Byretorial - when the music stops!

[japancool]

Oh let's not fight the whole Brexit question again, there are other threads for that.

 

[Mr D]

Very easy with hindsight of course but maybe not giving a referendum to sort out an internal party issue to a generally ignorant nation fed on the daily xenophobia of the Daily Mail, Express & Telegraph would have been better for all involved.

What was it Churchill is once said to have claimed? "The greatest argument against democracy is a five minute chat with the average voter".

Then perhaps parties should not promise people a vote.

As it turns out the majority of those voting in the referendum decided to leave the EU - so were the politicians actually giving the people what they wanted?
Rather than simply ignoring the question until UKIP formed a government?

 

[Newchodge]

Regarding house prices, I moved out of home when I was 23 in 1993.
I had two part time jobs then which added up to a full time and a quarter job. My parents acted as guarantors although I paid the mortgage and bills myself so never needed their help.
My first house came on to the market a little while back and I was shocked to realise that now, with my own business and fairly good wage, I wouldn’t get a mortgage on my own for that same house.
House prices have risen faster than wages, so how can the country rectify that?
My niece is now looking for her first place, a single bedroom flat in our market town in the south east (non commuter belt, average town) sold the same day as it came to market. The owners of the next flat will see that and make sure they increase the price.
Maybe it’s time we started to hammer the landlords, most of whom have only entered the buy to let market as the returns on their savings elsewhere we so poor. Let’s encourage them to sell their portfolios and increase the housing stock available? Maybe start with those who own over 50 homes, then bring it down every few years?

Selling a buy to let portfolio does NOT increase the housing stock. It may increase the number of houses available for sale but there are still exactly the same number of houses.

 

[Mr D]

Regarding house prices, I moved out of home when I was 23 in 1993.
I had two part time jobs then which added up to a full time and a quarter job. My parents acted as guarantors although I paid the mortgage and bills myself so never needed their help.
My first house came on to the market a little while back and I was shocked to realise that now, with my own business and fairly good wage, I wouldn’t get a mortgage on my own for that same house.
House prices have risen faster than wages, so how can the country rectify that?
My niece is now looking for her first place, a single bedroom flat in our market town in the south east (non commuter belt, average town) sold the same day as it came to market. The owners of the next flat will see that and make sure they increase the price.
Maybe it’s time we started to hammer the landlords, most of whom have only entered the buy to let market as the returns on their savings elsewhere we so poor. Let’s encourage them to sell their portfolios and increase the housing stock available? Maybe start with those who own over 50 homes, then bring it down every few years?

Well bang goes any pension scheme you have then.
Some of that housing stock is owned by investment funds in which pensions are invested.

Not that the housing stock changes one iota by selling a house. If we had 10 million houses before it was sold then we have 10 million houses after its sold.
To change the housing stock numbers then add houses or remove houses - perhaps what we need is dozens of 2 bedroom houses being built rather than a half dozen larger houses with decent gardens. If housing stock is the only problem then a million 2 bedroom new terraced houses with no garden and front door opening onto the street should be fine.

If however its not the housing stock numbers that is the issue then that is a really bad solution!

 

[MarkOnline]

You looking at income? Or wealth?
Sure, income is nice and all. However when referring to percentages the common method is to use it in relation to wealth.
So you'd say Elon Musk is in the top 0.1% - he has a lot of valuable shares. That is wealth - but is not income. Daresay he has a good income too, that tends not to be talked about so few will have an idea of that. His wealth does get reported from time to time.


Now, add up all your wealth - your house, pension etc - now take off your mortgage. A figure greater than zero? Then you are probably in the top 75% - how much more than zero will determine where you are.

You cant see the synergy between the two

Ok I will ask you a simple question.
Two men both 40 years old. One has a million pounds of assets and no income. The other has £100,000 of annual taxable income but no assets. Which man has the real wealth?

Elon musk has a lot of valuable shares because they can easily be converted to cash and or they also produce regular dividends. My own defenition of an asset is something which produces surplus nett cash on a regular basis without that asset having to be sold to raise money. No your home doesnt qualify as an asset if all you do is live in it.

 

[Mr D]

You cant see the synergy between the two

Ok I will ask you a simple question.
Two men both 40 years old. One has a million pounds of assets and no income. The other has £100,000 of annual taxable income but no assets. Which man has the real wealth?

