Sunday, Jan 14, 2007
Buy To Let Nab Majority of Homes
Guardian: Buy-to-lets nab London's homes
More than two thirds of new homes in London are sold to buy-to-let investors, increasing fears that the property market's rise - which is squeezing out first-time buyers - is being fuelled by speculators.
Posted by rich @ 12:51 PM (152 views) Add Comment
20 Comments
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1. paul said...
I met someone yesterday with a wife and a kid renting a house in Ealing, complaining that he couldn't afford to buy.
Normally, I'd say "well join the club mate". But he's not a lowly paid social worker or a teacher - he's an airline pilot!
When airline pilots can't afford to buy themselves property, the market is essentially doomed.
2. paul said...
"There are fears that another rate rise could prompt investors to sell off properties, sparking a price dip. But a survey of buy-to-let investors last week found that six out of 10 expected to acquire more property, with only a fraction expecting to sell."
Let's remove the "But", exchange it for a "moreover" and see how it reads.
"There are fears that another rate rise could prompt investors to sell off properties, sparking a price dip. Moreover, a survey of buy-to-let investors last week found that six out of 10 expected to acquire more property, with only a fraction expecting to sell."
This shows a) some bias in the reporting, because the writer refuses to point out the folly of the BTL speculators, and b) that the writer feels that maybe BTL speculators know something the rest of us don't - which is ridiculous.
3. Domski said...
This headline does not reflect a new phenomena - it has been going on for the last five years. I am sick of the BS suggesting that shared purchases are a solution.
4. harold said...
"More than two thirds of new homes in London are sold to buy-to-let investors"
If this statistic is correct then serious legislation is required to discourage the BTL bandwagon - what a completely unacceptable and unsustainable situation. No wonder the 'boom' has continued for so long.
5. Garch said...
2 out of 3 new homes (mostly flats I presume) are being bought as a speculative investment??
If this is anywhere near true I wouldn't want to be long that market if there's a shakedown...
6. David20040_0 said...
Yup and the boom will go on and on with BTL.
7. Fatboyslim said...
Don't worry Paul we will.
The 6 properties that i have in my portfolio are all doing just fine thanks. Technically that should be 7... but just accepted an offer on my Greenwich apartment to a FTB for 240k bagging me 26k in 3 months:) and i only spend 2.5k doing it up over 3 weekends LOL. Easy money,
CANT lose if you know what your doing - LOSERRRRRRRR.
Just join the bandwagon - BUT YOU NEED BIG BALLS, booked my tickets for the property show and looking forward to seeing what other investment opportunities are awaiting. Have you?
AKA: SIGNET
8. bidin'matime said...
Harold, it's called the free market - if they want to screw up their lives like this, then it's a free world and we shouldn't try to stop them. They will be paying out for the rest of their lives so that others can enjoy living in the house for a modest rent - only to buy it off them for a modest price when the going gets too tough and they are forced to sell. Sounds fine to me.
9. sirgoogle said...
Its going to get rougher.
Remember HIPS anyone??
OK so it will not be introduced in such an extensive way as envisaged - but even the watered down HIP will be introduced in July 2007. This will be seen as extra hassle and cost by sellers.
I expect a lot of BTL houses to come onto the market around Easter - so many that buyers will be able to pick and choose - and drive prices down and down, triggering panic selling by the BTL brigade before the HIP deadline.
Lets hope so.
10. harold said...
bidin'matime, no it's called an asset bubble and has nothing to do with a 'free' market (nanny UK is certainly not a free market system) and everything to do with lax monetary policy set not by a democratically elected body (as one might imagine in a 'free' market system and society), but unelected central bankers. "...if they want to screw up their lives like this..." but the whole point is that they are not just screwing up their own lives, hence the need for blog sites like this. BTLers are not just exploiting HPI; they are part of the problem because they are being allowed to borrow to speculate recklessly.
11. Davros said...
Who cares if buy to letters are snapping up all the properties? More fool them. As long as they believe prices are going to rise by double figures every year, they'll pay whatever it costs. As soon as prices rises don't meet their expectations however, watch out... Forget this rubbish about being in it for the long term. It's not a case of choosing to sell up, it's a case of being forced to sell up.
