Will we end up renting EVERYTHING ?
Discussion
J4CKO said:
I think the problems with leasing come with scope creep, need a new family car, £200 for a Citroen Picasso or something, creeps up and before you know it there is an Evoque on the path and you need to find £500 a month.
This x a million. The people who say oh i only pay £300 a month and it's cheaper than the depreciation - but yeah if you had the £30k in the bank you probably would have bought something half the price.
And i learned this lesson the hard way. Used to buy cars cash, but got on the pcp train. When you get used to paying £300, £400p/m seems ok. When you get used to that £500p/m seems ok - never again
bloomen said:
I cannot wrap my head around people who 'rent' furniture when the world is awash with second hand stuff for a fraction of the price.
Yeah madness, you can buy something like a HM aeron chair for example on ebay, then relist it when you don't need it - if you buy well you will lose almost nothing as there is a liquid market for things like that.Failing that, IKEA / ebay.
Shnozz said:
Whilst I see an occasional benefit to the subscription/rental model of today (music/films in particular), I also think it represents a sea change in what society has morphed into and it doesn't bode well for the future if anyone wishes to retire.
I don't have some conspiracy theory regarding the banking dynasties of the world, but a few things have already been highlighted on this thread such as the shift from debt to "credit" and the lack of concern people have as a result. It has also allowed a great many things to inflate in price almost unnoticed.
Student debt has always been something rarely considered due to the repayment thresholds and interest applied. University fees have crept up and up and in tandem with this, students are targeted for credit cards before they have even learned anything to give them a career, let alone earn a penny from it.
So day 1 in working life, you have an enormous debt to repay, a chain around your neck.
The next adult step of buying a house and the business model to lend has been flexed to allow more "credit". For many years it was the 3 (4 at a push) x multiple of earnings, 25 year product. Even with more sensible ratios being back in place post 2008, the mortgage term is often now 35 or even 40 years. If you (optimistically) said that young adult was in a position to buy by 30 years old, its their entire working life allowed for. Again, the manipulation of lending has been a large factor in house prices rising to a point its just the new normal. Parents giving over tens of thousands to kids is now normal to get a deposit, for those lucky enough to have wealthy parents or to the detriment of less wealthy parents who again see this as the new normal.
Cars are rarely bought these days, allowing prices to inflate as the overall price is of no concern, only the monthly cost. The flip cycle of PCP/lease deals becomes a new normal. Not a criticism of those who chose to use such deals and accept the depreciation curve -v- payments can be in their interest - my point is simply that the subscription model becomes the new normal.
If such models were not available, I do wonder where the asset prices would stand today as against when they are subject to long term finance, leases or subscriptions. I wonder hoe many more people would have a huawei instead of an iphone.
Mobile phone deals, furniture deals, gym deals, TV subscription deals etc etc. You can see why its attractive for any supplier to align itself to a subscription based model. Hell, if I could work out how to sell my services on a subscription model rather than as and when needed I would.
It's not all bad, as I say. However, the idea of a working lifetime of debt before you have started a day of work or as a young person in those early years is a bit of a sad prospect. Couple that with having to rent/lease items in tandem that you won't ever get to own leaves you needing to find £X of capital in retirement to keep them. And all the while, you must of course save a massive amount to give you any sort of pension whatsoever to pay for those items or just to feed yourself. Of course, you'd need less in your pension if interest rates went up and your annuity bought so much more...but then you can't pay your 35 year mortgage or the interest payment on your leased car etc. It's quite an ugly machine and I cannot see how it can be re-calibrated but it won't be a revolution so no doubt more products will evolve, or more money printed, or whatever it takes to keep the wheels on but I cannot see where the UK public can be squeezed further in terms of leverage unless it goes multi-generational as it has elsewhere in the world.
Fully agree with you thereI don't have some conspiracy theory regarding the banking dynasties of the world, but a few things have already been highlighted on this thread such as the shift from debt to "credit" and the lack of concern people have as a result. It has also allowed a great many things to inflate in price almost unnoticed.
Student debt has always been something rarely considered due to the repayment thresholds and interest applied. University fees have crept up and up and in tandem with this, students are targeted for credit cards before they have even learned anything to give them a career, let alone earn a penny from it.
So day 1 in working life, you have an enormous debt to repay, a chain around your neck.
The next adult step of buying a house and the business model to lend has been flexed to allow more "credit". For many years it was the 3 (4 at a push) x multiple of earnings, 25 year product. Even with more sensible ratios being back in place post 2008, the mortgage term is often now 35 or even 40 years. If you (optimistically) said that young adult was in a position to buy by 30 years old, its their entire working life allowed for. Again, the manipulation of lending has been a large factor in house prices rising to a point its just the new normal. Parents giving over tens of thousands to kids is now normal to get a deposit, for those lucky enough to have wealthy parents or to the detriment of less wealthy parents who again see this as the new normal.
Cars are rarely bought these days, allowing prices to inflate as the overall price is of no concern, only the monthly cost. The flip cycle of PCP/lease deals becomes a new normal. Not a criticism of those who chose to use such deals and accept the depreciation curve -v- payments can be in their interest - my point is simply that the subscription model becomes the new normal.
