Sunday, May 27, 2007
BTL mortgage lender turns bear
Mail: Warning over 100% buy-to-let
"Specialist buy-to-let broker Landlord Mortgages has said that only experienced landlords with substantial portfolios should GAMBLE on a property where rent only just covers the mortgage" A lender recommending caution? Using the G-word? But we all thought property is the safest bet!?
Posted by confused76 @ 10:32 AM (302 views) Add Comment
17 Comments
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1. Rimmer said...
One of my friends is a BTL owner and is exposed well past the 1/2 Million mark, what is finally dawning on him now is not that interest rates will go sky high but the facts of life that interest rates may well be here at 6% or around that for a very long time, he can also see prices being static or effectively static for 10 years plus, he says may well be looking to sell soon as there is the danger of the catching a cold should others follow suit in droves <<< He needs £3500 a month to cover his costs..
Should he be worried, bloody right he should!
2. royston said...
Whatever happened to Glorious Sunshine? Come on, GS, we need a bit of balance. This site is becoming overwhelmingly bearish.
3. royston said...
I mean, there is just no sport in it anymore.
4. royston said...
....It's becoming like shooting ducks in a barrel.
5. Orwell said...
Who is glorious sunshine?
6. talking rot said...
Royston
Stop shouting. You've scared GS away. Besides, he's probably queueing at the nearest CAB for details on how to take out an IVA.
7. Pr said...
Royston, I've been thinking similar things too. Most other crashes would tend to take people by surprise. Is this time different? More communication via computers, etc, but that would make people react earlier, leading to more of a soft landing or a longer downturn, unlike the last time where most of the falls came in 1.5yrs. Maybe, like Tony Blair, house prices will stay longer than we thought? Either way, something has to happen at some point, the longer they stay up, the longer I have to save a deposit for when they come down. Either way, I win. Is there an opposing website somewhere out there for optimists? HousePriceRally.com?! To be honest tho, all us blog posters are doing is reflecting what people are saying in the national papers and news agencies. If I'd seen a positive article somewhere, I'd have posted it. Nohting positive tho for at least 3 weeks. Danger is, that people start become biased when it becomes fasionable to be bearish. Are we looking for cracks? Do house prices have another rally in sight? Is it different this time? Is the UK economy going to, once again, weather the global downturn, as we did during the .com bubble, when prices just stabalised and we came out as the biggest economy in Europe? Answers on a postcard!!
8. Jolo said...
Going off subject, good old crash has left the country in a bad way with regards to inflation,debt,etc. Does anyone know who the next chancellor is likely to be? I really do feel for the poor sod.
9. Scott said...
What's next? "Harry Potter and the curse of Royston's 30 year property crash", "Star Wars - Return of the Royston", "007 HPC Another Day", "Pirates of the Caribbean: Royston's Revenge".
10. bingo said...
It's fish in a barrel, but we know what you mean....
11. Crash Bandicoot said...
Can you see the irony? The BTL landlods have now priced themselves out of the market! Is there a pricedoutbtl website somewhere?
12. paolo88888 said...
Royston,
I agree, there are too many bears these days. thank-you for giving me the opportunity to try to redress the balance.
Everyone must buy property - either directly, or getting a landlord to do it for you and paying a fee (rent) for the service. Supply and demand mean that over a modest timeframe, the latter will only be possible if the landlord gets a reasonable return. And its less tax efficient.
Everyone wants to buy. The contributors on this site want to buy. There are two camps - the "smuggies" who relish the coming crash and the mouthwatering deals of houses at 1980 prices that it will bring (although they frequently visit this site for reassurance of this from fellow smuggies) - and "moanies" who think that prices should be lower for moral reasons and want the government to make this happen by taxing BTL. But one thing unites them - they want to live in a house.
Yes, prices may well fall. But smuggies and moanies will be checking Rightmove every week. They will aim to hold out for the bottom. But there are people living at home or in shared rented accomodation who want to start a family - or who have started a family and need a family home. Let us put aside flats for a moment and think of nice semis, terraces and small detached with gardens. Can't afford those? well suppose that you could? Then some will make a practical decision, rather than an investment decision, and not wait for the bottom. The average age of FTBs has risen - so there is pent-up demand. The amount of new-build is minimal. Where I live it is insignificant.
Property is a good investment because people can't do without it.
13. Scott said...
Paolo has a point, but perhaps he should study 1990's Japanese history, or 1980's Norwegain history, or 1920's Florida history, the list goes on.
14. Samone said...
Most people are taking as fact that something is happening in the housing market, and it's not going in an upward direction and it certainly cannot do in the next ten years what it has done in the last.
The doomsayers on this site point to a massive crash like the one in 1929, but in fact we could see the same type of recession as the 70s (where houses stop increasing in value and everything else overtook), or something a bit like the 90s where there was a crash but it was only really concentrated in the property market (as in there wasn't massive stock market meltdown and bread lines), or we could experience the same type of crash as Japan which is somewhere in-between the two.
Being bullish right now is very difficult, and while we can be said to be VI in favour of a crash. I certainly am not going to make a call on how bad it will be or how the game will play out.
Bulls on the other hand do have data to support the fact that property value always goes up, but even that suggests what we’ve seen in the last ten years cannot be sustainable.
15. confused76 said...
Paolo,
Just two words to say that your blablabla is wrong: Interest rates
Going forward think with the brain and be concise.
16. paul said...
paolo88888888,
"Then some will make a practical decision, rather than an investment decision, and not wait for the bottom."
What you mean is that some will make an irrational decision and buy. After all, in a falling market, NOT buying is the practical decision.
Oh, and "pent up demand" is a myth. If prices are falling it's because there's no demand.
It's called economics.
17. confused76 said...
Paul is right.
marginal demand is from BTLers, and will vanish once expectation of capital appreciation goes away
the FTB pent up demand is very small compared to BTLers and wont avoid prices from falling
and then... why shoud I buy in a falling market, isnt it better to pay rent to a landlord who is also losing out on capital?