Property crash, just maybe it really is different this time

[Noallegiance]

Bears out in force today:

Voices: A housing crash is now inevitable – why aren’t we talking about it? (msn.com)

[sancho panza]

5 hours ago, spygirl said:

Theye might be grumpy as theyve discovered that theyve lent a lot of money to someone whos renting out the house without a BTL mortgage and has bought a load of fields with grass.

 

This sort of stuff is what BS used to do.

However, they only used to deal with medium sized local builders whod already sorted out planning.

 

 

I had a quick look at said BS's accounts this morning and whislt I'm not going to mention the acutal one,this is similar.

Net assets(ie laons outstanding plus other assets) £800million,net interest margin 1.34%.The figures speak for tehmselves.

If the sort of laon I'm sat amongst is symptomatic of their wider loan book,these small BS's are fubar.And they're claiming cpaital tier one equity of 17% nearly.......mmmmm!!!!! looking at the laon qulaity I appear to be looking at I think we need to develop a Dowd Buckner for BS's.

All it would take to upset this apple cart is a a few hundred thousand more unemployed or the govt reigning in the fiscal deficit(quite likely imho with 7% RPI)

This is Hinkley and Rugby

https://www.hrbs.co.uk/wp-content/uploads/2022/03/Hinckley-and-Rugby-Annual-Report-and-Accounts-2021.pdf

[HousePriceMania]

6 hours ago, Noallegiance said:

Bears out in force today:

Voices: A housing crash is now inevitable – why aren’t we talking about it? (msn.com)

 

 

 

 

Edited April 13, 2022 by HousePriceMania

[spygirl]

6 hours ago, sancho panza said:

I had a quick look at said BS's accounts this morning and whislt I'm not going to mention the acutal one,this is similar.

Net assets(ie laons outstanding plus other assets) £800million,net interest margin 1.34%.The figures speak for tehmselves.

If the sort of laon I'm sat amongst is symptomatic of their wider loan book,these small BS's are fubar.And they're claiming cpaital tier one equity of 17% nearly.......mmmmm!!!!! looking at the laon qulaity I appear to be looking at I think we need to develop a Dowd Buckner for BS's.

All it would take to upset this apple cart is a a few hundred thousand more unemployed or the govt reigning in the fiscal deficit(quite likely imho with 7% RPI)

This is Hinkley and Rugby

https://www.hrbs.co.uk/wp-content/uploads/2022/03/Hinckley-and-Rugby-Annual-Report-and-Accounts-2021.pdf

One thing you have to bear in mind that consumer mortgages were not properly regulated til 2004.

Until then, you had more consumer protection buying a box of eggs than a 250k mortgage.

Nuts, wasnt it.

But that's how it was.

The total fuckup of endowments in 2000 meant this was going to happen.

Til then it was good chaps rules I.e none.

Then MMR followed, after the last gasp fuckwittery of IO, liar loans.

That's why 95%+ of mortgage are repayment now. No magic repayment.

You want a mortgage? 20%, under 4x household income, 5-10 fix.

No lying about your income. Or crossing your fingers you'll win the lottery and be able to pay off the IO.

I mention that, as when it comes to fucking over mortgage holders to bail out their mistakes, banks names hands are totally tied with consumers.

However ... commercial lending is gloves off.

If you've spoken to a business that went into a slowdown with bank debt, you'll understand why most long running business avoid bank debt bar an OD facility.

It's that painful.

However, theres  loads of properdee developers gleefully borrowing shit loads. Ditto IO butlers.

What could go WRONG.....

Unregulated commercial lending us where banks are going to draw blood to cover up their fuckups.

Io btls, FHL, developer loans.

 

 

[Bilbo]

Good news bad news? Good for buying, shit for renters.

Telegraph today.

https://www.telegraph.co.uk/property/uk/landlords-cash-soaring-house-prices-forcing-renters-bidding/

Free for me on Android ... Will post free link if you need one.

