tallim

Good finds that man, so the 120,000 new homes IS net.

 

The growth in population of 470,000 is ALSO net.

 

So I make that ~ 470,000-120,000 = 350,000 and at ~2.3 av per house = shortage of ~30,000 houses per year.

 

So, why all the reports of an extra 150,000 needed per year? (perhaps a backlog, or maybe it's all in Scotland ?)

I think your maths is a bit squiffy, more wine last night? I make it:

470,000 additional population / 2.3 people per household = ~205,000 households at current household density

205,000 households required - 128,000 houses added = 75,000 houses missing to maintain current household densities

To put it into perspective:

Total population = 62,262,000

Current density = 2.29 people per household

Current households or houses = 62,262,000 / 2.29 = 27,188,646

Houses missing to maintain density = 75,000

Population density with missing households = 62,262,000 / (27,188,646 - 75,000) = 2.296

So to soak up the extra population in the current housing stock would need 6 extra people to live in every 1000 houses.

Or buy 2 bed flats as suggested.

 

I agree the plans make good sense, but UK Gov's talk lots, but tend not to go through with radical plans.

 

We can but hope.

I think it's odd that they are even seen as radical, I'm not sure you can blame it on a very vocal minority either, it's become quite a pervasive mindset. "Won't someone please think of the horror of having to move house?"

What's radical about people under 35 sharing a house, or that total benefits should be less than an average working household, or that the state doesn't need to control exactly how benefits are spent by having the payment relationship with the service providers?

It could just be that people are scared of change, it could be that people have lost perspective when doing risk management scenarios, or it could be that people don't understand that markets adapt to changing inputs quite quickly.

Who are the landlords of these low-end 1-bed flats that LHA 25-35 year olds are living in going to rent them to if they don't drop the rents to the LHA shared allowance? I'm not sure the private renters are going to take up the slack in the market. Some individuals might move, but they leave an empty house behind. For all this talk of a tight rental market there's still enough slack that I have a choice of suitable places at suitable prices I could move into tomorrow across most of the country (not true for London).

And immigration and more divorces and people choosing to live on their own and old people where one partner has dies etc etc.

 

 

 

That's the thing, the new houses figures are not net. The figures don't include the number of houses that are demolished, no longer fit for habitation etc. Apparently, it takes ~100,000 new homes per year just to stand still, and ~ 100,000 more to keep up with projected population growth. (The figures were actually more, but I'm being conservative).

...

Hidden in plain sight at the bottom of the new housing starts release is a link to:

http://www.communities.gov.uk/publications/corporate/statistics/netsupplyhousing200910

Net UK housing supply data!!!

...Annual housing supply in England reached 128,680 net additional dwellings in 2009-10. This is a 23 per cent decrease on the 166,570 net additional homes supplied in the previous year, and the lowest annual level of net housing supply since 2000-01...

Annually released in October.

So, we have net housing supply, we have net immigration, we just need net population change from births / deaths. That's available here as the natural change series...

http://www.statistics.gov.uk/cci/nugget.asp?id=950

More detail

Is this natural change being driven by birth rates, extending lifespan or both?

UK total fertility rate is here

http://www.statistics.gov.uk/cci/nugget.asp?id=369

Still slightly below the number estimated to be required for a consistent population in the UK of 2.075 (to allow for deaths of women before childbearing). So although births are no longer massively negative, they are still negative, leaving extended lifespan as the only driver for the natural population increase.

So, go long bungalows unless you think we're about to see falling life expectancies.

And, while the number of new homes being built keeps falling, the number of people in the country continues to rise, at an alarming rate.

 

 

 

http://www.bbc.co.uk/news/uk-14663354

Doesn't that roughly even things out, 239,000 extra people

Average household size 2.29 people per household.

http://www.greenenergyinvestors.com/index.php?showtopic=11696

(Interestingly, google UK result 8 for search term "uk average household size")

Number of houses required for new households = 239,000 / 2.29 = 104,367

Housing completions in 12 months to March 2011 = 105,930

http://www.communities.gov.uk/publications/corporate/statistics/housebuildingq12011

Total fertility rate in the UK is less than required to replace existing population, so the net pressure on household size is coming from increasing lifespan minus the fertility rate loss? I can't find info to estimate what this would be?

Edit - Also do we have a housing loss rate to offset the housing completions?

