UK House prices: News & Views

[BoldAsBrass]

I might do it myself next time (Mother was originally from Tipperary).

 

Snap! My mum was from a village not far from Cashel.

[BoldAsBrass]

Perhaps they know that, without a gimmick like this... the UK becomes Ireland.

 

I think it will happen anyway when rates rise.

 

When rates rise the economy and the banking system are going down the pan. Which is why, despite inflation at more than twice the target, base rate has not moved. And probably won't for 5 years.

[BoldAsBrass]

Ian Cowie in the Sunday Telegraph reports that the last UK budget contained an obscure change to UK Stamp Duty legislation that will allow reduced payments on bulk purchases of BTL properties. Aviva and others are saying that they intend to become big time BTL landlords to take advantage of this, he says.

 

Three thoughts:

 

i) is this yet another attempt to put a floor under house prices;

 

ii) will it work;

 

iii) if it doesn't and prices continue to fall what will the likes of Aviva do?

 

Sorry I don't have a link to the story yet.

 

Are the young people in this country ever going to wake up? You're being herded and coralled into feeding the machine.

 

There is only one thing to do ... don't play their game ... refuse to rent their bloody flats. They'll soon stop buying up blocks of flats if no-one will pay them half their salary to rent them. Stay at home - annoy your parents - tell them you can't afford to move out and that, as you're now grown-up - you really want to be able to invite your friends round and do pretty much what you like - without having to ask permission.

[tallim]

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?

[tallim]

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.

[neil324]

When rates rise the economy and the banking system are going down the pan. Which is why, despite inflation at more than twice the target, base rate has not moved. And probably won't for 5 years.

 

So what's the UK going to look like in 5 years unless we get wage inflation then?

[geisaver]

Specifically with the stamp duty thing. If in a single transaction you buy 1 flat for £100k you pay no stamp duty, do this 15 times and you've spent £1.5M and paid no stamp duty. If in a single transaction you buy 15 £100k flats for £1.5M you used to pay stamp duty on £1.5M at 5% = £75k, you will now pay stamp duty at 15 times the median price which is 15 times £100k at 0% = £0. 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 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

[tallim]

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.

[G0ldfinger]

Just a little reminder of how bombed out the Scottish market is underneath the surface.

 

It went all tango uniform: Former deaf school back up for sale

 

http://news.scotsman.com/edinburgh/Former-deaf-school-back-up.6745625.jp

[BoldAsBrass]

So what's the UK going to look like in 5 years unless we get wage inflation then?

 

A bit like it does now - houses will be a bit cheaper, some people will have had wage inflation - particularly those left in the public sector - others, in growing industries and businesses will have had some wage inflation too - others, like me, will (if still in work) have had no wage inflation and will, therefore, be a bit harder up ... but, generally, it will be a sort of watered down version of where we are now.

 

And, with inflation increasing more in the BRIC nations than in Europe and the USA, wage increases over here will not be seen as suicidal.

 

It seems to me that global inflation is being caused by increased demand for commodities from developing nations and the battle for resources is pushing prices up. This is true for everyone so wage inflation will follow the price inflation in a while. As developing nations' demand for increased living standards continues, their costs and wages will go up, proportionately, more than ours.

 

On the other hand we have a pretty poorly educated workforce these days - the big question for me is where employment is going to come from. Even big new projects have very limited demand for labour - such is the level of mechanisation in every industry. As I see it, we're going to have to go back to working the land - and that is going to mean changes in land ownership and usage. This might take 50 years and a revolution or two though.

[BoldAsBrass]

Just a little reminder of how bombed out the Scottish market is underneath the surface.

 

It went all tango uniform: Former deaf school back up for sale

 

http://news.scotsman.com/edinburgh/Former-deaf-school-back-up.6745625.jp

 

 

Ahhh, you have to smile. CALA paid £22m for it and are looking to get £20m for a unique opportunity to develop a landmark - or some such nonsense.

 

Maybe Barratts will offer them £11m.

 

I stayed in a hotel in the highlands somewhere - must be best part of 30 years ago. Barratts were building new buildings in the grounds and were creating a timeshare development. At that time they had a daft advert with a bloke in a Barratts helicopter flying through one of those big bill-board hoardings you get at the side of some roads. The hotel was really out in the wilds - must have been 60 miles to the nearest decent sized town. The site agent used to get dropped there by helicopter every morning and picked up again in the evening. At the time I was a site manager on projects in London. That helicopter was certainly one up on my 1.3L Ford Escort.

