How far will house prices fall [volume 4]

[Shnozz]

troika said:

Jesus. That will tip a lot of people over the edge. I’m imagining poll tax style riots, but then remembered those that will have to pay it will be at work or too old to riot. I’d just go on the dole as presumably those on benefits won’t pay it.

I can see Brexit being derailed followed by an election that Corbyn would win. Maybe it’s time to sell everything up and clear off in the camper van whilst there is a window of opportunity...

Not too far away from what I am in the process of doing. Although for camper van read sell UK property and purchase in europe. UK equities reduced in SIPP aside from some of the FTSE 100 ones operating predominantly outside of the UK but domiciled here. Gold trust purchases and O&G purchases.

For a number of reasons I see a severe storm in 6 - 18 months and just little methods available for government (or BoE) to keep the plates spinning. Even when they came up with QE magic tricks last time its meant UK (and US) real-world inflation grew. The only positive trend I have witnessed between 2008 - 2018 is the reduction in borrowing leverage against property. It seems to have led to bulging pocketed spend spend spenders to other arenas and mainly car finance which has ballooned but that is another matter.

I certainly cannot see much growth ahead and given the reduction to 0% in mortgage relief on BTLs, the second stamp duty and a seemingly electorate-popular crusade against anyone who dares provide BTL homes, I can't see the climate improving in any way. With no capital growth and yields reduced I can see better options.

Like a house somewhere sunnier and fook all rent but a nice tan.

[Francois de La Rochefoucauld]

p1stonhead said:

troika said:

98elise said:

troika said:

98elise said:

Don't forget the Land Value Tax Labour are also planning to introduce. It's expected to be 3% of the Land value, which for a home owner would be about 50% of the entire property value.

For me that's going to be a an extra 6k bill each year, and I was hoping to retire in the next couple of years.

Is this really on the cards if these clowns get in?

Yes, it was in their manifesto.

Jesus. That will tip a lot of people over the edge. I’m imagining poll tax style riots, but then remembered those that will have to pay it will be at work or too old to riot. I’d just go on the dole as presumably those on benefits won’t pay it.

I can see Brexit being derailed followed by an election that Corbyn would win. Maybe it’s time to sell everything up and clear off in the camper van whilst there is a window of opportunity...

It’ll never happen. It was a vote stealer policy only.

I wouldn't bet on it, perhaps not in the next couple of years but certainly in the next decade I'd say. There was a good piece of research I read recently discussing how taxes on land/property were all but inevitable as we continue to rely on a shrinking tax base to fund ever greater handouts from the state. I can see the smart money selling up and renting in the future.

[scenario8]

Nice for you to have the option!

[p1stonhead]

Francois de La Rochefoucauld said:

p1stonhead said:

troika said:

98elise said:

troika said:

98elise said:

Don't forget the Land Value Tax Labour are also planning to introduce. It's expected to be 3% of the Land value, which for a home owner would be about 50% of the entire property value.

For me that's going to be a an extra 6k bill each year, and I was hoping to retire in the next couple of years.

Is this really on the cards if these clowns get in?

Yes, it was in their manifesto.

Jesus. That will tip a lot of people over the edge. I’m imagining poll tax style riots, but then remembered those that will have to pay it will be at work or too old to riot. I’d just go on the dole as presumably those on benefits won’t pay it.

I can see Brexit being derailed followed by an election that Corbyn would win. Maybe it’s time to sell everything up and clear off in the camper van whilst there is a window of opportunity...

It’ll never happen. It was a vote stealer policy only.

I wouldn't bet on it, perhaps not in the next couple of years but certainly in the next decade I'd say. There was a good piece of research I read recently discussing how taxes on land/property were all but inevitable as we continue to rely on a shrinking tax base to fund ever greater handouts from the state. I can see the smart money selling up and renting in the future.

And you think landlords won’t pass it on to tenants? Boom rental and sales market both absolutely dead and the country thrown into an economic ice age. Never going to happen.

[Harry Flashman]

The retardedness of this all is that a council tax revaluation would do all of this. I, frankly, should be paying triple what I do. Enough like me in the SE to probably deal with council deficits.

But no. The proposal is to up my local tax burden not by 3x, but by 20x. At which point I, and others like me, will either leave, or (more likely) be unable to sell our now worthless houses, be deep in negative equity, and spending the vast majority of my salary on mortgage and property tax. At which point it would be more expedient to quit my job, throw the keys at the bank, declare bankruptcy and become one of the ones needing handout!

OK, a bit extreme as I suspect we could make the payments - but many won't be able to: And if interest rates go to 10% because the economy is f*cked, then even the moderately wealthy will be f*cked if they have a mortgage and have to pay this tax.

[Francois de La Rochefoucauld]

p1stonhead said:

Francois de La Rochefoucauld said:

p1stonhead said:

troika said:

98elise said:

troika said:

98elise said:

Don't forget the Land Value Tax Labour are also planning to introduce. It's expected to be 3% of the Land value, which for a home owner would be about 50% of the entire property value.

For me that's going to be a an extra 6k bill each year, and I was hoping to retire in the next couple of years.

