Thanks for your response.
I didnât actually interpret Larkâs post as trying to contribute to the âongoing prosecution-and-defence of Robinâs character or workâ, but instead think it is trying to add to the cancel culture conversation more generally, using Robinâs case as a useful example.
Sorry, this is on me. The original draft of that sentence read something like âI agree with Khorton below that little is being served by an ongoing prosecution-and-defence of Robinâs character or work, so Iâm not going to weigh in again on those specific points and request others replying to this comment do the same, instead focusing on the question of what rules we do/âdonât want in generalâ.
I then cut the sentence down, but missed that in doing so it could now be read as implying that this was Larksâ objective. That wasnât intentional, and I donât think this.
I also live in London, and bought a house in April 2016. So Iâve thought about these calculations a fair bit, and happy to share some thoughts here:
One quick note on your calculations is that stamp duty has been massively, but temporarily, cut due to COVID. You note itâs currently ÂŁ3k on a ÂŁ560k flat. Normally it would be ÂŁ18k. You can look at both sets of rates here.
When I looked at this, the calculation was heavily dependent on how often you expect to move. Every time you sell a home and buy a new one you incur large fixed costs; normally 2-4% of purchase price in stamp duty, 1-3% in estate agent fees, and a few other fixed costs which are minor in the context of the London property market but would be significant if you were looking at somewhere much cheaper (legal fees etc.). All of this seems well accounted for in your spreadsheet, but it means that if you expect to move every 1-3 years then the ongoing saving will be swamped by repeatedly incurring these costs.
Thereâs also a somewhat fixed time cost; when I bought a home I estimate I spent the equivalent of 1 week of full-time work on the process (not the moving itself), most of which was spent doing things I wouldnât have needed to do for rented accomodation.
All told, for my personal situation in 2016 I thought I should only buy if I expected to stay in that flat for at least 5 years, and to make the calculation clear I would have wanted that to be more like 10 years. As a result, buying looks much better if you have outside factors already tying you down; a job that is very unlikely to be beaten, kids, a city you and/âor your partner loves, etc.
This is a much closer calculation that will come out with your numbers, because I donât think a 7.5% housing return is a sensible average to use going forward. I had something like a 2% real (~4% nominal, but I generally prefer to think in terms of real) estimate pencilled in for housing, and more like a 5% real (7% nominal) rate pencilled in for stocks. Thereâs a longer discussion there, but the key point I would make is that interest rates fallen dramatically in recent decades, boosting the value of assets which pay out streams of income, i.e. rent/âdividends. Itâs unclear to me that the recent trend towards ever lower rates can go much further, and markets donât expect it to, so I didnât want to tacitly assume that.
So far, that conservative estimate was much closer, London house prices rose by roughly 1.5% annualised between April 2016 and March 2020. Then a pandemic hit, but happy to exclude that from âthings I could have reasonably expectedâ.