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  • Property-a-holics

    Base rate 5.0% + 40% price drop = ???



    What is everyone's plan if prices drop by 40%, or should I say when they drop by 40%? I am old enough to remember 2 big price crashes, so surely it's a matter of time before there is another. What would you do if the bank of england base rate returns to the pre global financial crash levels of 4 to 5%?

    I only have a couple of buy to lets with lowish gearing and they are on long term fixes so in the short term it wouldn't affect me much. Longer term I will probably convert to flats or HMO and rent out and just ride out the storm with a plan to never sell. In summary I could handle a 40% price drop and 5% interest rates but it wouldn't be pretty. It could be a great buying opportunity to get in at lower prices if you have the liquid capital.

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    I am not sure we will have a Property Crash in the UK

    I believe we could see a major correction in London and then spreading out

    The further  away an investor is from London the better they will be

    The Northern property has more chance of rising But its not going to be fast

    The NE is still 20% lower today than it was in 2007

    I also feel after we do see a price correction Stagnation will follow  for a long time to come

    If I were buying now I would wait and when I see Property with a very good yield I would buy again

    We may also see a Landlord sell off so bargains could come for landlords with good cash balances in the Bank

    Cash is king and if you can buy with cash None of the S24 rules apply and you don't need a company

    If you borrow via a Company and investor will pay more tax if they take an income

    In 25 years time we could look back and say a new golden time is about to begin

    The EURO thing will have ramifications for a  very long time to come.

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    Learn Change and Adapt ?????


    You say prices are still 20% off 2007, where are prices in relation to 2000?

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    I have just checked

    I bought three in early 2000s and I paid 50k each and they are worth today 75K

    in 2007 they were 95k

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    Learn Change and Adapt ?????

    I am not sure what % drop in prices constitutes a 'crash' or a 'correction' however since we have had two 30%+ drops in the last 30 years I don't think it is unreasonable to predict that at some stage in the future we will have another one. I am not saying it will be now but surely it is bound to happen in the next say 20 years.


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    hahah you made me belly laugh. On a serious note though if anyone out there is struggling financially don't let that define you, if it all goes Pete Tong just take it on the chin, dust yourself down and try something else or get a simple job and work yourself back again.

    I met a couple a recently who were remortgaging and they told me when interest rates went to 15% in 1989 they handed their keys into the local building society, many people did.

    Going bust or 'bankrupt' used to carry a huge stigma, less so in the US I think, these days it carries much less stigma.

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    Bankruptcy  for those whose jobs don't mind it has no stigma anymore.

    Many jobs would have the bankrupt being sacked just for being bankrupt

    Bankruptcy is just a way of managing business.

    It is highly unlikely that those who returned their keys to lenders invested until 12 years had elapsed as that is how long Statute Barring of mortgage debt recovery lasts for

    So any buying after  2002  and they would be in the clear.

    In the US you can just return the keys  and not bother with paying any mortgage  which is not the case in the UK.

    12 years is a small price to pay before investing again as you will then be in the clear

    There are many stupid people that didn't understand  what statute barring of mortgage debt was..

    They made new property purchases before 12 years had elapsed and discovered their former lender turned up and  forced the sale of their new property

    So by all means default on mortgage debt.

    Just don't buy property until 12 years have elapsed.

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    ok good knowledge PB. The particular couple in question would have been way over the 12 year period so there wouldn't be any record. So basically if a highly geared landlord gets in trouble and goes bankrupt it will be 6 years until it disappears off their credit report and 12 years before they can safely buy another property due to the statute barring. Interesting most mortgage lenders ask applicants if they have EVER been made bankrupt, so they require it to be disclosed even if it is 6 years after and it is not on your credit file. 

    seriously though beachy head is a bad option, if someone is thinking of that then just go bankrupt and try something else, treat it as a learning experience. You can buy again in 12 years time, I am sure there are ways of buying sooner if you do it in someone else's name and use a trust deed type arrangement.

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    If info isn't on the credit  files then don't mention it!

    You just have to check which CRA a lender uses and tailor the information to only that which is with that CRA.

    Though I suppose it would be easy for a lender to search the London Gazette where all bankrupts are still published.

    Not sure if the London Gazette database can be searched going back years.

    But if a particular  lender wasn't on the file then I didn't mention  it to another lender.

    So in answer to the bankruptcy  I would say no as the lender will have no way of knowing if it is off the credit files.

    I've had loads of stuff drop off my files.

    5 years to go and I'm in the clear..

    That will be 12 years in total though no mortgage defaults.

     But bankruptcy should be planned for though try to be avoided

    That means divesting yourself of  all assets in your name apart from the products you intend to cause bankruptcy

    So many S24 LL  need to sell their residential property to a trusted party ASAP

    This should have been done in 2015  which is what I suggested at the time LL would need to do if affected to the point of non-viability.

    But I doubt many LL  were as forward  thinking as me back then!!

    It is going  to be a tough old time for many LL

    They need to work out whether S24 survival is doable

    If not the game is up and they need to get a move on to rationalise their circumstances to the point of getting rid of everything

    Hiding the cash and then rent themselves

    But 12 years from 2022 there will be many former LL  still affected by S24 bankruptcy

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    It isn't going to happen, and my family are from London and the South East.

    How do I know?

    I have younger brothers.  One is 26 and his fiancee is 23.  They have bought a house now worth approx £1m based upon on the business he created and her income in the City.  He told me today that he is going to start buying buy to lets as he needs something to put his money into.  I couldn't have been more negative about btl and yet today I think he made me see things differently as he ran through some detailed projections. BTL is even now still likely to be more profitable than pretty much any other investment that you can get into.  He was using 10yr fixed rates too so no exposure to an interest rate rise until 2028.

    I expressed concern that the market is high but he told me that pretty much all of his and his fiancee's friends of their sort of age either have, or are in the process of buying.  He said that although prices are high it is still a fairly common amongst their peers that they aspire to home-ownership.

    I then spoke to my other brother who is also in the process of buying and felt the same.

    Whilst the younger generation are that confident and bullish , I am happy.

    If the base rate went to 5% and properties did fall 40% I would go on a huge property spending spree!

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