Showing posts with label renting. Show all posts
Showing posts with label renting. Show all posts
Saturday, May 23, 2009
Saturday, March 21, 2009
The home equity housing bubble
(click on the chart for a sharper image)The recent housing bubble was strange. The volume of sales didn't increase much, yet prices shot up. This lack of activity also features in gross mortgage lending data. Loans for house purchases remained comparatively flat throughout the bubble (see the chart above).
In contrast, home equity lending exploded. By 2007, it accounted for almost 40 percent of all mortgages. Of course, these loans fed straight into consumption. Homeowners, who are mostly middle aged, borrowed and spent, based on the illusion that they were rich because house prices were inflating. In the post-bubble world of 2009, this idea seems truly bizarre, but that is how things worked in early 2007.
Buy-to-let was the other major growth area for mortgage lending. By 2007, around a quarter of loans were financing small time property investment. Many of these investors were already home owners, who used the equity in their homes to provide collateral to dive into fully fledged speculation via the BTL market.
There is an interesting implication here. While the housing bubble generated a huge amount of personal debt, it is heavily concentrated among home owners. Renters never found it easy to get access to credit. Apart from college loans and some heavy credit card balances, young people are also comparatively free from debt.
So behind the government's banking sector intervention lurks a homeowner bailout. Brown wants banks to increase their lending, in the vague hope that house prices will stabilize and the home equity bubble can resume.
This bailout works against the interests of both renters, and the young. Higher house prices shuts out renters from home ownership, while huge bailouts puts the burden of paying for this mess on young taxpayers.
There will be some pay-back for this mess. One day, those young taxpayers will have to pay for the pensions of heavily indebted homeowners. I wonder how generous they will be?
(The chart comes from the FSA's Turner report)
Thursday, February 26, 2009
Time to rent
Frustrated property sellers equals happy renters.
The cost of renting a home has dropped as frustrated property sellers have been flooding the market, according to two separate surveys. Owners were choosing to let rather than sell, having accepted that property prices were likely to stay low for some time, said property website Globrix.
Cities such as Manchester continue to have an oversupply of new-build apartments, said Findaproperty.com. Its research chief said landlords were adding perks to attract tenants.
The cost of renting a home has dropped as frustrated property sellers have been flooding the market, according to two separate surveys. Owners were choosing to let rather than sell, having accepted that property prices were likely to stay low for some time, said property website Globrix.
Cities such as Manchester continue to have an oversupply of new-build apartments, said Findaproperty.com. Its research chief said landlords were adding perks to attract tenants.
Monday, January 12, 2009
Rent crash continues
Mayfair rents; the top of the market on the monopoly board. Now they are crashing.
For a decade it was the preferred location for hundreds of hedge fund managers as they deserted the City and set up shop nearer to their well-heeled clients. Making the move to Mayfair and St James’s, they would think nothing of paying more than £100 a square foot for a few floors inside a Georgian townhouse, driving rents ever higher as they bid against each other.
Property experts described the rents as “eye-popping”, but investors’ money was flooding in and fee structures were designed to capture 20 per cent of the profits, so managers believed that the bills could be shouldered easily.
(from today's Times)
For a decade it was the preferred location for hundreds of hedge fund managers as they deserted the City and set up shop nearer to their well-heeled clients. Making the move to Mayfair and St James’s, they would think nothing of paying more than £100 a square foot for a few floors inside a Georgian townhouse, driving rents ever higher as they bid against each other.
Property experts described the rents as “eye-popping”, but investors’ money was flooding in and fee structures were designed to capture 20 per cent of the profits, so managers believed that the bills could be shouldered easily.
(from today's Times)
Saturday, November 8, 2008
Say no to debt serfdom
A few days before the Bank of England cut 150 basis points off the base rate, Sir Terry Leahy, the chief executive of Tesco had a breakfast meeting with Mervyn King, governor of the Bank of England. Today's guardian reported that during this cosy little discussion, Leahy "put pressure on the monetary policy committee to slash interest rates".
