I have no idea why they use CPI and not RPI other then to try and intentionally cause massive bubble in house prices.
Alternatives to living in a house?
- Thread starter FoxEye
- Start date
I have no idea why they use CPI and not RPI other then to try and intentionally cause massive bubble in house prices.
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Caporegime
- Joined
- 29 Aug 2007
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- Auckland
?
I dont think they own the land, its on a site. Im sure they pay ground rent.
ok so effectively they just bought a very nice mobile home and pay to park it.
Yes, sorry I should have clarified that I was referring to properties within walking distance to a tube station. If one explores the option of taking a train to get into london then there are better deals.
Don't know about the area though, I haven't heard good things about Mitcham but I have no personal knowledge so can't judge.
No personal experience, just hear say, so I will not comment on it further. I was pretty sure though that a lot of home buyers were put off from auctions due to BTLs, which doesn't really help the situation overall.
People get rewarded for taking on risk - this is the key point. The landlord is (often) making a leverage investment. The landlord is providing a service to anyone who needs the accommodation the tenant can often quit with short notice and doesn't have to worry about the property being empty or its value dropping significantly (perhpas below the level of the mortgage).
The landlord might choose to make modest returns on a property he can easily afford or make much large returns by taking on more risk - plenty of buy to let landlords have gone bust by over leveraging themselves/taking on too much risk.
Either way they're providing a service and they're getting rewarded in proportion to the level of risk they take on.
Similarly someone working in IT can often earn more money by taking on more risk and working as a contractor rather than an employee.
There is nothing stopping the lowliest of cleaners from choosing to become self employed rather than work for minimum wage - it doesn't necessarily require significant outlay though it certainly means accepting a lot more risk.
Mitcham is a huge dump however that house is on the north side of mitcham which is Tooting really and is not a bad area at all.
But yes if you want something in zone 1 or 2 or even 3 you will end up paying 300k for a one bedroom so the rent will be proportional to the property value.
Generally not many home buyers can meet the requirements to buy at auction and are not willing to take the risk which is part of why houses at auction generally go for under market value. Its a quick sale for the vender and 5 to 10% off market value for the buyer, if a home buyer had the money in place and wanted a house at auction the will beat a BTL investor every time. A smart BTL investor will only buy if if he is getting a good deal (or has some other larger plan) however someone that wants to live in the house is going to be willing to pay more because that is the house they want and not one of the other 200 being sold that day.
For example I bought something at auction on behalf of my parents. I paid 75k to 100k under market value but I was willing to go very close to market value because this is the house we wanted. However all the people who wanted to flip it stopped at the next stamp duty threshold as the profit to risk ratio started going down for them.
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