Elon musk has a lot of valuable shares because they can easily be converted to cash and or they also produce regular dividends. My own defenition of an asset is something which produces surplus nett cash on a regular basis without that asset having to be sold to raise money. No your home doesnt qualify as an asset if all you do is live in it.

Synergy between the two?

How about looking at the one aspect usually referred to when talking percentages. Wealth.
A little old lady living alone in the house she's lived in for 50 years may have wealth of over a million and be living on under a grand a month total income.
Her wealth is in the property she is living in. Does not mean she can go mad spending money as her income won't support that.

Or how about a guy working in the City, £600k income - and lots of outgoings. Perhaps his wealth is a lot less than his income? His wealth doesn't change his income.

Shares can be quickly converted to cash so long as there is a buyer. Ask people who are holding shares that have dropped massively just before a company goes under what success they had selling shares.

Your definition of asset for an individual agrees with mine. However wealth is far more than an income bearing asset would you not agree?

Totally agree about the home you live in not being an asset. It is part of your wealth and when you die will likely form part of your estate?

 

[MarkOnline]

Synergy between the two?

How about looking at the one aspect usually referred to when talking percentages. Wealth.
A little old lady living alone in the house she's lived in for 50 years may have wealth of over a million and be living on under a grand a month total income.
Her wealth is in the property she is living in. Does not mean she can go mad spending money as her income won't support that.

Or how about a guy working in the City, £600k income - and lots of outgoings. Perhaps his wealth is a lot less than his income? His wealth doesn't change his income.

Shares can be quickly converted to cash so long as there is a buyer. Ask people who are holding shares that have dropped massively just before a company goes under what success they had selling shares.

Your definition of asset for an individual agrees with mine. However wealth is far more than an income bearing asset would you not agree?

Totally agree about the home you live in not being an asset. It is part of your wealth and when you die will likely form part of your estate?

OK so youve said what you wanted to say. Can you answer the question who has the real wealth?

 

[Irontoe]

Selling a buy to let portfolio does NOT increase the housing stock. It may increase the number of houses available for sale but there are still exactly the same number of houses.

But it does increase the availability, making getting on the property ladder or moving up it easier and lowering house prices.
It shouldn’t be a radical idea to make it easier for young people to own their own home rather than enriching those with a few hundred thousand knocking about that they can invest in property.

 

[Mr D]

OK so youve said what you wanted to say. Can you answer the question who has the real wealth?

Let me rephrase your question, "who has the wealth?"

Then let me add the dictionary definition.

WEALTH | meaning in the Cambridge English Dictionary
"a largeamount of money or valuable possessions that someone has:"

The one with the assets of course. Why you cannot see what is obvious is disturbing.

Income is nice and all but tends to be spent or saved as the person needs to. A person with £100k income may be spending all £100k so has no money to put towards their wealth.

However as you pointed out an asset has a particular meaning. Wealth does not have the same meaning.
Your pension fund, your house, your car - all can be part of your wealth. But may not be part of your assets unless you do something with them.

 

[Mr D]

But it does increase the availability, making getting on the property ladder or moving up it easier and lowering house prices.
It shouldn’t be a radical idea to make it easier for young people to own their own home rather than enriching those with a few hundred thousand knocking about that they can invest in property.

Why does selling it increase availability? Surely someone with buy to let house will be looking to rent it out - hence someone lives there. Just like would happen after selling it.


Lowering house prices - that tends to be the goal of people who haven't yet got a house. Those who have purchased one tend to want to retain house value and even have it go up over time!

A chunk of those with a few properties may well be those who purchased houses when cheaper - say 1970s, 80s or 90s - and then having considerable equity in the house used the equity to finance purchase of another property - and perhaps even several properties over the course of years as equity increases over time while mortgage owed either stays the same or goes down over time.

 

[UKSBD]

OK so youve said what you wanted to say. Can you answer the question who has the real wealth?

Wealth is relative to your lifestyle and what you are used to.

I always had a low paid job, mainly because I had this notion of loyalty and security.

I worked for a very small building company earning the equivalent of about £17k a year for 1st 10 years or so, then was getting equivalent of £22k plus free use of vehicle and fuel costs paid. I was treated as par of family in early days (except for the low wages), Working for larger firm I would have probably been on £30k plus

My wife has never worked, so for nearly 10 years we lived solely on my income £16k, no other support, but we managed

When we had our 1st child I threw my toys out the pram at work and immediately got a £5K raise, it made me realise loyalty isn't all it's cracked up to be, years later after I had left I asked my old boss why we were never paid much and his answer was, you never asked for more.

