Welcome to the new version of European Tribune. It's just a new layout, so everything should work as before - please report bugs here.
Display:
buying it would have been costly, but it was the deposit that would have been prohibitive. The mortgage would probably have been £800 or so, Mig would know better.

but imo to be within cycling distance of your job in the City carries a considerable premium where you're saving £150 - £250 a month in commuting charges. Plus personal time saved.

I compare London to a black hole, the event horizon where the normal laws break down is probably the M25. Leyton is well within that.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 1st, 2011 at 06:41:52 AM EST
[ Parent ]
buying it would have been costly, but it was the deposit that would have been prohibitive. The mortgage would probably have been £800 or so, Mig would know better.

The way I remember it we were paying less than £1000/mo for rent but would have paid over £1500/mo for a mortgage.

Of course, when you're paying rent all the rent minus owner's expenses goes to the owner, whereas when you're paying a mortgage the mortgage minus interest stays with you, so it might still make sense to buy at £1500/mo over renting at £1000/mo. However, I just couldn't sustain an outlay of £1500/mo plus owner's expenses, whereas I could sustain a rent of £1000/mo. So there was no choice. The "better option" was simply unaffordable.

I'm shocked at the prices you refer in the diary. £2500/mo for rent in the friggin' boonies? What?

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 06:57:35 AM EST
[ Parent ]
Well, as I said, it all breaks down inside the M25, especially given buy-to-let, which I forgot to talk about.

Yes, £2500 a month. And it's prone to flooding. Madness, but that's what it's like

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 1st, 2011 at 07:04:35 AM EST
[ Parent ]
Leyton is in area 3 of the Tube well inside the M25. What has gone on with prices since I left in 2008? 2500 for rent was Bermondsey prices in 2008.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 07:06:52 AM EST
[ Parent ]
Out at this distance, being London comuterland, just over an hour by train from St Pancras station, it's £800 to rent a 2 bed house/flat, with an extra £600 to spend on monthly train tickets to get to work if you work in the London. so that's clos to £17,000 a year before you start to think about food and bills

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Jun 1st, 2011 at 07:26:23 AM EST
[ Parent ]
How on earth did I manage to rent a 3 bed house for less than 1000 in Tube area 3, which meant 100/mo per adult for public transport? What's happened since 2008?

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 07:47:28 AM EST
[ Parent ]
well the bubble went up to it's peak, plus buy to let percentage bonus so market rate is set  at that price point. and everyone else then rents at that market rate.

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Jun 1st, 2011 at 07:50:56 AM EST
[ Parent ]
Can you do me a favour and upload a static copy of this graph?

Looks like the bubble did deflate, got stabilised and is deflating again.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 08:18:29 AM EST
[ Parent ]
i know it's the express, so as realistic as rollerskating Hippos

Express.co.uk - Home of the Daily and Sunday Express | UK News :: 2015 housing recovery predicted

Improvements to the major banks' balance sheets should lead to them loosening their strict lending criteria, enabling more people to buy a home.

The previous upturn in the housing market was caused by a mismatch between supply and demand, but the recovery petered out as economic uncertainty caused potential buyers to sit on their hands, while those who wanted to press ahead with a purchase continued to face problems raising the mortgage finance they needed.

But CEBR said with just 130,000 new homes built in 2010, around half the level needed to keep pace with the growing number of households, prices should increase by 16% between 2011 and 2015, the equivalent of a gain of around 4% a year.

The recovery will be more marked in London, with demand from international buyers, as the pound remains weak, set to push up the cost of housing in the capital by around 2% a year more than across the UK as a whole.


Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Jun 1st, 2011 at 08:38:20 AM EST
[ Parent ]


Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Jun 1st, 2011 at 08:38:56 AM EST
[ Parent ]
It hasn't changed much. You were in an unpopular area.

The rent for that area today is still around £1000-1200 for a 3br.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Jun 1st, 2011 at 09:16:24 AM EST
[ Parent ]
Yeah, I guess upstanding white English don't want to share their neighbourhood with pakis, blacks, polish plumbers, students, kiwis and aussies on their 2 years abroad, white trash, and other assorted rabble.

If Helen is complaining that prices out in suburbia are outrageous, well, colour me unimpressed.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 09:35:43 AM EST
[ Parent ]
£1k pcm is about what you'd pay for a 4 bed out here.

I think I may have mentioned the local manor house - not a huge country house, but more than 4 beds - is being rented for £2k pcm.

At the other extreme the top line London properties go for around £1-3m for a penthouse flat in a des area, to £3-5m for a family house somewhere on the outskirts, two or three times that closer in, and £20-40m for a premium property near the centre.