12. Enuii said...
What does everyone expect when the only quick legal money to be made in town is percieved to be 'buy to let'. I work as an engineer, an old industry with a high age demographic, over 50% of the older employees (over 55) have worked at a succession of now defunct companies and their associated pension schemes have not returned a pension that they can live on. Many are continuing to work and are actively ploughing their money into BTL at an alarming rate in order to provide a boost to their meagre pensions, they see this as their last chance to make enough money to retire on.
This whole scenario is a symptom of an out of control, convulsing economy driven by short-termism with no long term future with regard to the prosperity of 75% of its resident population.
13. bidin'matime said...
Harold - it works both ways - I am exploiting the BTLers by having sold my house at a silly price, made silly by the efforts of BTLers and the like, and will await the crash so that I can buy in again at a lower price. It is a free market, free to form a bubble if it chooses, but free nonetheless. No one is forcing anyone to buy.
14. Soothsayer said...
I really think BLT is doomed. Live in a 2 bed flat built in 2005 in East London.Development has 150 flats, almost 120 of which have been bought by investors. At any point in time almost half are empty. Market value is approx 325 K. Monthly rent is 1K ie 12 K per year..annual maintenance charges are 2K plus say 1 K for per annum other repairs..so even if they are occupied for 12 mths the return is less than 3%...ie. 9 K net yield per annum they make approx half of an interest only mortgage....the fall cannot be far
15. paul said...
"CANT lose if you know what your doing - LOSERRRRRRRR."
Hehe. 7 properties Fatboy? I made my money in Japanese bonds. Don't need your advice. My portfolio is much more liquid than yours. And I don't have that bothersome problem of contractual obligations on my investments. And the outlook for your property portfolio? Bad to Worsening.
Sleep well.
You're the loser Fatboy, because you only think you know what you're doing.
16. Nohpc said...
bidintimematime - nice to meet another sold to rent muppet. You will not make any money this way once you take into account all the fees you will pay first selling your property and then buying another. Unless you were planning on selling up anyway. The market may drop but unlikely to drop by enough to make your rather foolish and naive efforts worthwhile.
You should not play around with these things when you clearly have a very tunnel visioned view. There is no reason why property in the UK should suddenly plummet. There is a very good reason why it may drop by say 10 - 20 percent but with the olympics coming upin 2012 this should be a big boost to the economy and I think it will be very good to own london property any time now up till then.
17. Rimmer said...
Paul
I am with you shares and bonds are sold at the touch of a button, all the talk here is about a normal worsening economy, if there were an economic trigger that can happen it would be dire for several years.
Fatboy
Congratulations if you have property and you done well, however the economics of buy with the markey high ( now ) doesnt look as good for returns,
26K in 3 months - i take it thats after capital gains tax, legal and estate agents fees? - it was also a speculative risk, what happens to your 6 properties if a new government taxes second properties and encourages migrant workers to go elsewhere, could you fund all the fees and costs for 6 months on them all with no income - i really hope you can but as Paul correctly comments you have to be aware of whats occuring and with so many money making "Bandwagons" when the public piles in its already too late
18. Rimmer said...
Davros
BTl may be a sound investment but the days of milk and honey are gone, if as expected over the next 10 years house prices track behind RPI and interest rates remain high the yield will be low especially with a glut of properties keeping rental prices low, dont forget there are upkeep costs to pay and Gordan must look at the BTL sector soon for at least part of his income.
There are always people that can spot a bargain or have an estate agent whos a mate ( so you can splash a bit of paint around and make a few quid ) but overall its long term you have to be into it warts and all, certainly at the moment if you have your own money it would be a stupid place to invest.
19. inbreda said...
Of course, NoHPC is absolutely correct. The olympics will probably make house prices triple.
Or, in reality, it is more likely to cost so much to host and be such a target for terrorists, that it will be the thing that breaks the economy and causes house prices to crash.
Now THAT would be funny.
20. Dohousescrashinthewoods said...
So, apart from the Kensington money-laundering set, FTBs can't get in and those on the ladder can't afford to trade up? Seems like only [amateur] speculators left trading?
(reading this with the earlier statistic that average housing turnover is very low - once every 18 years if I remember)