[Wight Flight]

45 minutes ago, Bilbo said:

Good news bad news? Good for buying, shit for renters.

Telegraph today.

https://www.telegraph.co.uk/property/uk/landlords-cash-soaring-house-prices-forcing-renters-bidding/

Free for me on Android ... Will post free link if you need one.

What happened to the theory that every time a landlord sold, a renter bought?

Doesn't seem to be working that way in practice.

[Boon]

Just seems to be the case that people live their lives through national statistics and everything applies to them.

Of course this is dumb but there are people in London who refuse to believe their flats are worth less because of the 'house prices +12%' headlines.

Much depends on the area doesn't it? I could imagine that landlords cashing out in some areas would lead to those houses being removed from the rental market, market forces would seem to dictate that either prices go up in that area, demand goes down or supply goes up. The latter one may be quite difficult.

In other areas however a rental being sold just means another landlord coming in, which doesn't reduce the rental supply. Or the place being sold to people who previously rented,which also does not. With areas with lots of development, rental supply is actually going up.

[AlfredTheLittle]

30 minutes ago, Wight Flight said:

What happened to the theory that every time a landlord sold, a renter bought?

Doesn't seem to be working that way in practice. 

Population growth. Over a decade it's in the millions, and must make a difference

[Wight Flight]

6 minutes ago, Boon said:

Or the place being sold to people who previously rented

I think a lot of them are being sold to thirty year olds who have been living at home building up a deposit - not current renters who in the main don't have the ability to do so.

1 minute ago, AlfredTheLittle said:

Population growth. Over a decade it's in the millions, and must make a difference

Yes, that demand has been pent up for years with the above being the 'battery'

 

[spygirl]

https://amp.theguardian.com/money/2022/apr/10/stamp-duty-holiday-tempted-buyers-into-marathon-loans

Quilter says this suggests borrowers were taking the opportunity during the stamp duty holiday to buy larger and more expensive homes, stretching repayments over a longer term in order to make them affordable.

I'd like them to talk me through the affordable bit.

 

[Loki]

4 minutes ago, spygirl said:

https://amp.theguardian.com/money/2022/apr/10/stamp-duty-holiday-tempted-buyers-into-marathon-loans

Quilter says this suggests borrowers were taking the opportunity during the stamp duty holiday to buy larger and more expensive homes, stretching repayments over a longer term in order to make them affordable.

I'd like them to talk me through the affordable bit.

 

Affordable now just means "Can I afford the monthly payment?  IF not can I add more months?"

Edited April 14, 2022 by Loki

[spygirl]

1 minute ago, Loki said:

Affordable now just means "Can I afford the monthly payment?  IF not can I add more months?"

Well, that breaks down when you go above 25.

You save fuckall.

[Animal Spirits]

Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubble

https://www.dallasfed.org/research/economics/2022/0329

And here's the buying spree they went on with soaring MBS holdings:

From April 2021: "It's not meant to provide direct assistance to the housing market"...

Edited April 16, 2022 by Animal Spirits

[spunko]

https://www.thisismoney.co.uk/property/article-10718595/Rental-property-battle-Notting-Hill-studio-vs-country-cottage.html#article-10718595

That studio flat is a kitchen with a bed in it. 

The world has gone mad 

[Wight Flight]

59 minutes ago, spunko said:

https://www.thisismoney.co.uk/property/article-10718595/Rental-property-battle-Notting-Hill-studio-vs-country-cottage.html#article-10718595

That studio flat is a kitchen with a bed in it. 

The world has gone mad 

'It is being rented fully furnished for £2,170'

fully furnished? A bed and two bar stools?

 

[leonardratso]

2 hours ago, Wight Flight said:

'It is being rented fully furnished for £2,170'

fully furnished? A bed and two bar stools?

 

well if you want a piss or puke in the night, its much quicker to get to the sink than to get to the toilet.

[Boon]

The journos seem to have stretched reality in order to make a point.

