Owning your own home

Have seen lots of financial 'influencers' spreading advice about buying houses on interest only payments and leveraging to buy second/third homes to rent out. Will not end pretty.

That said, even myself is somewhat bricking it with our mortgage not due to be renewed for another 4 years.. I suppose we'll be trading livestock under a nuclear winter by then anyway.

Yeah - its our meter :) the reading they gave matches it unfortunately

@Kurai not at all - I thought something similar at one point. I've messed around with stopcocks - turning the mains one in the house off stops the meter in the street ticking over. Turning the internal stopcock back on and the meter starts spinning again. So there's a lot of water going somewhere in the house behind the stopcock.

I don't know where it could be, there's no damp anywhere. The rate it's going you'd expect to see it. Got a chap coming with gas and audio equipment on Wednesday to track it down hopefully.

If it's a really strong flow you would think it must be coming in and out at similar rates. I suppose checking the main exit drain to see if it has constant flow would confirm that.

Some people are going to have to sell up and move into rented accommodation so that they can get out of their mortgage.

I know I might, this also raise another concern; will there be flat to rents left?

As we've seen with the currency today. As soon as something looks cheap someone will buy/rent it. Because of human nature we're more likely to have a big collapse of values than a slow erosion it's just that the circumstances have not been right just yet.

It was only a few years ago that discussions were being had on here about borrowing money to buy classic cars. Expect that kind of borrowing to figure in the first wave of defaults and asset devaluation. House prices are little more stable and there would be significant interest from foreign investment if we remained in a strongly devalued state.

Also wise to remember that every other first world economy has the same problems. We each have different infrastructures and the solutions will vary because of that but the underlying problems are the same.

there would be significant interest from foreign investment if we remained in a strongly devalued state

I do wonder how strong this effect is these days. Obviously in days gone by overseas buyers loved the opportunity to snap something up cheaply in London, but maybe the attraction is weaker now? Particularly when the Euro is almost as significantly devalued in USD terms.

I'm no expert but we've got huge building works locally that are basically pension funds building flats. Without getting all Matrix about what that means the snake is eating it's tail in a very real way and humans are the power source. So keeping them in hutches to pay for someone else's retirement is par for the course.

That is what I mean by attractive to foreign investment. It's not so much that individual chinese or indian investors might like to hold a bit of the UK property market although there is a fair bit of that because so far at least our legal system protects your investment in a way that's not so clearly guaranteed under some other regimes.

Ang on ang on.

Is sterling weak, or is the dollar like crazy strong?

1 euro < 1 dollar ATM.

Is sterling weak, or is the dollar like crazy strong?

Both, probably, isn't it?

I hadn't really been paying attention (because, like, what am I actually going to do about it?).

I wouldn't expect pension fund demand to be massively stimulated by GBP devaluation. They are buying for the rental yield which is denominated in... GBP?

If they wanted to take a directional cable bet I could sell them a derivative and save them a bunch on stamp duty.

Did you just reply to your own comment? ;-D

I think I was making a similar point- USD is really strong across the board, but GBP has depreciated more than EUR. If I was a wealthy person with USD funds I would be shopping in the South of France rather than London...

This is probably the peak for dollar strength. It's literally the biggest turd in a bucket of turds.

Worth remembering that we are an island economy and ignoring the individual elements of our current crisis, looking at the big picture we will go through ups and downs in a different way. Especially now we've to some extent detached ourselves from the continent.

We're worrying about things happening that have already been happening in Greece, Spain, Portugal etc. No medicine supplies is something we should be worried about for example.

Rental yield is a percentage of your investment. Have you done any maths before 🤪

They are but they're in competition with Belgians, Germans, Dutch etc. and prices are 'eye watering' even from a dollar perspective.

Rental yield is a percentage of your investment. Have you done any maths before 🤪

That's the point - buy GBP property, receive GBP yield (income). GBP depreciation doesn't really help that equation.

BoR reasonable worst case scenario is 31% drop in house prices. Reasonable best case scenario unknown at this point.

BoE reasonable worst case scenario is 31% drop in house prices

Is that recent? I seem to remember a number like that floating around a few months ago, so I'm surprised it hasn't been revised further down.

According to Morgan Stanley about 20% of BTL mortgages cannot be serviced by net rental income if rates go up 250 bps from this summer's levels. (that's already nailed on to happen)

I'm looking at it more from the perspective that they will be buying the property once the worst of the depreciation has happened and the damage to prices is in full effect. It was kind of connected to the 'what happens once the shit has hit the fan'. So the income will still be a percentage of the investment. There's likely a baseline for depreciation of the currency unless we go full Argentina which is still possible.

It's trying to look at the 'who will be able to afford the property' question.

cannot be serviced by net rental income

Do they have to be? Surely plenty of people sitting on capital who are prepared to top up and keep the asset with hopes to weather the storm?

You would think so wouldn't you but people have got it bit used to a one way street of money flow. I think a lot will do it at least for a while but it will start to affect the quality for the tenants and we go back to the kind of living conditions that were pretty common in the 80's.

Ice on the inside of the windows anyone?

If I had an asset producing structurally negative cash flow I would take the equity out and invest it in something else. You would have to have huge expectations of future capital growth to make it economically rational to keep bleeding cash in.

Ah OK, if you’re saying that there is some kind of floor on prices from the higher % yield post capital value depreciation then I would agree with you. But that floor may be quite a way below today’s values.

I’ll be hopefully renting out my flat soon, i’m not mortgaged to the hilt on it (40%LTV). complicated situation where i need to extended lease before selling so am waiting for the legislative changes to go through the lords to make that cheaper as well as sitting out the remaining 2 years of mortgage and not pay the big exit fees if i sell. proceeds of which will take a big chunk off new cohabitation property bought by partner come remortgage
i’ll not charge absolute top money and it will pay for itself over the next 2 years with a small surplus to cover any unexpected repairs or breakages.

from a professional landlord point of view it’s probably not enough yield but for us it makes sense and somebody gets a flat for 2 years with a new kitchen and bathroom and no damp/mould and everything works.

haters will still hate for being a landlord though.

Loads of LL have sold which has reduced rented housing stock, and increased prices for renters.

Plenty who aren't though. I nearly ended up remortgaging and renting my flat out when the buyer fell through and I needed to move and although the numbers just about worked and it was a viable option I decided against it as anything going wrong would have left me screwed.

Also lots of professional landlords with highly leveraged portfolios and not much in the way of liquid assets.