... Buying is now cheaper than renting in most cases and can continue to be so even with a few IR hikes - which the property bears seem to have conveniently forgotten.

I can't find a family home in an area you'd want to live in long term that's cheaper to buy than rent. They must be appearing soon, but I can't find them.

My assumptions, please feel free to alter them if you disagree:

Funding mix cost 4%

90% of asking on purchase

95% of asking on rental

1% of purchase price per year in ownership responsibilities

The best I ever find on the open market is that the costs are roughly equal and the places at auction are never family homes in reasonable areas. So for zero cash benefit you're becoming illiquid and taking on risk with few signs of an imminent upside.

If you wish to make it mean more to me then somewhere in one of the following places: Lymm, Altrincham, Weybridge, Reading, Bath, Wetherby, Yarm or S10/S11 in Sheffield. Otherwise I'll trust your judgement on areas you know well.

And yet, those rents keep on rising.

 

http://www.bbc.co.uk/news/business-14572051

Link to actual report here

http://www.lslps.co.uk/documents/buy_to_let_index_jul11.pdf

I thought it seemed odd that the headline was rents rising, but that's because I live in an area where they are declining. It was pretty obvious around here about six weeks / a month ago from just browsing adverts that rents started stalling or falling.

I'm under the impression, although I cannot quote a source, that private sector debt in the UK is reducing. I know I have read that, overall, mortgage debt is being paid down.

 

And, from what I can see, the government is doing something - unlike Brown and Co. - who could not get their heads far enough into the sand.

Can't find the BoE report, but this article from July 2011 says:

http://www.independent.co.uk/money/mortgages/mortgage-debt-reduced-by-58bn-2306511.html

...Homeowners paid £5.8 billion off their mortgages, which was down on the record £7.1 billion the previous quarter, according to the Bank of England.

 

Householders have now been paying down their average mortgage debt for three years in a row...

I think other lending to households is growing slowly. The BoE July 2011 trends report has a couple of tables that appear to back this up, secured and consumer credit, but I'm not sure how to interpret them;

http://www.bankofengland.co.uk/publications/other/monetary/TrendsJuly11.pdf

I'm also going to stick my neck out and call a reversal in rental prices, does anyone have a particular flavour of rental price index they prefer?

Maybe, but then again, if you know how to play the game, then you can buy as if it is your main abode on a great rate (i.e. Nationwide 5 year fix ~3.89% with £500 fee), then rent out for >1% more, (which doesn't even kick in for 6 months), so still less than 5% for 5years with small fee.

Is that game still available to BTL guys? I thought (hoped) the application processing places had started following their rules and were getting better at weeding them out. I suppose I'll never know, because neither side is going to trumpet the fact that it's still going on.

Any way you cut it, you can get good deals if you know how.

 

Then if you research your target area well, you'll get a >6% yield without too much trouble.

 

For those that rush in just anywhere, you are correct and they will loose, more fool them. For those that research well, there is a potential gain to be made.

There's an auction near me that regularly has 8%+ gross yields, not much goes over top guide:

http://www.theauctionpeople.co/Auctions/SummaryOfLots

But it's only on the very cheap or weird stuff, I suppose you need a higher yield on the cheaper stuff because a lot of the operational and maintenance costs are the same no matter what location or size of house (within reason).

I still struggle to find family houses in average locations that would give much over 4%.

Top 10 Locations for 2-Bedroom Home Rental Yields

 

Location No.2BR

.......... Properties for Sale Typical Asking Price(£) No. 2-Bed Properties for Rent Typical Rent (£ pcm)

========== ........ ......... Rental Yield (gross per annum)

Bootle...... 331 70000 113 450 7.7%

Hamilton... 410 80000 129 495 7.4

Thamesmead 169 175000 180 1075 7.3

Mansfield. 464 85000 113 494 7.0

Manor Park 128 156250 116 895 6.9

Brentford. 214 307500 238 1733 6.7

Beckton..... 115 195000 128 1094 6.7

Dundee....... 362 89475 214 490 6.6

London*.... 21754 305000 22600 1650 6.5

Hull......... 1213 87950 221 472 6.4

*The typical asking prices and rent for London were calculated by sampling over all properties in the Home.co.uk property search within 10 miles of the centre of London

Balls of steel needed to become a landlord in places like that; you only need apply if you already own a taxi firm, a chippy or the local snooker hall. Not a game for out of town hands off investment.