Leahy figured that only a rate cut would keep his deeply indebted customers coming to his supermarkets and filing up their trolleys. Leahy might have posed a rate cut in terms of the national interest, but Tescos profits mightily when consumer borrow and banks again recklessly started to expand their balance sheets.
This corrupt little tale crystallizes everything that is wrong about UK monetary policy today. Where is this so called independence of the Bank of England? The events of the last two months have exposed that particular canard.We all knew about New Labour's pressure on the MPC; today we learnt that private business interests can also pile it on and force the MPC to cut rates.
Where did this frightful dependence on interest rates come from? Why is the price of credit so central to the UK's economic welfare? Actually, it is not a hard question to answer. Many UK households live in semi-bondage, crushed by huge personal debt levels. Changes in interest rates can mean the difference between another shopping spree down at the mall or an afternoon of despair contemplating the credit card bill.
But what about savers? Why doesn't Mervyn King invite a debt-free renter for breakfast. Why can't he share a slice of toast with someone who decided to put some money away for the future rather than build up an unsustainable balance on her credit card, and then plead to the MPC for relief via a rate cut. Why can't savers lobby the Bank of England for a rate hike, just like the supermarkets and debtors, who endless pressurize the bank to cut rates.
The answer is a depressing one. There is a new almost unnoticed realignment within British politics. The debt-serfs are in the majority. On top of them, there are the banks, supermarkets, and retailers who provide the infrastructure for this system of debt oppression. Everyone has an interest in keeping the scam going; the government, the Bank of England, and even the debt-serfs themselves.
Savers are the new oppressed minority. In today's Britain, they are voiceless. They are too few to be heard. So, when the Bank of England wants to rip them off with negative real interest rates, which will see their savings eroded and their prudence punished, the government, the supermarkets and the banks are happy to help. The government will follow up with withholding tax on interest income and as savers are impoverished, the banks will be there, ready to offer credit cards and loans that will shackle them with debt.
It is so hard to say no to debt. There is absolutely no incentive to save and enormous pressure to jack it in and borrow like the rest of them. However, debt is slavery, and even if the government steals your savings, at least there is the freedom of owing nothing to the bank.
Leahy figured that only a rate cut would keep his deeply indebted customers coming to his supermarkets and filing up their trolleys. Leahy might have posed a rate cut in terms of the national interest, but Tescos profits mightily when consumer borrow and banks again recklessly started to expand their balance sheets.
This corrupt little tale crystallizes everything that is wrong about UK monetary policy today. Where is this so called independence of the Bank of England? The events of the last two months have exposed that particular canard.We all knew about New Labour's pressure on the MPC; today we learnt that private business interests can also pile it on and force the MPC to cut rates.
Where did this frightful dependence on interest rates come from? Why is the price of credit so central to the UK's economic welfare? Actually, it is not a hard question to answer. Many UK households live in semi-bondage, crushed by huge personal debt levels. Changes in interest rates can mean the difference between another shopping spree down at the mall or an afternoon of despair contemplating the credit card bill.
But what about savers? Why doesn't Mervyn King invite a debt-free renter for breakfast. Why can't he share a slice of toast with someone who decided to put some money away for the future rather than build up an unsustainable balance on her credit card, and then plead to the MPC for relief via a rate cut. Why can't savers lobby the Bank of England for a rate hike, just like the supermarkets and debtors, who endless pressurize the bank to cut rates.
The answer is a depressing one. There is a new almost unnoticed realignment within British politics. The debt-serfs are in the majority. On top of them, there are the banks, supermarkets, and retailers who provide the infrastructure for this system of debt oppression. Everyone has an interest in keeping the scam going; the government, the Bank of England, and even the debt-serfs themselves.
Savers are the new oppressed minority. In today's Britain, they are voiceless. They are too few to be heard. So, when the Bank of England wants to rip them off with negative real interest rates, which will see their savings eroded and their prudence punished, the government, the supermarkets and the banks are happy to help. The government will follow up with withholding tax on interest income and as savers are impoverished, the banks will be there, ready to offer credit cards and loans that will shackle them with debt.
