Tuesday, Jun 05, 2007
BTL'rs Barely Treading Water (AND THIS IS BEFORE ANY FURTHER IR RISES?)
City Wire: BUSINESS ARTICLE
I recommend that one reads this article, but as they say looks like the chickens are coming home to roost!!!
"...Already an alarming jump in %ages of BTL's being reposessed (8% to 25% of repossessions). In some BTL postcodes 50% of the auction properties are BTL's!
The average price of a new falt increased by only 0.8% b/w 2nd quarter of 2004 and first quarter of 2006!
Over the past five years the average price of older flats has soared in value by 59% while the average price of a new build flats rose by just 15%!
The buy-to-let lobby is reluctant to admit there is a problem!..."
I bet they are! Am I dreaming? Is this the UK? What is going to happen to all Mr. Prestcott's new built flats in the green belt? Are they telling us the full truth about the seriousness of this?
1 Comment
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1. talking rot said...
This is a long piece but one well worth reading. Lenders could be facing a problem of determining whether, or not, a loan is for owner-occupancy or is being illicitly used to fund a Buy-To-Let. The problem of Buy-To-Lets occurs when they fail. The morrtgage-holder just walks away because he/she does not have the interest in maintaining a loss-making property; such mortgage-holders are more likely to walk away from a failed investment then an owner-occupier walking away from a home. The lenders are therefore unable to manage risk because they appear unsure how many mortgages are being used for illicit Buy-To-Let. They are unable to accurately quantify the risks they are holding and therefore how much capital they need to mitigate the risk. This has the potential to go horribly wrong. Let's hope it does!