We were then living on family income of about £22k but coping fine.

I then got lucky, earned 3 or 4 hundred £K over the next 3 or 4 years but our lifestyle barely changed

Since getting ill a couple of years ago, our income is around the £22k mark again but we are extremely wealth in comparison to a few years ago as I spent all the money I earned when things were good on clearing one mortgage and buying 2nd home outright.

Technically we are well below the poverty barrier but are extremely wealthy asset wise in comparison to how things were.

2 properties (very small mortgage), 2 reasonable cars bought outright, reasonable furniture, carpets, appliances, electricals, etc. all bought outright.

Our income is low again, about £22k again counting income received from other house)
I'm virtually retired at 56, wife has never worked, but we've got virtually all we need even though we are technically well below the poverty threshold.

 

[Mr D]

Wealth is relative to your lifestyle and what you are used to.

I always had a low paid job, mainly because I had this notion of loyalty and security.

I worked for a very small building company earning the equivalent of about £17k a year for 1st 10 years or so, then was getting equivalent of £22k plus free use of vehicle and fuel costs paid. I was treated as par of family in early days (except for the low wages), Working for larger firm I would have probably been on £30k plus

My wife has never worked, so for nearly 10 years we lived solely on my income £16k, no other support, but we managed

When we had our 1st child I threw my toys out the pram at work and immediately got a £5K raise, it made me realise loyalty isn't all it's cracked up to be, years later after I had left I asked my old boss why we were never paid much and his answer was, you never asked for more.

We were then living on family income of about £22k but coping fine.

I then got lucky, earned 3 or 4 hundred £K over the next 3 or 4 years but our lifestyle barely changed

Since getting ill a couple of years ago, our income is around the £22k mark again but we are extremely wealth in comparison to a few years ago as I spent all the money I earned when things were good on clearing one mortgage and buying 2nd home outright.

Technically we are well below the poverty barrier but are extremely wealthy asset wise in comparison to how things were.

2 properties (very small mortgage), 2 reasonable cars bought outright, reasonable furniture, carpets, appliances, electricals, etc. all bought outright.

Our income is low again, about £22k again counting income received from other house)
I'm virtually retired at 56, wife has never worked, but we've got virtually all we need even though we are technically well below the poverty threshold.

Wealthier probably than half the country. If you are happy that is all that matters.

 

[MarkOnline]

Let me rephrase your question, "who has the wealth?"

Then let me add the dictionary definition.

WEALTH | meaning in the Cambridge English Dictionary
"a largeamount of money or valuable possessions that someone has:"

The one with the assets of course. Why you cannot see what is obvious is disturbing.

Income is nice and all but tends to be spent or saved as the person needs to. A person with £100k income may be spending all £100k so has no money to put towards their wealth.

However as you pointed out an asset has a particular meaning. Wealth does not have the same meaning.
Your pension fund, your house, your car - all can be part of your wealth. But may not be part of your assets unless you do something with them.

"Income is nice" I think you'll find that income is what accumulating and maintaining wealth is what its all about. But yet again you come out with a reply which just demonstrates to me your lack of real experience in building anything of significant value.(in regards to running a business)

You are in a similar market to me and with the little bits youve given away in some of the many posts you have made, youre not exactly cracking any pots, although you may think you are.

The ability to service debt (income) seems to be the way fortunes are being made, but you already knew that didnt you!

 

[Mr D]

"Income is nice" I think you'll find that income is what accumulating and maintaining wealth is what its all about. But yet again you come out with a reply which just demonstrates to me your lack of real experience in building anything of significant value.(in regards to running a business)

You are in a similar market to me and with the little bits youve given away in some of the many posts you have made, youre not exactly cracking any pots, although you may think you are.

The ability to service debt (income) seems to be the way fortunes are being made, but you already knew that didnt you!

You are confusing wealth and income. Please, learn the difference.

I only have 3 businesses currently, been in business over 20 years of one form or another. Mostly self employed or partnerships but have had 2 limited companies.

Not cracking any pots? That is quite amusing. For what we have invested in these businesses we are doing OK, aren't going to be taking on a 2nd member of staff in one business for some time to come but I'm fine with that. The biggest one for sales keeps quite a few people busy as its extremely outsourced - keeps me busy mere minutes a week glancing at the sales and production figures. What with the impact of the virus it doesn't need more involvement at this stage.

