Thursday, Jun 07, 2007
Even more good news...
EstateAngels: No disguising BTL 'scrap-heap'
"This is body-blow for the buy-to-let lobby and a wake-up call for intermediaries, as It looks like buy-to-let chickens are finally coming home to roost"... WOW what a language!
Posted by confused76 @ 07:04 PM (366 views) Add Comment
10 Comments
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1. uncle chris said...
‘We estimate that 50% of repossessions are buy-to-let properties,’ says Robin Gordon Walker of the FSA.
Wow! No real surprise for us but still, Wow! And just last week ARLA were claiming all's rosey in BTL-land. Kinda blows their lies out of the water. With all the bad BTL press recently, I think we are not far off a BTL stampede.
By the way, does anyone know where these repossession auctions are advertised? Maybe my 'vulture' instincts are starting to emerge. Not really interested in a 2-bed flat though, especially one with tenants - Yuk!.
2. Scott666 said...
This is a good example of something which is obvious 'in hindsight', but for a lot of people who have been through similar boom/bust cycles it is obvious right now. Of course it's possible that if everyone keeps their nerve that there won't be a surge of properties onto the market at once but that's the kind of VI psychology used by people intent on getting their properties sold while others dither confused by the mixed messages on the housing market coming out from the media.
Remember a property that's let is not a particularily liquid asset, the inability to sell straight away can leave you stranded in a market which can go into reverse overnight. There are plenty of warning signs around, how many 'Danger, cliff ahead' signs do you think you can pass before you run out of road?
3. Whiteknight said...
The FSA has done nothing except commission reports, express mild concerns and waste all our time, whilst infact, they should have been regulating the financial services industry.
4. bidin'matime said...
The lenders don't know the half of it - they have for a long time bragged about how much more reliable BTL borrowers have turned out to be compared to owner-occupied, but what they don’t realise is that BTL landlords remortgage one property to raise the money to meet the repayments on the others – I’ve seen this at first hand. The result is that they all think that their loans are in better nick than they really are and, when the remortgage fountain dries up, they will experience a domino effect as the borrowers default on one then the next, then the next, in quick succession. As they say in the article, BTL borrowers are more likely to simply walk away and that’s exactly what’s going to happen – with little or no warning.
5. Scott said...
Actually Uncle Chris you would do well to buy flats with tenants if you intend to play this game. Read up on Van Hoogstraten. He started being a property investor in the late 1960s. He would buy with tenants in, due to the big discounts, then force the tenants out by ANY MEANS NECESSARY and then re-sell. One of his tenants even got a grenade thrown through the front living room window. Today he is worth approx £800 million. He also owns the largest collection of antique French furniture in private hands and owns more land in Zimbabwe than Mugabe.
6. Orwell said...
Over to Mrs Flange....
7. confused76 said...
I managed to pass the link below in a few discussion forums, also in the Times
I hope people start becoming more cautious of the consequences of making the wrong investment
up to now people have been very afraid of missing the runaway property train...
"I think the days of the BTL are counted. Check repossessions figures involving BTLs... majority of the cases and on the rise
http://www.home.co.uk/guides/news/story.htm?no_disguising_btl_scrap_heap "
8. European-bear said...
If 50% of repossesions are BTLs, but BTLs represent about 8% of total mortgages (which I have read somewhere), then rather than being less risky (as lenders often toute), the risk on BTLs are some x4 more risky...simple maths really....
9. maddison said...
The thing is that really with only arrears at 1% and BTL at 0.6 % these figures are incredibly low given that everyone keeps going on about rent not covering the mortgage.
My boss has a BTL in west country that has been empty for a year and he doesn't even flinch. Oh and he has a NZ$1m mortage in Auckland. Rent on that BTL doesn't cover even half the mortgage but guess what that doesn't bother him either as the value of the property is some NZ$2.5m. Capitalism is stronger than incomeism
10. dohousescrashinthewoods said...
Interesting, Maddison, but I suspect many BTLs aren't "bosses" with income to burn. What will he do if the NZ bubble bursts?
"You smell that? Do you smell that? BTL is toast, son. Nothing else in the world smells like that. I love the smell of toast in the morning. You know, one time we had a housing boom, for twelve years. When it was all over I walked up. We didn't find one of 'em, not one stinkin' BTL landlord left. The smell, you know that panick smell, the whole lot of 'em. Smelled like ... victory. Someday this boom's gonna end.."