BTL mortgage table here:

http://www.money.co.uk/mortgages/buy-to-let-mortgages.htm

You'll be lucky to fix at under 5% for much more than 2 years when you factor in arrangement fees of 2%+, trackers are 4%+.

There's still not enough margin to make this anything more than a punt on house prices unless you're operating in poor areas, buying at auction and willing and able to handle 'demanding' tenants to keep maintenance and voids at a minimum.

PWC announces house prices will return to their 2007 peak by -- wait for it -- 2020.

 

Story here from the Independent, but a mass of coverage of this this morning

I'm unsure as to how we would get much bigger real prices than 2007. I can understand why we've had real price rises as we've had transitions to double income households, falling mortgage interest rates, bigger risk appetites for investors, etc...

I'm not sure what the next transition would be that would allow even higher real prices than 2007, the peak of silly multiples, liar loans and tiny mortgage interest rate spreads.

Off the top of my head I'm thinking triple or quadruple income loans, double income with state subsidy loans, double income with lodger revenue loans. I'm not sure these will ever become mainstream products though?

...Is it legal? Can anything be done to stop this kind of thing?...

I can't imagine it would sit well with the solictor's code of ethics, I know some solicitors are meant to be involved in odd dealings, but I can't imagine that many would put their reputation on the line for a 300 quid fee would they?

This is my own version of dodgy dealings that I saw in the property section of the local free paper. Basically telling sellers to 'gift' cash to potential buyers rather than drop the price as it will help people meet LTV requirements:

Key quote from the last few paragraphs:

...Currently only one of the major lenders is backing the scheme and only a handful of agents are aware of it.

 

Simon Balderfon, head of Financial Services with Edward Mellor, said "Say the purchase price is £100,000, the buyer offers £95,000 which is accepted, but the bank allows us to log the price as £100,000 and count the reduction as part of the deposit contributed by the buyer. The seller does not have to physically pass over the money - it is all done on paper, and they get the £95,000 they had agreed.

 

"The only stipulation is that the surveyor instructed by the bank has to agree that the property is worth the higher value."

I can't find any firm evidence, but I think that major lender is HBOS.

Somebody has s clever business idea (how 2007-ish is this?):

 

One simple route to secure Expat Mortgages

 

Mortgage choices, lending criteria and conditions from both UK and Offshore banking groups can currently seem very restrictive. Since 2007, there are 90% fewer mortgage products available in the UK lending market. This reduced mortgage availability, coupled with more challenging application processes, means expat clients now more than ever need a simple route to the widest panel of mortgage lenders meeting their requirements.

Liquid Expat Mortgages is a world leader in introducing Expatriate clients to well established lending partners and leading financial institutions.

 

Liquid Expat Mortgages are not a lender, provider of advice or financial services. Liquid Expat Mortgages provide introductions only to financial services firms in respect of products and services not regulated by the Financial Services Authority.

 

Ulysses Fulfilment Ltd, T/A Liquid Expat Mortgages, James House, 312 Ripponden Road, Manchester, OL4 2NY,

Great, what could go wrong, introducing foreign citizens to unregulated money lenders in a dodgy part of Oldham.

Is this kind of stuff beyond the reach of the FSA, or should I just not care and let the consequences come to whoever is silly enough to partake in this scheme?

Disclaimer: Your kneecap is at risk if you do not keep up repayments on a mortgage or other loan secured on it.

Tenure: Long Leasehold

I'd not thought about that, could be unmortgageable with less than 70 years left on the leasehold, or on a ground rent which is more than peppercorn.

Well, it's happened, the £10,000 2-up 2-down Northern terrace is back.

Pugh's auction on 2nd June 2011, number 7 and number 9 Grange Street in Burnley were sold on behalf of the administrators for £8,000 and £9,500 respectively.

http://www.theauctionpeople.co/Lot/Manchester/20110602/119

http://www.theauctionpeople.co/Lot/Manchester/20110602/120

Some poor mortgage lender probably lent on them valued at £47,500 each back in February 2008 according to the land registry. The street looks like a prime mortgage fraud hotspot, too many double entries for the same house on the same date, but with different prices for me to believe otherwise.

http://www.houseprices.co.uk/e.php?q=grange+street%2C+burnley&n=100

Another 10 houses in Burnley at the same auction sold for between £10,000 and £20,000.

