Property crash, just maybe it really is different this time

[ste]

I'm still not so certain of a 'crash' - a softening perhaps, but I cannot see demand falling nor building increasing to cover any shortfall.

The reliance on housing (and imputed rent) in GDP and the banks exposure means it cannot 'crash' without bringing the economy down with it, neither party wants that when they are only squeezing out growth of 0.1% each quarter.

Starmer is playing to his base ahead of an election, nothing more and both seem intent on flooding the country with more immigrants.

Mortgage/rent comes first and people will adjust. Despite the interest rate rises and inflation so far, there still seems to be plenty of money out there, roads busy, shopping centres busy as are those shitty little chain restaurants they like to put in their car parks are too.

[JoeDavola]

Article on bbc NI that rents in NI are soaring, evidence of people ‘bidding’ on properties to rent etc.

Fucking horror show just gets worse and worse, I honestly don’t know where people are actually going to live at this point if nobody’s selling, few people can buy what is being sold, no council houses being built and a collapse in rental supply.

https://www.bbc.co.uk/news/uk-northern-ireland-65624843.amp

As @gibbon says it’s probably a better market than ever to be an HMO slum landlord, if you could live with yourself.

[Wight Flight]

2 minutes ago, JoeDavola said:

Article on bbc NI that rents in NI are soaring, evidence of people ‘bidding’ on properties to rent etc.

Fucking horror show just gets worse and worse, I honestly don’t know where people are actually going to live at this point if nobody’s selling, few people can buy what is being sold, no council houses being built and a collapse in rental supply.

https://www.bbc.co.uk/news/uk-northern-ireland-65624843.amp

As @gibbon says it’s probably a better market than ever to be an HMO slum landlord, if you could live with yourself.

Most people with a reasonable job will have got a payrise of about £2k this year, or £100 a month take home.

It is no great surprise that rents seem to be going up by about £100 per month.

[JoeDavola]

3 minutes ago, Wight Flight said:

Most people with a reasonable job will have got a payrise of about £2k this year, or £100 a month take home.

It is no great surprise that rents seem to be going up by about £100 per month.

The scarier part is not even getting as far as finding a landlord to hand all your money over to - a mate of mine with two kids a wife and two dogs rents and he was 2 weeks away from being homeless about 12-18 months ago when his landlord gave him 3 months notice. Found somewhere by the skin of his teeth. I reckon today he would be homeless.

Edited May 19, 2023 by JoeDavola

[Wight Flight]

1 minute ago, JoeDavola said:

The scarier part is not even getting as far as finding a landlord to hand all your money over to - a mate of mine with two kids a wife and two dogs rents and he was 2 weeks away from being homeless about 12-18 months ago when his landlord gave him 3 months notice. Found somewhere by the skin of his teeth. I reckon today he would be homeless.

That is absolutely standard here, and affects everyone, even nurses and teachers. I can guarantee at least one desperate plea on facebook every day. It will probably be me as well when my landlord kicks me out.

[JoeDavola]

6 minutes ago, Wight Flight said:

That is absolutely standard here, and affects everyone, even nurses and teachers. I can guarantee at least one desperate plea on facebook every day. It will probably be me as well when my landlord kicks me out.

The irony is the most perfect HMO house that I know of is the house my parents have just sale agreed. I shoulda bought it from them and started a new life as a landlord.

Edited May 19, 2023 by JoeDavola

[belfastchild]

27 minutes ago, JoeDavola said:

The irony is the most perfect HMO house that I know of is the house my parents have just sale agreed. I shoulda bought it from them and started a new life as a landlord.

Belfast City Council are looking for landlords to house immigrants.

You could have taken the parents out to a fancy restaurant to break the news to them. Watch them choke as you pick up the bill with the money made from your 'investment'.

[MrXxxx]

11 hours ago, Wight Flight said:

Won't someone spare a thought for the landlords with their 3% yields?

Yes....

 

[MrXxxx]

10 hours ago, Wight Flight said:

Agreed. 

The figures just don't add up unless they are banking on mad capital gains.

Any landlord that paid a price more than 10x the annual rent deserves all that is coming to them.

My place is valued at 40x rent. That is dotcom valuation territory.

Can you explain the significance of 10 x annual rent.

[Wight Flight]

1 minute ago, MrXxxx said:

Can you explain the significance of 10 x annual rent.

It was the standard calculation for many years.

Makes sense. Long term interest rates at 6%, costs 2%, profit 2%.

10% ROCE shouldn't be exceptional.

[JoeDavola]

21 minutes ago, belfastchild said:

Belfast City Council are looking for landlords to house immigrants.

You could have taken the parents out to a fancy restaurant to break the news to them. Watch them choke as you pick up the bill with the money made from your 'investment'.

They actually wouldn't give a fuck, for all their complaining about immigrants the last two times they pretended to sell the house it was immigrants they were happy to sell to on both occasions.

[JoeDavola]

7 minutes ago, Wight Flight said:

It was the standard calculation for many years.

Makes sense. Long term interest rates at 6%, costs 2%, profit 2%.

10% ROCE shouldn't be exceptional.

Yes IIRC at the very bottom of the crash in NI around 2012 there would have been some - only some mind - houses that would have had this 10% figure of yearly rent to buying price.

[Axeman123]

45 minutes ago, Wight Flight said:

It was the standard calculation for many years.

Makes sense. Long term interest rates at 6%, costs 2%, profit 2%.

10% ROCE shouldn't be exceptional.

