Property crash, just maybe it really is different this time

[Democorruptcy]

11 minutes ago, Frank Hovis said:

 

For starters it clearly isn't a fire sale but generally they aren't paying a lot as they buy buildings which have no obvious other use so buy them cheaply.

The Bodmin 'Spoons is up for sale again after being reprieved a couple of years ago.  IIRC it closes at the end of October and I want to make a farewell visit.

It is one of my favourites.  It was previously a Methodist Chapel.

It is set back from the High Street up either a lot of stairs or a steep ramp at the side.  There is no parking even for staff.

You would be lucky to be able to park in the street anywhere near, and even then it's only for an hour, so I always park some way away and walk to it.  There are a lot of factors not in its favour.

I don't see what commercial use there is for such a site and they, for that reason, presumably bought it really cheaply.

The upstairs bar; which is very rarely open these days.

What a shame, that's a great looking pub. You would know what the year round trade is like there better than me but is that sale perhaps triggered by the number of homes previously occupied by residents being sold for holiday use? Therefore there aren't enough locals to support the business? I spotted a property here on Anglesey and put it forward to the Spoons development manager, he replied that I was correct the property was ideal for them but not viable due to not enough year round population.

Re you owning the shares previously, I actually bought expecting a lockdown boost but immediately had buyer's remorse, thinking energy bills, inflation, rising rates etc. Sold them for a tiny profit at £8+. A new £4.01 target seemed greedy!

[Frank Hovis]

1 minute ago, Democorruptcy said:

What a shame, that's a great looking pub. You would know what the year round trade is like there better than me but is that sale perhaps triggered by the number of homes previously occupied by residents being sold for holiday use? Therefore there aren't enough locals to support the business? I spotted a property here on Anglesey and put it forward to the Spoons development manager, he replied that I was correct the property was ideal for them but not viable due to not enough year round population.

Re you owning the shares previously, I actually bought expecting a lockdown boost but immediately had buyer's remorse, thinking energy bills, inflation, rising rates etc. Sold them for a tiny profit at £8+. A new £4.01 target seemed greedy!

 

Bodmin is an inland locals town without holiday homes AFAIK, I'd say the problem is that, whilst the pub looks impressive both inside and out, its location very much counts against it for visitors (it's a fair old walk from the nearest parking) so it's going to be mainly locals who will be eating at home and then buying the cheap beer.  I assume that the majority of the profit is made on the food and they're not selling enough for that reason.

It's also not a town that many people would go to for a day out so they're not getting much visitor trade.

I'll certainly miss it.

Annoyingly I've just realised, should have remembered, that my ultra low cost Vanguard accounts are ultra low cost for a reason.  You can't buy shares.

I'll have a think about whether I want to buy them directly which will mean setting up a new account.  Bother.

[Guest]

The biggest problem with most UK commercial real estate is that the UK population just isn't very affluent. There is a niche for providing expensive catering/manufactured goods/accommodation etc to the top few percent but below that the disposable income after housing costs drops away very quickly.

[spygirl]

10 minutes ago, Darude said:

The biggest problem with most UK commercial real estate is that the UK population just isn't very affluent. There is a niche for providing expensive catering/manufactured goods/accommodation etc to the top few percent but below that the disposable income after housing costs drops away very quickly.

Ill rephrase that.

The problem with the UK is theres a rapidly diminising number of people working.

Seriously. They need to be tracking working age doing 38h/w.

I reckon most towns would be lucky to get over 50%.

 

[Democorruptcy]

22 minutes ago, Frank Hovis said:

 

Bodmin is an inland locals town without holiday homes AFAIK, I'd say the problem is that, whilst the pub looks impressive both inside and out, its location very much counts against it for visitors (it's a fair old walk from the nearest parking) so it's going to be mainly locals who will be eating at home and then buying the cheap beer.  I assume that the majority of the profit is made on the food and they're not selling enough for that reason.

It's also not a town that many people would go to for a day out so they're not getting much visitor trade.

I'll certainly miss it.

Annoyingly I've just realised, should have remembered, that my ultra low cost Vanguard accounts are ultra low cost for a reason.  You can't buy shares.

I'll have a think about whether I want to buy them directly which will mean setting up a new account.  Bother.

Quick check on AirBnB for a week next June had 151 holiday lets available, obviously won't all be ex-residential use

 

[Frank Hovis]

7 minutes ago, Democorruptcy said:

Quick check on AirBnB for a week next June had 151 holiday lets available, obviously won't all be ex-residential use

 

 

I am genuinely surprised that there are that many!

I don't wish to run it down but the benefit from staying there would primarly be that it's cheaper than staying by the sea.

It has Bodmin Moor on its doorstep as well as the end of the Camel Trail walking and cycle path along the old railway line and mostly along the river that takes you to Wadebridge and then Padstow.

