UK House prices: News & Views

[John Doe]

In a few years, they will be telling the same story about the UK.

Perhaps not.

 

UK is not Eire, never was. They took the madness of the UK and multiplied it tenfold, and built more houses than they had people.

 

The crazy NIMBY attitude and planning system in UK meant this never happened here.

 

They are a small country with a debt per capita (& deficit) that makes UK look like a model of prudence.

 

The two cannot be compared.

 

UK £875B = £14.5k per person

US £21k per person

Eire £127B, or £31k per person

[borassic]

Well we may not have physical ghost towns here in the UK, but ghost towns nonetheless - thanks to chronic structural unemployment in our once great industrial cities of the midlands and north. When the cuts really kick-in these towns that were net takers of public money will become very horrible places in which to live.

 

If our "growth" is purely down to "financialization" type activities (I suppose that means flogging off debt, or participating in zero-sum activities like trading) we really have no choice to become a Ruritanian holiday destination for Asians!

 

We have rid our means of wealth creation, what/who/how will bring it back? Indeed when?

[John Doe]

Well we may not have physical ghost towns here in the UK, but ghost towns nonetheless - thanks to chronic structural unemployment in our once great industrial cities of the midlands and north. When the cuts really kick-in these towns that were net takers of public money will become very horrible places in which to live.

Will become? I think many are already there. A lot of these areas have been c**p since Thatcher. They won't notice much difference. The fringe areas probably will though (where the trickle down had some effect and the EA's and coffee shops moved in, these are now closing).

[borassic]

Will become? I think many are already there. A lot of these areas have been c**p since Thatcher. They won't notice much difference. The fringe areas probably will though (where the trickle down had some effect and the EA's and coffee shops moved in, these are now closing).

 

 

No, no, they will be a hell of a difference! Since Thatch they have recieved stunnning amounts of public money in order to remain relatively civilised. City of Culture bollox (Liverpool, Glasgow). This final support is now going.

[Erewhon888]

Irish property auction

 

 

http://www.independent.ie/lifestyle/the-property-auction-that-will-show-us-just-how-bad-the-crash-is-2606455.html

 

April 15 will be a sickening day because it should reveal just how far prices have flopped in the bust.

 

Some will have to suffer the indignity of seeing the house next door flogged off for half the amount they paid for theirs a few years ago.

 

But for the lucky few who sold at the peak, held onto their cash and played the waiting game by renting, the moment may just have arrived when they feel safe to step their toes back into the property game.

 

[G0ldfinger]

Ja, now they cut the crap, finally.

 

http://www.independent.ie/lifestyle/the-property-auction-that-will-show-us-just-how-bad-the-crash-is-2606455.html

 

In the good times, would-be buyers planning a future there might have been greeted by the aroma of percolating coffee and fresh-cut flowers wafting through the air.

 

With cushions plumped, door knobs polished and hedges trimmed, gushing estate agents would lead them through the 'light and airy' rooms and 'well-proportioned' gardens bordered by 'mature' trees.

 

But the trickle of viewers sizing up the property today will be spared the guff and they'll have to do without the gloss. Somebody's dream home has become a receiver's nightmare, a debt-riddled, distressed asset destined for the bargain-basement of the crippled property market.

[G0ldfinger]

An HPC par excellence!

 

Head south to the rolling hills of west Wicklow and you could pick up a sprawling equestrian holding with 55 acres of grazing land, a tumbledown farmhouse and outhouses. Five years ago, in the fever of the bubble, it sold for €1.29m.

 

Today, a million has been knocked off that price and it goes into auction on Friday week with a reserve of just €290,000.

[G0ldfinger]

That must sound like music in some peoples' ears!

 

"People don't want auctioneer's bullshit. There will be no spiel, no hype. This is a no-nonsense, no-frills sale. We're letting the bidders decide the value."

[d2thdr]

Perhaps not.

 

UK is not Eire, never was. They took the madness of the UK and multiplied it tenfold, and built more houses than they had people.

 

The crazy NIMBY attitude and planning system in UK meant this never happened here.

 

They are a small country with a debt per capita (& deficit) that makes UK look like a model of prudence.