Is this really on the cards if these clowns get in?

Yes, it was in their manifesto.

Jesus. That will tip a lot of people over the edge. I’m imagining poll tax style riots, but then remembered those that will have to pay it will be at work or too old to riot. I’d just go on the dole as presumably those on benefits won’t pay it.

I can see Brexit being derailed followed by an election that Corbyn would win. Maybe it’s time to sell everything up and clear off in the camper van whilst there is a window of opportunity...

It’ll never happen. It was a vote stealer policy only.

I wouldn't bet on it, perhaps not in the next couple of years but certainly in the next decade I'd say. There was a good piece of research I read recently discussing how taxes on land/property were all but inevitable as we continue to rely on a shrinking tax base to fund ever greater handouts from the state. I can see the smart money selling up and renting in the future.

And you think landlords won’t pass it on to tenants? Boom rental and sales market both absolutely dead and the country thrown into an economic ice age. Never going to happen.

Nope. Not all people will be able/willing to sell up. When I say 'smart' what I really mean in those with sufficient liquidity and means to own homes in more than one jurisdiction i.e. rich people. There is also no evidence to suggest that the withdrawal of mortgage interest rate relief has had an impact on rents as some predicted.

Edited to add. This is all a bit dooms day stuff, I suspect like most things the answer will be quite a lot in the middle will pay more, with those at the upper and lower ends staying roughly the same.

Edited by Francois de La Rochefoucauld on Wednesday 2nd May 18:18

[p1stonhead]

Francois de La Rochefoucauld said:

p1stonhead said:

Francois de La Rochefoucauld said:

p1stonhead said:

troika said:

98elise said:

troika said:

98elise said:

Don't forget the Land Value Tax Labour are also planning to introduce. It's expected to be 3% of the Land value, which for a home owner would be about 50% of the entire property value.

For me that's going to be a an extra 6k bill each year, and I was hoping to retire in the next couple of years.

Is this really on the cards if these clowns get in?

Yes, it was in their manifesto.

Jesus. That will tip a lot of people over the edge. I’m imagining poll tax style riots, but then remembered those that will have to pay it will be at work or too old to riot. I’d just go on the dole as presumably those on benefits won’t pay it.

I can see Brexit being derailed followed by an election that Corbyn would win. Maybe it’s time to sell everything up and clear off in the camper van whilst there is a window of opportunity...

It’ll never happen. It was a vote stealer policy only.

I wouldn't bet on it, perhaps not in the next couple of years but certainly in the next decade I'd say. There was a good piece of research I read recently discussing how taxes on land/property were all but inevitable as we continue to rely on a shrinking tax base to fund ever greater handouts from the state. I can see the smart money selling up and renting in the future.

And you think landlords won’t pass it on to tenants? Boom rental and sales market both absolutely dead and the country thrown into an economic ice age. Never going to happen.

Nope. Not all people will be able/willing to sell up. When I say 'smart' what I really mean in those with sufficient liquidity and means to own homes in more than one jurisdiction i.e. rich people. There is also no evidence to suggest that the withdrawal of mortgage interest rate relief has had an impact on rents as some predicted.

Interest rate relief is not the same ball park as having to find an extra grand or two per month on a rental property you own. It will absolutely be passed on to tenants. But tenants won’t of course be able to pay it, so the landlord will want to sell but possibly won’t be able to.

[loafer123]

Rents are a factor of affordability, not set by landlords to reflect whatever they want.

If they were, why would a landlord not simply increase their rent?

To look at it another way, if land tax were 10% of property value, do you think you could pass that on? Of course not.

[p1stonhead]

loafer123 said:

Rents are a factor of affordability, not set by landlords to reflect whatever they want.

If they were, why would a landlord not simply increase their rent?

To look at it another way, if land tax were 10% of property value, do you think you could pass that on? Of course not.

Markets dictate rents. If costs instantly went up 10% across the whole rental market, all rental properties would try to cover it off.

[loafer123]

p1stonhead said:

loafer123 said:

Rents are a factor of affordability, not set by landlords to reflect whatever they want.

If they were, why would a landlord not simply increase their rent?

To look at it another way, if land tax were 10% of property value, do you think you could pass that on? Of course not.

Markets dictate rents. If costs instantly went up 10% across the whole rental market, all rental properties would try to cover it off.

They might try to, but the tenants can’t simply magic more income out of thin air...

[p1stonhead]

loafer123 said:

p1stonhead said:

loafer123 said:

Rents are a factor of affordability, not set by landlords to reflect whatever they want.

If they were, why would a landlord not simply increase their rent?

To look at it another way, if land tax were 10% of property value, do you think you could pass that on? Of course not.

Markets dictate rents. If costs instantly went up 10% across the whole rental market, all rental properties would try to cover it off.

They might try to, but the tenants can’t simply magic more income out of thin air...

Neither can the landlords....

Uh oh. Now all the tenants are homeless.

See - never going to happen.

[loafer123]

p1stonhead said:

loafer123 said:

p1stonhead said:

loafer123 said:

Rents are a factor of affordability, not set by landlords to reflect whatever they want.