It is so hard to say no to debt. There is absolutely no incentive to save and enormous pressure to jack it in and borrow like the rest of them. However, debt is slavery, and even if the government steals your savings, at least there is the freedom of owing nothing to the bank.
Friday, October 10, 2008
Alice's bubble wrap
British banks face nationalisation if £400bn bailout fails
"Senior UK sources at the IMF in Washington gave strong hints tonight that if the British Government's £400 billion bailout fails, the only option left to stabilise the economy and financial system could be wholesale nationalisation of the UK banking system."
RBS, European Banks Slide on Concern About Economy
"More than $4 trillion has been erased from global equities this week".
Iceland: Britain's Credit Crunch Scapegoat
"There's nothing like an external enemy to make a country pull together, and Britain, until recently fractious and dissatisfied with its Labour government, has found a fresh foe: Iceland."
Brown Threatens to Freeze Icelandic Assets in U.K.
"The Icelandic banks are unable to finance about $61 billion of debt, 12 times the size of the economy, according to data compiled by Bloomberg."
How could a country of just 300,000 people run up such a large debt stock?
Buy One Spanish Home, Get One Free
Still not interested.
U.K. Pound Has Biggest Weekly Drop Against Dollar in 8 Years
The U.K. currency was also down against the euro and the yen this week.
FTSE loses fifth of its value in a week
"London equities tumbled on Friday extending the FTSE 100’s decline to five-consecutive days during which the senior index lost a fifth of its value."
Initial Lehman CDS Auction: 90 Cents on the Dollar, Worse Than Forecast
"Those who wrote $400 billion plus of protection on Lehman's credit default swaps had been expected to make a substantial payout in the 80% to 85% of face value range, but the preliminary auction showed even worse results."
UK exports slip to create biggest goods trade deficit since 1697
"The Office for National Statistics said yesterday that July's deficit with the rest of the world had been revised upwards to £8.238bn - the biggest gap since records began in 1697. It blamed the revisions on a large number of late returns. The goods trade gap reached £8.198bn in August, well above City forecasts of £7.6bn."
"Senior UK sources at the IMF in Washington gave strong hints tonight that if the British Government's £400 billion bailout fails, the only option left to stabilise the economy and financial system could be wholesale nationalisation of the UK banking system."
RBS, European Banks Slide on Concern About Economy
"More than $4 trillion has been erased from global equities this week".
Iceland: Britain's Credit Crunch Scapegoat
"There's nothing like an external enemy to make a country pull together, and Britain, until recently fractious and dissatisfied with its Labour government, has found a fresh foe: Iceland."
Brown Threatens to Freeze Icelandic Assets in U.K.
"The Icelandic banks are unable to finance about $61 billion of debt, 12 times the size of the economy, according to data compiled by Bloomberg."
How could a country of just 300,000 people run up such a large debt stock?
Buy One Spanish Home, Get One Free
Still not interested.
U.K. Pound Has Biggest Weekly Drop Against Dollar in 8 Years
The U.K. currency was also down against the euro and the yen this week.
FTSE loses fifth of its value in a week
"London equities tumbled on Friday extending the FTSE 100’s decline to five-consecutive days during which the senior index lost a fifth of its value."
Initial Lehman CDS Auction: 90 Cents on the Dollar, Worse Than Forecast
"Those who wrote $400 billion plus of protection on Lehman's credit default swaps had been expected to make a substantial payout in the 80% to 85% of face value range, but the preliminary auction showed even worse results."
UK exports slip to create biggest goods trade deficit since 1697
"The Office for National Statistics said yesterday that July's deficit with the rest of the world had been revised upwards to £8.238bn - the biggest gap since records began in 1697. It blamed the revisions on a large number of late returns. The goods trade gap reached £8.198bn in August, well above City forecasts of £7.6bn."
Saturday, July 19, 2008
Horrible, horrible, horrible
Where did all this nastiness come from? Moribund credit, excessive personal debt, and a commercial property crash; isn't there any good news out there? Well, some people believe that rents are increasing at double digit rates.
