home investment by partnership in rent by: bill powell [email protected] housing portfolio...
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Home Investment by Partnership in Rentby: Bill Powell
[email protected] www.fairshares.co.uk/fair-housing
CO
MM O N W E A L T
H
S HA
RE D R ES O U R CES
Housing Portfolio North Warwickshire
Borough Council.
Action for Land Taxation
& Economic Reform
Presented to : International Union for Land Value Tax & Free Trade 28 May, 2004.
UK Housing in CRISIS
• Elderly living longerDivorceLate marriage
• Prices up 38% in one year• Low / Variable interest rates• Fewest built since WW2 (1945)• First time buyers can’t afford
NEED = 100,000 more homes p.a.?
‘Affordable’ Housing
R = Rent at 40% discount
MR = Shared Equity
R = Rent at 40% discount
M = Mortgage at 40% discount
LAND discount = 40% ‘FREE Land from Developer
BUILD discount = 40% from N Warks social rents!Now our homes decay!
Discounts are ‘in perpetuity’.
M = Open Market (mortgage)
M M MR RM
‘HAVE’s vs. ‘HAVE NOT’s
18 25 45 5535 65AGE
Pension
IncomeSupport
Rental
Mortgage
Engineer PhD
NursePension
£
No Hope
LOW INCOMENursesFiremenTeachers
IRREGULAR INCOMEWaitersFruit PickersMusicians
RENT POVERTY
Winners
Small Mortgage
BIG Mortgage
FREE Housing
BORROW
World Cruise!
Purchase by Mortgage
0 5 15 25YEARS
£ x 1000's
300
200
100
£ per m onth
00
660
Ho
use
Pri
ce
Mr Jonesforced sale
Equity Mr
Sm
ith
'sE
qu
ity
Loan
Pay
men
ts
Losers
WAGE LOSSIll HealthJob Loss
PARENTHOOD
DIVORCE
INCREASE %interest rate
HOME
REPOSSESSED
€
€€
€ €
365Units
1 UnitBought
RentRent
Investor
Partnership – Year 1
€
€€
€ €1 UnitBought
Rent
365Units
Rent
Investor
Partnership – Year 27
Purchase in Partnership
0 7 21 28YEARS
Rent & Buy
£ X 1000s
300
200
100
£per m onth
1000
660
BankEquity
Pay
men
ts
Hou
seP
rice
14
Rent only
Equity Equity
Mrs JONES
‘Career Break’ Parent: for 5 Years
Miss JONES
Student Nurse In training: RENTS Trained: BUYS 8 units p.a.
Mr & Mrs JONES
Retire with 365 units. SELL: 16 units p.a.
Flexibility
Affordabilityat 30% of Income
Mortgage Rent & OwnRent +
Maintainance
Pay per month £ 590 £ 464 £ 305 **
Income Required
£ 23,600 £ 18,600 £ 12,200
Down Payment £ 10,000 £ 10,000 £ 305
Term 28 years 28 Years -
** Includes £ 121 Maintenance per month
Purchase by Mortgage
House Price
110,000Rising at per year
4.00%Interest
Rate5.50%
Down Payment
10,000M onthly Payment
590.12
YearHouse Value
Loan Interest Repaid Equity
0 110,000 100,000 10,0001 114,400 98,419 5,500 1,581 15,9817 144,752 86,926 4,901 2,181 57,82614 190,484 67,909 3,909 3,172 122,57621 250,664 40,244 2,467 4,614 210,42128 329,857 0 369 6,712 329,857
Purchase in Partnership
House Price
110,000Rising at per year
4.00%Occupation
Charge2.00%
Down Payment
10,000Yearly
Purchase3.25%
Investor'sReturn
6.00%
YearHouse Value
Occupation Charge
Occupier Share %
Occupier Pays
Occupier Buys p.a.
Occupier Equity
Payment p.m.
0 110,000 9.1% 10,000 10,0001 114,400 2,200 12.3% 2,000 3,571 14,114 464.297 144,752 2,784 31.8% 1,898 4,519 46,058 534.7514 190,484 3,663 54.5% 1,665 5,947 103,901 634.3121 250,664 4,820 77.3% 1,096 7,825 193,695 743.4228 329,857 6,343 100.0% 0 10,298 329,857 858.15
Rental in Partnership
House Price
110,000Rising at per
year4.00% 1462
OccupationCharge
2.00%
Down Payment
305Yearly
Purchase0.00% 3.00%
Investor'sReturn
6.00%
YearHouse Value
Occupation Charge
Occupier Share %
Occupier Pays
Occupier Buys p.a.
Occupier Equity
M aintenancePayment
p.m.
0 110,000 0.3% 305 3051 114,400 2,200 0.3% 2,194 0 317 1462 304.662 118,976 2,288 0.3% 2,282 0 330 1506 315.633 123,735 2,380 0.3% 2,373 0 343 1551 327.004 128,684 2,475 0.3% 2,468 0 357 1598 338.785 133,832 2,574 0.3% 2,567 0 371 1645 351.006 139,185 2,677 0.3% 2,669 0 386 1695 363.677 144,752 2,784 0.3% 2,776 0 401 1746 376.81
M anagement, M aintenance & Repairs
Rising at per year
Inve
sto
r
So
cial
Lan
dlo
rd
Occ
up
ier
Social Landlord
Social Units
Rent Free
‘Never’ Sold
Maintenance Charge
‘Affordable’ Rent = £ 231 per month
Income Required = £9,263 p.a.
Social Housing in Partnership
Savers Choice?
%Building Society
Indexed BOND
FTSE‘Property
Investment Partnership’
Income 4.5 2.0 3.1 2.2
Growth Nil 2.9 4.0 5.3
Total 4.5 4.9 7.1 7.5
Savers & Occupiers in Partnership
Local Housing Partnership LLP
Community LandPartnership LLP
Property Investment Fund Ltd
Shares
D ep o sits
SA
VE
RS
OC
CU
PIE
RS
Maintenance
Other LHPs
Partnership = True ‘Equity Share’
Limited Liability Partnership (LLP)
Easier entry than Mortgage
Very Flexible
Tracks inflation
Shared interest in value