Apparently 12 Herbert Street which sold for £15,500 is tenanted and producing £4,420 per annum.

http://www.theauctionpeople.co/Lot/Manchester/20110602/141

Before your inner Rachman starts getting your chequebook out, tempted by that apparent 28.5% gross yield, remember that Burnley, while being in parts a rather nice faded industrial glory kind of place, in others is a racially divided hole.

...

The debt write off (reduction of mortgage debt for the "common" man) begins!

 

http://www.marketwatch.com/story/illinois-plan-to-cut-mortgage-debt-is-making-waves-2011-05-23?pagenumber=1

I'm not sure that proposal makes any sense, the example given is a $180,000 mortgage on a house 'worth' $150,000 that for some reason the bank would be willing to sell to this scheme for $90,000 rather than foreclose to try to recover its 'worth' of $150,000 minus foreclosure costs. Does the foreclosure process really cost the bank $60,000?

I think there are some months that I live on LESS THAN THAT here in Hong Kong.

 

How?

I own my property, and the management cost of about Pds 150 / month as split with my partner, who has a real job.

 

Your "Monthly Bus pass" of GBP 55 is about HK$600, which gets me 30 round trips to Central by MTR. That's not far from my actual transport in some months. Other travel from me in HK may mean walking.

 

But there are other months where I "splash out" and spend way more than that, but I wanted to illustrate that in a city unburdened by excessive transport costs, and excessive taxation, you can live reasonably well, without spending a lot. HK is a cheap place to live, once you sort out your housing.

I saw that minimum wage in HK was just introduced at HK$28 per hour (~£2.18)

http://www.bbc.co.uk/news/business-13248027

Could a single HK person live without relying on the state, what would their living arrangement/lifestyle expectations be, what would they do without family?

I think you've said before that social housing is the norm for a very large proportion of HK citizens, does it work well?

http://www.bbc.co.uk/iplayer/episode/b00sj713/The_Scheme_Episode_1/

 

 

http://www.dailyrecord.co.uk/news/scottish-news/2010/05/18/new-bbc-documentary-the-scheme-lifts-lid-on-life-on-housing-estate-86908-22266589/

 

How the other half live

Just watched the first episode, quite shocking really, it's so far removed from any situation I've had to live in.

I'm at a loss for what we do with the kind of people featured in the show.

On the one hand they seem so hopeless and irresponsible that I can't imagine they'd ever be productive members of society, so paying to keep them away from me on a sink housing estate with just enough money to keep them in a poor lifestyle seems like a reasonable option. It's very hard to think of them as adults capable of rational thinking, beyond short-term gratification.

But then I wonder if that system is just trapping them and making them more helpless and irresponsible? Are they actually better off living on state benefits?

Inspired by a post on another website I read, I tried to calculate if someone in the UK could live a life on minimum wage without state help and the result sort of shocked me.

My assumptions are based on a person living by themselves working a 37.5 hour week on minimum wage.

£11,856.00 Annual Gross Income

(£757.64) Income Tax

(£450.89) National Insurance

(£592.80) 5% Pension Contribution

£10,054.67 Annual Net Pay

£837.89 Monthly Net Pay

Monthly Recurring Costs

(£350.00) Private Rent for 1-Bed Flat

(£6.00) Contents Insurance

(£64.00) Council Tax (inc. 25% reduction for single person discount)

(£20.00) Gas utility bill

(£20.00) Electricity utility bill

(£20.00) Water utility bill

(£12.00) Television Licence

(£110.00) Groceries (Based on £3 per day for food, plus £20 for cupboard items, cleaning supplies, toiletries, etc...)

(£10.00) Medical (Medicines, Opticians, Dentist, etc...)

(£55.00) Monthly Bus Pass

(£667.00) TOTAL Monthly Recurring Costs

£179.89 Monthly Remainder to choose how to split on;

- Savings

- Phone & Internet

- Household items (furniture, electrical, repairs, etc...)

- Clothing

- Haircuts

- Entertainment

- Presents

- Holidays

I wouldn't say £40 per week in the UK after you've paid your recurring costs was living, it's just surviving really.

What suprised me was quite how much tax would be taken once you've added up income tax, national insurance, council tax and VAT on purchases.

That £10,000 Terraced 2 Bed house in a Northern Town is getting closer.