UK economy heads for ‘horror movie’
"Britain is facing an “economic horror movie” because of a “toxic mixture” of a moribund credit market and volatile oil prices." The Ernst & Young forecasting group predicts 1.5 percent growth this year, slowing to 1 percent in 2009; while consumer spending will slow to a standstill. The UK will be lucky to attain these anemic growth rates.
Given a Shovel, Digging Deeper Into Debt
A New York Times video shows how a Pennsylvania woman accumulated almost $300,000 of debt. The collection agencies call at least 20 times a day.
City regulator in mortgage fraud crackdown
The FSA are about to crackdown on mortgage fraud. Why bother? UK mortgage approvals are crashing towards zero. It is another reason why the FSA must be abolished.
Demand for office space crumbles
The housing market isn't the only crash; commercial property prices have fallen much further and faster.
Brown mocked over fiscal rules reform
The Treasury always intended to revise the rules, really, they did.
More insanity from the times property pages
It is becoming a nasty habit; but I can't help myself reading the Times property pages. In this article, the Times tackles the question of rents. Rental inflation has replaced house price appreciation as the saviour for the buy-to-let brigade.
"Given rising demand in a context of less supply, rents in many areas are likely to rise quite significantly in the short run, unless the UK economy plunges into a sharp recession. Although it is difficult to predict short-term changes in housing rents, increases of 10%-15% in both 2008 and 2009 may well occur, outside a relatively limited number of areas with a significant glut of properties."
We are half way through 2008, and the governments rental inflation index is running at about 3.5 percent. In order to get a 10-15 percent rental inflation number by the end this year, rents would have to explode. This is a matter of simple arithmetic.
In principle, 10-15 percent rental inflation is possible in 2009, but only if the Bank of England really began to push up monetary growth. Currently, the money supply is growing at 11.5 percent. Even a pessimist like me thinks that we have probably reached a peak growth rate for the money supply.
UK economy heads for ‘horror movie’
"Britain is facing an “economic horror movie” because of a “toxic mixture” of a moribund credit market and volatile oil prices." The Ernst & Young forecasting group predicts 1.5 percent growth this year, slowing to 1 percent in 2009; while consumer spending will slow to a standstill. The UK will be lucky to attain these anemic growth rates.
Given a Shovel, Digging Deeper Into Debt
A New York Times video shows how a Pennsylvania woman accumulated almost $300,000 of debt. The collection agencies call at least 20 times a day.
City regulator in mortgage fraud crackdown
The FSA are about to crackdown on mortgage fraud. Why bother? UK mortgage approvals are crashing towards zero. It is another reason why the FSA must be abolished.
Demand for office space crumbles
The housing market isn't the only crash; commercial property prices have fallen much further and faster.
Brown mocked over fiscal rules reform
The Treasury always intended to revise the rules, really, they did.
More insanity from the times property pages
It is becoming a nasty habit; but I can't help myself reading the Times property pages. In this article, the Times tackles the question of rents. Rental inflation has replaced house price appreciation as the saviour for the buy-to-let brigade.
"Given rising demand in a context of less supply, rents in many areas are likely to rise quite significantly in the short run, unless the UK economy plunges into a sharp recession. Although it is difficult to predict short-term changes in housing rents, increases of 10%-15% in both 2008 and 2009 may well occur, outside a relatively limited number of areas with a significant glut of properties."
We are half way through 2008, and the governments rental inflation index is running at about 3.5 percent. In order to get a 10-15 percent rental inflation number by the end this year, rents would have to explode. This is a matter of simple arithmetic.
In principle, 10-15 percent rental inflation is possible in 2009, but only if the Bank of England really began to push up monetary growth. Currently, the money supply is growing at 11.5 percent. Even a pessimist like me thinks that we have probably reached a peak growth rate for the money supply.
Monday, June 23, 2008
Rental yields "highest in two years"
These stories about rising rental yields really irritate me. Today, Paragon Mortgages again claimed that rental yields have hit highest levels for more than two years, in its latest buy-to-let index.