No idea what you are referring to when talking about ability to service debt (income). Care to clarify? After your wealth ideas I'm wary of your other misunderstandings.

 

[UKSBD]

Wealthier probably than half the country. If you are happy that is all that matters.

Generous grandparents helps too

 

[MarkOnline]

You are confusing wealth and income. Please, learn the difference.

I only have 3 businesses currently, been in business over 20 years of one form or another. Mostly self employed or partnerships but have had 2 limited companies

No idea what you are referring to when talking about ability to service debt (income). Care to clarify? After your wealth ideas I'm wary of your other misunderstandings.

I will try to clarify the best I can. Many growing businesses are creating wealth by borrowing money. Over the last few years its never been a better time to borrow, and at this moment in time in many instances it is foolish not to (even if you have sufficient short to medium term funds) that is providing that you can put that money to work. Now for something small (nothing wrong with that if thats what you want) then if your business isnt on a growth path or its capital requirements are small then work with your own funds if thats your thing (but money is so cheap why woulndt you (the main reason IMO is that many doubt their ability to pay it back- lack in confidence of their ongoing long term profitability)

However to service the debt requires either cash flow (income), reserve capital or selling off an asset to maintain repayments. Without the generation of free cash those assets will eventually dissapear. I can buy anything thats for sale that I want provided I have either the funds or the collateral to put the financiers mind at rest.(or a combination of the two).

I would rather have a taxable income of £100,000 a year than a £1 million in assets every day of the week. Why? because without income I am going to have to realise assets to service my living expenses. With £100k I can service a certain level of debt, keep assets I manage to accumulate over time and keep a decent roof over my head etc etc.

MrD a few years ago I had a high opinion of myself and my understanding of all things business, it wasnt until I realised how little I knew and how much I needed to learn that things started to change for the better. There are many business people much smarter than I but I dont count you among them.

 

[Mr D]

I will try to clarify the best I can. Many growing businesses are creating wealth by borrowing money. Over the last few years its never been a better time to borrow, and at this moment in time in many instances it is foolish not to (even if you have sufficient short to medium term funds) that is providing that you can put that money to work. Now for something small (nothing wrong with that if thats what you want) then if your business isnt on a growth path or its capital requirements are small then work with your own funds if thats your thing (but money is so cheap why woulndt you (the main reason IMO is that many doubt their ability to pay it back- lack in confidence of their ongoing long term profitability)

However to service the debt requires either cash flow (income), reserve capital or selling off an asset to maintain repayments. Without the generation of free cash those assets will eventually dissapear. I can buy anything thats for sale that I want provided I have either the funds or the collateral to put the financiers mind at rest.(or a combination of the two).

I would rather have a taxable income of £100,000 a year than a £1 million in assets every day of the week. Why? because without income I am going to have to realise assets to service my living expenses. With £100k I can service a certain level of debt, keep assets I manage to accumulate over time and keep a decent roof over my head etc etc.

MrD a few years ago I had a high opinion of myself and my understanding of all things business, it wasnt until I realised how little I knew and how much I needed to learn that things started to change for the better. There are many business people much smarter than I but I dont count you among them.

Yes, can agree with you that many growing businesses either start out or soon after try borrowing money to fund expansion / running costs / correcting mistakes etc.
Sometimes it is necessary and a good idea. Sometimes.

For instance the BBL scheme - low interest rate, large sum of money, payable over initially 6 years and now up to 10 years with payment holidays - as a deal is pretty good.
Betting your house on the business ..... scary! Hence not a fan of big secured loans.

I have known instances where money had to be borrowed to resolve an issue and it worked - in that instance each time it was a good idea. Have heard far more where money was borrowed because it was available or because there was a vague idea about expansion - and it turned out to be a millstone or killed off the business.

We agree on some stuff and disagree on others. Pretty normal for humans - we have different experiences, different businesses, different lives. Be boring if we were all the same.

Debt wasn't what killed off my previous company. Repayments were. Do £5k turnover in a week, call it £3k profit - and repayment of debts being £2k plus rent, electricity, ebay, royal mail etc as ongoing direct debits. Then drop the turnover to 50% but debts still need paying and bills remain high at least a month or more later. Summer - the dead time of the business and needed 6 weeks to recover that I could not get.