[sancho panza]

3 hours ago, Dave Bloke said:

Northwood reckon not, they say everything can be done WFH and have ditched nearly all their branches. They said people search online now and all contact is at the properties. The margins have also been reduced due to legals etc.

Our last application was all done online till we picked up keys.The savings from Hight St presence trnasfer straight to the bottom line.Most retners are under 50 and only search for properties online.

UK High sts going to be a ghost tonw soon

1 hour ago, Democorruptcy said:

I agree with a lot of that but in the short term they look better positioned than other pub chains. I think they could have ut their pub prices up more recently but maybe they are trying to put the competition out of business? If there are more closures from pubs suffering more, then JDW should pick up more market share? They own 70% freehold and have also renegotiated lower rents on the leased. This week they have said they are selling another 32 pubs, maybe the rents there were too high not their freeholds? Your empty pub could be held by a greedy landlord? They need to offload the less profitable pubs and emerge leaner. If the governbankment don't lift bennies/pensions by inflation that could knock the share price. I just thought at £4 it was worth a punt. This is not advice!

Balance sheet not in great shape,but theyve had a tought couple of years tbf.

In 2018/19 they were kciking off FCF that would put them on a 20% FCF yield today.

Edited September 30, 2022 by sancho panza

[Boon]

Maybe still too early but gotta feeling there will be more bad stories like this:

https://forums.moneysavingexpert.com/discussion/6390886/landlord-mortgage-interest-tax-query

It is fucking funny how most of these describe themselves as 'accidental'; reality being nobody wanted to pay the price they wanted so rented it instead.

If they can't afford both tax and mortgage payments, then they are a forced seller, and there might be a large difference in the price they want and what the market can pay.

[sancho panza]

7 minutes ago, Boon said:

Maybe still too early but gotta feeling there will be more bad stories like this:

https://forums.moneysavingexpert.com/discussion/6390886/landlord-mortgage-interest-tax-query

It is fucking funny how most of these describe themselves as 'accidental'; reality being nobody wanted to pay the price they wanted so rented it instead.

If they can't afford both tax and mortgage payments, then they are a forced seller, and there might be a large difference in the price they want and what the market can pay.

Think you're right there Boon.Also a lot of BTL punters who didn't realsie tehir own home was at the end of the default chain if there's no equity in their BTL's and they're not in a ltd co.

Could sell it but doesn't want to as there'd be little profit??? Any single parent struggling with kids gets my sympathy but this is entirely a mess of his own making in terms of keeping the one bed flat as in investment

I'll do the introductions

'Accidental Landlord meet Mr Market'

Edited September 30, 2022 by sancho panza

[spygirl]

6 minutes ago, Boon said:

Maybe still too early but gotta feeling there will be more bad stories like this:

https://forums.moneysavingexpert.com/discussion/6390886/landlord-mortgage-interest-tax-query

It is fucking funny how most of these describe themselves as 'accidental'; reality being nobody wanted to pay the price they wanted so rented it instead.

If they can't afford both tax and mortgage payments, then they are a forced seller, and there might be a large difference in the price they want and what the market can pay.

I have a rental property that the mortgage is currently on a variable rate with and so going up and up!

As I understand it, as interest on mortgage can no longer be declared a cost for tax purposes, if my increasing interest I am paying gets to the point where the profit on the property is either extremely small, or there is no profit, I still have the pay the large amount of tax I have been paying the last couple of years on it? Is this correct can anyone confirm?

I am a landlord by accident, rather than a professional landlord. (I could not afford to buy a family home so kept my 1 bedroom flat to let out whilst renting a larger property for my family) and am a working single parent. So I simply cannot afford both the big increase in mortgage payments and the amount of tax due on it if tax is at the same level. 

Surely there must be some legislation that means if the property is non-profitable due to the mortgage increased payments, the tax due is lower or reduced? Or because the cost is all in the interest on the mortgage, does it mean I still have to pay full whack tax on it too?

That's someone whos paid fuckall tax is just going thru an excel ss now.

 

 

[Axeman123]

Interesting little article from the Telegraph, via yahoo finance. 

Headline: House purchases collapse as banks slash thousands off loans

"Property sales are collapsing and banks are cutting valuations by tens of thousands of pounds after the mortgage market descended into chaos this week. Lenders are reneging on offers and agreements in principle as interest rates soar, meaning buyers who were on the cusp of getting a mortgage have been forced to pull out of sales or reduce their offers, estate agents and mortgage brokers have warned"

One estate agent claims to have had twenty sales fall through already.

 

[Democorruptcy]

Mortgage swap rate up to 5.7% today. Apparently HSBC would have recently offered a FTB 3.8% at 95% LTV, now it's 6.65%

[Dave Bloke]

50 minutes ago, spygirl said:

Surely there must be some legislation that means if the property is non-profitable due to the mortgage increased payments, the tax due is lower or reduced? Or because the cost is all in the interest on the mortgage, does it mean I still have to pay full whack tax on it too?