[drbubb]

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.

 

Move in with family, £16,404 over 2 years

Take a second job, £6,028 over 2 years

Stop smoking, £3,284 over 2 years

Cut 1 foreign holiday per year, £1,400 over 2 years

Sell your 2nd car, £6,000

TOTAL = £33,116

 

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

Because it takes planning and discipline.

Govt has pampered people for so long, that they have lost that.

Selling the 1st car might help too.

[marceau]

I thought people might find this amusing;

 

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

 

 

 

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

 

After 2 years - congratulations, you now have a 5% deposit on a shoebox. You should be so proud.

[John Doe]

Meanwhile, rental demand keeps increasing massively, with landlords cashing in (Although, competition is coming in the BTL business as could soon be taken over by the big boys).

 

 

Landlords benefitting from our economic woes

 

Over the last year rental demand has shot through the roof, with Government figures showing that nearly 300,000 extra households moved into privately rented accommodation in England alone.

 

Tenant demand hit record levels at the end of 2010 — and it remains high this year.

 

As a result rental income has also rocketed. Almost a third of landlords (32%) have already raised their rents this year, according to a survey published by Paragon Mortgages this week.

 

 

http://uk.finance.yahoo.com/news/Landlords-benefitting-yahoofinanceuk-3494099014.html

 

The game is rigged.

[Concrete Jungle]

I thought people might find this amusing;

 

http://money.uk.msn....entid=156830900

 

 

 

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

 

I am doing the above, but the big difference is the money I save won't be finding its way in to the UK property market.

[drbubb]

Meanwhile, rental demand keeps increasing massively, with landlords cashing in (Although, competition is coming in the BTL business as could soon be taken over by the big boys).

 

Landlords benefitting from our economic woes

 

Over the last year rental demand has shot through the roof, with Government figures showing that nearly 300,000 extra households moved into privately rented accommodation in England alone.

Hmm.

 

Where or where is the demand coming from?

 

In the US, demand is shrinking. In times of economic stress, people move in with friends and family to save money.

[BoldAsBrass]

In times of economic stress, people move in with friends and family to save money.

 

Which kind of suggests that we are not going through economic stress yet.

 

I know when I was looking to rent again last year (before I bought in the autumn) we were facing a rent increase of £500 a month just to stay in the same sort of house. There wasn't much on the market and the decent stuff was getting rented out on a phone call. One of the reasons we bought was that demand for rented property was so high - we felt we'd be lucky to find somewhere half decent to live and we'd pay through the nose for the privilege.

 

That and the fact I was getting progressively more worried about having a stash of cash in the UK banking system.

[John Doe]

Hmm.

 

Where or where is the demand coming from?

 

In the US, demand is shrinking. In times of economic stress, people move in with friends and family to save money.

What a horrible thought (You haven't met my family )

 

But I guess people here people want their independence, whatever the cost. I know I do.

 

Just another cultural difference I guess.

 

In theory, the demand is coming from those who are not buying instead.

[John Doe]

Halifax up 0.1%

 

BUT YOY down 2.9%

[harold bishop]

All to be taken with a pinch of salt. I viewed a house yesterday, more out of curiosity than anyhting as the area wasn't what I wanted. It last sold in mid 2005 for £290k. Nicely done up and now on at £500k. Told the agent I thought it was overpriced and was informed they have a firm, cash offer at asking price and were hoping to get more for the vendor.

 

Viewed another when it came on the market a couple of weeks back in an area I want but house needs £80k spending on it. Called the agent today to have another look at it and was told I would be wasting my time. Two asking price offers slugging it out. Both cash.

 

I'm in N Oxfordshire and this story is the same, time and time again. There are no price drops in the houses I'm looking at. In fact the reverse.

[BoldAsBrass]

All to be taken with a pinch of salt. I viewed a house yesterday, more out of curiosity than anyhting as the area wasn't what I wanted. It last sold in mid 2005 for £290k. Nicely done up and now on at £500k. Told the agent I thought it was overpriced and was informed they have a firm, cash offer at asking price and were hoping to get more for the vendor.

