Be Excellent To Each Other

On occasion I look at Zoopla for house prices, for ages my house never really went up. It never bothered me as unless I get some sort of windfall or life changing event we are staying put.

Now Zoopla is saying my house is worth 50K more that I paid for it 4 years ago!?

Not sure how credible Zoopla are, but that is a mental increase around 14%, they always talk about a house price bubble in London but I live 30 miles away in the sticks
Are prices climbing for everyone else??

House prices are going up everywhere.

Which is the problem, you'll still only be able to swap it for a house of the same size.

There's a really nice 3 bed semi round the corner from us that's for sale. I idly looked up the price the other day.


THREE AND A QUARTER MILLION POUNDS.

True, but I guess the increase in equity can help get a better mortgage deal.

Where do you live Mayfair?!

The housing market is still reasonably stagnant though, outside of London and the immediate area. The prices may be going up, but that doesn't mean houses are selling much quicker. The mortgage market is still nowhere close to where it used to be, which could be argued as a good or bad thing

My street is around half a mile long and houses sell within a month of the For Sale sign going up normaly. There were a few big bungalows that took longer as they were quite expensive for the area but even they have sold now.

They (Zoopla) reckon mine is worth £363,528, based on us buying it in August 2010 for £332,500.

Considering that's not what we paid for it, I'm not going to trust them that much

I'm not sure were they get the information from. Many of the houses either side of me have no price info at all.

I bought my pokey little one-bedroomed flat in 2005 for £76,000.
I just sold it for £83,500 (yet thanks to stupid financial decisions by myself the mortgage has £82K outstanding, so I won't have anything left after sale)
The person I bought the flat off paid £24,000 for it in 1997.

I'm now in the process of buying a 2-bedroomed terraced house 5 miles out of Shrewsbury for £138K - an equivalent house in the town centre is £250K.

In summary: Fuck house prices.

Zoopla's data about my little flat is very accurate in that it's got the sale date and price I paid for it bang on. However I don't trust their value estimate in the slightest as they've got it sitting at very close to the £92k I paid for it whereas the last valuation (which was a couple of years ago granted) had it in the low 70s.

You're 30 miles out of London though, aren't you? That is well within the bubble.

http://www.thisismoney.co.uk/money/bill ... -1900.html

According to this £76,000 in 2005 is worth £99,028.00 today via inflation. I don't know how trust worthy this site is though. Though 24,000 in 2007 is only £38,131.20 now.

I hate house prices. I hate inflation more though, as it confuses the issue.

What I hate even more than those is the middle class culture and thousands of TV shows centered on houses as some kind of commodity or investment that you buy, "do up" the house by repainting it and possibly knocking a wall out, and then sell at a higher price. All that does is raise the prices whilst keeping the house supply constant, for a bunch of naff changes that most people don't want or need.

We live in a set of identikit flats. There's 24 altogether.

Zoopla reckons that they're worth between £90,000 and £160,000.

Either someone laid gold flooring, or got ripped off, or it's all a load of cobblers.

I bought my current house for £204k nearly three years ago and would think that £235k would be a realistic sale price now. Partly that's due to general price rises (which are nowhere near London levels), and partly because I bought from a new developer who had them very keenly priced compared to everything else. Probably a fifty fifty split between the two factors.

London price rises are just mental at the moment - there's no way that's sustainable.

Zoopla use land registry data for sale prices, but their predictions on current value seem to be pretty random to me.

I bought for £190,000 and sold for £249,999 12 years later because STAMP DUTY IS STUPID FUCK STAMP DUTY.

Yep, it's ludicrous that adding £1 to the sale price should cost the buyer an extra £5k.

Stamp duty is just bullshit, it was supposed to be a tax for the wealthy, but these days it is a punitive tax for everyone.

OR!

All homeowners possessing a house of such value are by definition, 'wealthy'.

