I have to pay my (notional) rent out of my income, their rent comes out of an additional budget. I suspect that their total income including rent is greater than mine.
I didn't say "They have lots of spare cash", I said "They seem to have more spare cash than I have."
The absolute minimum value of a house is the intrinsic value of the materials it is made of and the land on which it stands.
Unless something drastic happens, such as the land falling off the edge of a cliff into the sea, or, possibly, other damage which makes it uneconomical to repair, the value of a house or other building can never be zero.
Never? Strong word never.
Mind you you'd be far more worried about other things, like getting enough food, to worry about the value of your house should that ever happen.
No, if it was a listed building in need of repairs (which the owner could be compelled to do) it could have a negative value.
The solicitors admitted they had f***d up/were lying.
Yes it can. The value can fall so it's less than the value of the mortgage. Called negative equity, amazed you javen't heard of it.
Negative BTW is less than zero. Leading to "toxic debt".
How is having nowhere to live not to worry about?
I don't think you can be compelled to make reapairs. Well known ploy for getting rid of a listed building.
"If an owner fails to keep a building in a reasonable state of repair the Council may, as a last resort, serve a Repairs Notice specifying the work to be carried out. This will ensure the proper preservation of the building.
If repair works are not carried out the Council also has powers to carry out repairs and charge the costs to the owners. In extreme cases the Council may compulsorily purchase the building, with minimal compensation, and carry out the necessary work."
The house still has a value. It is simply less than the amount of money that is borrowed against it.
A toxic debt is one that has little or no probability of being repaid with interest. Mortgage holders in negative equity are still liable to repay their loan, even if they cannot cover the full amount by sale of the property. The debt is, therefore, not a toxic debt unless they are unable to meet the repayments.
Colin Bignell
And you are always so keen to prove that you don't.
"An urgent works notice may be served where works are urgently necessary for the preservation of a listed building."
"The cost of carrying out the works may be recovered by the local authority or English Heritage (as appropriate) from the owner. Such cost may include the continuing expense of providing temporary support or shelter of the building."
According to an estate agent I know, who specialises in buy to let commercial property, purchasers expect to get an annual rental income in the order of 8% of their capital outlay. I presume that those in the domestic property market expect similar, or they would be buying commercial property instead.
Colin Bignell
I've heard of negative equity, yes. I have been in that situation myself. The house still had *some* value, though. Negative equity is a fiction dreamt up by the banks to let them get their hands on your home when they've cocked up by letting you borrow too much.
However, my point is that even when there is negative equity, which is a technical term for "I've borrowed more money than my home is worth", the house still has *some* value, unlike shares. Having negative equity does not wipe out all value from the house, just the bit that the occupier or mortgagee owns.
Give an example of where a house and the land it is on have zero value, excluding situations brought about by legal fictions such as listed building status or the examples I gave earier. War and civil unrest are normally only temporary situations.
If you're alive and reasonably fit, all else is fixable. I know this from my own experience. I have, in the past, been homeless with only a couple of quid in my pocket. I now own most of a house and haven't been unavoidably hungry in years.
Even after society totally collapses, there will be value in having land to grow food on and shelter from the weather, assuming you can hold on to it.
Indeed. Which is one reason to live somewhere defendable with a garden.
The one I'm thinking of was (30 or so years ago) a church in North London which the denomination sold to the local council for a nominal £1 to get shot of it.
No because commercial property is riskier and when you get a void you may wait for months before getting a new tenant, and then they may insist on a rent-free period to allow for fitting out.
One reason that commercial property investment buyers won't touch anything without a long term tenant in place.
Colin Bignell
But, even long term tenants sometimes go bust, eg Comet.
So outline to me a third alternative situation?
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