Can agree with you about servicing debt - so long as easy to service people can carry on without a care in the world. Lose job, lose business, spend time in hospital or whatever - and suddenly the debt becomes harder to service.

Income? Yes I'd rather have the income than the wealth. The income can be put to use or squandered on slow women and fast drinks - or indeed invested to bring in future income. Can agree with you that realising assets in order to live is dumb - and of course may not get what you want for them or when you want it.
Owning assets is worth it so long as you don't need to sell them suddenly. Have had to do that a couple of times - sell the car or avoid eating, the car gets sold. Amazing how happy someone can be with £100 in their pocket, 6 weeks food ....

However for wealth its total held, income may well be a lot less than wealth. On this housing estate I can probably find a couple of dozen retired people with no mortgage. Lots of wealth in the house itself and contents, the car, the caravan etc - income of person, works and state pensions. Comfortable enough to have holidays, comfortable enough to change the car every few years - or repair a much loved old car regardless.
They have wealth and income, they will be able to leave their families or chosen charities something after they are dead.
Daresay its not uncommon for those who own their house - lots of wealth (by way of the property at least) and some income from various sources including government.




Smart? Yes I am thanks. Been in business over 20 years and pretty much every day still learn something new. I do know a lot from my own experiences and from close relationships with a few other business owners - plus I talk to reps (terrible gossips as they are!) and subscribe to industry press in several fields, some of which I'm not in yet but will be.
I'll make mistakes. Been listing on ebay about 18 years with probably hundreds of thousands of listings and still managed to mess up a listing last Friday. Noticed and corrected - though daresay at some point will come across a mistake I made years ago unnoticed since.

However being smart doesn't mean someone succeeds in business. Experience helps, as does talent, opportunity seized and risks reduced.
Time will tell if I have meet my own definition of success for each business. Its the only definition of success that matters.

 

[MarkOnline]

For instance the BBL scheme - low interest rate, large sum of money, payable over initially 6 years and now up to 10 years with payment holidays - as a deal is pretty good.
Betting your house on the business ..... scary! Hence not a fan of big secured loans.

BBL is upto £50k, thats not a large amount of money its a personally guaranteed loan, from what I understand if you default your primary residence cannot be used to settle the debt. £50K is a lot of money if you havent got the scale of business to support it. But TBH over 10 years its not far off paying for a decent meal out once a week.(repayment wise). Again your reply gives me quite a bit of information as to where you and your business/s are in the grand scheme of things.

I have known instances where money had to be borrowed to resolve an issue and it worked - in that instance each time it was a good idea. Have heard far more where money was borrowed because it was available or because there was a vague idea about expansion - and it turned out to be a millstone or killed off the business.

I am not a big fan of borrowing money to sail into the unknown.A new venture should ideally start with its own funds, or at least with a relatively small personal loan which can be serviced from a decent paying job. Learn how to survive first. Borrow money to thrive when you have got things figured out and you generate free taxable income.

We agree on some stuff and disagree on others. Pretty normal for humans - we have different experiences, different businesses, different lives. Be boring if we were all the same.

Debt wasn't what killed off my previous company. Repayments were. Do £5k turnover in a week, call it £3k profit - and repayment of debts being £2k plus rent, electricity, ebay, royal mail etc as ongoing direct debits. Then drop the turnover to 50% but debts still need paying and bills remain high at least a month or more later. Summer - the dead time of the business and needed 6 weeks to recover that I could not get.

That doesnt make sense, what were the repayments for? The things you mention are business expenses. £5k turnover call it £3k profit. What world do you inhabit where a business turns over £5k and has £3k profit, nonsense and the fact it went tits up verifies that fact.

Can agree with you about servicing debt - so long as easy to service people can carry on without a care in the world. Lose job, lose business, spend time in hospital or whatever - and suddenly the debt becomes harder to service.

Unless you have a business which operates without the need of the owner to be there in order for it to function. Oooh your giving a bit away there!

Income? Yes I'd rather have the income than the wealth. The income can be put to use or squandered on slow women and fast drinks - or indeed invested to bring in future income. Can agree with you that realising assets in order to live is dumb - and of course may not get what you want for them or when you want it.
Owning assets is worth it so long as you don't need to sell them suddenly. Have had to do that a couple of times - sell the car or avoid eating, the car gets sold. Amazing how happy someone can be with £100 in their pocket, 6 weeks food ....

