Wednesday, Sep 26, 2007
How the smell of fresh paint will cost investors thousands
Monevator.com: How Andy Warhol’s loft living sowed the seeds for risky BTL investment
Few BTL investors seem to realise they’re actually paying a hefty price for those shiny new build flats. Fresh paint, unblemished kitchens and the perk of having the keys handed to you by that charming sales rep can come at a 20% premium to buying a second hand home. Some people may feel this is a price worth paying, just as there’s a huge market willing to sacrifice 30% of the cost of a new car the second they drive it away from the showroom. But why would anyone pay tens of thousands of pounds to give their tenants this brand new buzz for free?
Posted by moneyman @ 01:57 PM (691 views) Add Comment
11 Comments
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1. alan said...
This same point was made on the commuter train this morning by a very old lady looking out on the new blocks of flats all the way along the railway line through Ilford to Liverpool St. (London). Their only benefit is a view of the tracks.
There were lots of exchanged glances and sniggers in the carriage!
2. Meow said...
"There were lots of exchanged glances and sniggers in the carriage!"
At or with her?
3. nacho99 said...
Yes Alan, spill the beans.
4. alan said...
A lot of people think the new flats are madness, so many ads are aimed at prospective BTLers. Local people (like my mum) think they will be slums in 10 years.
If they are purchased by the new breed of brainless BTLers, they will be repossesed in 2 years time and they aren't even completed yet!
5. nacho99 said...
I have a new build block of flats not too far from me.
The other day I saw a billboard advertising the development saying
“Why not cut the cost in half and buy with a friend”
LOL, it made me laugh and I can just see so many lemmings going for it.
6. Gumbo said...
I like many others, am taking great delight from all the uncertainty and impending doom...I too would have sniggered.
The reality is simple, when you loan people multiples of 6-8 times their salary, they go and buy these new build houses predominantly on an interest only mortgage. They then gamble that rates will remain static, and that mug tenants will service the debt for them, with a tidy profit to boot.
WRONG. Food prices are rising, the pound is steadily devaluing, as is the dollar. Confidence in the market is also at a low. Even if Mervyn and his mates want to drop interest rates, they are now faced with inflation rising and have a big decision to make.
Besides it seems that mortgage interest rate rises are now the preserve of the banks, and are no longer governed by the BOE.
My only worry is that there are alot of people.......... maybe many of you, who are waiting to buy, and will not be prepared to wait long enough for the price to drop sufficiently enough.
Slums...maybe...price drops...a certainty.
7. Meow said...
So, with her
8. inbreda said...
"6. Gumbo said...
I like many others, "
Yeah Gumbo. I'm not too fussy myself. Any port in a storm as they say.
9. enuii said...
There are so many new build flats around at ridiculously inflated prices for even a 1 bed hovel that I am convinced that their actual market value could be as low as 60% of their current purchase price. Buyer Beware.
10. wiltshire said...
"My only worry is that there are alot of people.......... maybe many of you, who are waiting to buy, and will not be prepared to wait long enough for the price to drop sufficiently enough".
I wouldn't worry too much. For every STR'er and the like there must be tens of thousands of people who have bought at, or near, the top of the market not to mention the millions in debt who won't be in a position to take advantage of a changing housing market. Also, as during the last crash, once it becomes apparent a crash is happening sentiment will take over. Many people simply won't pile into a crashing market because why buy this month when the price could be another 10% lower next month. Finally, I think any crash which may occur now could be so rapid and overwhelming that even the most confident HPC-er will have cause to sit (very very) tight.
Over the past 2 or 3 years the powers that be have (unwittingly???) allowed the economic/housing situation to reach a state of critical mass. It's a bit like Chernobyl, when this things blows it's going to heard around the entire world.
11. Ericthered said...
These flats are not just any old flats ! They are 1 - 2 bedroom luxuary flats or stylish flats or flats given a wonderful (escape from the real world) name like Oasis blue or Kings palace, surely these will nether lose finacially ?