BTL as a pension fund - why not?

[jdw1234]

This amusing article (although focused on pensions) illustrates why I am long term bearish on BTL as a pension (and house prices).

http://www.thedailymash.co.uk/news/society/young-p...

[economicpygmy]

heppers75 said:

It is needed because people don't/won't live in a truly bottom end house...stuff

Wrong, increasing levels of credit are needed due many factors, most importantly this trend: http://www.nationwide.co.uk/~/media/MainSite/docum...

[JagLover]

ATG said:

Not sure why resenting having to spend 10 times your salary to buy a hovel is seen as an attitude problem. When we hear that speculators are pushing prices up in commodity markets or on the stock exchange we generally think of that as A Bad Thing. We generally think of rampant inflation as A Bad Thing. But when both happen in the housing market, people pipe up "it's always been this way, it's normal, I had to suffer this so the next generation can too." Might almost think you were hearing the voice of a vested interest.

We do have a choice here. We could reform the housing market to make it more efficient, and to provide the goods people want at more reasonable prices. If this was anything other than housing you'd be hard pressed to find anyone who would complain about those objectives in principle.

Well said.

Increased house prices are mainly increasing the cost of living just as if any other necessity or life is going up in price. It only delivers a "benefit" upon downscaling or death.

The fact that a few hundred cr*p properties can be had cheap in the local area is an irrelevance. Why can't children earning more money in real terms than their parents purchase the same quality of housing?, not better the SAME.

Whether by accident or design governments of various stripes have driven up house prices, and kept them there, and reduced the standard of living of generations to come as a consequence.

[heppers75]

economicpygmy said:

heppers75 said:

It is needed because people don't/won't live in a truly bottom end house...stuff

Wrong, increasing levels of credit are needed due many factors, most importantly this trend: http://www.nationwide.co.uk/~/media/MainSite/docum...

Is that working on the "average" house price though? Or is it based on what FTB are actually buying? I think the latter.

That does not mean there were not cheaper houses available that just means people are choosing to buy more expensive houses the first time around.

[menousername]

Rovinghawk said:

What was said was working one's way up, as opposed to just expecting perfection to be within affordable immediate reach.

fair enough...

but there is no "up" when you are looking at 4/5x salary or more, in an area with poor prospects for a fixer upper that will need 20 / 30k spent on it and involves spending 2/3 hours a day commuting.

maybe they dont have the 20 or 30k left. previously that would have come from a remortgage against the increasing value / equity in the house, when prices were at more realistic levels.

me, personally, would love to find a fixer upper at a good price so I can protect equity, but lets face it anything worth fixing up has been jumped on already - if there is a profit or equity in it and its not selling then there are other factors in play, namely location, quality of the neighborhood etc... if its a decent buy its gone already

[RichB]

Willhire89 said:

RichB said:

HB?

Housing Benefit

None of my properties are now available to HB applicants - as I found to my cost rent comes much further down the priority list after Lambert & Butler and White Lightning

Thanks.

[ATG]

gibbon said:

Yet i imagine you want a return for your money held in a bank savings account and are quite keen for your pension to be managed efficiently and making a decent return?

I dont mean this directly at you ATG, but the hypocrisy and ill thought out rants of some really do make me chuckle.

I am unconvinced we have a housing problem or quality of living problem in real terms in this country, what we have is a fixation on aspirational living and a lack of ability or willingness to achieve it, driven by nonsense reality tv and get rich quick 'celebrities' flaunting their lifestyles through various social media and broadcast media outlets.

There's no hypocrisy here. With all due respect, I don't think you've thought through the difference between investing and buying a house. Owning a house is absolutely nothing like having cash on deposit at a bank.

Why should owning a house lead to a capital gain? I.e. why should a house go up in price above the general rate of inflation? Why should anyone expect a house to be an investment? By nature it's just another depreciating asset; a physical object that you buy that slowly falls apart unless you keep spending more money to repair it. The _only_ reason for it to go up in price is scarcity value.

Investing means putting capital to work; buying into a company or lending to some entity that is going to use your money to do something. That's why buying wine, old cars or trading forex is not investment; it is speculation. Neither is just buying and holding a house an investment.

[heppers75]

ATG said:

There's no hypocrisy here. With all due respect, I don't think you've thought through the difference between investing and buying a house. Owning a house is absolutely nothing like having cash on deposit at a bank.

Why should owning a house lead to a capital gain? I.e. why should a house go up in price above the general rate of inflation? Why should anyone expect a house to be an investment? By nature it's just another depreciating asset; a physical object that you buy that slowly falls apart unless you keep spending more money to repair it. The _only_ reason for it to go up in price is scarcity value.

Investing means putting capital to work; buying into a company or lending to some entity that is going to use your money to do something. That's why buying wine, old cars or trading forex is not investment; it is speculation. Neither is just buying and holding a house an investment.

An often overused quote but very true, land is one of the best investments, it is afterall the one thing they are not making any more of!

[jdw1234]

Assuming no additional permission to build is granted. Otherwise is that not the same as making land?

[ATG]

heppers75 said:

An often overused quote but very true, land is one of the best investments, it is afterall the one thing they are not making any more of!

Yes, but there is no shortage of land in the UK. We could double the UK housing stock by building on a few % of the country.

The only thing that jacks up the price of land in the UK is the difficulty of obtaining planning permission.

Farm land is very roughly 10k an acre. Same land with planning permission could easily be worth 100 times more.

If that doesn't illustrate the degree to which the supply side of the market is artificially constrained, I don't know what does.