There are rumours the flats in Hyde Park One - supposedly the most expensive tower block in London - sold for around £70m.

An estate near me with four substantial houses and a fair amount of land sold for around £6m recently.

Typical "successful middle class" homes - lawyers, business owners, small-scale entrepreneurs, minion-class board members, thieves and gangsters - are consistently between £1-2m in most of the UK, and maybe double that around the London green belts.

I have no idea how these prices compare to the rest of the EU.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Jun 1st, 2011 at 09:57:25 AM EST
[ Parent ]
I'm complaining that the entire UK housing market is hopelessly distorted and massively over-priced.

As for Leyton being "cheap", it has always been true that you can always tell Londoners as they (mostly) live outside the M25. London is full of people who weren't born there and are on their way somewhere else (better probably).

Anybody who wants to won a house with garden cannot possibly afford london anymore, so they leave.

As this letter in the Independent explained today (I didn't write it);-

Once upon a time, not too long ago, a single bread-winner could go out and earn sufficient money to both feed a typical family and pay a reasonable mortgage. Nowadays two bread-winners are struggling to earn sufficient to be able to save for a deposit ("Britain to become a nation of renters", 31 May).

Obviously something has gone badly wrong; either rates of pay are far too low or house prices are far too high. The only two solutions seem to be to raise wages or to build a lot more council houses to reduce house prices.

Incidentally, if the principle of "right to buy" is such a good principle, why isn't it extended to the private rented sector?



keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 1st, 2011 at 10:01:32 AM EST
[ Parent ]
Anybody who wants to own a house with garden
That's why the diary is called "Strange Housing Priorities". My parallel with suburbia does not seem out of place. If "Londoners" live "outside the M25" (i.e., outside the Greater London Authority let alone London proper) and everyone wants "a house with a garden" it's not so different from America's sprawl where people will mortgage themselves to the hilt to own a huge house out in the desert and commute 2h each way in traffic jams.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 10:28:49 AM EST
[ Parent ]
where people will mortgage themselves to the hilt to own a huge house out in the desert and commute 2h each way in traffic jams.

Dude, we don't all live in Southern California. ;)

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 1st, 2011 at 10:48:15 AM EST
[ Parent ]
I know... But it appears "Ground Zeros" of the real estate bust are a dime a dozen in the US. Denver, Florida...

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 10:51:47 AM EST
[ Parent ]
Once upon a time, not too long ago, a single bread-winner could go out and earn sufficient money to both feed a typical family and pay a reasonable mortgage. Nowadays two bread-winners are struggling to earn sufficient to be able to save for a deposit ("Britain to become a nation of renters", 31 May).

Obviously something has gone badly wrong; either rates of pay are far too low or house prices are far too high. The only two solutions seem to be to raise wages or to build a lot more council houses to reduce house prices.


Same here and I suppose almost everywhere...

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Wed Jun 1st, 2011 at 09:04:19 PM EST
[ Parent ]
Out at this distance, being London comuterland, just over an hour by train from St Pancras station, it's £800 to rent a 2 bed house/flat, with an extra £600 to spend on monthly train tickets to get to work if you work in the London.

That's insane.

An hour by ordinary commuter rail... that's what, 100 km? And you're not crossing any expensive bridges or tunnels.

Two adults, monthly rail cards, 100 km, no choke points, that shouldn't work out to more than £100-200. Tops.

What has the UK been doing to its rail net?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jun 1st, 2011 at 10:18:14 AM EST
[ Parent ]
But if you move within area 6 of the Transport for London system you can cut those commute costs to under 200 pounds a month. And you will be able to find a 2-bed for 800 in that range (albeit in an "unpopular" - i.e., full of the wrong kind of regular people).

It's all about choices.

But, yes, I was just checking that a 1-way ticket from Luton to St. Pancras (30 minute train ride) costs 13 pounds off-peak. So spending 30 pounds a day commuting into London (plus some London public transport) does not seem impossible.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 10:22:55 AM EST
[ Parent ]
But, yes, I was just checking that a 1-way ticket from Luton to St. Pancras (30 minute train ride) costs 13 pounds off-peak.

But any properly run rail net has a tiered price scheme, where greater commitment on volume nets you lower price. That separates chumps and tourists from their money more efficiently, while still allowing commuters to pay only the (lower) true economic cost.