Mrs B's flat is in an area in which stamp duty rates were lower at the time she bought the flat so she paid nothing, which was a nice bonus given that, as everyone else has noted, the whole concept is the biggest pile of utter fucking bullshit. Certain areas were given lower rates on the basis they were 'disadvantaged' but this exemption list was obviously massively out of date given that Battlefield has been a very nice area for as long as I've known Glasgow. I see now the whole scheme was done away with in April last year though unfortunately.

http://www.hmrc.gov.uk/sdlt/reliefs-exe ... -areas.htm

Indeed.

That surely depends on how much of it is equity.

Not necessarily. With 95% mortgages available they might only own £13k of a house in the 3% band so £7.5 stamp duty is a big chunk extra..

True, but then they have an asset that they own 13k of, which can be expected to appreciate faster than pretty much anything short of a wall being painted by Banksy.

I certainly couldn't afford to do that, and I earn well over double the national average.

But when house prices are rising all over, assuming people still need a place to live, then the value of that asset is pretty much null. If you want to move, then whatever value you have is swallowed by the increase in cost of where you move to. You only get the value out when you die...

If you don't need that place to live in, then your asset is taxed via capital gains.

The 3% band was supposed to be for the upper earners and large houses, not for an average family home.

I'm still not convinced that having £13k to your name is enough to class someone as wealthy.
Obviously if you are looking at it from the point of view of someone on benefits it's going to seem pretty good, but it's basically enough to buy a car.

Or a house.

Stamp duty itself is fine. The tiered approach to it is ludicrously moronic.

It's worth pointing out that I am playing Devil's Advocate here.

The purpose of houses and mortgages (other than for living in) is so that when you retire, you own your home and have no debt on it. This means two things:

1 - You don't have to pay rent, which is good because you now earn less than you did when working.
2 - You now have a ton of equity; far more than any prudent investment would likely return.

This allows old people to not destroy the economy by siphoning out all the monies. Unfortunately, this cycle is utterly fucked at present, with fewer and fewer people able to get to such a stage.

I paid 234K for my first house and sold it for 245K. I had spent around 10K on mostly outdoor stuff like fences landscaping and a new roof one the single story side part of the house.

We moved as any extension work would have priced the house in the 270K range and these are always harder to sell.

Next house was 375K so just over 11k in stamp duty.

We are going to extend the house moving forward as to move to anything bigger would be in the 500K mark and I can better spend the stamp duty on that sort of purchase on extending.

What's wrong with the houses you're in? Are you adding features to them purely to increase their value, so that you can 'move up'?

The house we have is great, nice garden plenty of space. The guy we bought if from was a builder, he did great work for people all over the street.

However in his own house he almost delighted in doing shit, half finished work everywhere. Nothing too major just loads of small things. For example I was able to lift the kitchen sink up by the tap by a good inch as he has fixed with electrical wire as a pose to the correct fitting. He did this as he couldn't be arsed to take out the integrated dishwasher to do the job right.

Bathrooms are a bit dated and the kitchen looks ok on first glance but look closer and the shit work shines through.

Also the house is a dorma bungalow, with 2 bedrooms upstairs and 2 down. There is much more space downstairs that up.

So the plan is to take the roof off and make the same space upstairs as we have downstairs. We really would like the bedrooms on the same floor as kid number 2 is planned with maybe a third!
Once we have done this we would not be planning to move unless we win the lottery !

No!

Maybe the correct fitting was turned on by builders modelling electrical wire. We don't have the context to judge.

A guy who works for me was telling me he went to see a friend at the weekend in Wimbledon, his house is about 5 minutes walk from the station.

The house is a 3 bedroom end of terrace with a loft conversion, it has a drive that is large enough for a small car such as Ford Focus as well as a garage that you could maybe get a smart car in. Its ok inside but things like the kitchen are dated

His friend paid £180,000 for it 15 years ago and its just been valued at a million pounds!

How people can get on the property ladder in areas of London now is beyond me, unless of course you get a £500,000 a year job straight out of university.

Just had a look on Rightmove at Wimbledon houses, and there's 4 bed 3 storey houses of a similar size and layout to mine for £1M, and some quite a bit smaller for not far off.

Ouch!

A quarter of that would get you a comparable house on my road in the Midlands.