She basically wanted someone else to buy her a flat, now she'll have to pony up some of her own money. I can't really see the problem. She could have sold her flat and put it in ISAs invested in the stock market if she wanted a long term investment.

[haroldshand]

1 hour ago, Axeman123 said:

Interesting little article from the Telegraph, via yahoo finance. 

Headline: House purchases collapse as banks slash thousands off loans

"Property sales are collapsing and banks are cutting valuations by tens of thousands of pounds after the mortgage market descended into chaos this week. Lenders are reneging on offers and agreements in principle as interest rates soar, meaning buyers who were on the cusp of getting a mortgage have been forced to pull out of sales or reduce their offers, estate agents and mortgage brokers have warned"

One estate agent claims to have had twenty sales fall through already.

 

If they were taken bets on it or maybe they even do on Forex or somewhere i would bet on a fall in house prices next months, no problem betting £1,000 evens on a fall for October, good chance we could start the ball rolling with a big drop as well

[No One]

On 27/09/2022 at 12:53, No One said:

345 +5 in 24 hours

354 +9 in 3 days

[Stuey]

1 hour ago, haroldshand said:

If they were taken bets on it or maybe they even do on Forex or somewhere i would bet on a fall in house prices next months, no problem betting £1,000 evens on a fall for October, good chance we could start the ball rolling with a big drop as well

They might drop 5% before boomers start to BTD. 

[No One]

1 hour ago, haroldshand said:

If they were taken bets on it or maybe they even do on Forex or somewhere i would bet on a fall in house prices next months, no problem betting £1,000 evens on a fall for October, good chance we could start the ball rolling with a big drop as well

 

51 minutes ago, No One said:

354 +9 in 3 days

[Bobthebuilder]

33 minutes ago, Stuey said:

They might drop 5% before boomers start to BTD. 

Have you turned into a housing bull? anyone would think you have just bought a house.

Nothing like having skin in the game eh?

[sancho panza]

2 hours ago, haroldshand said:

If they were taken bets on it or maybe they even do on Forex or somewhere i would bet on a fall in house prices next months, no problem betting £1,000 evens on a fall for October, good chance we could start the ball rolling with a big drop as well

could be 9 months or so before it appears in the headline indices.

4 hours ago, Democorruptcy said:

Mortgage swap rate up to 5.7% today. Apparently HSBC would have recently offered a FTB 3.8% at 95% LTV, now it's 6.65%

using a mrotgage calcualtor that's £1034 @3.8% on £200000 moving to £1370 at 6.65%.

I'd suspect most people could squeeze that out of their budget but thereafter may get dififcult.

Over the full 25 means total repaid goes from£311,000 to £411,000

Edited September 30, 2022 by sancho panza

[Democorruptcy]

15 minutes ago, sancho panza said:

using a mrotgage calcualtor that's £1034 @3.8% on £200000 moving to £1370 at 6.65%.

I'd suspect most people could squeeze that out of their budget but thereafter may get dififcult.

Over the full 25 means total repaid goes from£311,000 to £411,000

"Full 25"

These 'affordability' checks in the face of rising rates, will mean longer terms.

[sancho panza]

3 hours ago, Democorruptcy said:

"Full 25"

These 'affordability' checks in the face of rising rates, will mean longer terms.

you any idea how long it'll be before those with mrotgages on the variable see rises?

How often do they adjust the rates?

 

edit to add

https://www.thetimes.co.uk/money-mentor/answer/mortgage-rising-interest-rates/

Is my mortgage going up?

This all depends on the type of mortgage you have.

Those with a tracker mortgage — around 800,000 people — will see their payments increase almost immediately. Those on standard variable rates — around one million homeowners — will likely experience rates rises in the coming weeks.

Discount mortgages offer a cheaper version of a lender’s standard variable rate. For example, if the lender’s standard rate is 5% and you enjoy a 1% discount then you would pay 4%.

If the standard variable rate goes up, these mortgages will too, thereby reducing the benefit of your discount deal.

When will I see the price increase?

The small print of your mortgage will tell you how quickly the rise will be passed on – but it’s typically within a month (your lender will write to you and let you know).

Some banks announced almost immediately after the latest Bank of England decision when their mortgage rates would go up, for example:

• Santander confirmed its tracker mortgage products would increase by 0.5% from 3 September. This includes the Santander Follow-on Rate which will increase to 5%. Its standard variable rate also increased by 0.5% to 5.99% from the beginning of September.
• All Alliance & Leicester mortgage products linked to the base rate increased by 0.5% from 1 September. Its standard variable rate also went up to 5.99%.
• Barclays upped its rates on 1 September. Its standard rate increased from 5.74% to 6.24%. The bank’s buy to let standard variable rate went from 6.24% to 6.74%.