If someone really wants to gamble their financial future on that artificial restriction not being relaxed, they are braver than me. I would want to be protected against the eventuality. Putting all your wealth in property or land strikes me as dangerously undiversified.

[anonymous-user]

Clear and present danger? Idiot politicians and rent controls! Except they arn't really rent controls, just a windfall tax on landlords with valuable properties. Does the London Mayor even have the legal authority for such a tax?

http://www.standard.co.uk/news/mayor/mayoral-hopef...

[Digga]

ATG said:

Yes, but there is no shortage of land in the UK. We could double the UK housing stock by building on a few % of the country.

The only thing that jacks up the price of land in the UK is the difficulty of obtaining planning permission.

Farm land is very roughly 10k an acre. Same land with planning permission could easily be worth 100 times more.

If that doesn't illustrate the degree to which the supply side of the market is artificially constrained, I don't know what does.

^This, totally, in a nutshell.

Don't forget, the gamble on property is not just hinging on supply side status quo, but also that those nice BRICs investors don;t need to liquidate their foreign assets.

[Justayellowbadge]

fblm said:

Clear and present danger? Idiot politicians and rent controls! Except they arn't really rent controls, just a windfall tax on landlords with valuable properties. Does the London Mayor even have the legal authority for such a tax?

http://www.standard.co.uk/news/mayor/mayoral-hopef...

As I will be Mayor before Abbott, I wouldn't panic yet.

[Rovinghawk]

heppers75 said:

land is one of the best investments, it is afterall the one thing they are not making any more of!

A while ago I was involved in building an island from nothing, so I have to disagree with you.

[anonymous-user]

Justayellowbadge said:

As I will be Mayor before Abbott, I wouldn't panic yet.

Good. Still, getting the natives all riled up is not helpful. Personally can't stand her but I'm surprised she's such a long shot to be honest. Red rosette, not white, renters new bestest friend... I'd have thought that's a sizable chunk of Londons voters in the bag?

[turbobloke]

Justayellowbadge said:

fblm said:

Clear and present danger? Idiot politicians and rent controls! Except they arn't really rent controls, just a windfall tax on landlords with valuable properties. Does the London Mayor even have the legal authority for such a tax?

http://www.standard.co.uk/news/mayor/mayoral-hopef...

As I will be Mayor before Abbott, I wouldn't panic yet.

If the many worlds interpretation of quantum mechanics is correct, in one universe you're already Mayor of London and in another you're married to Abbott. Beyond that it gets messy for the rest of us so best to stop there and leave you with those comforting thoughts

[andy43]

turbobloke said:

Justayellowbadge said:

fblm said:

Clear and present danger? Idiot politicians and rent controls! Except they arn't really rent controls, just a windfall tax on landlords with valuable properties. Does the London Mayor even have the legal authority for such a tax?

http://www.standard.co.uk/news/mayor/mayoral-hopef...

As I will be Mayor before Abbott, I wouldn't panic yet.

If the many worlds interpretation of quantum mechanics is correct, in one universe you're already Mayor of London and in another you're married to Abbott. Beyond that it gets messy for the rest of us so best to stop there and leave you with those comforting thoughts

Oh thanks for that. Thanks a lot. Every time I close my eyes now I'm in the universe you just described.
The one without the shiny Roller included as a perk of the job. And I can't get out. Heeeelp meee.

Roller = Rolls-Royce.

[turbobloke]

andy43 said:

turbobloke said:

Justayellowbadge said:

fblm said:

Clear and present danger? Idiot politicians and rent controls! Except they arn't really rent controls, just a windfall tax on landlords with valuable properties. Does the London Mayor even have the legal authority for such a tax?

http://www.standard.co.uk/news/mayor/mayoral-hopef...

As I will be Mayor before Abbott, I wouldn't panic yet.

If the many worlds interpretation of quantum mechanics is correct, in one universe you're already Mayor of London and in another you're married to Abbott. Beyond that it gets messy for the rest of us so best to stop there and leave you with those comforting thoughts

Oh thanks for that. Thanks a lot. Every time I close my eyes now I'm in the universe you just described.
The one without the shiny Roller included as a perk of the job. And I can't get out. Heeeelp meee.

Roller = Rolls-Royce.

To escape, concentrate on the universes where you've got every car and every hottie you ever wanted, not only that Rolls Royce but you own the factory as well. Abbott doesn't exist. FTFY

[crankedup]

heppers75 said:

ATG said:

There's no hypocrisy here. With all due respect, I don't think you've thought through the difference between investing and buying a house. Owning a house is absolutely nothing like having cash on deposit at a bank.

Why should owning a house lead to a capital gain? I.e. why should a house go up in price above the general rate of inflation? Why should anyone expect a house to be an investment? By nature it's just another depreciating asset; a physical object that you buy that slowly falls apart unless you keep spending more money to repair it. The _only_ reason for it to go up in price is scarcity value.

Investing means putting capital to work; buying into a company or lending to some entity that is going to use your money to do something. That's why buying wine, old cars or trading forex is not investment; it is speculation. Neither is just buying and holding a house an investment.

An often overused quote but very true, land is one of the best investments, it is afterall the one thing they are not making any more of!

Scarcity of building land has so many variables attached to it that piling in to buy can result in potential loses. It has to be treated like any potential investment regards due diligence.
Houses can be seen as investments in the current financial and Social climate, its why foreign money is flooding in. Also some houses are so distinctly attractive or different from the 'average' that they can certainly be classed as good investment potential.