Playing Property Roulette

Pullens, 10.06.86, when voting Labour may have made a difference.

Likesay, I own my home. I exercised my right to buy my council flat at the turn of the Millennium, when Blair’s government first capped the discount to long term tenants. Word went around our Pullens Buildings, Victorian tenements near the Elephant & Castle, to act now or forever lose the chance to betray one’s principles. I duly qualified for the full 70% discount, thank you VERY much.

Our buildings were saved from demolition by squatters, following a legendary battle vs. bailiffs backed by cops in the Summer of ’86, but now we’re a Heritage Conservation area. South Wark recently valued my place at £430,000, but the more desirable flats regularly achieve £480+. I saw a Facebook post from two years ago, when the record stood at £365,000. Our flats have been earning leaseholders, like me, a grand a week!

According to one analysis, I should thank Thatcher for making me rich by bringing in the right to buy. I’m not going to apologise for having taken advantage of the circs. as they presented themselves, but I did not buy into the Tory mindset. Never say never, but I have yet to leverage the equity in my home to become another blooming property developer.

I have exploited my capital asset by travelling on its rental income. In late 2010, I found a reliable tenant and went to India for six months. Only I neglected to take out travel insurance and came home in four months, badly mangled, with bits blown off. It is quite a tale. Being able to recuperate in my very own home, surrounded by good neighbours, some of whom I’ve known for decades, has been a major factor in my recovery.

I’ve considered moving, but continue to live in my over-valued gaff because I like it here, #SarfLDN. The people are more tolerant, I speak their language, and the food is better. Besides, whatever my mission might be, I suspect that it’s specific to this location. I’m not selling up because, if I had the money, I should like to buy a nice flat of my own, like the one in which I currently reside. I do not wish to re-mortgage to buy another flat, somewhere cheaper, and don’t even talk to me about AirBnB!

Peoples’ memories are short. Few remember the last significant property crash, 25 years ago. In London, the 2008 shenanigans arrested market growth for a couple of years, but the madness soon resumed. In South Wark, the Labour-led Council that was elected in 2010 initiated a massive programme of urban renewal that involved the social cleansing of local estates. Rents in the new developments, even those that are supposedly ‘affordable’, are sky high and there are next to no new ‘social rents’ (i.e.: Council flats).

The reason I got my gaff valued is because I face a bill for £13,117.27 (including fees of £375). The Council will lend me the money to pay its bill, secured against 3.05% of the equity in my flat; the interest is determined the amount its value increases before it is sold. However, although hardly anyone seems to believe it, even London property prices may tumble. By exercising the ‘equity loan’ option to pay this bill, I have entered into a game of property roulette with South Wark, praying for a  crash.

Housing is such a massive problem in London because of the stinking thinking that surrounds it. More than a place to live, one’s flat is an investment vehicle or a rung on some notional ladder. That’s why the Elephant is being filled with residential towers that locals cannot afford to live in. Still, that situation can quickly turn around. Most of those new flats have been bought off plan by foreign speculators, who expect to see a profit before they pay the balance. When the market stalls, they will write off their deposits and precipitate an avalanche.

Maybe I’m mad, but I am playing a long game, gambling that by the time I come to repay South Wark, the loan will be worth considerably less than the sum I borrowed. If I’m wrong, 3.05% is not a bad interest rate. It may be that London property continues to defy the laws of nature indefinitely, but I’ve been forecasting an imminent collapse for years, now. Surely I can’t go on being wrong forever?

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