Thats good I got something right....however you had to sell your car to keep it afloat, sounds like it wasnt worth saving (especially so if your previous ventures went tits up) oh and you were undercapitalised and/or not utilising what you had effectively. Running before you could walk perhaps?


Smart? Yes I am thanks. Been in business over 20 years and pretty much every day still learn something new. I do know a lot from my own experiences and from close relationships with a few other business owners - plus I talk to reps (terrible gossips as they are!) and subscribe to industry press in several fields, some of which I'm not in yet but will be.
I'll make mistakes. Been listing on ebay about 18 years with probably hundreds of thousands of listings and still managed to mess up a listing last Friday. Noticed and corrected - though daresay at some point will come across a mistake I made years ago unnoticed since.

I used to think I was smart, as I said previously, but look at where you are as oposed to where you would like to be. Be honest with yourself, the realisaton that may bring you is a great liberator and enabler.

However being smart doesn't mean someone succeeds in business. Experience helps, as does talent, opportunity seized and risks reduced. ( you missed off excellent money management skills hard work and focus)
Time will tell if I have meet my own definition of success for each business. Its the only definition of success that matters.

In terms of being business smart success is the only measure. The wealth you create is the way your business measures itself against your peers. I was the smartest (insert whatever you want here) but the business went tits up means as a business owner your a lightweight. The business world is full of failed geniuses who were too smart to realise they didnt have a clue.

I would just like to add that this post isnt meant to belittle anyone out there trying to get on and get themselves a living. Ive been well and truly skint and know the value of a pound, but MRD represents himself as some sort of business guru so IMO is open to rational criticism.

 

[MarkOnline]

Apologies to The Byre for derailing your thread somewhat.

 

[Mr D]

BBL isn't personally guaranteed. A quarter of your turnover in the year immediately prior to the loan being created for us to use is not a small sum. Its also somewhat affordable as you say - well, for those who didn't have a £50k loan on £10k turnover anyway.
I used it to increase my stock on hand by about 60%. If ignoring the stock that could not be sold at that time I increased stock on hand by over 100%. Don't know about your business but in mine if stock is purchased its with the expectation it is going to be sold.

Yes, we can agree about borrowing for the most part.

After paying bills associated with the sale of the items £3k profit on £5k turnover (that's £6k sales!) isn't bad.
Like it's hard! The repayments were for things like a CCJ, previous supplies, negotiated payments etc. - all costs of the business but costs that didn't depend on sales, didn't change as sales increased or dropped.

Yes, a business that operates without its owner. Two of our businesses are set up that way. A few minutes checking for messages or looking over sales - everything else done as needed by contract.
The third is more hands on as we don't intend making this 100% hands off. And is not the biggest business.



No, I sold my car so I could eat. That was well over 20 years ago. Homeless and sleeping in the car, eating as and when - plenty more places to sleep, money from the car can go a long way regarding food.

Where I am as compared to where I want to be? Looks like ahead of the plan. Several projects brought forward. OK one of the businesses is losing money, production outstrips sales by quite a bit - the sales will catch up eventually. Demand hasn't changed, supply of that demand impacted by the virus. Nothing to do with the UK, our lockdown irrelevant to EU shipments.


Hard work? Sorry, what relevance has that got?
Why do hard work when can outsource work pretty cheap? Is there something particular profitable about hard work? Looking around apparently not.

Agree about success being the only measure. If, of course, you have defined what success means.
I have - and on target to hit that. Your definition matters to you, not someone else.

Smartest? Never claimed that. Have met people smarter than me. I had a business go under - and learnt from it. How many people never have anything go wrong?
I am smart by being measured that way. Were you using some other measure?

Have never presented myself as a business guru. Though that is a good idea for the future.
Thanks, will add that to the list for later this decade. I get so many good ideas for businesses from these forums.

 

[Irontoe]

Why does selling it increase availability? Surely someone with buy to let house will be looking to rent it out - hence someone lives there. Just like would happen after selling it.


Lowering house prices - that tends to be the goal of people who haven't yet got a house. Those who have purchased one tend to want to retain house value and even have it go up over time!

A chunk of those with a few properties may well be those who purchased houses when cheaper - say 1970s, 80s or 90s - and then having considerable equity in the house used the equity to finance purchase of another property - and perhaps even several properties over the course of years as equity increases over time while mortgage owed either stays the same or goes down over time.