Variation I heard in the 1980s was £10/month rent for every £1k purchase price, ie 1%/month and 12%/year. Landlords from back then would be shocked at yields people have been willing to accept in recent years.

[Google247]

I know a few landlords in the south east and they base their calculations on a minimum of a 10% yield on the mortgaged amount.

If your ltv is under 50% the number still stack up

And as minimum deposit has been 25% for many years now unless the landlord is working on a ti y yield then numbers still stack up

The landlords who bought in the last 5 years or so around London with a 3% yield are absolutely screwed though

[Axeman123]

29 minutes ago, Google247 said:

base their calculations on a minimum of a 10% yield on the mortgaged amount.

If your ltv is under 50% the number still stack up

I take your point, but it seems like a rationalisation more than a critical sessment. Landlords often have an emotional attachment to the idea IMO, so this may actually represent their thinking quite well.

10% yield on the 50% LTV less an optimistic 7% for all costs leaves 3%, which is equivalent to 3% yield on the value of the 50% downpayment/equity figure. You can beat that yield on instant access savings accounts right now, and have no risk or tenant stress.

Without anticipated capital gains it still doesn't add up IMO, but people are drawn to it for some mad reason.

[JoeDavola]

15 minutes ago, Axeman123 said:

I take your point, but it seems like a rationalisation more than a critical sessment. Landlords often have an emotional attachment to the idea IMO, so this may actually represent their thinking quite well.

10% yield on the 50% LTV less an optimistic 7% for all costs leaves 3%, which is equivalent to 3% yield on the value of the 50% downpayment/equity figure. You can beat that yield on instant access savings accounts right now, and have no risk or tenant stress.

Without anticipated capital gains it still doesn't add up IMO, but people are drawn to it for some mad reason.

It's an ego thing - people want to say they 'own' multiple houses, as it impresses the average Brit at a dinner party more than something like stocks. Oh I'm a pwopertee invester I have a portfolio. Fuck off.

[onlyme]

Another factor, as much as the government are intent on flooding the country with as many bodies as possible if they do push the Brexit reverse button with what has been going on over the last few years a lot of the Brexiteers will hit the bail button and look for soemwhere else to live - why stay in the country watching it rot and being taxed to the gills - might as well do that poolside in a cheaper country.

I just can't see the demand / availability of finance for the next for years and longer being up to keeping this pig propped on all fours legs at all.

[AWW]

12 hours ago, Wight Flight said:

Agreed. 

The figures just don't add up unless they are banking on mad capital gains.

Any landlord that paid a price more than 10x the annual rent deserves all that is coming to them.

My place is valued at 40x rent. That is dotcom valuation territory.

Mine too. Or at least, it was. I am a buyer at 20x rent.

And even then, I look at what mates have to spend on houses when they find problems with them, and wonder if I even want to own one at all. If your rental has dry rot or is sliding down a hill, you can just move out.

[AWW]

10 minutes ago, JoeDavola said:

It's an ego thing - people want to say they 'own' multiple houses, as it impresses the average Brit at a dinner party more than something like stocks. Oh I'm a pwopertee invester I have a portfolio. Fuck off.

This has become more obvious to me since the kids started school and I've mixed with people I wouldn't otherwise have met. The amount of showing off and humble-bragging is off the scale. I don't care what anyone thinks of my clothes, car, house or lifestyle. To be honest, given how much energy some people seem to expend giving a fuck about that sort of thing, it feels like a superpower.

[Wight Flight]

1 minute ago, AWW said:

Mine too. Or at least, it was. I am a buyer at 20x rent.

That's my issue. I would love to buy the place I currently rent, but just the interest on the mortgage would be double the rent I pay.

#rentforever

[AWW]

The reaction to finding out that I rent my house has changed in the last few months though. It used to be one of pity, but not anymore.

[JoeDavola]

1 minute ago, AWW said:

This has become more obvious to me since the kids started school and I've mixed with people I wouldn't otherwise have met. The amount of showing off and humble-bragging is off the scale. I don't care what anyone thinks of my clothes, car, house or lifestyle. To be honest, given how much energy some people seem to expend giving a fuck about that sort of thing, it feels like a superpower.

Yes life for many does seem to be about how much stuff you can die with.

Fortunately I don't mix in such circles, if someone tried to brag to me about being a BTL-er I'd tell them exactly what I thought of them.

[AWW]

Just now, Wight Flight said:

That's my issue. I would love to buy the place I currently rent, but just the interest on the mortgage would be double the rent I pay.

#rentforever

Pretty similar sums for me. And if S21 does end up in the bin, even less reason to buy.

[Wight Flight]

3 minutes ago, AWW said:

Pretty similar sums for me. And if S21 does end up in the bin, even less reason to buy.

I think the S21 thing is a total red herring. It was hardly ever used apart from to get rid of antisocial tenants, or for the reasons that are still allowed (sale / landlord moving in)

[JoeDavola]

10 minutes ago, Wight Flight said:

That's my issue. I would love to buy the place I currently rent, but just the interest on the mortgage would be double the rent I pay.

#rentforever

25 year mortgage at 5% mortgage rates plus ownership costs that I don't pay (council tax, building maintenance, allow say 50 a month over the long term for internal maintenance and occasional extra building repair) puts my one bed hovel at £1100 a month if you were buying it. Quite sobering really when you look at it that way, especially since it's as cheap as a city centre flat would get really.

Edited May 19, 2023 by JoeDavola