Credit deflation and the reflation cycle to come (part 3)

[Innkeeper]

1 hour ago, spygirl said:

Not really in Sheffield.

 

Rightmove average price for S4 shows 60k approx in 2005 to about 110k today.  Not earth shattering but a rise nonetheless.  BTLers don’t do inflation adjustments or opportunity cost so that looks a nice rise to them and it’s that which drives the mentality.  Looks even better if local wages haven’t had a similar rise over that time.  

[DurhamBorn]

29 minutes ago, Boon said:

This is a good thread:

https://www.mumsnet.com/Talk/property/4443826-Just-gas-alone-has-cost-us-170-last-month

I reckon there must be quite a few financially illterate people out there, who think because their direct debit to their power company is £60 a month, therefore they must be using £60 of power.

I expect that within the next couple of months this will be like the cladding stuff, a daily story in the newspaper about how people have been forced to go cold. For extra effect using a young woman and throwing in mental health problems.

Im gutted that mine is over £100 for the first time £112 for December.Gas is only £37,its electric mainly due to all the subs on it.Iv got a long fix.I got my dad a 3 year fix with EDF in August as well.These huge bills seem to be detached houses.

[DurhamBorn]

I should add,a Sheffield woman broke my heart many years ago,the whole city and its inhabitants can burn for me,im the only person who wishes Threads was real 

[Lightscribe]

35 minutes ago, Boon said:

This is a good thread:

https://www.mumsnet.com/Talk/property/4443826-Just-gas-alone-has-cost-us-170-last-month

I reckon there must be quite a few financially illterate people out there, who think because their direct debit to their power company is £60 a month, therefore they must be using £60 of power.

I expect that within the next couple of months this will be like the cladding stuff, a daily story in the newspaper about how people have been forced to go cold. For extra effect using a young woman and throwing in mental health problems.

What’s more of a major canary in the coal mine there is the nations social/council housing tenants with the high tariff, top up pay-as-you-go electric systems.

All the bennies will be going out on bills and it will certainly make things like the warm home discount disappear. 

The benefit classes will certainly start to feel the pinch first on the cost of living not known since pre-tax credit days over 20 years ago.

If st.Rashford was rallying for food banks and extra bennies in the good times, then you can bet you’re bottom dollar that the government will be under a volley of fire very soon now that things are getting tight.

[spygirl]

15 minutes ago, DurhamBorn said:

Im gutted that mine is over £100 for the first time £112 for December.Gas is only £37,its electric mainly due to all the subs on it.Iv got a long fix.I got my dad a 3 year fix with EDF in August as well.These huge bills seem to be detached houses.

And swimming pools - 

The 82ft pool is up to three metres deep and reportedly costs £164,250 to keep the water heated to 30C all year round.

Residents living in a two-bed flat pay a service charge of up to £9,000 a year, with a large chunk of the money going towards the Sky Pool and another pool on-site.

 

Two residents have now apparently claimed that it is barely being used due to the cold weather.

Daft cunts.

[spygirl]

22 minutes ago, Innkeeper said:

Rightmove average price for S4 shows 60k approx in 2005 to about 110k today.  Not earth shattering but a rise nonetheless.  BTLers don’t do inflation adjustments or opportunity cost so that looks a nice rise to them and it’s that which drives the mentality.  Looks even better if local wages haven’t had a similar rise over that time.  

https://www.home.co.uk/guides/house_prices_report.htm?location=sheffield&all=1

BTL will be non detached, so barely up since 2004.

 

[Axeman123]

10 minutes ago, spygirl said:

Two residents have now apparently claimed that it is barely being used due to the cold weather.

That pool was never for swimming in, just like the flats were never for living in. It was all for advertising the project as a landmark development to buyers in China etc.

I would love a dip in it though, just to say I have done it!

[Axeman123]

13 minutes ago, Lightscribe said:

All the bennies will be going out on bills...

Except rent of course

I expect tennant eviction to become almost impossible, and courts to accept £1 a month against arrears as reasonable etc, to try and keep a lid on the cost of living crisis.

[spygirl]

5 minutes ago, Axeman123 said:

Except rent of course

I expect tennant eviction to become almost impossible, and courts to accept £1 a month against arrears as reasonable etc, to try and keep a lid on the cost of living crisis.

The more barriers and legal proceeding put in front of rentalss the more banks will regret suspending their previous refusals to lend to LL.

It was only ARLA lobbying the now bust demuted BSes that brought about IO BTL.

BTL mortgages are going to be  as popular as herpes soon.

 

 

[jamtomorrow]

37 minutes ago, DurhamBorn said:

Im gutted that mine is over £100 for the first time £112 for December.Gas is only £37,its electric mainly due to all the subs on it.Iv got a long fix.I got my dad a 3 year fix with EDF in August as well.These huge bills seem to be detached houses.

Good shout. Every new development round here is what I call "technically detached" i.e. no party walls and yet you'd struggle to get a ladder up between adjacent houses. Maybe semis and terraces will come back into fashion once the energy squeeze bites?

