Why the California is a third of the price for pensioners

[Borris]

As a fan and follower of Banksy..... This thread made me think of his latest statement:

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Actually many baby boomers find themselves looking after elderly parents, regularly bailing out their kids after having paid handsomely to put them all through university as well as providing free child care for their grandchildren also at considerable personal cost. Whilst this is usually done willingly and out of love, isn't it rather handy that BBs have perhaps benefited from becoming rather more wealthy than previous or perhaps successive generations. We need the cash to help them all out and pay for our own end of life social care as well. If there's anything left at the end then they will get that as well. I don't feel guilty, just fortunate to be in a position to help them all as much as possible.

As for the prospects of our future generations, they are going to have to make the best of the situation they find themselves in just like we did. Getting a job was undoubtedly easier in the seventies but I don't remember that getting on the housing ladder was a doddle either. There was no flat screen tv or fancy mobile phones for us then, in fact there was no tv or telephone. We simply couldn't afford them! Our furniture was all hand me downs and we ate off the ironing board to start with. When our kids arrived they got free milk and I had three jobs. At one stage the variable mortgage interest rate was around 15%, yes that's right 15%! Interest free mortgages and other similar products weren't available then. The only reason we were able to get a mortgage was that my father in law was a drinking buddy of a manager of a Building Society. He did all sorts of dubious things to get us a start.
We didn't expect to have everything at once and we certainly weren't jealous of our parents who owned thier own houses and were relatively wealthy.

If the current adult generation wants a bright future then I'm afraid they must realise that to a certain extent they have their destiny in their own hands.

 

[MarkVw2017]

Well said @Borris "You reap* what you sow!"



* Minus what HMRC take ;-)

 

[T6 CFO]

@Borris.

You were lucky. Eating off an ironing board. Dead posh.

I keep this link.

https://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

I too am bored with the sweeping generalisation of our generation.



Mike

 

[MarkVw2017]

@Borris.

You were lucky. Eating off an ironing board. Dead posh.

I keep this link.

https://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

I too am bored with the sweeping generalisation of our generation.



Mike

Wow 1989 was a horror year for people with mortgagaes then, ouch nearly 15% what the hell happened to the economy?. I was only a kid then!

 

[T6 CFO]

Wow 1989 was a horror year for people with mortgagaes then, ouch nearly 15% what the hell happened to the economy?. I was only a kid then!

Yep. We had a 4year old a 2 year old and a year later a third. We didn’t go out much


Mike

 

[MarkVw2017]

Yep. We had a 4year old a 2 year old and a year later a third. We didn’t go out much


Mike

Ooh that must have been hard. What happened to the economy,it was hard enough 2008 when markets crashed and i just had a baby!

 

[Amarillo]

Yep. We had a 4year old a 2 year old and a year later a third. We didn’t go out much

I thought that with interest rates at 15% it would be a good time to buy my first flat. I paid £57,000 for a flat I still have and is now worth ~£375,000. But paying a £525 per month mortgage on take home pay of ~£800 was a struggle. I slept on a futon mattress and took in a lodger who paid me £38 per week.



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[Amarillo]

Ooh that must have been hard. What happened to the economy,it was hard enough 2008 when markets crashed and i just had a baby!

2008 to 2012 was a golden opportunity for those with savings to invest and good credit ratings.


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[GregW]

I recall around 1989 and 1990 I had friends who had bought their first houses handing their house keys to their bank as they couldn’t pay the mortgage. It was a pretty awful time.


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[MarkVw2017]

2008 to 2012 was a golden opportunity for those with savings to invest and good credit ratings.


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As in all financial crashes, the rich get richer, the poor get poorer. Money makes money, problem is, you need money in the first place 2009 was a horrible time for me (and sure many many others), got a 20% payrise, which was great with a baby and jist got our first mortgage and then a month later after the crash, got a choice between 20% wage reductuon or loose our jobs Ultimately firm went bust, oooh signing on in the job centre when i just got a mortgage and new baby and just graduated, oohh it was AWFUL so thought sod that, so ended up working for a council digging graves and litter picking via an agency so no job security honedtly thought my degree meant i could pick any job i wanted (ye right!) all well, when needs must you got to just keep on Ive worked my bum off for 10 years and now getting a cali delivered next month! Cant bloody wait!

 

[soulstyledevon]

1988/89 I was just a kid and luckily my parents couldn’t afford their own house. So they rented off the council. It was cheap and interest rates didn’t matter.
2008 I was lucky enough to be working for a British University. Tuition fees were being introduced and we didn’t see anything that resembled a recession in 2008 the universities were all of a sudden cash rich.
Still working at that gravy train...

So probably been quite fortunate so far...

 

[ejmoore]

Inheritance tax doesn't make any difference to our buying a California - we're not dead yet

 

[Ian Ralph]

What nonsense, the pensioner has still had to earn the 60k in the first place !

 

[motacyclist]

Inheritance tax doesn't make any difference to our buying a California - we're not dead yet

And when you do go you can save money on a hearse, just put the bed down and they can slide you in the Cali!

 

[WelshGas]

And when you do go you can save money on a hearse, just put the bed down and they can slide you in the Cali!

Especially if you have got a " Limo " tint on the rear windows as most of the black T5's used by the local undertakers have.

 

[GrannyJen]

I so loved the days of 20% inflation.

We were totally skint, avoided the bailiffs by having great friends who cleared our council flat out in 2 hours and drove us off to somewhere else. Trying to bring two children up when the cost of a tin of carnation milk for my babies would be one thing in the morning and 10p dearer in the evening.

Then things got better, we worked hard, and we could afford a house and a mega mortgage. Enter the goon show, Lamont and Major, Assisted by EMU snd the snake and 15% interest rates on the mortgage.

