home investment by partnership in rent by: bill powell [email protected] housing portfolio...

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Home Investment by Partnership in Rent by: Bill Powell [email protected] www.fairshares.co.uk/fair-housing C O M M O N W E A L T H S H A R E D R E S O U R C E S 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.

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Page 1: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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.

Page 2: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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.?

Page 3: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

‘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

Page 4: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

‘HAVE’s vs. ‘HAVE NOT’s

18 25 45 5535 65AGE

Pension

IncomeSupport

Rental

Mortgage

Engineer PhD

NursePension

£

Page 5: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

No Hope

LOW INCOMENursesFiremenTeachers

IRREGULAR INCOMEWaitersFruit PickersMusicians

RENT POVERTY

Page 6: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

Winners

Small Mortgage

BIG Mortgage

FREE Housing

BORROW

World Cruise!

Page 7: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 8: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

Losers

WAGE LOSSIll HealthJob Loss

PARENTHOOD

DIVORCE

INCREASE %interest rate

HOME

REPOSSESSED

Page 9: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

€€

€ €

365Units

1 UnitBought

RentRent

Investor

Partnership – Year 1

Page 10: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

€€

€ €1 UnitBought

Rent

365Units

Rent

Investor

Partnership – Year 27

Page 11: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 12: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 13: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 14: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 15: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 16: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 17: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 18: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 19: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

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

Page 20: Home Investment by Partnership in Rent by: Bill Powell bill@vts16.fastmail.net  Housing Portfolio North Warwickshire Borough

Partnership = True ‘Equity Share’

Limited Liability Partnership (LLP)

Easier entry than Mortgage

Very Flexible

Tracks inflation

Shared interest in value