'I am part of the most selfish generation in history', says Paxman

[Cyclone]

An execution only service will rebate 5-6% on unit trusts etc..I presume your IFA has the fruits of your investment.Thanks for your offers of help but I am quite happy to buy property while the market is so depressed.There are many bargains to enjoy and little pressure from rival buyers.The Walkley and Hillsborough areas seem to be going through the doldrums now the young professionals are moving to Birley Carr,Wadsley Bridge and Norwood;Crookes is fine and bouyant.

 

You're hoping for capital gains then instead of a good return through rental?

[gnvqsos]

You're hoping for capital gains then instead of a good return through rental?

 

I am expecting growth and a decent return,having bought at below market value.

[NewBiz]

I'd strip you of your ownership of the land, and allow you the right to rent it from the common man (numerically you can consider that the common man = nation/number of citizens). Idle land would be taxed heavily, unless set aside for common leisure (parks etc.).

 

You would still have to pay for keeping it in reasonable nick.

 

A) Not really, unless your actively exploiting the monopoly upon land to better yourself at the expense of everyone else, especially if you know that the reduction in the available amount of land to everyone else, enriches you at their expense.

 

B) Basic income funded by land value tax...

 

So what exactly are you saying? You state you'd strip me of my ownership of the land, which I assume you'd extend to anyone who owns land. You then state 'Idle land would be taxed heavily'

So you appear to be saying you'd take all land in private ownership into the ownership of 'the common man', then offer it for rent, but if no-one wanted to rent it you'd then heavily tax 'the common man' because it would be standing idle. Oh and before you start whittering on about common use, parks etc if all privately owned land where made accessible to the public there would be an enormous glut of land, most of which doesn't even vaguely resemble a park or indeed anything most people would want to spend time 'enjoying'

 

Sounds terribly implausible to me.

[Anna B]

Interesting thread. The boomers will be retiring on masse soon. In ten years will they be so shrill/smug or tough on themselves when:

 

1. They find out the nice little part-time post-retirement jobs they were counting on aren't there

 

2. They have locked-in poor pension returns for life because of the faltering economy

 

3. They realise they got 30 years left to go and not enough money to support it. Maybe they pee'd it down the bog on a dream property in Spain or Turkey. Maybe they're even stuck in Spain or Turkey. Maybe there isn't public housing in the UK for them to scuttle back to.

 

4. They forgot their health was going to start failing.

 

5. Those debts they had, well they didn't pay them all off before retirement and they got to pay them till they're 75. But point 1 - the part-time jobs aren't there

 

This is a sincere post not intended to goad anybody. It's the future reality for a lot of the boomers

 

You might be right, but if it's going to be so bad for this 'lucky' generation of Boomers, imagine what it's going to be like for everybody else...

[Rupert_Baehr]

...I didn't say I wanted to buy a house from your accountant, I asked if he was selling one, since he's advising you to buy one. The implication being that it's not a good investment at the moment...

 

I'm not so sure that buying a house is invariably a bad investment at the moment. If the house is priced reasonably, it might be a better investment than it would (at first) appear.

 

Consider Germany. A part of the Eurozone. The German economy is doing fairly well, (output is up) but the Euro itself is under pressure because of the (mis)behaviour of other Eurozone states.

 

If the Euro falls against other world currencies, what do you think that will do to the price of houses in Germany? I have a house in Germany which is on the market (at the moment.) If the Euro gets weaker, the price will go up.

 

They're not making any more land in Germany and the local economy is fairly strong. I don't intend to lose money because the Greeks can't pay their bills.

 

My house will be around long after I'm gone - but then again, so will my grandchildren (I hope) - and I wouldn't have much difficulty in letting it (at a reasonable rent, under terms which are fair to and binding on both parties.)

 

It may be that a wodge of Euros is a poorer investment than a piece of land with a house on it.

 

Where I am at the moment (winter home) the economy isn't doing well and house prices have tumbled. This is probably not a good area in which to buy an 'investment' property, but if you're looking for somewhere to live, there are bargains around. Plenty of them. (There are also houses offered for sale at pre-price drop prices; they are not selling, but presumably the owners are prepared to wait.)

 

... Aside from the odd (and rare) example quoted above, you won't tend to find all that many doctors living in rented ex-council houses. Look to the nicer suburbs of S7, S10, S11, S17 and you'll find plenty of doctors (and dentists, architects, barristers and various chartered professionals), but not so many will choose a life below their means...