The troubled lender announced that landlords’ rental incomes have risen nearly 12% in the past year and 6% during the past six months. Meanwhile, property values have risen 7.5% year-on-year, although by just 0.2% over the past six months.
So how does Paragon reconcile their double digit rental growth with the rental inflation data produced by the Office of National Statistics. Here is there chart, which shows that rental inflation is running at approximately the same rate as RPI inflation:
The troubled lender announced that landlords’ rental incomes have risen nearly 12% in the past year and 6% during the past six months. Meanwhile, property values have risen 7.5% year-on-year, although by just 0.2% over the past six months.
So how does Paragon reconcile their double digit rental growth with the rental inflation data produced by the Office of National Statistics. Here is there chart, which shows that rental inflation is running at approximately the same rate as RPI inflation:
Tuesday, June 17, 2008
UK rent inflation
Despite whatever you might have read in the property pages of leading newspapers, rental inflation remains subdued. Actually, it edged down 0.1 percent in May to 3.4 percent; only a fraction higher than the CPI inflation rate and almost a full percent lower than the RPI rate.Today's numbers only go to prove that the buy-to-let bubble has done wonders for renters throughout the UK. When compared to retail prices and average earnings growth, rents have grown at a slower rate over the last ten years.
Unfortunately, the good times could be coming to an end. The credit crunch threatens to scare off would-be amateur buy-to-let landlords. Renters need these jokers to keep coming into the market, since they maintain an ready supply of rented accomodation.
Thankfully, it hasn't happened yet. Despite the credit crunch during the first quarter of 2008, lenders handed out around 49,000 new BTL loans. This should keep rents lower for the foreseeable future.
Wednesday, June 11, 2008
Rents falling by 7 percent
For understandable and self-centred reasons, I am always interested in stories about rent inflation. The interest has heightened in recent weeks, as Paragon and other BTL advocates have pushed the myth that rents are going through the roof right now. So this firstrung story about rents falling 7 percent definitely attracted my attention. The story claimed:
Despite high levels of demand, rents actually fell sharply during the three months to the end of May, with average rents for houses falling by 7 percent,
The level of income landlords can expect from flats dropped by 9 percent.
Although I was happy to hear about collapsing rents, I do not believe that rents are falling. I reckon that rents are increasing by around 4 percent a year. I did not pick that number out of the air. That is the number recorded by the Office of National Statistics in their monthly survey of rents, which is included in the retail price index
Although I was happy to hear about collapsing rents, I do not believe that rents are falling. I reckon that rents are increasing by around 4 percent a year. I did not pick that number out of the air. That is the number recorded by the Office of National Statistics in their monthly survey of rents, which is included in the retail price index
Tuesday, April 29, 2008
So farewell, Inside Track
Today was a pivotal moment in the demise of the housing bubble. Inside Track - the UK's biggest property investment company - has collapsed. As it disappears, it takes with it the obscenely stupid aspirations of a generation of amateur property speculators.In a press release, the company said: "Due to the continuing sustained difficulties arising from the credit crunch Inside Track has been placed into administration." On the face of it, it seems an implausible excuse since Inside Track wasn't much of a player in the wholesale money market.
Nevertheless, there was a twisted and concealed truth in the Inside Track statement. The credit crunch was the inevitable consequence of 10 years of irresponsible lending. This easy money allowed companies like Inside Track to prosper. Once the easy credit dried up, Inside Track and its ridiculous seminars promising millions from property speculation made no sense any more. So like the Dodo before it, the company could not survive.
However, it was more than just the credit crunch that put the company into administration. It was also facing the growing threat of legal action from disgruntled customers. Many customers were beginning to lose series money on off-plan investments that the company promoted. The company was about to be buried under an avalanche of writs.
So, farewell then to those £2,500-plus weekend-long courses and to the new-build properties in Spain and Florida. The "inner circle" of real estate has now closed. Those property "discounts" are no more.