If you buy a monthly card and you're not getting at least 50 % off the one-way price, you should feel like someone's cheating you. Coz they would be. Hell, in Copenhagen, a ten-trip card gives you 30-40 % off the one-way price, and the monthly card breaks even with the ten-ticket packs at around 40 trips per month.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jun 1st, 2011 at 10:34:10 AM EST
[ Parent ]
There are ways to save. One way is to buy a ticket before 6pm the previous evening.
Advance - Buy in advance, sold in limited numbers and subject to availability. These tickets are only valid on the date/train specified.      
Off-Peak - Buy any time, travel off-peak                      
Anytime - Buy any time, travel any time
Season - Unlimited travel between two stations for a specified period
Rovers and Rangers - Unlimited travel within a specified area. There may be a few time restrictions on when you can travel.
Railcards offer value for money if you travel by train, saving you at least 1/3 on rail fares. They cost from £18 to £26 each and are valid for 12 months. Our Railcards page shows more details. Take a look at our discounts page to see what other discounts are available.
Various discounts are cumulative, resulting in a Byzantine faer system. But it's still expensive.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 10:43:27 AM EST
[ Parent ]
Going to the Railways season ticket calculator, a Luton to central London monthly season ticket with area 1-6 tube card is £406.30, without the tube it's £326

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Thu Jun 2nd, 2011 at 08:21:29 AM EST
[ Parent ]
Also, Luton is far worse than many of London's "unpopular" areas.

There are people out here who commute to London regularly - about 3-4 hours by car and 2 hours by train.

But if the mortgage doesn't get you the train fares will.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Jun 3rd, 2011 at 05:01:14 AM EST
[ Parent ]
Jesus, just move somewhere in tube areas 4-6.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Fri Jun 3rd, 2011 at 05:11:27 AM EST
[ Parent ]
Those times are both ways.

An hour into London isn't much worse than getting in from (say) the outer limits of Zone 6.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Jun 3rd, 2011 at 05:20:16 AM EST
[ Parent ]
Just to take an extreme example, Chesham to Bank is an hour and fifteen minutes.

Brighton to Bank is an hour and nineteen.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Jun 3rd, 2011 at 08:22:16 AM EST
[ Parent ]
Here ya go.  5BR house on Worrin Road in Brentwood that's up for both sale and rent (always helpful when you can compare them on the same house obviously).

You can rent it for £2,950 per month or buy it for £950k.

Good way to figure out if this makes sense: Divide the annual rent by the interest rate, and adjust the interest rate up (thus the price down) to take into account maintenance, insurance, taxes, etc.

P = (RPCM*12)/i

Actual interest alone is going to run you more than 4%, but even assuming 4% the house is only worth £885k.

At 6% -- typically thought of as a good sort of indifference point between buying and renting -- the house is only worth £590k.  At 9% -- a good point to say, "Okay, time to buy before I miss my chance" -- the house is only worth £393k.

That house can't even fetch enough in rent to cover the interest payment, let alone principal and cost of ownership.

Here's another for rent at £900/month.  One next to it is selling for £215k.  At 5% interest, it's about spot on.  On a fairly generous 7% assumption, it should go for £155k.  At 9%, £120k.

That's similar to the math on Mig's place in Leyton.  It's less bubblicious than the 5BR, but still quite bad.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 1st, 2011 at 07:54:07 AM EST
[ Parent ]
Worrin road (only 3 miles away form me) probably ranks as one of the most desirable places in Essex. Leafy, quiet, upper middle class (very non-Essex) grass verges on pavements and walking distance from a fast train into the City. Front door to Bank (in the middle of the City) in 35 - 40mins easy.

So wealthy that Shenfield still has two very up-market butchers (one is a game supplier), a fish shop, a greengrocers as well as a Tesco.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 1st, 2011 at 08:06:51 AM EST
[ Parent ]
Those things are relevant when comparing neighborhoods.  But if people are willing to pay more to live in the area, they'll be willing to pay more in either mortgage or rent.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 1st, 2011 at 08:22:28 AM EST
[ Parent ]
Well since 2009 the Financial services Authority has put a limit of a maximum of 3*earnings as an amount that can be loaned as a mortgage, so on mean London income, the maximum available as a mortgage is  just under £90,000 which will mean you need quite a deposit to get anything.

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Jun 1st, 2011 at 09:48:54 AM EST
[ Parent ]
Or prices will have to go down.

I knew the UK housing market was insane when they started offering 5x mortgages and I still couldn't afford to by the place I was renting.

And it hasn't let up.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 09:55:54 AM EST
[ Parent ]
That on its own is going to kill most of the market, when average earnings are around £21kpa.

Anyone with a £100k deposit and earning enough to afford a £200k mortgage isn't going to want to live in an area where they can afford a £300k family home.

Really what's happening is that buy-to-let is keeping prices artificially inflated. People with no choice keep renting, the owners keep cashing in.

But if rates rise the numbers won't add up, and it's unlikely rents can rise much further.

If there's a mass exodus from b2l, or mass repossessions, prices will fall by up to 30% best case.

