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Housing market

Darth Vader said:
When I lived and worked in Germany I had to put up a 3 month rent deposit plus a months rent in advance for our flat. To my surprise that deposit was put into its own interest bearing account by the landlord and each year received a statement showing the interest paid. When I left 4 years later I got the whole lot back plus the interest. This was decades ago when Germany still had the DM.

DV
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Great idea, particularly as you can now gain a return on deposit. I have to pay to keep a tenant’s deposit in a non interest bearing account. It works out at -2% per annum (cost to me, obviously). Someone’s making a pile of money somewhere.
 
Ponty said:
Down again, along with mortgage approvals. Friends put their house on in December. Cracking family house in a great location, would normally be gone in a week. Taken £50K off to try and find some demand. Time will tell.

https://www.bbc.co.uk/news/business-64471258
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I'm guessing the ratio of mortgage approvals for BTL Landlords has increased too since Trussgate. The main metric the bank uses for BTL (assuming you have a large deposit) is the rental yield, not your salary, etc....or at least they used to unless that's changed.
 
In NI it's normally a months rent for a deposit and a month in advance. If you cannot offer a guarantor then you may be asked for two months as a deposit.
The deposit is held by a separate company, TDS N.I not the landlord or letting agent. They are a non-profit organisation.
 
andyoz said:
I'm guessing the ratio of mortgage approvals for BTL Landlords has increased too since Trussgate. The main metric the bank uses for BTL (assuming you have a large deposit) is the rental yield, not your salary, etc....or at least they used to unless that's changed.
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I just can’t see how leveraged BTL stacks up at current house prices, IR’s and tax regime.
 
Ponty said:
I just can’t see how leveraged BTL stacks up at current house prices, IR’s and tax regime.
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What would you do if you had, say, £1M to invest? I can see a case for leveraged BTL, given demand, but I've not thought through the details.

By the way, I've just seen how easy it has become to put up to 80K on instant access deposit for 3% gross. You don't do much better with a bond.
 
mandryka said:
What would you do if you had, say, £1M to invest? I can see a case for leveraged BTL, given demand, but I've not thought through the details.

By the way, I've just seen how easy it has become to put up to 80K on instant access deposit for 3% gross. You don't do much better with a bond.
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It would depend when I next need to see it again and the level of work / hassle / risk I want to take on. Personally, I’d stick it in a 3 year savings bond at circa 4.5% as my personal view is that rates will starting coming down within 12 months. If I could sell up tax efficiently I’d do it in a heartbeat and not worry about boilers, maintenance, parasitic agents, unfavourable tax regimes etc etc.
 
andyoz said:
Are there any areas left with decent yields in England?
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What’s a decent yield considering the hassle / risk / tax factor when you can get 4.5% risk and hassle free? 10%? Might be possible in certain areas but going to be a load of agro I suspect.
 
Ponty said:
What’s a decent yield considering the hassle / risk / tax factor when you can get 4.5% risk and hassle free? 10%? Might be possible in certain areas but going to be a load of agro I suspect.
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A lot depends on how you predict the capital growth. From the house you may get 5% income and 5% growth.
 
Ponty said:
It would depend when I next need to see it again and the level of work / hassle / risk I want to take on. Personally, I’d stick it in a 3 year savings bond at circa 4.5% as my personal view is that rates will starting coming down within 12 months. If I could sell up tax efficiently I’d do it in a heartbeat and not worry about boilers, maintenance, parasitic agents, unfavourable tax regimes etc etc.
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Shit, I've just bought 1 year at 4.1%!
 
mandryka said:
Can you summarise it, I can't read it?
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Sorry. It's mostly personal stories, with analysis and graphs based on a few data points.
FT said:
Thirty years ago, the average property bought by a first-time buyer in London was worth £122,000, roughly 1.5 times the UK average price, according to Nationwide building society. Last year, the average first-time buyer in London spent £462,070, double the average price around the rest of the country.
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FT: 'the average first-time buyer in London last year had a deposit of just under £150,000 and a household income of £92,000.' Thirty years ago, the average deposit was less than £24,000.

The ratio of average house prices to average earnings is around 14 in London. Thirty years ago, it was 7.

Put all of that together, and there is a 'deposit barrier' to buying in London. Hence, for a lot of people, the only way to buy a home (i.e. fund a deposit) is inheritance.
 
mandryka said:
I keep wondering whether I should start to sell up and buy an annuity. Must be getting old, the rates look great!
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Just spend it! With revolving 1,2 and 3 year savings bonds and 12 months expenses on instant access at 2.5 - 3%. 5 year not a bad shout either. In ISA wrappers if you can.
 
laughingboy said:
Sorry. It's mostly personal stories, with analysis and graphs based on a few data points.
FT: 'the average first-time buyer in London last year had a deposit of just under £150,000 and a household income of £92,000.' Thirty years ago, the average deposit was less than £24,000.

The ratio of average house prices to average earnings is around 14 in London. Thirty years ago, it was 7.

Put all of that together, and there is a 'deposit barrier' to buying in London. Hence, for a lot of people, the only way to buy a home (i.e. fund a deposit) is inheritance.
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With a household income of £92k, not many FTBs will be doing that on their own. OK, if you work in the City etc a salary of £90k is normal, but less so otherwise, even in London. It always amazes me that managerial rates in food factories in London are not higher, I can only conclude that some people just want to be there and don't care what it costs. Contract rates are low too, I've lost count of the number of bids I've put in only to lose out to someone who will travel to work on an Oyster card and work for very little. Even if I drop my day rate I'm into £100 a day in the hotel and £200 a week travel, and it blows the price out of the water. No loss, I'd rather be in Wales or East Anglia for my working week.
 
Ponty said:
I have to pay to keep a tenant’s deposit in a non interest bearing account. It works out at -2% per annum (cost to me, obviously). Someone’s making a pile of money somewhere.
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Why don't you use the gov't's free deposit scheme; works well. Those agency-based schemes like TDS are a rip-off

mandryka said:
By the way, I've just seen how easy it has become to put up to 80K on instant access deposit for 3% gross
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Yup, or close to. £85K is the max level for the FCSC (or whatever they're called now).

mandryka said:
Shit, I've just bought 1 year at 4.1%!
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Swings and roundabouts. Get that return until rising rates make it non-competitive or keep in easy acc's until int. rates peak, then plonk it into a bond. I couldn't resist a 3.59% (mthly) ISA until November a couple of weeks ago (now closed, of course).

This increasing rates scenario is sth I've not experienced for decades, and I find it tricky to manage, esp. as this time the fin. companies drag their heels after BoE rises and often pass on a fraction. However, it's a lot better than 0.5% of a large wedge.
 
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mandryka said:
Not a good idea IMO if it’s an assured shorthold tenancy. Tell them that they will probably be unable to use a fast track eviction process and the judge may be very unsympathetic to discretionary grounds under s8. I do not believe that they will be able to insure the deposit.

I notice that homelessness was on the up in Sept 22 in Scotland and that France is also seeing a significant increase - I’m not sure if the explanations are the same in both cases.
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They only get away with it if people are willing (and daft) enough to agree to it!

I was talking to someone today, they have a small'ish house on the market since last October with Abode, they've only had one viewing and have just reduced the price a little. They have another estate agent coming over this afternoon, so maybe changing from Abode

Looks very much to me like the housing market is slowing down as the cost of living starts to hit
 
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