 

The two cannot be compared.

 

UK £875B = £14.5k per person

US £21k per person

Eire £127B, or £31k per person

 

 

Do you really believe the figures reported? UK is a bit higher than what you have stated.

[drbubb]

Ja, now they cut the crap, finally.

Some will have to suffer the indignity of seeing the house next door flogged off for half the amount they paid for theirs a few years ago.

 

But for the lucky few who sold at the peak, held onto their cash and played the waiting game by renting, the moment may just have arrived when they feel safe to step their toes back into the property game.

[John Doe]

Do you really believe the figures reported? UK is a bit higher than what you have stated.

True, but they all fiddle their figures so it's probably a fair comparison.

 

Have friends in Wexford, luckily they are mortgage free, but they said there is no work, no hope of work and everyone is talking of leaving. (Young and old). You can pick up a 5 acre plot with permission for a big 5 bed house with sea views for under 30k Euro now!

 

Maybe even cheaper if they are to be auctioned off.

 

(Tempted to get one now in case I retire early and make it into a small holding.)

[tallim]

Only a small beginning unfortunately, many of the proposals don't come into effect for a year or two yet (April 2013 for some).

 

There is a good round up on the BBC ("in graphics" tab, 12 cuts on 12 pages) that outlines the saving, the dates and the number affected.

 

http://www.bbc.co.uk/news/uk-12906528

 

Something funny is going on though.

 

I too read that BBC news story, but I've just checked the LHA Direct website and it's chucking out the 30th percentile rates when you do a rate search.

 

The BBC article reckoned that was October 2011 instead.

 

The VOA site listing the 30th percentile rates that fitkid linked to also seems to indicate that these will apply from April.

 

For me the 30th percentile could have a larger impact than just the initial savings, it could trigger a rent price downward spiral. If you get multiple landlords chasing LHA tenants by dropping prices below the 30th percentile, as the rates are updated each month, each price drop feeds back into the calculation and lowers the 30th percentile rate again.

 

Although the rates will not apply to existing LHA claimants for 9 months or their next review (whichever is earlier) we should start to see the impact on advertised open market prices fairly soon.

 

In my area (Southern Greater Manchester) the biggest shock is going to be on 4 and 5+ bed houses.

 

4 Bed - £219.23 to £184.62

5+ Bed - £321.92 to £184.62 (4 Bed rate now applies)

 

You know, it feels kind of nice when it appears that the Government is on your side.

[tallim]

True, but they all fiddle their figures so it's probably a fair comparison.

 

Have friends in Wexford, luckily they are mortgage free, but they said there is no work, no hope of work and everyone is talking of leaving. (Young and old). You can pick up a 5 acre plot with permission for a big 5 bed house with sea views for under 30k Euro now!

 

Maybe even cheaper if they are to be auctioned off.

 

(Tempted to get one now in case I retire early and make it into a small holding.)

 

I think that it could be a great place to retire for UK people. Close to family that stay in the UK, great countryside and coastline, decent infrastructure, educated population. Not sure what health care provision is like, but you could probably get private insurance cover and maybe the EU system integrates health care provision for EU nationals of other countries?

 

I might well get my parents to look closer. They're retired and not making use of the fact that they could live anywhere in the EU, I keep telling them to go rent a little apartment somewhere for 500 euros a month over winter to try all the countries out. They don't have health problems, so it's not a huge risk. Maybe Ireland being so close and English speaking will convince them to try it.

[drbubb]

I think that it could be a great place to retire for UK people. Close to family that stay in the UK, great countryside and coastline, decent infrastructure, educated population. Not sure what health care provision is like, but you could probably get private insurance cover and maybe the EU system integrates health care provision for EU nationals of other countries?

 

I might well get my parents to look closer. They're retired and not making use of the fact that they could live anywhere in the EU, I keep telling them to go rent a little apartment somewhere for 500 euros a month over winter to try all the countries out. They don't have health problems, so it's not a huge risk. Maybe Ireland being so close and English speaking will convince them to try it.

So there we are - Ireland is being seen as a possible "cheap retirement spot" for well-off Brits.

 

Will London one day be seen as a cheap retirement spot for wealthy Chinese?

