Comments on: The Man with 900 Houses

By: John

John — Mon, 11 Jan 2010 05:35:04 +0000

Firstly, all gas appliances MUST be serviced and installed by GasSafe (was CORGI) engineers. Rented property needs an annual Landlords inspection. If this man is using handymen, he should be heavily fined and all his properties inspected properly. He is breaking the law, which is a criminal offence, although I doubt if the police would get involved leaving it to H&S. He can’t evict people for getting in certified engineers, and deducting it from the rent – assuming he was warned by the tenant. Just sit in the property – change the locks – and if he comes around get the police who will threaten to arrest him or his men if they harass the tenant. He has no right of entry whatsoever – not even to inspect. Only the GasSafe man can gain entry, and only with the police, who have to be convinced there is a danger, not a normal service. Once in court he will lose.

Fergus just goes by the laws and deals on gut instinct and knowledge of his area. He forecasts house price rises – although stating it was a sort of fact rather than crystal ball gazing. Well they have been rising by the odd 0.5 to 1% here and there. He can sit on his properties and ride out the CC. That is how large landowners make their money – wait until the time is right and re-let say a farm they took back with a higher rent.

Whether he has 900 homes and some have none or one, is irrelevant. The underlying problem is the planning and land laws. LVT would be fine,but only if people are allowed to build on subsidised fields. Only 7.5% of the UK is settled, if more land is available to build on, then more people would buy, and build their own homes as in other countries, and the likes of Fergus would be history.

I’m sure most of his tenants rent because they can’t afford to buy. Yes, he didn’t have much of an idea of the underlying drivers to the housing market, which to be fair is complicated and can change from district to district. If a new factory opens in the area his land value rise, so he makes money because of someone else’s efforts, but so does the fish and chip shop increased business. So, he would look at it that way. LVT would make him and the chippy make a fair share, as his shop value would rise too. He views houses and land like they were washing machines.

Taxpayers money in improved infrastructure have increased the value of his 900 homes, that is for sure.

By: Weatherman

Weatherman — Tue, 29 Dec 2009 19:34:56 +0000

You talk of “creaming off capital gains” and “windfall gains” as if it’s guaranteed his properties will increase in value.

At one point you say “allow the capital value of the property to increase”, as if he just has to permit it and it will happen.

You use the fact that he doesn’t use his own money as an accusation.

The fact is he’s brave enough to trust his judgment, is good at finding properties, and his track record means banks will lend to him.

In answer to your question on how you should feel about being unable to buy one house while he has 900, I would say “you could have 900 too some day, mate, with a bit of ability and some courage.”

By: Housecrash

Housecrash — Tue, 22 Dec 2009 18:25:23 +0000

This is dated 21st October, 6 weeks AFTER he and his wife publicly announced they were selling their property portfolio.

http://www.dailymail.co.uk/news/article-1210885/Maths-teacher-property-tycoons-700-homes-sale-go.html

So I would be very surprised if he weren’t talking up the prospects for the housing market. Perhaps ‘a health warning’ to this effect should be given at the start of the film.

By: Timo

Timo — Mon, 21 Dec 2009 21:58:55 +0000

You need to stress the point that value is accruing to the property speculator from infrastructure paid by the tax paying populace, in addition to other locational effects. Thus, they earn their name as kleptocrats/kleptocracy, as labeled by Michael Hudson. There are other areas where kleptocrats steal value from the citizenry.

The equation is more complex, as locational value changes over time, as industries come and go (superseding technologies, over-seas competition etc.) and new infrastructures come into being. As new locations become desirable for industries and home buyers, values can plummet in previously desirable areas. This leads to big problems for some speculators, as indicated by commentator stephen clacy above. Previously profitable sites can become ‘under-water’ and over leveraged speculators go bankrupt. These situations can arise even when the property market is broadly rising. Zoning regulation for new development tied with infrastructure development is intensely political because of the vast profits to be made by privileged competitors.

By: Dave Miller

Dave Miller — Sat, 19 Dec 2009 16:15:09 +0000

Excellent interview, and I’m glad you’re talking about this, as I see very little coverage of this in the news, but it’s bothered me for ages. I live in London and we have lots of buy to lets in our road. While those of us who own homes spend a lot to keep our houses in good order and looking nice, the buy to lets generally look run down, often with rubbish piled out in front. There is a steady changeover of tenants, noisily moving in and out, often late at night, and we never know what type of people are going to move in. The tenants generally don’t join in with the community life of the street, which must be sad for them, but their response is generally disinterest, which is understandable as they don’t stay very long. I see the landlords (and estate agents, as they usually ‘manage’ the properties) as parasites, giving nothing back to the community, yet draining money out of the street, running a business off our backs. It’s all about greed, and I think they should be taxed heavily, hopefully pushing prices back down to a level where everyone can afford to buy their own home.

By: Liam Palmer

Liam Palmer — Tue, 08 Dec 2009 17:04:37 +0000

Guys…really…just the most arrogant interview and set of comments I have seen in a long time. I support a lot of the “Renegade Economist”’s views and approach, but do you think that this kind of behaviour makes people agree with you…or think you are extremists who should be ignored??

By: Terence Dale

Terence Dale — Sat, 21 Nov 2009 16:57:53 +0000

House prices will continue to fall for the next 10 years (the lost decade). Until salaries are 3x anual earnings the market will continue to be undermined. Ross was very astute in obtaining confirmation from Fergus Wilson that house prices will start to rise from February 2010. The BTL (Buy to Lose) King will be dethroned within the year.

By: Paddles

Paddles — Fri, 20 Nov 2009 19:24:20 +0000

Excellent interview. You let him do nearly all of the speaking and it illuminated how unaware he is to what’s coming down the line for him. There’s simply no way his strategy and model can survive unless he stopped buying property before 2004-ish. Otherwise, the capital gains have been wiped out by the market correction (which surely has another, greater leg down to come).

By the way, the mortgage company with which he is allegedly £350k arrears has a “margin call” capability in its standard buy to let terms and conditions.

By: Ragleth

Ragleth — Fri, 20 Nov 2009 18:27:13 +0000

What he describes in this interview is exactly the philosophy of Robert Kiyosaki the author of the Rich Dad Poor Dad series – this is the best selling personal finance book of all time. There is nothing extraordinary in his philosophy but most people don’t follow it – the rules are simple, buy an undervalued property (they are easy to find at the moment) and rent it out insuring you get passive income. Never sell it but continue to collect the rent and re-mortgage it when you want to pull some money out. There are also tax benefits and depreciation benefits on owning a rental propety that make it a far better investment than stocks – just read Rich Dad Poor Dad and the forumula is there – they don’t teach this in schools in the same way we don’t get a financial education in schools because the education system was set up to keep us in the dark on financial matters so that the rich can continue to be rich – but if you follow this simple formula you have a chase of joining the ranks of the rick

By: stephen clacy

stephen clacy — Tue, 17 Nov 2009 02:03:57 +0000

The man is a Buffoon.

If he was as shrewd as he tries to imply he would have sold up two years ago. To carry on being a major buyer when the market was falling confirms his status in the animal kingdom

It ceases to amaze me that when investors have geared investments they fail to adjust their rate of return to reflect the risks involved.

If the portfolio is worth around £135m with £85m in debt he has wealth of £50m

If it falls by 15% to £115m with £85m in debt he has £30m

This is of course a fall of 40% due to a 15% downward adjustment. If the market gets a whiff of fear his portfolio may be trimmed a lot more than 15% and a 30% correction may be possible with void periods whilst the properties are sold plus disposal costs could see their wealth evaporate