The countrys’ desire to own ones’ own property is a major driver behind the country’s economy , of that there is no doubt. Property generally accounts for an extraordinary large amount of the country’s wealth and the industries that it spawns off account for a large proportion of the country’s economy. It appears only reasonable that We Buy Houses as more than just dwellings, normally taking into account that We Buy Homes with an eye to a future improvement in the property price. But is it therefore entirely natural that we should be quite so heavily invested in the UK housing market on a personal level?
Well I shall play devils advocate here and say “Really , no it isn’t”. Heresy, I hear you shout but please hear me out.
I am very substantially invested in the property market in the UK. Well if you call four flats , a bungalow , all rented out, and a modern house which I actually live in , heavily invested then that’s me. All of the properties have mortgages against them and at the moment all but the one I live in are rented out. Aside from a tiny pension fund the whole lot represents my entire capital within the UK at the moment and, unless I win a viable sum on the premium bonds, (an unlikely event as rates have gone down and I don’t have all that many bonds) , then that’s probably all I will have to rely on for my retirement. The situation I envisaged was that I would Sell My House as I approached retirement and downgrade thus releasing some money from my residential home, and then continue to have income from the rental properties
It sounds like a smashing plan doesn’t it? But in a real situation it has a possibly fatal flaw. I am hopelessly over exposed to the present state of the housing market at any time. If there is a real housing price fall then all my capital and equity in the rented properties might be wiped out forcing me to 
php" target='_blank'>Sell My House in order to finance the rented out properties, if there are long periods when they are not tenanted. A hike in interest rates could finish me off altogether . If I had invested in a more diverse number of products then I would be in a position to rent accommodation of my choice secure in the knowledge that all my eggs are not in one basket and that if one sector take a nose dive, another may well make it all up thus securing long term profit.
It has been a bit traditional that when We Buy Houses in the UK , we expect them to be solid investments that will increase in value in the medium term and even produce pretty spectacular gains all leveraged by finance , usually in the form of finance from a bank or building society. But when We Buy Homes with finance it’s almost always a given that we take a short term view of the finance rates – and this is encouraged by overly generous discounts or fixed rates from seemingly caring financial institutions who claim to have our welfare at heart.
Pretty rarely do we give a thought to the flip side in that we have invested all the capital we have into a market that we can never control and have leveraged the purchase with cash from institutions that , despite their cheerful friendly TV advertising, have hearts as black as pitchcoal and managements that would pickle their own grannies if they thought they could sell them in jars at a profit.
No there has to be a better way, a different way. Given my time over I certainly would not have invested all my available money into high value items that are difficult to shift on the down times. I would have separated my needs for housing from my investments strategies and maybe had a small investment in a single rental unit and put the rest into stocks, bonds, gold, commodities, well whatever the smart money was doing at the time.
And I would have rented a property rather than buying one as when the bad times came , I would have been able to move on at will and save my cash .
But that’s just being the devils’ advocate here. Or is it?
Discussion
No comments yet.