Where is the benefit of allowing older generations to hoard wealth at the expense of the younger ones though?
Let’s say that flat that my niece looked at was snapped up by a buy to let investor. Now, your right that someone will go in there, but they’ll be renting. It may be the case that a short term rental is ideal for them but we are seeing an increasing proportion trapped in rental. Whereas a mortgage o the same property would cost £400 they are paying a rent of £600, any spare cash they could be saving for a deposit is being used up filling the nest egg of the landlord.

Your



The original post was about the impending doom and gloom crash - I’ve pointed out just one example of unfair asset imbalance and the immediate responses seem to have been very protective of buy to lets. ‘Think of our pensions!’ etc.

If the OP is right and the western world has a big reset coming a lot of it will be down to the fact that not enough people want things to change.

 

[Newchodge]

But it does increase the availability, making getting on the property ladder or moving up it easier and lowering house prices.
It shouldn’t be a radical idea to make it easier for young people to own their own home rather than enriching those with a few hundred thousand knocking about that they can invest in property.

Why should owning your own home still be something for young people to aim at? Would it not be better to reform the housing stystem so that evryone has an affordable (whether rented or purchased) decent home. There will always be a number of people who cannot purchase. Concentrating reform on making it easier to buy leaves those people behind.

EDIT: To my mind the problem is, and has been for a very long time, the attitude that a house is an asset and will appreciate in value. So everyone buying a house is, in effect, a speculator. Currently house prices are ridiculous, partly because of a number of government initiatives that have increased the desirability of owning a home, thereby pushing up the cost. Starting, ironically, wth the removal of tax relief on mortgage interest.

 

[japancool]

There are many, many countries such as France, where renting, rather than owning is the norm.

 

[UKSBD]

EDIT: To my mind the problem is, and has been for a very long time, the attitude that a house is an asset and will appreciate in value. So everyone buying a house is, in effect, a speculator.

It's not just that though.

When the mortgage repayments on a house are less than the rent there's always going to be a problem.

I dread to think what will happen when interest rates go up

 

[Newchodge]

It's not just that though.

When the mortgage repayments on a house are less than the rent there's always going to be a problem.

I dread to think what will happen when interest rates go up

I owned a house in the early 80's when the interest rate hit 15%. I took in a lodger.I bought the property, in North London, in 82 for £24,000. I sold it a couple of years later for about £32,000. A very few years later it was for sale at a quarter of a million. Incomes had not increased at a similar rate making a very basic, starter home, unaffordable.

 

[The Byre]

I dread to think what will happen when interest rates go up

Wholesale defaults on debts everywhere is what happens!

Then the banks start to collapse - only this time there can be no bail-outs. Governments everywhere will try to unilaterally alter the terms of their debts or just force central banks to wipe the slate clean.

Instead of bail-outs, there will be bail-ins! In other words, they'll take your money! Every government everywhere has been preparing for this since the banking crisis. In the UK the banks can sequestrate any funds above £85k. In the US it's $250k.

What they are allowed to do is take all your money if they go bankrupt and give you (worthless) shares in the bank.

"The Financial Services (Banking Reform) Act 2013 (the 2013 Act) confers on the Bank of England a further option for the resolution for banks, building societies, investment firms, and certain banking group companies: the bail-in stabilisation option."

https://www.gov.uk/government/consu...ary-legislation/bail-in-powers-implementation

Please note that the terms of the bail-ins are at the behest of the BoE. i.e. they can and will change as the banks go down like dominos. It may not just be money! If they have the deeds to your house, be afraid - be very afraid. Those are assets that the BoE may feel need to be used as part of the bail-ins.

"Bail-in involves shareholders of a failing institution being divested of their shares, and creditors of the institution having their claims cancelled or reduced to the extent necessary to restore the institution to financial viability. The shares can then be transferred to affected creditors, as appropriate, to provide compensation."

Further -

"Bail-in will help to ensure that shareholders and creditors of the failed institution, rather than the taxpayer, meet the costs of the failure."

BIG PROBLEM - creditors and shareholders are also the taxpayers! The word 'creditors' means people who have deposited money with the banks or with other financial institutions such as assurance companies, building societies, pension schemes, mutual funds, etc. And 'shareholders' means mutual funds, building societies, or any other investment or savings schemes that YOUR PENSION may have funds in.