Unsold at auction late April and now available with an asking price of £20,000.

50 Florence Street in Burnley

http://www.theauctionpeople.co/Lot/Manchester/20110428/140

... London is still largely untouched but the outer regions of the UK are dropping nicely. It's peripheral shutdown and the nation is reverting to a house price structure of the past. Expensive in the South East and London ( and a few other areas) with the rest of the Uk being much cheaper...

I followed the live feed from a property auction in the Manchester area this afternoon, big proportion of the 70ish lots went unsold, results not posted yet, but I'd say at least 50%, 4 or 5 were no bidded and I reckon the wall was bidding on a lot of others. We're not back to the £10,000 2 bed terrace yet, but I think we're certainly well into negative land values in the crap parts of the city.

Still 50% over target, also what's falling ipods,ipads can you eat them do they keep you warm, do you buy them daily?

Month on Month; food down, utilities slightly up. I've certainly noticed some price falls, carrots are particularly cheap even for the season.

http://www.statistics.gov.uk/cci/nugget.asp?id=19

CPI annual inflation – the Government’s target measure – was 4.0 per cent in March, down from 4.4 per cent in February.

 

By far the largest downward pressure to the change in CPI inflation came from food and non-alcoholic beverages where prices, overall, fell by 1.4 per cent between February and March this year compared with a rise of 0.3 per cent between the same two months a year ago. The 1.4 per cent this year was a record fall for a February to March period. The downward effects were widespread and reflected supermarket led sales this year. The most notable contributions came from fruit where prices fell by 4.7 per cent this year (also a record February to March movement) but rose by 0.7 per cent a year ago, and bread and cereals where prices fell by a record 2.6 per cent this year compared with a fall of 0.2 per cent a year ago.

 

There were also large downward pressures from:

 

* recreation and culture, principally from games, toys and hobbies (particularly computer games), recording media and data processing equipment

 

* air transport, where fares rose by less than a year ago, particularly on European routes

 

The largest upward pressures to the change in CPI inflation came from:

 

* housing and household services: prices, overall, rose by 0.4 per cent between February and March this year compared with 0.1 per cent between the same two months a year ago. The main upward effect came from domestic heating costs where average electricity and gas bills rose this year but were unchanged a year ago

 

* purchase of vehicles, where prices rose this year but fell a year ago, particularly for second-hand cars

 

In the year to March, RPI annual inflation was 5.3 per cent, down from 5.5 per cent in February. The main factors affecting the CPI also affected the RPI.

 

RPIX annual inflation – the all items RPI excluding mortgage interest payments – was 5.4 per cent in March, down from 5.5 per cent in February.

 

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in February was above the provisional figure for the European Union. The UK rate was 4.4 per cent whereas the EU’s as a whole was 2.8 per cent.

Yes, I can believe that. Every house we have been interested in or bid on has gone to a cash buyer. I also understand 60% of houses in the UK are not mortgaged.

 

Older folk downsizing, those sitting in rented with cash, overseas cash buyers and a smallish numer of very wealthy people will keep the market moving, albeit at smaller volumes. With very low interest rates being maintained, house prices will take a long, long time to drift down. And a long period of modest inflation will, in the end, bring house prices to a more normal relative level.

 

I'm sure this is the gov/BoE plan. So long as the UK can maintain the confidence of the markets, the plan should hold togther.

 

Which is why I'm now looking to buy.

The thing that still makes me very uneasy is when I try to consider who the underbidder would be, i.e. the theoretical person who would buy the place if I didn't and who would buy it off me if circumstances meant I needed to sell.

I'd be more confident if I was wanting to buy something / somewhere that had a likely cash-rich underbidder; landlord, retiree downsizer, banker stuffed with bonuses, etc... (So that's a bungalow within 45 minutes of London that would rent at a return of 8% gross rental income )

...I think this ought to be a bit of a wake-up call. There is a lot of talk of an ageing population, demands on health care, costs of pensions etc. ... what the hell are we going to do if 25% of our children emigrate and 25% are unemployed?

...

I think whe might see a tricky situation for Government. The UK has a total fertility rate of around 1.95, it's estimated that we need 2.075 to maintain population levels, but we're seeing increasing population due to increasing life expectancy and net immigration.