Indeed the good old days.

Every generation has good and bad in it's lives. 11th November and I will be stood under the Menin gate in Ypres forever grateful that my generation has avoided the horrors faced by my Father's and my Grandfather's generations.

 

[Pete Wilkins]

As I am into my sixty's I am possibly at the right age to answer this one.
We have gone through life scrimping and saving whilst raising a family in our case 4.
We have reached the age where the mortgage is paid, bearing in mind that we paid 17%intrest rates on our loans.
Our parents taught us to save for what we want.
So we have saved up through our working life as well as paying a morgate, and then find we get nothing for our investments.
If you look at the way the Cali is going up we can have fun investing in the Cali and not losing to much money in the investment and keeping out of the hands of those gready bankers.
A win win why let the government take it we are having fun while it lasts.

 

[Ksar-el-kebir]

Have you ever wondered how or why so many pensioners can afford to drive expensive cars like the California? The answer is simple - they are a nearly a third of the cost to many pensioners compared to people who might be considered high earners.

Inheritance tax is charged at 40%. A pensioner liable for this tax on death will receive £24,000 tax relief on their estate on a Cali purchase of £60,000; the real cost of the Cali is £36,000.

Meanwhile a high earner is taxed at 40%, so will need to earn £100,000 to make the same £60,000 purchase, almost 3 times the real cost of the pensioner's purchase.

Discuss...

Well Tom, I’m a pensioner and just got a new 4motion. How do I get my rebate?

 

[Amarillo]

Well Tom, I’m a pensioner and just got a new 4motion. How do I get my rebate?

Simple.

1. Have £510,000 in assets before purchase, £450,000 in assets after purchase.
2. Die
3. Estate pays nil IHT, or £24,000 if you didn’t buy the Cali.


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[Velma's Dad]

Our parents taught us to save for what we want.
So we have saved up through our working life as well as paying a morgate, and then find we get nothing for our investments.

That might be what our parents taught us, but actually we didn't follow their advice. Consumer debt, including mortgages, was steady at about 30% of GDP up to the beginning of 1980s. Then - when today's 60 year olds were young adults - it started to climb inexorably, peaking at nearly 100% of GDP in 2008.

Pete you mentioned 17% mortgage rates and they were certainly high for periods in the 1970s and 80s. But then, since the 1990s, cheap money drove the explosion in very affordable credit, in turn driving up the value of our houses. Yes investment returns are low at the moment but that's just the flip side of having had cheap credit to ratchet up our wealth in house values over the past three decades.

We can now cash in those property asset windfalls if we want, equity release or downsizing or whatever, to buy our Cali toys. I think overall we've been extremely lucky.

 

[Bellcrew]

Simple.

1. Have £510,000 in assets before purchase, £450,000 in assets after purchase.
2. Die
3. Estate pays nil IHT, or £24,000 if you didn’t buy the Cali.


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All to do with the fact the California is a vehicle which the IR designates as a shrinking asset. The tax man ignores the outrageous depreciation of most new cars but is very interested in the rising price of your house.
Otherwise known as heads we win tails you lose.

 

[Amarillo]

That might be what our parents taught us, but actually we didn't follow their advice. Consumer debt, including mortgages, was steady at about 30% of GDP up to the beginning of 1980s. Then - when today's 60 year olds were young adults - it started to climb inexorably, peaking at nearly 100% of GDP in 2008.

Pete you mentioned 17% mortgage rates and they were certainly high for periods in the 1970s and 80s. But then, since the 1990s, cheap money drove the explosion in very affordable credit, in turn driving up the value of our houses. Yes investment returns are low at the moment but that's just the flip side of having had cheap credit to ratchet up our wealth in house values over the past three decades.

We can now cash in those property asset windfalls if we want, equity release or downsizing or whatever, to buy our Cali toys. I think overall we've been extremely lucky.

Very true.

The above inflation rise in house prices is a transfer of wealth from the next generations to the previous generations. It also increases the divide between those who own property and those who rent property.


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[T6 CFO]

Very true.

The above inflation rise in house prices is a transfer of wealth from the next generations to the previous generations. It also increases the divide between those who own property and those who rent property.


Follow my blog: www.au-revoir.eu

Very true. It could also be said the rise in house prices rewarded those who did not save but chose to invest in property. Those that chose to repay debt and save were rewarded with poor interest rates as these were reduced to save the economy from the excess of the gamblers.

A house is to live in and the obsession with treating it as an investment vehicle has caused problems that are far to complicated to neatly wrap up on here by blaming a generation. Some members of it perhaps

 

[DavidofHook]

They could of course fritter it away on wine, women and song and 60k would buy a lot of all 3 esp. Up t North.

Or they could waste it?

 

[RonB]

Very true. It could also be said the rise in house prices rewarded those who did not save but chose to invest in property. Those that chose to repay debt and save were rewarded with poor interest rates as these were reduced to save the economy from the excess of the gamblers.

A house is to live in and the obsession with treating it as an investment vehicle has caused problems that are far to complicated to neatly wrap up on here by blaming a generation. Some members of it perhaps

Yes, that is the key point. Being a Cali owner in my sixties, and having progressed over almost fifty years through the various stages of family life from private rented accommodation to council housing to our own bought property that was changed primarily to accommodate our changing needs, our generation has certainly benefited from the upward trend of property prices. But that was never a conscious decision on our part, as we always took the view that a 'house' was actually a 'home', and chosen with that in mind, as opposed to being a 'property' with investment potential. From Thatcher flogging off council housing to the spivs and speculators buying to capitalise on the rental market, we seem to have lost sight of the wood for the trees.