It also means OTHER BANKS! The word 'domino' springs to mind!

It couldn't happen? Something like that is unthinkable? Hey! Wake up! You've just been under house-arrest for 12 months - now tell me it couldn't happen!

 

[japancool]

Where is the benefit of allowing older generations to hoard wealth at the expense of the younger ones though?

Old people shouldn't be allowed to own homes?

 

[Newchodge]

Old people shouldn't be allowed to own homes?

They have to, where else are we going to lock them up to save them from illness?

 

[Irontoe]

Old people shouldn't be allowed to own homes?

Maybe just the one home rather than ten?

 

[japancool]

Maybe just the one home rather than ten?

Are there a lot of old people who own ten homes?

Are young people allowed to own ten homes?

 

[Newchodge]

Maybe just the one home rather than ten?

Ban all private landlords? You can only rent a home from a social housing provider?

 

[Darren_Ssc]

Why should owning your own home still be something for young people to aim at? Would it not be better to reform the housing stystem so that evryone has an affordable (whether rented or purchased) decent home. There will always be a number of people who cannot purchase. Concentrating reform on making it easier to buy leaves those people behind.

Exactly. The problem is the in-built inefficiency in the market which serves no one other than the house-building cartel.

They buy plots of land, they borrow money to build on those plots and then a buy to let landlord borrows money in order to rent the house to someone else.

No prizes for guessing which bit of this can be removed from the process?

 

[Darren_Ssc]

Ban all private landlords? You can only rent a home from a social housing provider?

From what I have seen, social housing providers are also part of the problem.

 

[Newchodge]

From what I have seen, social housing providers are also part of the problem.

In what way?

 

[Darren_Ssc]

In what way?

A few executives being rewarded very generously, for instance. At ground level though, lots of poor management and wasteful spending.

 

[Newchodge]

A few executives being rewarded very generously, for instance. At ground level though, lots of poor management and wasteful spending.

You may have a point there, although they are, or at least they were, very highly regulated.

 

[Chris Ashdown]

Ban holiday homes would be a great start, and maybe a double rates for any home unoccupied after 3 months since the last tenant left the property, so many homes left empty for various reasons, often for re-development that takes years to materialise if ever

 

[Mr D]

Where is the benefit of allowing older generations to hoard wealth at the expense of the younger ones though?
Let’s say that flat that my niece looked at was snapped up by a buy to let investor. Now, your right that someone will go in there, but they’ll be renting. It may be the case that a short term rental is ideal for them but we are seeing an increasing proportion trapped in rental. Whereas a mortgage o the same property would cost £400 they are paying a rent of £600, any spare cash they could be saving for a deposit is being used up filling the nest egg of the landlord.

Your



The original post was about the impending doom and gloom crash - I’ve pointed out just one example of unfair asset imbalance and the immediate responses seem to have been very protective of buy to lets. ‘Think of our pensions!’ etc.

If the OP is right and the western world has a big reset coming a lot of it will be down to the fact that not enough people want things to change.

LOL - the older generations do not hoard wealth for the most part - gets distributed when they die. They may indeed want to keep it when they are alive. Beware of people wanting others to redistribute hoarded wealth, they'll come for your wealth next.

Renting or owning, the flat will be used to house someone. No difference in the availability of housing stock.

Trapped in rental? Then all they need is massive house price crash without a major change in requirement to get a mortgage. Then they will join the people who want house prices to increase in value - they tend to cycle but can be decades between crashes and could well be a bigger crash this time than last time, the increase has been far bigger.

Yes, property owners tend to want to keep the value of their property. Its perfectly natural to want to protect what is yours. Can end up with a single person rattling around in a property that used to have 6 adults in but not wanting to move.

 

[Mr D]

From what I have seen, social housing providers are also part of the problem.

Not being good businesses? Or being good businesses and having to evict people?

 

[Mr D]

Exactly. The problem is the in-built inefficiency in the market which serves no one other than the house-building cartel.

They buy plots of land, they borrow money to build on those plots and then a buy to let landlord borrows money in order to rent the house to someone else.

No prizes for guessing which bit of this can be removed from the process?

Yes indeed - you can buy a plot of land, build a house on it and rent out or sell it. Nothing stopping you.
Except your costs will tend to be higher and won't be quite so efficient. Of course, you may have to sit on the land a couple of years while you get planning permission before you can start building.