 

What's the rental market in 'upmarket' houses like in Sheffield? Presumably there are a number of professionals who are in Sheffield on fairly short-term (3 or 4 year) contracts who know they will be leaving and are not prepared to buy a house and incur the cost of getting rid of it in a few years' time?

[Cyclone]

If the Euro gets weaker the price in Euro's won't change at all (for a house priced in Euro's in the first place). We're probably not talking about international investment here, I suspect that qnvqous is talking about buying a house in £ because you've got £ to invest.

 

Of course the question about letting it for rent is the key one isn't it. That's what determines the return. Assuming that there'll be capital growth is speculation, not investment.

The type of house q mentioned could look like a terrace in Walkley (he didn't give any details, so that's a complete guess). Priced at at least 100k, they rent for £500/month.

By the time you've taken into account the costs associated in the purchase and in running a BTL I think you'd be lucky to make a 3% return and there's risk and effort involved in doing so and of course prices are actually still falling so you'll loose capital as well.

Compare that to the (best) 2 year bond I just found of 3.85% or 1 year of 3.5%... Clearly buying a house in Walkley to let it out would be a bad investment right now.

 

I've never looked at the upper end of the rental market...

That's eye opening, you can spend upto a couple of grand a month on rent, but around £1k/month will rent you a house that would cost about 300k. So as an investment if bought today those would be even worse than the house in Walkley.

[gnvqsos]

Walkley is a dead loss for rentals but even your figures give 5% gross allowing for two moinths void.Gross rents would become about £4500 after insurance and repars,which if gained would br broadly similar to your 3.85%;if house bought below value at £90K then this will be 5% net,and a jolly 6.7% if let.I would also suggest the provision of good housing is providing a service given the paucity of good landlords,whereas saving in a bond is rather neutral,and frankly unadventurous.

[Rupert_Baehr]

If the Euro gets weaker the price in Euro's won't change at all (for a house priced in Euro's in the first place) ...

 

Unless, of course, the vendor decided that (s)he is no longer willing to sell at the published 'asking price'. The asking price is merely 'an invitation to treat', it's not binding on either the buyer or the seller.

 

In a market where the demand to purchase housing is low and the demand for rented accommodation is high (much of Germany) a significant depreciation in the Euro could well scare vendors away.

 

I've never looked at the upper end of the rental market...

That's eye opening, you can spend upto a couple of grand a month on rent, but around £1k/month will rent you a house that would cost about 300k. So as an investment if bought today those would be even worse than the house in Walkley.

 

Thanks for that. If I sold my house in Germany I would replace it with one in the UK, but if a 300k house in the Sheffield demands about 1k pcm in rent, it would probably make more sense to rent out my house in Germany and pay rent for a house in Sheffield.

[Cyclone]

Walkley is a dead loss for rentals but even your figures give 5% gross allowing for two moinths void.Gross rents would become about £4500 after insurance and repars,which if gained would br broadly similar to your 3.85%;if house bought below value at £90K then this will be 5% net,and a jolly 6.7% if let.I would also suggest the provision of good housing is providing a service given the paucity of good landlords,whereas saving in a bond is rather neutral,and frankly unadventurous.

 

2 months empty/annum is probably a fair provision.

But £500 a year for insurance and maintenance is extremely low.

And of course there's the time and effort involved or the alternative of using an agent, which would probably take another £1000 off the top of that.

I think you'd be lucky to see £3000 profit in a year, gross.

 

My 100k estimate was already below market value for a well maintained 3 bed in Walkley though, they'd be on the market for 120 and you might get one for 110 if you were lucky. If you found one to buy for 90 it would probably need 10 to 20k spending to make it lettable.

 

Adventurous and investment are not terms that you should normally use together.

[Cyclone]

Unless, of course, the vendor decided that (s)he is no longer willing to sell at the published 'asking price'. The asking price is merely 'an invitation to treat', it's not binding on either the buyer or the seller.

That's unrelated to the strength of the Euro though. My point was that the strength of the euro is irrelevant to someone who earns in euro's and sells a house in euro's.

 

In a market where the demand to purchase housing is low and the demand for rented accommodation is high (much of Germany) a significant depreciation in the Euro could well scare vendors away.

Unless the vendors are from outside the euro I can't really see how the strength against another currency would be relevant at all. They purchase in euro's, they take rent in euro's, they buy their grocery with euro's. How many pounds that euro would get doesn't alter anything.