Worst case will be Ireland 2.0.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Jun 1st, 2011 at 10:05:05 AM EST
[ Parent ]
I'm surprised Buy to Let hasn't blown up yet.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 10:08:29 AM EST
[ Parent ]
BBC News:

The number of mortgages approved for house purchases hit a new low in April, Bank of England figures show.

At just 45,166, the number of new approvals was the lowest April figure since the Bank's records began in 1992.

Analysts said the data may have been affected by the number of public holidays in April.

However, the figures suggest that the UK property market will remain subdued in the coming months, with a low level of sales and falling prices.

The number of approvals was 4% lower than in March and 9% down on April last year.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Jun 1st, 2011 at 10:17:59 AM EST
[ Parent ]
9% down on last year when sales were terrible, that can't be good.

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Jun 1st, 2011 at 11:21:40 AM EST
[ Parent ]
Depends on your definition of "good."

A housing market where an entry-level mortgage is 5+ times median income is not my definition of "good." There are only two ways in which that can change: Higher incomes or lower prices. And higher incomes would take time, even if the British government had the inclination or the economic expertise to make them happen.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jun 1st, 2011 at 11:54:47 AM EST
[ Parent ]
I'm sure with 0% down and 45 years to pay the mortgage the 5-bedroom makes more sense.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Jun 1st, 2011 at 08:14:58 AM EST
[ Parent ]
Funny how close to that we got by accident. We need to move because there will be one more of us. And we had found a place to rent.

But then we saw that, all of a sudden, it was for sale! And we were not in the flat yet so we did not feel too comfortable. I much preferred renting (hell, we probably won't even be in the same country in 10 years time...), my wife maybe swallows a little bit too easily some of the legends about housing but I tried to keep that in check.
Of course, renting in the UK is not the most pleasant situation, with the landlord able to raise the prices pretty much as he feels (that is highly regulated in France).

Anyway, we had agreed to rent it for 550 a week, which was a lot but with the nursery we had to be close to our workplace.
And we made the offer at... 480k (they were asking for 530). Which makes the rental price 5.96% of the offered price. Which they ended up accepting. So we're pretty much in the indifference zone.

On the other hand, it confirms that our Paris flat (which we failed to sell when the market just stopped) should not be worth what it would apparently sell for right now. Based on the rent (OK, maybe I could have a wee bit more but it's not too silly) it should be 260k€. And judging from the offers on the agencies (even taking 10% off) and what you read in the press it would probably go for 360k€.


Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Thu Jun 2nd, 2011 at 02:24:08 PM EST
[ Parent ]
In countries where tenants have rights (foreign concept, I know), there tends to be a markdown if it's occupied - so you'd want to sell when between tenants.

Or not at all - as long as the operating expenses and amortisations are paid out of revenue, it's making you free money.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 2nd, 2011 at 03:50:07 PM EST
[ Parent ]
I know that -but there were no tenants. The owners were leaving. So AFTER agreeing to have us as tenants (but pushing back the date when they'd vacate it) they decided to try and sell it -without telling us.

A bit unsettling when you're supposed to move 3 weeks later. With a pregnant wife and the clear knowledge that your current place already isn't enough with the number of children (well, child) you currently have.

On a side note, it's a flat with a freehold.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Thu Jun 2nd, 2011 at 05:17:48 PM EST
[ Parent ]
 Funny (not in the "ha-ha" sense).  I used to live in N6 and shared a house with three others.  My share of rent was ~£25-30/week, a sum which was right at the limit of what I could manage.  Before moving there, I'd lived (blissfully) in WC2--a few minutes' walk from Russell Square; and I walked to work in twenty minutes on mornings when the weather was fair.  Those were the days! (sort of).

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge
by proximity1 on Wed Jun 1st, 2011 at 07:58:07 AM EST
[ Parent ]
The way I remember it we were paying less than £1000/mo for rent but would have paid over £1500/mo for a mortgage.

Depends on how long you are planning to live there. You accumulate more equity in the latter part of the amortisation schedule with a fixed-payment mortgage.

If you're only planning on living there for a year or two and take out a 20 year mortgage, you're kidding yourself if you think you're "saving up" equity. If you plan to live there for ten years, now that's a different story.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jun 1st, 2011 at 07:15:28 AM EST
[ Parent ]
That quoted bit should've been:

Of course, when you're paying rent all the rent minus owner's expenses goes to the owner, whereas when you're paying a mortgage the mortgage minus interest stays with you, so it might still make sense to buy at £1500/mo over renting at £1000/mo.

Needs moar caffeine.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Jun 1st, 2011 at 07:16:24 AM EST
[ Parent ]

Display:

Occasional Series

24 July 2014
by dvx - Jul 23
59 comments