If you go searching on Rightmove they have taken a ridiculously priced studio - most areas of London have stuff priced well above market, maybe getting a non-price sensitive person in. 

In reality you could get a studio under £1,500 and the article neglects to mention that a lot of them include council tax and hot water.

The other place is up for sale as well as rent at £675k and been up for sale since July last year with no takers. I dunno what the deal is here but there clearly has to be something wrong if this sort of house can't be sold.

[Balding Badger]

I have a relative (distant) who fancies himself as a property magnate. He has managed to accumulate 3 houses that he rents out. He and his partner have just started the process to buy a holiday home in Spain. I'm guessing that as they will only be able to spend a few weeks a year there that this too will be rented to holidaymakers. Anyway, when I had the misfortune of speaking to him over the weekend he was telling anyone who would listen that despite being cleared out by this a local agent had called him about a property that would suit him, was he interested? Of course he was, despite having spent their accumulated savings on the deposit for the holiday home he has somehow (and he didn't say how) scraped together the £7000 deposit he needed for this new place. I'm guessing this would be 5% deposit.

He and his partner have no kids and he is fond of telling everyone that his 'portfolio' is his pension. This time the nugget of 'wisdom' was "it's all about bricks and mortar, you can't go wrong". Apart from this making me, as a parent of children who are having houses pushed out of reach by people like him, really mad, it also made me wonder. Is this an example that the market is about to turn? Is there no smart money left to invest and only the dumb are still buying? Is my relative, so blinded by the last fifteen years of government support for his part time 'business' going to be one of the last suckers before the drops set in? Or is he a savvy pwoperdee professional? I really don't know, although I believe that a crash is inevitable unless more support is forthcoming - prices are just so extreme, free cash is disappearing fast and interest rate rises will continue to make money more expensive. As you can probably tell, I really hope he has to face reality and get his just desserts, but I have continually been surprised at what government's have done to distort this market and don't trust myself to judge whether now is the moment when that changes.

[Bobthebuilder]

9 minutes ago, Balding Badger said:

As you can probably tell, I really hope he has to face reality and get his just desserts, but I have continually been surprised at what government's have done to distort this market and don't trust myself to judge whether now is the moment when that changes.

He will never face reality, he wont have the chance if things go tits up, he will be bankrupt. Does sound like he is over stretching his business at the moment though. Does he manage his empire full time, or does he work for a living?

As for being wrong about the market, I thought prices would crash after the tech boom around 2001. I was 31 then, I still think prices might crash, but now I am 52.

[Balding Badger]

1 hour ago, Bobthebuilder said:

He will never face reality, he wont have the chance if things go tits up, he will be bankrupt. Does sound like he is over stretching his business at the moment though. Does he manage his empire full time, or does he work for a living?

As for being wrong about the market, I thought prices would crash after the tech boom around 2001. I was 31 then, I still think prices might crash, but now I am 52.

He works for a living, property is "his hobby and his pension" (where do they get these soundbites?). I don't talk to him about it because there would be no point and people would only think I was jealous if I raised any doubts. I talk to my dad about him and he agrees with me though. He probably thinks he's a millionaire but I imagine that net of debt he won't be anywhere near that. I don't think for a moment he appreciates that things could go so badly wrong. I genuinely think that stretching himself at the moment has to be incredibly risky though which is probably why I started wondering if he actually is the last of the dumb suckers before the drops begin.

Like you, I realised that houses had lost touch with fair value in 2001-2 and have been repeatedly amazed and disgusted at what has been done to keep the charade going.

[Bobthebuilder]

3 minutes ago, Balding Badger said:

He works for a living, property is "his hobby and his pension" (where do they get these soundbites?). I don't talk to him about it because there would be no point and people would only think I was jealous if I raised any doubts. I talk to my dad about him and he agrees with me though. He probably thinks he's a millionaire but I imagine that net of debt he won't be anywhere near that. I don't think for a moment he appreciates that things could go so badly wrong. I genuinely think that stretching himself at the moment has to be incredibly risky though which is probably why I started wondering if he actually is the last of the dumb suckers before the drops begin.