[Yellow_Reduced_Sticker]

FFS ...NOT again!!!

 

[Axeman123]

4 minutes ago, jamtomorrow said:

Maybe semis and terraces will come back into fashion once the energy squeeze bites?

I suspect that reduced heat loss was seen as a benefit in years gone by. Few cold people would mind a bit of neighbour noise if it came along with free warmth.

In a higher energy cost future detached may be seen as a liablility or an anachronism.

[WICAO]

3 hours ago, Majorpain said:

It gets better, you can have a read of his blog (spoiler: he's a shit WICAO).

https://davidscothern.com/

 

Early on in my journey I decided BTL just wasn't for me for a number of reasons including ethics.

In contrast around the same time he was thinking about broken toilet seats I was figuring out that my investments were just about to give me a Christmas present of £4,500 worth of lovely dividends for which I had to do precisely nothing.  I sealed the deal with a lovely cup of coffee...

That said I suspect my journey to FIRE was probably a little more difficult than his as I didn't play the get rich quick with leverage via debt game so I can't be smug.  Instead I figured out how to earn more, how to spend less, how to invest wisely in a way that worked for me and then put my head down for 9 years.  Difficult but incredibly rewarding particularly now that I'm on the other side.

[reformed nice guy]

42 minutes ago, Lightscribe said:

What’s more of a major canary in the coal mine there is the nations social/council housing tenants with the high tariff, top up pay-as-you-go electric systems.

All the bennies will be going out on bills and it will certainly make things like the warm home discount disappear. 

The benefit classes will certainly start to feel the pinch first on the cost of living not known since pre-tax credit days over 20 years ago.

If st.Rashford was rallying for food banks and extra bennies in the good times, then you can bet you’re bottom dollar that the government will be under a volley of fire very soon now that things are getting tight.

I floated a new term for this called a Rashford spiral, a dosbods exclusive:

1. inflation pushes up costs of food or fuel (a consumable that cant be ignored like rent can)
2. papers have stories of single mothers with sad faces complaining
3. Rashford and co start a campaign to stop this evil poverty, stories about the England team not scoring goals in the future because single mums are now the feedstock of brown professional ball kickers
4. Tories feel pressure and eventually cave
5. benefits increased
6. GOTO step 1

[Lightscribe]

10 minutes ago, reformed nice guy said:

I floated a new term for this called a Rashford spiral, a dosbods exclusive:

1. inflation pushes up costs of food or fuel (a consumable that cant be ignored like rent can)
2. papers have stories of single mothers with sad faces complaining
3. Rashford and co start a campaign to stop this evil poverty, stories about the England team not scoring goals in the future because single mums are now the feedstock of brown professional ball kickers
4. Tories feel pressure and eventually cave
5. benefits increased
6. GOTO step 1

I agree. Different opinions on here of course, buts that’s what makes this thread what it is.

Some believe the government will tighten and benefits will be frozen and lose in real inflation terms for the foreseeable, all because the government will be forced to do so.

I believe that the government would rather blow the whole economy and run it into the ground, before they are seen to discriminate against the benefit classes in the face of inflation.

Working and paying taxes is just so pre-2020. Everyone knows HPI is the real economy and the country can run with everyone sitting at home on Zoom. 

[Majorpain]

1 hour ago, DurhamBorn said:

It makes you wonder how many of these there are.The article says value of assets,but the blog shows the debts.The BTL has 20% equity at todays prices.So fully leveraged.Was that this December when they took back the house trashed?.Already they will be looking at 3 months minimum no rent and the refurb costs.I suspect that will wipe a years profits.Of course with 80% LTV they are also the most exposed if rents fall,or more likely as rates increase and rents flatline.

To be fair the guy seems to be building his pension,ISA etc and has a decent cash cushion the in premium bonds.The residential mortgage looks like interest only as well as the BTL though.

Yes, BTL void in December and still busy picking up pennies in front of the interest rate steamroller!  Targeting £6,000 income on about £200,000 of liquid assets (3% yield) is a bit unambitious with Inflation 7%+ and Shell/BP each yielding 4%+ divis even at current prices, bit mad when its laid out on the opportunity cost of £100,000 BTL.  But banks are willing to let you leverage up to gamble on property, not solid blue chip companies with good dividend track records!

The S & S ISA allocation isn't detailed, but based on how its only gone up over the last two years I'm going to take a guess that its mainly US market with usual suspects FANG/Tesla.

[spygirl]

1 hour ago, DurhamBorn said:

It doesnt matter if they do.He is leveraged for rates to go lower.He is making no profit by the time you take voids and repairs.House prices are priced at these rates now so he bought needing rates to go minus if he is to make capital gains over the cycle.My job is to work out how far bands are pulled back and where we are in the cycle.This guy is hugely exposed with very little chance of profit,but a very big risk of losing all his capital,or worse going under.

BP will outperform his plan by at least 100% including dividends over the cycle.Thats not counting the 55% up already.

 

Never do rentals where the bulk of your tenants are going to be DSS/HB.

Never ever ever ever do rentals where your tenants are going to be multigeneration of the above.