If they were, why would a landlord not simply increase their rent?

To look at it another way, if land tax were 10% of property value, do you think you could pass that on? Of course not.

Markets dictate rents. If costs instantly went up 10% across the whole rental market, all rental properties would try to cover it off.

They might try to, but the tenants can’t simply magic more income out of thin air...

Neither can the landlords....

Uh oh. Now all the tenants are homeless.

See - never going to happen.

I think your grasp of market economics could do with some work...

[Burwood]

loafer123 said:

p1stonhead said:

loafer123 said:

Rents are a factor of affordability, not set by landlords to reflect whatever they want.

If they were, why would a landlord not simply increase their rent?

To look at it another way, if land tax were 10% of property value, do you think you could pass that on? Of course not.

Markets dictate rents. If costs instantly went up 10% across the whole rental market, all rental properties would try to cover it off.

They might try to, but the tenants can’t simply magic more income out of thin air...

Unfortunately rents always move up with cost increases. Perhaps not 100% but it’s naive to think it won’t hurt the consumer.

[loafer123]

Burwood said:

loafer123 said:

p1stonhead said:

loafer123 said:

Rents are a factor of affordability, not set by landlords to reflect whatever they want.

If they were, why would a landlord not simply increase their rent?

To look at it another way, if land tax were 10% of property value, do you think you could pass that on? Of course not.

Markets dictate rents. If costs instantly went up 10% across the whole rental market, all rental properties would try to cover it off.

They might try to, but the tenants can’t simply magic more income out of thin air...

Unfortunately rents always move up with cost increases. Perhaps not 100% but it’s naive to think it won’t hurt the consumer.

Don’t get me wrong, I certainly agree there would be upward pressure on rents as landlords seek to recover additional costs, but to believe there is the ability to directly pass them on to tenants is not right, not least as not every landlord will have the same financial pressures.

[p1stonhead]

loafer123 said:

Burwood said:

loafer123 said:

p1stonhead said:

loafer123 said:

Rents are a factor of affordability, not set by landlords to reflect whatever they want.

If they were, why would a landlord not simply increase their rent?

To look at it another way, if land tax were 10% of property value, do you think you could pass that on? Of course not.

Markets dictate rents. If costs instantly went up 10% across the whole rental market, all rental properties would try to cover it off.

They might try to, but the tenants can’t simply magic more income out of thin air...

Unfortunately rents always move up with cost increases. Perhaps not 100% but it’s naive to think it won’t hurt the consumer.

Don’t get me wrong, I certainly agree there would be upward pressure on rents as landlords seek to recover additional costs, but to believe there is the ability to directly pass them on to tenants is not right, not least as not every landlord will have the same financial pressures.

It won’t be instant or 100% but landlords are there to make money. Unexpected losses especially if it applies to the whole market will definitely be passed on as much as reasonably possible to the end user of the property.

[loafer123]

p1stonhead said:

It won’t be instant or 100% but landlords are there to make money. Unexpected losses especially if it applies to the whole market will definitely be passed on as much as reasonably possible to the end user of the property.

On that we agree.

[joyless lobotomised parrot]

Recently The Greens tried desperately hard to get LVT through the Scottish Parliament. In fact, insisted SNP included it in their economic plan for Scotland. Threatened to withdraw their support if SNP wouldn't do it.

Got bounced. And not by a slim margin either.

[98elise]

loafer123 said:

Rents are a factor of affordability, not set by landlords to reflect whatever they want.

If they were, why would a landlord not simply increase their rent?

To look at it another way, if land tax were 10% of property value, do you think you could pass that on? Of course not.

Landlords can't just add 10% with their costs have not increased because there is a free (isn't) market. Nobody would pay the extra 10% because other houses as available without that cost.

If you add 10% to the entire supply chain then rents will need to increase to cover it. Those that can't pay won't, and the market will contract as landlords sell up as no money can be made. That will stabilise at a point where those that can afford the rise are paying it.

Ultimately the buyer always ends up paying the tax, unless a landlord wants to operate at a loss. Corgyn and McDonnell know this hence their intent to have rent caps and long term tenancies and more power to tenants.

Gross yields are about 4-5% at the moment, add a 3% LVT and there is almost no margin as an investment. IMO the market will collapse.

Corbyn has promised to buy every homeless person a home though, so perhaps that's his intent.

[hyphen]

kingston12 said:

..

Mail is saying that Kingston is one to watch with a likely swing to Lib Dems.

That would get rid of that questionable council leader, but will it stop the developments? It may not and just end up with higher amounts of affordable housing in them so hope those voters realise that.

Probably also a double edged swords for the Kingston Tory councils to be so pro-university accommodation and having built all those new blocks, as the growth of the university will also have more Lib/Labour students, especially considering Kingston is so far down the University rankings so many will be thick

[brickwall]

p1stonhead said:

Nice little earner

http://www.rightmove.co.uk/house-prices/detailMatc...

My ready reckoner says ~20% CAGR on equity, assuming they had a 80% LTV mortgage to start with.