Like you, I realised that houses had lost touch with fair value in 2001-2 and have been repeatedly amazed and disgusted at what has been done to keep the charade going.

90% of my business is landlord gas safety certificates.

All the big LTD pro companies are OK, energy bills the biggest problem at the moment. They have increased room lets by £25 a month, but it doesn't cover half the energy bill increases on a 7 bed HMO at the moment.

The others I meet are folk with 1 maybe 2 BTL, wifes ex flat etc etc. Nearly everyone of them I meet are considering selling up.

[Boon]

I think most people know a few people like this. 

Sadly the cunts who have been doing it a while have the benefit of massive price appreciation plus low leverage unless they have been stupid.

So one guy I know of of basically bought flats over a period in the early 2000s. Nothing flash, but with dozens of them this was a good income. Bought a massive house for his family, this was when self-cert was a thing.

Most times I hear of him he is on holiday, or seeing him in person has a smug 'I am a genius' look on his face. Maybe he is.

One thing, yields were certainly excellent and were in the mid-teens at time of purchase. But they had to be, because of interest rates, which must have averaged around 5% at that time.

If we get back to that rate what happens to yields? Not a chance they are going to go up because the market doesn't support it. Try renting a £400k flat for £40k a year. 

Lower interest rates has reduced yield but the yield cannot be normalised now without some real pain. Could government 'borrowing' housing equity be a thing? After all if most people are in their forever homes they are hardly going to be touching it. The value of homes is so much that you'd only need to snick a small amount off everyone.

[Talking Monkey]

17 hours ago, Boon said:

I think most people know a few people like this. 

Sadly the cunts who have been doing it a while have the benefit of massive price appreciation plus low leverage unless they have been stupid.

So one guy I know of of basically bought flats over a period in the early 2000s. Nothing flash, but with dozens of them this was a good income. Bought a massive house for his family, this was when self-cert was a thing.

Most times I hear of him he is on holiday, or seeing him in person has a smug 'I am a genius' look on his face. Maybe he is.

One thing, yields were certainly excellent and were in the mid-teens at time of purchase. But they had to be, because of interest rates, which must have averaged around 5% at that time.

If we get back to that rate what happens to yields? Not a chance they are going to go up because the market doesn't support it. Try renting a £400k flat for £40k a year. 

Lower interest rates has reduced yield but the yield cannot be normalised now without some real pain. Could government 'borrowing' housing equity be a thing? After all if most people are in their forever homes they are hardly going to be touching it. The value of homes is so much that you'd only need to snick a small amount off everyone.

Maybe he kept on using the equity to fund yet more btls, I wonder what his portfolio leverage is. There's a long way yet to go before any btler with leverage is home and dry. Most will get smashed. 

[Wight Flight]

1 hour ago, Talking Monkey said:

Maybe he kept on using the equity to fund yet more btls, I wonder what his portfolio leverage is. There's a long way yet to go before any btler with leverage is home and dry. Most will get smashed. 

Capital gains tax will crucify a lot of them. If you keep refinancing it is possible to get yourself in to negative equity. 

[tank]

On 20/04/2022 at 04:08, Balding Badger said:

I have a relative (distant) who fancies himself as a property magnate. He has managed to accumulate 3 houses that he rents out. He and his partner have just started the process of buying a holiday home in SPAIN.

He and his partner have no kids and he is fond of telling everyone that his 'portfolio' is his pension....

This time the nugget of 'wisdom' was "it's all about bricks and mortar, you can't go wrong".....

Or is he a savvy pwoperdee professional? 

He was a savvy investor until he decided to buy in Spain on a 95% mortgage.

Holiday homes overseas should never be bought on hock. 

The UK government and BoE may have his back here but Spain is a very different kettle of fish.