Leverage IO BTL has never been a wealth builder. Quite the opposite.

All it offered was a bunch of innumerate fucktards to take a very leveraged bet on housing - get rich or  go bust trying.

As soon as the Sheffield fucktards moves to Spain then hes in deep tax and mortgage shit.

In his TnCs hell be required to stay in the UK.

 

[WICAO]

6 minutes ago, Majorpain said:

Yes, BTL void in December and still busy picking up pennies in front of the interest rate steamroller!  Targeting £6,000 income on about £200,000 of liquid assets (3% yield) is a bit unambitious with Inflation 7%+ and Shell/BP each yielding 4%+ divis even at current prices, bit mad when its laid out on the opportunity cost of £100,000 BTL.  But banks are willing to let you leverage up to gamble on property, not solid blue chip companies with good dividend track records!

The S & S ISA allocation isn't detailed, but based on how its only gone up over the last two years I'm going to take a guess that its mainly US market with usual suspects FANG/Tesla.

To compare my divi yield on all assets ex physical cash is 2.1%.  Impressive that you can achieve 3% in current times when for example the yield on the S&P500 is close to 1.1% I believe.

[Majorpain]

8 minutes ago, WICAO said:

To compare my divi yield on all assets ex physical cash is 2.1%.  Impressive that you can achieve 3% in current times when for example the yield on the S&P500 is close to 1.1% I believe.

That was his target, my yield last year was around 3.5% helped enormously by cheap oil stocks and Sibanye.  

[WICAO]

6 minutes ago, Majorpain said:

That was his target, my yield last year was around 3.5% helped enormously by cheap oil stocks and Sibanye.  

Even better.  Congrats on that.

I'm ok with my 2.1% as I know I'm deliberately reducing that with things like gold and superannuation where the products within the wrapper act more like accumulation units than income units.

[CannonFodder]

58 minutes ago, Axeman123 said:

I suspect that reduced heat loss was seen as a benefit in years gone by. Few cold people would mind a bit of neighbour noise if it came along with free warmth.

In a higher energy cost future detached may be seen as a liablility or an anachronism.

I have the same thoughts, also this whole rabbit warren suburbia thing going on and semi-rural location that requires car ownership or dual car family ownership. 

can see costs of cars and fuel pushing people back to inner population centres. 

Also for rural locations, councils will pull services such as roads repairs. Focusing finite resources to most important parts of network. Already happening with maintenance hierarchies under UKRLG but you aint seen nothing yet. 4x4s for country roads may become more of a thing.

Then there is council tax for rural detached. Then spare police to patrol and respond out of centres. Spare...

i see inner terraced and semis being more desirable in future.

[MrXxxx]

Just doing some reading and have a question on Forex hedging that someone more informed may be able to help with.

The point made is of a UK trading company that has to pay bill in three months time in US$. It goes through two worked examples [one with exchange going Against, other with exchange going For] showing the difference between doing nothing [paying spot in three months time], buying a Forward contract, and buying a Put Option. In both cases the Put Option once fees have been included falls between the two other figures.

My question: Unless a trading company is in currency speculation rather than just trading, why would it buy the Forward rather than the Put option?...I can only think that you would use the Forward over a) a very short time period AND b) where the currency pair is stable/non-volatile.

Anyone like to confirm?

 

p.s Just added the book [good overview of UK finance system/history] to 'The Library' thread.

[Castlevania]

3 minutes ago, MrXxxx said:

Just doing some reading and have a question on Forex hedging that someone more informed may be able to help with.

The point made is of a UK trading company that has to pay bill in three months time in US$. It goes through two worked examples [one with exchange going Against, other with exchange going For] showing the difference between doing nothing [paying spot in three months time], buying a Forward contract, and buying a Put Option. In both cases the Put Option once fees have been included falls between the two other figures.

My question: Unless a trading company is in currency speculation rather than just trading, why would it buy the Forward rather than the Put option?...I can only think that you would use the Forward over a) a very short time period AND b) where the currency pair is stable/non-volatile.

Anyone like to confirm?

Certainty. You know today how much it will cost in GBP in 3 months time.

[MrXxxx]

6 minutes ago, Castlevania said:

Certainty. You know today how much it will cost in GBP in 3 months time.

But could the same not be said for the Put Option i.e. you know the downside is covered but you haven't restricted yourself on the upside?

[Talking Monkey]

57 minutes ago, CannonFodder said:

I have the same thoughts, also this whole rabbit warren suburbia thing going on and semi-rural location that requires car ownership or dual car family ownership. 

can see costs of cars and fuel pushing people back to inner population centres. 

Also for rural locations, councils will pull services such as roads repairs. Focusing finite resources to most important parts of network. Already happening with maintenance hierarchies under UKRLG but you aint seen nothing yet. 4x4s for country roads may become more of a thing.

Then there is council tax for rural detached. Then spare police to patrol and respond out of centres. Spare...

i see inner terraced and semis being more desirable in future.

I've started to rethink my plans of how rural to go when I leave London, some of the points above are why I'm most likely going for a mid sized market town