Falling property prices and a falling pound might do that, but not for years

[John Doe]

So there we are - Ireland is being seen as a possible "cheap retirement spot" for well-off Brits.

 

Will London one day be seen as a cheap retirement spot for wealthy Chinese?

Falling property prices and a falling pound might do that, but not for years

Saying that, it appears the EU is now going to insist on a property tax in Eire. Coming in soon and to rise quickly once in place.

 

Might hold on for a bit, not sure if it would apply to land ownership (with planning).

 

Oh, and everywhere will probably end up a cheap retirement spot for wealthy Chinese one day

[BoldAsBrass]

Saying that, it appears the EU is now going to insist on a property tax in Eire. Coming in soon and to rise quickly once in place.

 

Might hold on for a bit, not sure if it would apply to land ownership (with planning).

 

Oh, and everywhere will probably end up a cheap retirement spot for wealthy Chinese one day

 

Sounds like a good way to help out a country with a failing property market - introduce a property tax! You have to smile really.

 

Last time I renewed my passport I got an Irish one - courtesy of it being my mother's country of birth. At the time it was a mild protest at the way New Labour were turning this country into what was beginning to feel like a police state.

 

Glad I did now.

[John Doe]

Sounds like a good way to help out a country with a failing property market - introduce a property tax! You have to smile really.

 

Last time I renewed my passport I got an Irish one - courtesy of it being my mother's country of birth. At the time it was a mild protest at the way New Labour were turning this country into what was beginning to feel like a police state.

 

Glad I did now.

Nice

 

I didn't even know you could do this. I might do it myself next time (Mother was originally from Tipperary).

[geisaver]

A link to the Allsops catalogue for the Irish auction

 

http://legals.auction.co.uk/irish/april2011/catalogue.pdf

 

It's largely flats.

 

I assume the houses have sold for a lot more in the past but they don't exactly look cheap do they?

Lot 26 - 400k

Lot 34 - 600k

The prices are reserve prices not to exceed - it will be interesting to see what they actually go for.

[Newbear]

Ian Cowie in the Sunday Telegraph reports that the last UK budget contained an obscure change to UK Stamp Duty legislation that will allow reduced payments on bulk purchases of BTL properties. Aviva and others are saying that they intend to become big time BTL landlords to take advantage of this, he says.

 

Three thoughts:

 

i) is this yet another attempt to put a floor under house prices;

 

ii) will it work;

 

iii) if it doesn't and prices continue to fall what will the likes of Aviva do?

 

Sorry I don't have a link to the story yet.

[drbubb]

Ian Cowie in the Sunday Telegraph reports that the last UK budget contained an obscure change to UK Stamp Duty legislation that will allow reduced payments on bulk purchases of BTL properties. Aviva and others are saying that they intend to become big time BTL landlords to take advantage of this, he says.

 

Three thoughts:

 

i) is this yet another attempt to put a floor under house prices;

 

ii) will it work;

 

iii) if it doesn't and prices continue to fall what will the likes of Aviva do?

 

Sorry I don't have a link to the story yet.

Perhaps they know that, without a gimmick like this... the UK becomes Ireland.

 

I think it will happen anyway when rates rise.

[geisaver]

Ian Cowie in the Sunday Telegraph reports that the last UK budget contained an obscure change to UK Stamp Duty legislation that will allow reduced payments on bulk purchases of BTL properties. Aviva and others are saying that they intend to become big time BTL landlords to take advantage of this, he says.

 

Three thoughts:

 

i) is this yet another attempt to put a floor under house prices;

 

ii) will it work;

 

iii) if it doesn't and prices continue to fall what will the likes of Aviva do?

 

Sorry I don't have a link to the story yet.

Now based on the average value of the properties bought instead of the total amount. Minimum 1%

 

For Example:

 

A landlord buying five properties valued at £200,000 each would currently face a tax bill of five percent i.e. £50,000.

 

Being able to choose to pay SDLT in relation to the average property value means that the one percent rate applies, and therefore the final bill is reduced to £10,000.