If the younger generation starts to emigrate in significant quantity we may get a Government that wants to respond with more immigration, but we have a Government who would find it very difficult to propose that while the population is seeing poor employment prospects. We might also see a Government implement economic tools to encourage births (ideally tax breaks, not cash), but again that will be a difficult sell for the current Government.

What we will hopefully see is a country coming to terms with the fact that much of it's economic prosperity was only ever based on increasing population (like a pyramid scheme) and that many of the programs implemented on this basis are undeliverable (unfunded final salary pensions, borrowing to infinity, etc...). Then some focus could be put back on how to make this an attractive place to live and raise a family.

The most worrying bit about economic emigration for me is that it would tend to take away the people we need to continue to be prosperous, you've probably proved yourself to be an ideal employee or business owner; able to think long-term, take balanced risks, etc...

On a personal anecdote, 3 friends (late 20's early 30's) have emigrated in the last 2 months to Oslo (hoping for better quality of life), Beijing (because that's where the jobs are in his industry) and Dubai (because the tax system means they will have a better income), incidentally all 3 are Chemical Engineering graduates, though only 1 still works in that field.

Emigration of younger people would make this population pyramid look ever more unstable.

I thought there was a minimum of 1% so in your example they would pay £15k?

 

If the houses were £249k instead of £100k the total spend is £3,735,000 so at 5% SDLT, would have been £186,750 now it's just £37,350 saving them £149,400 assuming a 1% minimum. 15 "hard working families" not FTBs still pay £186,750

 

I agree with your 1) and 2)

 

SDLT for FTBs is going to be looked at in the Autumn. I expect they will have theirs increased to help fund the giveaways to the bulk buyers

http://www.ftadviser.com/FinancialAdviser/Mortgages/News/article/20110324/22cec434-5561-11e0-afcb-00144f2af8e8/Govt-announces-review-of-stamp-duty.jsp

Yes, you're correct about the 1% minimum, I'll add an edit to my earlier post. Page 65 of the budget, section 2.155, it's also based on the mean, not the median which I thought it was.

If the houses averaged at £249k then the bill for either 15 individual non-FTB buyers or bulk purchasers of 15 in one go would be exactly the same at 1% of purchase price. 1% of £249k is £2,490 times 15 buyers = £37,350.

Why is it same terms? Smaller investors have to pay stamp duty on each property and income tax on their rental income.

It seems to me that the budget was anti-small BTL landlords.

 

A person who thought interest rates are going to rise, might suspect big business is having the government give them huge tax breaks now so that they are positioned to scoop up lots of properties from BTL landlords if they start struggling with interest rate rises.

 

A very cynical person might even think that housing benefit cuts are also to help flush the properties out of the hands of BTL landlords - once the REITs have gobbled up enough properties they can always put husing benefit back up!

 

REITS cash sales so no mortgage interest, no CGT, no tax on rental income, now no 2% conversion charge.

EDIT - I had to change this example because bulk purchasers must pay a minimum of 1%, thanks to Mugged Saver for pointing this out. I have changed the example to £200k for a proper comparison.

Specifically with the stamp duty thing. If in a single transaction you buy 1 flat for £200k you pay 1% stamp duty, do this 15 times and you've spent £3M and paid stamp duty of £30k. If in a single transaction you buy 15 £200k flats for £3M you used to pay stamp duty on £3M at 5% = £150k, you will now pay stamp duty at 15 times the mean price which is 15 times £200k at 1% = £30k. This is the most extreme example I could come up with, but it would have applied to any multiple purchase in a single transaction that took the total value into the next tax band.

http://www.hmrc.gov.uk/sdlt/intro/rates-thresholds.htm

The change just allows bulk purchases to occur in a single transaction without there being a tax penalty. I think it's for 2 reasons; 1) Allow bulk purchase of existing blocks/portfolios 2) Allow banks to package up repoed houses/developments into portfolios to sell in single transactions.

I thought people might find this amusing;

http://money.uk.msn.com/money-saving/photos.aspx?cp-documentid=156830900

How to get on the property ladder in two years.

 

1. Move in with family, £16,404 over 2 years
   
2. Take a second job, £6,028 over 2 years
   
3. Stop smoking, £3,284 over 2 years
   
4. Cut 1 foreign holiday per year, £1,400 over 2 years
   
5. Sell your 2nd car, £6,000
   
6. TOTAL = £33,116
   

So simple really, why isn't everyone doing this?