Friday, Feb 09, 2007
BTL and the damage it has caused
Firstrung: Buy to let has taken one million properties from first time buyers - Firstrung
Firstrung, the leading website for first time buyers seeking their first mortgage, has poured scorn on the most recent pronouncement from ARLA who stated earlier this week that the recent 'buy to let movement' has not harmed the buying opportunities of first time buyers.
Firstrung estimates that up to one million properties have been taken out of circulation by the buy to let movement and Firstrung further suggest that this 'movement' has caused price increases, specifically in the first time buyer sector, of approximately 50K over the past four years...
Posted by converted lurker @ 11:59 AM (144 views) Add Comment
18 Comments
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1. Ilejustwait said...
still there is one good thing about all this, that is the BTLs will need the FTBs to buy there property from them, the table turns !!
2. dohousescrashinthewoods said...
If BTL is damaging the market, the market will bite back. If there is a new fair value, unfortunately that's where it will stay.
Looking forward from here, I see HPC, BTL carnage and, in 10 years' time, the advice down the pub will be "don't touch it with a barge-pole, mate, my missus, she lost a mil trying that out, it's a mug's game". Meanwhile, savvy investors will be doing the maths instead of reading the Murdochs (sorry, papers).
When the market is booming, sentiment is suspicious, when the market peaks, (and the Murdochs are reporting "stunning" successes), sentiment is high, when the market crashes and recovers, sentiment is that fingers got burned.
3. headmelter said...
What the Lord giveth the Lord can taketh away.
(or something like that)
4. george monsoon said...
Im worried about this. Is it possible that we don't see a crash and the country ends up being a nation of renters and rich landlords? what happens then?
5. Davros said...
There's no such thing as a rich landlord anymore. They're subsidising us renters, while we get better returns elsewhere. Take away the double digit year on year growth though and it'll be a race to get rid the quickest.
6. inflation is eating my savings said...
George, it's happened before- read "Keep the Aspidistra Flying" by Orwell.
7. dohousescrashinthewoods said...
George, I don't feel we need to be worried. I don't think we will end up in serfdom. I think there will be more landlords in the future, but I also think the market is out of balance right now so it will get a bit better eventually.
I think people will be more mobile, will understand (and be attracted to) the benefits of renting and some may even own property while they are off renting elsewhere.
The market will correct, there could be a bundle of economic turmoil, some BTLers will get badly burnt and we will all one day pay more for our houses than we would like to, but we'll look back in 20 years and it will be ok. "What a crazy time the new millennium was," I think people will say. Just make the best and bravest choices you can today and you will be glad of them tomorrow (advice I would dearly like to reach the chancellor's ears).
8. Rationalinvestor said...
isn't it possible that the rise of BTL is just another symptom of the increasing gap between rich and poor in our society. if you look at wage inflation for the richest 5-10% society versus the poorest 5-10%, the difference is astonishing. for instance, wage inflation in the City (including middle office staff, IT, lawyers, accountants etc) was probably about 10-15% this year, and it's been around 8-10% for a few years. given the multinational client base of the financial industry, its not really reliant on the domestic economy, either. It's not just the bankers and their bonuses either, if you look at solicitors firms, they're having to implement pay rises considerably above inflation. if all these people are getting rises above national wage inflation, then the poorest in society must be getting less. and so wealth distribution (whether through property or other asset classes) becomes even more inequitable.
I agree that it's not a healthy trend - it's terrible for social cohesion - but that doesn't necessarily mean that it's going to change any time soon, unless the government intervene.
9. Cheekie Charlie said...
1 million BTL homes + 700,000 empty investment flats. Wow they'll be selling them 2 for the price of 1 when the panic starts especially in Leeds were there still sprouting out of any piece of derelict land one occupied by our once proud maufacturing industry!
10. Northernlad said...
Mmmm.... THANKS GORDON!!!!
11. Ticktock said...
dohouses,
I think that is a very optimistic view, but there is nothing wrong with that.
If a broader, more global, view is taken then the financial situation looks far more serious, and the prospects for the future rather bleaker than you seem to suggest.
Crazy House price inflation is after all a symptom of the financial illness, and not the illness itself.
12. Rimmer said...
George
If it were not for the great " Emperors new cloths" analogy with the UK economy i would agree, a great economy cannot survive shuffling bits of paper or shuffling summs of money, my fear is worse than yours, i fear what i think might happen will and common sense will catch up on reality.
13. monty said...
Yes George.
As I've just mentioned on a similar thread on the forums "the number of owner occupied homes in the UK has been a steady 69/70% from 1991 to 2003/2004 after a rapid rise from 49% in 1979 on the back of the council housing right-to-buy scheme."
It may well be the case that a 70% owner occupier level is unsustainable given the wage (and soon to be pension) inequality that exists in the UK. For better or worse the right-to-buy was a one-off hand out. You can sell off (or give away) the family silver once only and that's what the councils did. I'm guessing that once the market has worked its magic the figure will stabilise again somewhere between 49% and 65%.
14. magnifico said...
George, this is my fear too. Legislated inequality. Homes as weath producing assets on one side and out of reach necessities on the other.But hey we reached an unprecedented three terms Labour Government.
15. Gav said...
I hope that is not what the future will bring George. Personally I hope that more young people will stay at hotel Mum & Dad for longer rather than rush out to rent somewhere just down the road. Thus leaving a few more empty pensions sorry BTL houses.
Gav
16. enuii said...
How many renters of property from private landlords will have a good enough pension to pay such rents when they retire?
Not many me thinks!
17. Davros said...
> How many renters of property from private landlords will have a good enough pension to pay such rents when they retire?
Well I don't suppose anyone renting here is planning on doing it for the rest of their lives, just until prices have reached more sensible levels. I doubt even the most commited buy to letter would suggest in the next 25 years we won't get a housing market crash.
18. dohousescrashinthewoods said...
Ticktock: I'm inclined to agree. I was trying to get away from my tendency to doom-laden global assessments, but this could be really really unpleasant before it clears up.
Cheekie Charlie: I'm with you 2 for 1 on shiny duplexes - extra 20% off. Everything must go!
I do think BTL is here to stay, but at a more sensible level once the market recovers.