Edited September 30, 2022 by sancho panza

[Bobthebuilder]

32 minutes ago, sancho panza said:

you any idea how long it'll be before those with mrotgages on the variable see rises?

How often do they adjust the rates?

 

edit to add

https://www.thetimes.co.uk/money-mentor/answer/mortgage-rising-interest-rates/

Is my mortgage going up?

This all depends on the type of mortgage you have.

Those with a tracker mortgage — around 800,000 people — will see their payments increase almost immediately. Those on standard variable rates — around one million homeowners — will likely experience rates rises in the coming weeks.

Discount mortgages offer a cheaper version of a lender’s standard variable rate. For example, if the lender’s standard rate is 5% and you enjoy a 1% discount then you would pay 4%.

If the standard variable rate goes up, these mortgages will too, thereby reducing the benefit of your discount deal.

When will I see the price increase?

The small print of your mortgage will tell you how quickly the rise will be passed on – but it’s typically within a month (your lender will write to you and let you know).

Some banks announced almost immediately after the latest Bank of England decision when their mortgage rates would go up, for example:

• Santander confirmed its tracker mortgage products would increase by 0.5% from 3 September. This includes the Santander Follow-on Rate which will increase to 5%. Its standard variable rate also increased by 0.5% to 5.99% from the beginning of September.
• All Alliance & Leicester mortgage products linked to the base rate increased by 0.5% from 1 September. Its standard variable rate also went up to 5.99%.
• Barclays upped its rates on 1 September. Its standard rate increased from 5.74% to 6.24%. The bank’s buy to let standard variable rate went from 6.24% to 6.74%.

And there you go, its a bit like the end of war of the war of the worlds, when the smallest, unseen bacteria kill off the monster host.

[Democorruptcy]

35 minutes ago, sancho panza said:

you any idea how long it'll be before those with mrotgages on the variable see rises?

How often do they adjust the rates?

That 5.7 swap rate I mentioned earlier was from one of the talking heads on Bloomberg but I don't know what he was looking at. This page has the current and previous day SONIA swap rate but has the 2 yr today at 5.246 slightly down from the 5.267 yesterday. Gilt rates are also on it and lower today.

https://www.chathamfinancial.com/technology/european-market-rates

 

 

[roundhouse]

10 hours ago, Democorruptcy said:

Quick check on AirBnB for a week next June had 151 holiday lets available, obviously won't all be ex-residential use

 

Bodmin's one of my local towns. 
@Frank Hovis is right about the Bodmin 'spoons and the town itself (except Camel Trail continues a fair way further up the Camel). Stunning building that had been empty for a long time, and they made a fab job renovating it. Sad if it sells, but maybe being an old chapel makes for expensive heating? I'm unsure how busy/empty it is, food or generally, but Bodmin is a relatively poor town which won't help. But a town with aspiration to grow and become capital of East Cornwall. Maybe not happening quick enough for 'spoons, I think it was part of their original thinking.

Bodmin's def not a tourist town for staying in but is well placed for south coast or north coast depending on which way the wind's blowing, or moors, or for off-road cycle trails (proper ones, not flat like Camel Trail). Many of those air bnb's though are in nearby countryside (several miles away), anyone staying in those wouldn't  think to go into Bodders to spoons when there's village pubs to go to (I think).

Good luck with your shares!
 

[spygirl]

10 hours ago, sancho panza said:

you any idea how long it'll be before those with mrotgages on the variable see rises?

 

Another of how the UK mortgage housing dynamics have changed.

Inside the breakdown of the UK’s mortgage machine

Market turmoil sparked by mini-budget saw banks scrambling and 1,688 home loans pulled from shelves

https://www.ft.com/content/086f8be1-5a98-4267-bfcd-7d752649c433

Last week was nothing more than the pain as the markets adjust to being normal.

Nothing to do with Loose Liz.

Markets now expect interest rates to be close to 6% by the spring

Nice chart but not jpeg so cant copy the fucker.

Back to dynamics and  there changes

We have moved from low rates - ~2% since ~ZIRP/2010ish, dipping to 1% (last 1 to 2 years), and now shooting up to 6%, which is3x the average rate for the last 10 years.

There will be a lot of people not buying now.

There will also be a lot of people looking to sell as they can no longer afford the mortgage.

There will also be a lot of HTB in London who are beyond fucked.

And we are mid boomer (2022-1955 = mid 70s) who are probably looking to downsize.

Oh, and all those IO mortgages, 2002-MMR, mainly in London (which has been falling for 6+ years) are about to mature.

And the IO BTLers whove finally sussed they have large tax bill and negative cash flow.