£625k to £1.55m looking a that. 4-10x my road.

Sw19 is a bit posh, though.

Not sure you benefit from that, my sister in law loves living in Maidenhead which is expensive now and will get worse once Cross Rail is finished

There are some really nice houses by the river and in other areas costing millions, but to be honest you are going to get a nice house anywhere if your spending £5 million or more.

So for the average joe houses cost maybe 10-30% more that one 10 miles away

What you get for that is average shopping, a river running through the town and lots of millionaires house to look and dream!

House prices are weird though. Most people buy a house with a mortgage, and most people will move out at some point before they finish paying it off.
The defining factors are the deposit needed, the mortgage repayments, and the equity change during the time you are in the house.

The actual house cost obviously defines all those factors, but it's not something I factor into the equation in and of itself, if that makes sense.

Yeah, I think MrsA said "We want to pay this much a month, in case one of us doesn't work for a bit" and then we looked around to see what that would get. I think we could have borrowed lots more if we wanted to, but in the end, didn't as we've seen some of our friends juggle the mortgage with a kid and the shortfalll in income.

tl;dr MaliA cheaps out, again.

Yep, affordability is what matters.

I have spent an excessive amount of time programming a script that projected my mortgage into the future, and adapted based on interest rate changes or increased overpayments. And it plotted a graph.

It was (and is, when I put it back online) a really useful way of visualising how paying off an extra £50 a month now will actually save you £1000s of pounds and months of your mortgage over the course of 30 years.

I've got a target for my savings account which I'm not far off (enough to live on for a year), then once I've got to that threshold I'm bumping up my mortgage payments to try and shorten the term by a decent amount.

Very sensible - a decent amount of readily available cash for emergencies or whatnot, and then plough the rest into the mortgage. Unless you can find a savings account which beats your mortgage rate, it's always always better to put the excess cash into the latter.

Always is a strong word. Once it is in, it can be difficult to get out again, and if house prices drop, completely impossible.

Backing it up with a load of savings mitigates that issue for sure, but it isn't always the no-brainer to pay off the that mortgage that it seems like, especially if you value flexibility.
To give a specific example, it's more tax efficient for me to not pay down the mortgage on the house up north, as I would have to pay tax on the earnings.

Possibly, but are you thinking long enough on the calculation?

Obviously mortgage interest counts against any 'profit' made from renting it out, which for me often made it loss-making. Paying off more certainly reduces the balance, and interest charged, thereby making it more likely you'll make a profit which is taxable. Remember also that Housing income loses are carried forward, so a negative year followed by a positive year may still attract no net tax.

However every quid you don't pay off isn't just saving you 20% of potentially taxable earnings, it's losing you 4% of that £1 over the remaining length of your mortgage. There will be a tipping point, but as a general rule over the long term, overpaying is 'always' better.

As I say, keep some aside for cashflow, but if the market does go into negative equity, overpaying is again surely the best bet? If you're waiting for the market to rise, you might as well overpay in the meantime, and if your alternative is to sell fairly soon at a loss, overpaying will at least save you the interest that would have accrued on the larger balance in the meantime.

Yeah, but my house ownership isn't a long term thing, i'm aiming to get out as soon as possible.

Plus I've got another mortgage on the flat that I live in, so in the choice where any extra cash would go (if I had any ) then that really is a no brainer. Pay down the one you live in first.

Pay down the one which has the largest interest %.

If you think as multiple mortgages as one giant credit card where different balances attract different rates, you always pay off the one which is costing you the most first.

Again it's one of these things where you think 'Oh, but it's only 0.2% or whatever and I'm probably selling soon', but differences like that make the difference of maybe £40-50 a year, and it's a pretty small adjustment to make that just makes things a little more efficient. It all helps!

Need to add in capital gains tax and income tax into that though, it's not that simple. If I pay off the house up north, I then have to pay income tax on the money when it starts making any, and capital gains on the equity when I sell it.
If I pay into the flat I don't have any of that to deal with.

Increasing pension contributions is the other worthwhile place to put it, especially for higher rate tax payers, but that's even more tied in than a mortgage.