If such models were not available, I do wonder where the asset prices would stand today as against when they are subject to long term finance, leases or subscriptions. I wonder hoe many more people would have a huawei instead of an iphone.
Mobile phone deals, furniture deals, gym deals, TV subscription deals etc etc. You can see why its attractive for any supplier to align itself to a subscription based model. Hell, if I could work out how to sell my services on a subscription model rather than as and when needed I would.
It's not all bad, as I say. However, the idea of a working lifetime of debt before you have started a day of work or as a young person in those early years is a bit of a sad prospect. Couple that with having to rent/lease items in tandem that you won't ever get to own leaves you needing to find £X of capital in retirement to keep them. And all the while, you must of course save a massive amount to give you any sort of pension whatsoever to pay for those items or just to feed yourself. Of course, you'd need less in your pension if interest rates went up and your annuity bought so much more...but then you can't pay your 35 year mortgage or the interest payment on your leased car etc. It's quite an ugly machine and I cannot see how it can be re-calibrated but it won't be a revolution so no doubt more products will evolve, or more money printed, or whatever it takes to keep the wheels on but I cannot see where the UK public can be squeezed further in terms of leverage unless it goes multi-generational as it has elsewhere in the world.
The US student loan situation is even more terrifying.
Dave ramsey FTW.
Rostfritt said:
Lord Marylebone said:
Part of my work includes project managing the building of new housing developments/estates, mostly for property that will be rented out, whether that be 1- 4 bed houses or apartments in a block or tower.
We now work on 30 year NPV figures, meaning that we expect the development to pay it's build costs off and then return a profit within 30 years (based on the rental income) as 30 years is what we estimate it's useful lifespan to be.
Essentially the things we are designing and building are priced so that they only have to last 30 years, and then they can potentially be demolished and replaced with the next set of '30 year' properties.
They may well last an awful lot longer than 30 years, but that is the parameters we are working to right now.
How does that work with leases? My flat was built about 30 years ago and was sold on a 125 year lease. What would the process be of them demolishing the block if they came to the end of their useful life? Is my flat then effectively worthless? They are a red brick construction with concrete floors so a pretty standard construction, so have plenty of life in them, but they aren't going to last forever. Will they have to buy people out of flats in tower blocks when they need to be rebuilt?We now work on 30 year NPV figures, meaning that we expect the development to pay it's build costs off and then return a profit within 30 years (based on the rental income) as 30 years is what we estimate it's useful lifespan to be.
Essentially the things we are designing and building are priced so that they only have to last 30 years, and then they can potentially be demolished and replaced with the next set of '30 year' properties.
They may well last an awful lot longer than 30 years, but that is the parameters we are working to right now.
Most of the properties being built will last an awful lot longer than 30 years, but we are demolishing things built in the 60's and 70's to make way for more modern properties, often because the older ones just aren't as desirable anymore and become difficult to let.
If you own, via leasehold, a property in a block of flats, and a developer owns the freehold and wishes to demolish the block, they will have to buy you out at market value, and you can then buy something else.
trowelhead said:
J4CKO said:
I think the problems with leasing come with scope creep, need a new family car, £200 for a Citroen Picasso or something, creeps up and before you know it there is an Evoque on the path and you need to find £500 a month.
This x a million. The people who say oh i only pay £300 a month and it's cheaper than the depreciation - but yeah if you had the £30k in the bank you probably would have bought something half the price.
And i learned this lesson the hard way. Used to buy cars cash, but got on the pcp train. When you get used to paying £300, £400p/m seems ok. When you get used to that £500p/m seems ok - never again
When we bought our current sofas from furniture village we wouldn't have minded a footstall but at £300 or so - half the cost of an actual sofa for a bit of ply with some 3rd rate cow/plastic blend nailed to it - seemed ludicrous. Then of course it dawned on me - NOBODY ever pays £300 for a such an item - they pay only another £1/month on top of the £9/month/5 years they're paying for their cruddy furniture anyway.
I bet sofa salesmen get huge bonus on footstools!
Teddy Lop said:
When we bought our current sofas from furniture village we wouldn't have minded a footstall but at £300 or so - half the cost of an actual sofa for a bit of ply with some 3rd rate cow/plastic blend nailed to it - seemed ludicrous. Then of course it dawned on me - NOBODY ever pays £300 for a such an item - they pay only another £1/month on top of the £9/month/5 years they're paying for their cruddy furniture anyway.
I bet sofa salesmen get huge bonus on footstools!
Fastpedeller said:
Teddy Lop said:
When we bought our current sofas from furniture village we wouldn't have minded a footstall but at £300 or so - half the cost of an actual sofa for a bit of ply with some 3rd rate cow/plastic blend nailed to it - seemed ludicrous. Then of course it dawned on me - NOBODY ever pays £300 for a such an item - they pay only another £1/month on top of the £9/month/5 years they're paying for their cruddy furniture anyway.
I bet sofa salesmen get huge bonus on footstools!
Gassing Station | The Lounge | Top of Page | What's New | My Stuff