Well, actually that last statement is not true. Sellers are now offering massive discounts on overpriced property, but nobody wants to buy anymore. Ultimately that is what really brought Inside Track crashing down.
Sunday, March 16, 2008
Nice Investments
I checked out a buy to let website - Nice Investments - today. I picked up a few quotes.
"New turn key service means high returns no longer demand huge resources."
"Multi-Let Residential: "This solution is uncompromisingly the best in the market for gaining the highest rental yields and equity growth."
"Example: Canada Water 4-bedroom property; Purchase price is £400K; Re-developed to provide 6 bedrooms: Monthly interest mortgage payment c£2K: Rental income c£4K: Property re-valued at £600K, freeing up cash to buy the next property."
Example: 1 Bedroom Flat in SE1: Market Value 205K: Negotiated purchase price 155K: Full re-furbishment and high rental fit out for 15k: Pre development rental £650 pm: Post development rental £1,050 pm: Revaluation after development £210k: Equity gain after 6 weeks of development £47K. Surplus cash funding next portfolio purchase.
Our unique approach enables us to double standard market rental yields.
So if any project in which you participate fails to return a profit by the end of the stated period, nice investment will return your original sum plus a return of 10% per year for the duration of your investment (not compounded).
Single-Let: The focus here is to achieve payback for an investor within months of purchase.
The promises here are extraordinary; high returns without "resources" (presumably this means investments without any down payments); the highest rental yields, equity growth, and a guarantee of a 10 percent return plus original investment.
However, I failed to find a single warning on this website that said that the value of an investment can go down; that leveraging multiplies the risk of loss, and that there is some risk with property speculation. Check the website out, and see if you can do better than me.
"New turn key service means high returns no longer demand huge resources."
"Multi-Let Residential: "This solution is uncompromisingly the best in the market for gaining the highest rental yields and equity growth."
"Example: Canada Water 4-bedroom property; Purchase price is £400K; Re-developed to provide 6 bedrooms: Monthly interest mortgage payment c£2K: Rental income c£4K: Property re-valued at £600K, freeing up cash to buy the next property."
Example: 1 Bedroom Flat in SE1: Market Value 205K: Negotiated purchase price 155K: Full re-furbishment and high rental fit out for 15k: Pre development rental £650 pm: Post development rental £1,050 pm: Revaluation after development £210k: Equity gain after 6 weeks of development £47K. Surplus cash funding next portfolio purchase.
Our unique approach enables us to double standard market rental yields.
So if any project in which you participate fails to return a profit by the end of the stated period, nice investment will return your original sum plus a return of 10% per year for the duration of your investment (not compounded).
Single-Let: The focus here is to achieve payback for an investor within months of purchase.
The promises here are extraordinary; high returns without "resources" (presumably this means investments without any down payments); the highest rental yields, equity growth, and a guarantee of a 10 percent return plus original investment.
However, I failed to find a single warning on this website that said that the value of an investment can go down; that leveraging multiplies the risk of loss, and that there is some risk with property speculation. Check the website out, and see if you can do better than me.
Sunday, January 6, 2008
The UK housing shortage - busting the myth
There is an almost universial belief that the UK suffers from a shortage of houses. This belief, or more accurately myth, is invariably thrown out as the ultimate justification for the unprecedented growth of property prices over the last ten years.
It is not true - there are plenty of homes in the UK. In fact, there are millions of houses - about 28 million to be a little more precise.
Recent trends in rents provides some of the most compelling evidence refuting the housing shortage myth. Over the last ten years, rents have increased by an average of 2.9 percent. This is fractionally above the CPI inflation rate, and and somewhat lower than the RPI inflation rate. It is also about the same rate of growth as wages.
If there was a general shortage of houses in the UK, then rents should have increased sharply. That is what supply and demand is all about. If something is in short supply, then the price - i.e. rents - should increase. As the chart above clearly demonstrates, that simply has not happened.
Rather than suffering from a chronic shortage of homes, the UK has suffered from a terrible speculative bubble. People have been misled into thinking that houses are in short supply and they have speculated on continuing price appreciation. The banks have gone along with this scam and provided the financing for this madness. The result has been an explosion in household indebtedness.
