Thursday, Oct 04, 2007
Yeah!!! Buy-to-lose-everything!!
National Homebuyers: Buy-to-let in crisis
Julian King of National Homebuyers, the UK's leading fast property purchase firm, says "We have received so many calls recently from landlords looking for a fast sale that it is obvious that the BTL market was unstable. "The Telegraph's figure of a 40 per cent fall is astronomical. BTL landlords currently clutching tightly to their would-be profit centre would be advised to sell the property quick". Sorry Maddison et al, BTL is based on bad bad fundamentals, it is a hype, it is a craze like the dot.com, get out before you get your fingers burned (if you still can!!) You are mad to think your pension can be built with tulips!
Posted by confused76 @ 12:38 PM (972 views) Add Comment
17 Comments
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1. Sold My Soul To The Never Never Never said...
It's not just on new build! Some 1 bed flats near to where I live were renovated and sold on for £85K in August 2006 (info from Land Registry) are being rented out for £377 p.c.m. (info from rightmove website) - roughly a 5.3% yield.. Take into account purchasing the property; fees to the agency; maintenance costs; possible voids and even perhaps having a BTL mortgage on this then the yield is a lot less.
Also in the same building the flat next door this year (13.02.07 - Land Registry) sold for £72,250. You do the Maths.
Double Whammy - Negative equity and negative yields too!!
2. uncle chris said...
"I think there are tens of thousands of people out there who like me jumped on the apartment bandwagon thinking they were on to a winner. Now they are feeling the pain," Matthew Loades, a buy-to-let investor who is losing cash on his property, told the newspaper."
As someone wise once said (probably on here) - if you recognise it as a bandwagon, then its probably too late to jump on.
3. captain sensible said...
This says it all - will BTL investors still be in it for the long run after reading this type of piece? The one statement which did jump out was 'It is thought that much of the problem is down to high interest rates which have left landlords unable to cover their buy-to-let mortgage costs with rent alone.' Base and mortgage rates are still at least two or three percentage points below the average for the last few decades. If BTL landlords can't cope in the current environment, what sort of business model were they applying to an investment which was supposed to span 20 years or more?
4. waitingfor hpc said...
Good - Good - Good
5. inbreda said...
Spot on captain sensible!!
confused76 - it certainly is good advice to tell BTLosers to jump ship now, but can I suggest that we do not extend the advice to David2004? It would be kinda nice to see his BTLose properties sink him !
6. cyril said...
"BTL landlords ....would be advised to sell the property quick", said Julian King of National Homebuyers, the UK's leading fast property purchase firm. Clearly an unbiased commentator!
7. maddison said...
Show me some real evidence that BTLers are selling up in large numbers. I sold my flat a year and a half ago and I am now livid that prices have gone up 20% since. One reason I sold was reading this site!! I am still waiting for some real evidence that BTL is a bad thing now. CGT reliefs that are very generous, Pensions aren't much good, cash savings- well they get eroded by inflation and Gold is just another asset. After the mortgage gets paid off the rent keeps coming in and in 20 years you will have a capital asset as well! I know it is all about gearing and yes 85% geared investments are perhaps unwise but most BTL are not geared that much.
8. Si said...
maddison,
In Bristol people are selling up in large numbers. 100+ (normally around 150) a day are appearing on rightmove. Last time I looked there were around 600 properties on sale <140k. This is a stark contrast to the last few years where property has been in very short supply. The difference volumes are simply incredible you'd expect maybe a dozen <140k previous to NR.
Whether they are BTLs or anything else it doesn't really matter, the sheer numbers will force the prices down. Thankfully.
I'd be very surprised if a significant proportion weren't BTL. It'd take a pretty 'brave' person to enter the property market now.
Please, keep believing what you need to, it's pretty obvious what is happening.
9. doomwatch said...
Bloke at work just sold 4 BTLs in Colchester he bought 8 years ago. He said he's
made f00k all for the lenght of time he's had them, and it's been a right pain in the rear.
10. bingo said...
Maddison, are you the same guy that sent that bird in Nigeria 15 grand, and it turned out to be a bloke? What a wheeze.... actually he wasn't greedy,,, just lusty.... woohoo
11. David Smith's Sub Prime. . . said...
David?
12. confused76 said...
Maddison
Two bedrooms in Chelsea peaked before the summer. I have plenty of evidence. Now international btl'osers are not being lent more than 50% of the capital, and surveyors are asked by the lender to apply a 10% to 20% void ratios to calculate prospective rental cover.
In the meanwhile you can park your cash in the bank and reap a hefty 6.5%
Fundamentals are poor... rental yield is too small
BTW, I like your punter attitude... prices up 20% so I lost... that is so crazy and "sub-prime"... just look at the US... and remember the UK catches the cold 6 months later
13. cyril said...
@maddison - we've all been surprised how long the boom has lasted. I thought the game was up about 5 years ago!
14. Techieman said...
Maddison - its a bit like the 89/90 crash. I had a property before Aug 89 and sold then. At that time EVERYONE thought that property ONLY ever goes up, and i remember the 20 year old spotty EA laughing when i told him i had no plans to buy and he shook his head. The point is you could look back at the ending at that time of double tax relief and think shit if there is an increase in rates this is gonna be a house of cards. Everyone was getting on the bandwagon of securing double tax relief by Aug 89, so things were going mad. In hindsight EVERYONE said it was obvious. Of course Maddison you could have held on for the last penny since no-one knew when the pin would burst the bubble (they only know in hindsight) . The parrallels with today are onimous - its good to have people saying it cant / isnt / wont happening, its only when the last bull becomes a bear that the market will reverse to the upside and bargains can be had with little risk - Read Charles Mackay read Bob Beckman - you will have time!!. And interestingly even now people on this site (me included) could be wrong....but you could lose a fortune holding on for the last penny, so be pleased that you have sold and secured some equity. If things get real bad and there is a scramble prices will overshoot on the downside as people get desperate to liquidate. This is herd mentality, difficult to stand in the way of it. The problem with property particularly in England is its an illiquid asset . Thats great if you are a seller in a bull market - Gazumping Rules - but when the bear raises its ugly head the English man's home is no longer a castle - its a prison!!
15. maddison said...
My boss has been offered a 75% LTV self cert mortgage on a property in Wandsworth. 6% Interest rate price £465k 3 bed flat. This is a complete liar loan as it is going to be used as an office. Credit Tightening? Not here!
16. sold 2 rent 1 said...
confused76,
"remember the UK catches the cold 6 months later"
Europe's housing as a whole (including Germany) is 2 years behind the US (30 years of data).
US housing peaked end of 2005 so we have 3 months left before Europe as a whole peaks.
UK Land Reg figures for Q1 2008 will show quarterly fall (1-2%) - have no fear.
Unfortunately we will have to wait for April 2008 to find out.
17. planning4acrash said...
Maddison, you could get 125% self cert only a few weeks ago.