Thursday, Feb 22, 2007
Another article questioning the strength of the BTL market
Guardian Unlimited: Buy-to-let investors are still smiling - but for how long?
Nothing really new for HPC visitors. It talks about how rental yields are falling, but with lots of quotes from VIs saying how the market will tail off rather than collapse. It also mentions that additional interest rate rises will be very dangerous to BTL... "With three interest rate rises in six months, and another on the cards, life is getting harder for buy-to-letters, with some talking about selling up because their mortgage payments are now higher than their income from rent."
Posted by rich @ 06:49 PM (189 views) Add Comment
13 Comments
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1. Davros said...
Supposedly investors are in it for 'long term capital appreciation'.
Well with a house price to earnings ratio of 6:1 at the moment, they're going to be sorely dissapointed. How are we possibly going to get prices further outstripping earnings if people are in financial difficulty with 5 times salary mortgages? If 'long term' we were to stay at 6:1, that'd mean houseprices have kept pace with earnings, 2-3%.
Not much of a capital appreciation compared to the humble savings account is it?
2. uncle chris said...
I would say that renters are the ones who are smiling thanks to the blinkered approach of BTL - just as a quick example
£1050 per month towards an Alliance & Leicester INTEREST-ONLY mortgage (SVR 7.39%) would get you around £175,000 purchase power
Buying in my area = http://212.50.188.107/cgi-win/vebra.cgi?details1?src=vebra&PropertyCode=1203005/THEGR/14472/5
And renting = http://www.balfours.co.uk/index.php?option=com_hotproperty&task=view&tpl=let&id=168
Decide for yourselves - would you like to rent or buy ?????
3. paul said...
Chris, no-one copies and pastes links because it borks up the browser page history - can you just tell us what you're pointing to?
4. paul said...
And you've got to laugh at the dizzy bint's final comment:
"The lesson she has learnt is to invest only in new-build flats with low maintenance."
Go ahead love, invest in future slum.
5. glorious sunshine said...
I am smiling! and looking to expand my portfolio. Of course it depends on location. Happy days!
Dark days were plenty
Never ending sorrow
Only the past with
Uncertain tomorrow
Oh God the pain
That I've been going through
Raining in my heart
To my emotional rescue
I used to be
So far from life
No one could help me
Not even my wife
Oh God the pain
That I've been going through
Raining in my heart
To my emotional rescue
Happy days are here again
The sky is blue and clear again
Everybody I talk to
Says, man, you're looking cool
Nature oh nature is slow to heal
Nature oh nature please let me feel
When he was?
Oh my gosh happy days are here again
I can see the twinkle in the people's eyes
Goodbye blues, happy days are here again
Spread it good
6. Davros said...
> I am smiling! and looking to expand my portfolio. Of course it depends on location. Happy days!
Genuinely, why would you want to expand your portfolio?
7. paul said...
You may be smiling sunshine, but for how long?
Sleep well!
8. monty said...
Aw c'mon Chris. Surely you can give a better example than that? Anyone paying 7.39% on a mortgage today needs their head read. £1075 can service a 90% IOL on £258k at 5.54% fixed for 5 years from A+L. That must buy something better than your £175k barn, even in Stoke.
I can think of a quite a few good reasons why a 6 bed farmhouse is not very good as BTL. I'm sure that folk who want to live in that kind of property would rather own it which means it's going to command a higher purchase price than a BTL type job. The same goes for the area I'm in. I could not afford to purchase the cottage I rent and the numbers do not work from a BTL-covering-the-IOL point of view but it is debt-free and is one of a few properties on a farm which my landlord lets out.
Apples and oranges.
9. Sam said...
monty, I think chris does have a point. I don't think you'll be able to get a good deal from the A+L on a BTL loan without telling a few porkies.
I know people who've bought btl property on these types of deals and they've always had to lie about what their intentions are with the property.
10. Maddison said...
I hate to say it but the BTL'ers dont run the property market.
Private rented stock is only 7% of the housing stock and it is unlikely that they will all leave the market unless there is a major economic upset/ new legislation or land tax! Now there is a thought. Even if they did it wouldn't precipitate a crash
11. Davros said...
Yeah, but it's only a small percentage of the housing stock that is for sale at any particular point in time. It doesn't take much to tip the balance one way or another.
12. Time To Raise Petrol Prices said...
"The lesson she has learnt is to invest only in new-build flats with low maintenance."
Ha ha ha ha ha ha ha ha! *THUMP* (sound of falling off chair laughing).
New build flats are the most wretched typeof property for BTL, with most lenders capping their LTV's because they know what crap they are, and this poor soul thinks that constitutes good value?
13. inbreda said...
Davros is right. It would only take a tiny proportion of spooked BTLers to put their property up for sale and it would flood the market in terms of the number of properties usually for sale. Then the snowball takes over.