Bubbles can not continue for ever, and the UK housing bubble has only recently begun to evaporate. Interestingly, 2007 was the first year in a decade where rents and house prices increased by the same rate.
(For those interested in the data souces, rents are from the ONS CPI rental index - the ONS code is D7CE. Data for 2007 is for the 12 month increase up to November. The Halifax provided the housing index. Again, data for 2007 is the 12 month increase up to November.)
Sunday, November 18, 2007
Why bother buying when you can rent
This article is so me.
Why bother buying when you can rent. For example, it is possible to get a 3 bedroom apartment Abbey Road in St. John's Wood for about £2,383. For those who don't know London very well, St. Johns Wood is residential paradise. It has everyone you want, and nothing you wouldn't want. Just try buying the same place with a similar mortgage payment.
With the likely prospects of significant capital loss in the future, renting makes sound financial sense. Moreover, rents can not increase due to speculation. If the landlord pushes the rent up, then just move to somewhere cheaper. Rents do not diverge from fundamentals. In this regard, buy-to-let speculators are just wonderful; the more there are, the more competitive the rental market, and the lower will be rents.
I just loved this quote:
"Fashionable or not, this “lifestyle choice”, (ie. renting) as I have discovered, provides an enjoyable holiday from all sorts of worries. When you rent a place, even the way it looks ceases to have much importance. Just so long as it’s comfortable and convenient, and it works – which it will, assuming you have a decent landlord (and, yes, I know there are some appalling ones out there). The council could turn our entire street into a halfway house for paedophiles and heroin addicts: it wouldn’t matter. We’d move – and with no agent’s or solicitor’s fees or stamp duty to pay, or Hips to arrange.
These days, I spend my spare time and money not on property brochures and household improvements, but in expensive clothes shops – much more enjoyable. No doubt I’ll end my days dossing down in some sad centre for the homeless, but then so might you if the property market crashes or your naughty, greedy children manage to sell your house from underneath you.
Life is full of uncertainties. And who knows? Perhaps, if the market really does crash, the temptation to submit to the national obsession will overcome us and we’ll clamber back onto that ladder once again. In the meantime, at least I won’t have wasted any more of my precious time searching for a sales assistant in Homebase."
Why bother buying when you can rent. For example, it is possible to get a 3 bedroom apartment Abbey Road in St. John's Wood for about £2,383. For those who don't know London very well, St. Johns Wood is residential paradise. It has everyone you want, and nothing you wouldn't want. Just try buying the same place with a similar mortgage payment.
With the likely prospects of significant capital loss in the future, renting makes sound financial sense. Moreover, rents can not increase due to speculation. If the landlord pushes the rent up, then just move to somewhere cheaper. Rents do not diverge from fundamentals. In this regard, buy-to-let speculators are just wonderful; the more there are, the more competitive the rental market, and the lower will be rents.
I just loved this quote:
"Fashionable or not, this “lifestyle choice”, (ie. renting) as I have discovered, provides an enjoyable holiday from all sorts of worries. When you rent a place, even the way it looks ceases to have much importance. Just so long as it’s comfortable and convenient, and it works – which it will, assuming you have a decent landlord (and, yes, I know there are some appalling ones out there). The council could turn our entire street into a halfway house for paedophiles and heroin addicts: it wouldn’t matter. We’d move – and with no agent’s or solicitor’s fees or stamp duty to pay, or Hips to arrange.
These days, I spend my spare time and money not on property brochures and household improvements, but in expensive clothes shops – much more enjoyable. No doubt I’ll end my days dossing down in some sad centre for the homeless, but then so might you if the property market crashes or your naughty, greedy children manage to sell your house from underneath you.
Life is full of uncertainties. And who knows? Perhaps, if the market really does crash, the temptation to submit to the national obsession will overcome us and we’ll clamber back onto that ladder once again. In the meantime, at least I won’t have wasted any more of my precious time searching for a sales assistant in Homebase."
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