors and to ensure electrical systems are inspected every five years. This would mirror changes in legislation imposed on private sector rented homes. Indeed this has been the approach taken by the Welsh Government and reflects the recommendations of a live Private Member’s bill: The Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill.

Combustibles ban?

Other potential changes to the Decent Homes Standard could include bans on particular materials used in the construction of social housing, for example the types of cladding highlighted as ‘combustible‘ following testing in the wake of the Grenfell Tower disaster. 

There is still a significant backlog of homes across the country that do not meet the current Decent Homes Standard. If the bar is raised to include additional safety measures with more guidance on fire safety, then the number of ‘affordable’ homes which fall into the category of ‘non- decent‘ will increase, and add to those which are currently rated as unfit for human habitation.

https://constructionmanagement.co.uk/what-will-new-decent-homes-standard-look/

[Long time lurking]

Mortgages for people on benefits 

 

Edited June 9, 2022 by Long time lurking

[GTM]

35 minutes ago, Long time lurking said:

Mortgages for people on benefits 

 

From about 1:20 in the JHB/Goveworm clip. It rather got glossed over, but what's this about proposals for savings being disregarded for UC?

[Frank Hovis]

10 minutes ago, GTM said:

From about 1:20 in the JHB/Goveworm clip. It rather got glossed over, but what's this about proposals for savings being disregarded for UC?

From the other thread:

2 hours ago, Wight Flight said:

Gove had a solution to that on JHB this morning.

They will create a special savings vehicle that is outside the scope of the £16k cap where people on benefits can save a deposit.

If they can save up a house deposit, benefits are too high FFS!

[Long time lurking]

 

[AWW]

On 09/06/2022 at 10:45, Axeman123 said:

Six figure salaries for the people at the top of the totem pole.

Six figure salaries aren't at all uncommon in my industry and area of the country. All those earning them must be minted, right? Well, if you earn £120k a year, the government lets you keep about £70k of it, around £6k a month. Are you supporting a family on that enormous wage? Well, if you're renting, £2.5k goes in rent. £200 on council tax. Another £200 on gas, electric, water, broadband, mobiles, Turkish Netflix and Argentinian Tidal. £900 on food. £300 to run and fuel a car. £250 on half time places at nursery, to prep the kids for school. Life insurance £30. Disposable income is down to somewhere around £1500 a month. If you want to make the max. SIPP contribution of £40k, you have no disposable income left, even with the tax relief. I'm not saying these people have hard lives; I'm saying they're not driving around in Lambos and drinking Krug.

Of course, if you are happy for your kids to be brought up by someone else, and both work, six figure salaries will give you a very comfortable lifestyle.