 

http://nlauk.wordpress.com/2011/03/23/if-at-first-you-don%E2%80%99t-succeed-%E2%80%93-try-try-try-again/

[scruffian]

Now based on the average value of the properties bought instead of the total amount. Minimum 1%

 

For Example:

 

A landlord buying five properties valued at £200,000 each would currently face a tax bill of five percent i.e. £50,000.

 

Being able to choose to pay SDLT in relation to the average property value means that the one percent rate applies, and therefore the final bill is reduced to £10,000.

 

http://nlauk.wordpress.com/2011/03/23/if-at-first-you-don%E2%80%99t-succeed-%E2%80%93-try-try-try-again/

 

yet another example of tax breaks for the wealthy...

[geisaver]

yet another example of tax breaks for the wealthy...

 

This was also in the budget

 

 

George Osbourne said in today’s Budget that it would drop the 2% charge for property companies wanting to convert to a REIT and instituted other measures to ease entry to the REIT regime.

 

As revealed by Property Week International (4.3.11) it also amended rules on diverse ownership of REITs – which said that REITs had to be owned by five or more investors – to allow institutional investors like pension funds and life insurance funds to put their property portfolios into REITs.

 

REITs can also now be listed on junior stock exchanges such as AIM. The change of the rules on ownership and the cheaper cost of converting to a REIT should encourage the creation of more REITs, and will be of particular benefit it helping to create residential REITs.

 

The supplementary documentation to the Budget said: “Subject to informal consultation, the Government will legislate in the Finance Bill 2012 to support good business practices and remove barriers to entry, and investment in, the REITs regime, including removing the REITs 2 per cent conversion charge.”

 

Under current REIT rules, when a property company wants to convert to a REIT, it has to pay a charge equivalent to 2% of its assets to the Government.

 

“Changes to REITs and stamp duty will help encourage large investors including pension funds into the sector providing a revolution in how rented homes are supplied,” Simon Rubinsohn, RICS chief economist said. “Changes to these systems will lead to more high quality properties which are a genuine alternative to owning a home.”

 

http://www.propertyweek.com/professional/policy/budget-2011-government-to-drop-reit-conversion-charge-and-easy-entry-requirements/5015488.article

 

Tax advantages on tax advantages!

 

What are the advantages of REITs

 

The main advantages of REITs are unsurprisingly tax-related. As quoted companies REITs do not pay Capital Gains Tax or tax on rental income received from the properties held in the fund.

http://www.moneyextra.com/guides/real-estate-investment-trusts-reits.html

[tallim]

Ian Cowie in the Sunday Telegraph reports that the last UK budget contained an obscure change to UK Stamp Duty legislation that will allow reduced payments on bulk purchases of BTL properties. Aviva and others are saying that they intend to become big time BTL landlords to take advantage of this, he says.

 

Three thoughts:

 

i) is this yet another attempt to put a floor under house prices;

 

ii) will it work;

 

iii) if it doesn't and prices continue to fall what will the likes of Aviva do?

 

Sorry I don't have a link to the story yet.

 

Chazza posted about it on page 108 of this thread. Conclusion seemed to be that it would just allow bulk buyers access to the market on the same terms as smaller investors. A bank doesn't really want to have to process 50 repo sales one at a time to a bulk buyer, but that's what they would have had to do to be tax efficient.

[geisaver]

Chazza posted about it on page 108 of this thread. Conclusion seemed to be that it would just allow bulk buyers access to the market on the same terms as smaller investors. A bank doesn't really want to have to process 50 repo sales one at a time to a bulk buyer, but that's what they would have had to do to be tax efficient.

 

Why is it same terms? Smaller investors have to pay stamp duty on each property and income tax on their rental income.

It seems to me that the budget was anti-small BTL landlords.

 

A person who thought interest rates are going to rise, might suspect big business is having the government give them huge tax breaks now so that they are positioned to scoop up lots of properties from BTL landlords if they start struggling with interest rate rises.

 

A very cynical person might even think that housing benefit cuts are also to help flush the properties out of the hands of BTL landlords - once the REITs have gobbled up enough properties they can always put husing benefit back up!

 

REITS cash sales so no mortgage interest, no CGT, no tax on rental income, now no 2% conversion charge.