 

Viewed another when it came on the market a couple of weeks back in an area I want but house needs £80k spending on it. Called the agent today to have another look at it and was told I would be wasting my time. Two asking price offers slugging it out. Both cash.

 

I'm in N Oxfordshire and this story is the same, time and time again. There are no price drops in the houses I'm looking at. In fact the reverse.

 

It's an interesting phenomenon. Transactions are low, prices are high and enough people want to buy the property that is available and have enough money to keep prices high.

 

For those people hoping for a house price correction (and that includes me - for the benefit of my kids and everyone else's too) - it isn't looking too hopeful.

 

In the same way that young people ought to boycott the housing market - refusing to buy or rent (if at all possible) - why isn't there a movement to boycott university next year. The powers that be would crumble overnight if they suddenly realized their income for next year was zilch, nada, rien, nothing. No wages, no pension - nothing - just empty buildings and a staff that cannot be paid.

 

Boy there would be a race to the bottom then. Where are the NUS these days? You'd think with Facebook et al they could organize a boycott in a week.

[John Doe]

In the same way that young people ought to boycott the housing market - refusing to buy or rent (if at all possible) - why isn't there a movement to boycott university next year. The powers that be would crumble overnight if they suddenly realized their income for next year was zilch, nada, rien, nothing. No wages, no pension - nothing - just empty buildings and a staff that cannot be paid.

 

Great idea

 

I can't believe that some of the "new" universities are planning to charge full fees. Still, if you cut their funding by so much, then I guess it’s s**t or bust for some.

[drbubb]

It's an interesting phenomenon. Transactions are low, prices are high and enough people want to buy the property that is available and have enough money to keep prices high.

 

For those people hoping for a house price correction (and that includes me - for the benefit of my kids and everyone else's too) - it isn't looking too hopeful.

I dunno.

Look at the Halifax reports, and it sounds like plenty of folks are standing aside. How much longer will sellers be able to hold up prices before caving in, and cutting them to find buyers ? The buying enthusiasm which usually comes in the Spring will fade soon, and the buyers that are still there will be more practical, and the sellers may soon panic, cutting prices more drastically.

 

 

/see: http://tinyurl.com/UKtrap

[BoldAsBrass]

I dunno.

Look at the Halifax reports, and it sounds like plenty of folks are standing aside. How much longer will sellers be able to hold up prices before caving in, and cutting them to find buyers ? The buying enthusiasm which usually comes in the Spring will fade soon, and the buyers that are still there will be more practical, and the sellers may soon panic, cutting prices more drastically.

 

Across the country small falls. Anywhere where people actually want to live (i.e. anywhere vaguely desirable or nice) no price falls at all. Relatively few forced sales.

 

Looking at it from my sons' point of view - they can either try to live where they grew up - which means they will need to earn big money - or they can move somewhere else where property is much cheaper. The problem is, of course, that where property is much cheaper, wages are much lower. So, same problem - housing is unaffordable.

 

Sellers will be able to hold up prices indefinitely before caving in - if they don't NEED to sell. Which means (as we have now) a market with low transactions yet still with enough demand and money available to keep prices up.

 

I just can't see this market correcting under its own steam. It needs concerted action by young people to withdraw from the market - both from renting and buying. And I can't see that happening either. So, one develops an 'every man for himself' philosophy. I'm resigned to selling up in a few years and giving my kids a chunk of money. If I don't need to - great - that will mean the market has corrected. Either way the equity I have 'built up' over the years is illusory - it will either disappear or I'll give it to my children so they can have somewhere to live without a mountain of debt around their necks.

[drbubb]

I just can't see this market correcting under its own steam. It needs concerted action by young people to withdraw from the market - both from renting and buying. And I can't see that happening either. So, one develops an 'every man for himself' philosophy. I'm resigned to selling up in a few years and giving my kids a chunk of money. If I don't need to - great - that will mean the market has corrected. Either way the equity I have 'built up' over the years is illusory - it will either disappear or I'll give it to my children so they can have somewhere to live without a mountain of debt around their necks.

"Kick out the Jams ! Mo//erFockers!"

 

 

Reduce all the expensive subsidies, and you will see: What you saw in the US.

 

People move in with friends and family, and the aggregate demand for Housing drops, reducing prices.

 

Instead, the criminal brigade that ran the UK before (the Brown stuff), just keep pushing up non-commercial demand,

fueling house price appreciation.