Thursday, Nov 08, 2007
More ramping from RICS
Channel4 News: Buy-to-Let 'a rich man's game'
A rise in the size of the deposit people need to put down, as well as higher interest rates, means only the wealthy can afford to become landlords, says RICS.
David Stubbs, RICS economist, said: "It takes more capital than ever to set up a BTL investment. Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined.
"However, existing landlords should be able to use the equity in their past properties to fund the deposit needed for new ones, and this should ensure that demand from the buy-to-let sector does not dry up."
Posted by little professor @ 10:06 AM (911 views) Add Comment
8 Comments
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1. little professor said...
Hands up who can point out the logical flaw in this statement:
http://www.aboutproperty.co.uk/news/property-investment/buy-let/buy-let-out-reach-most-investors-$481174.htm
2. sold 2 rent 1 said...
A good article that defines the final stages of this 70 year debt bubble.
The only people who can afford to buy houses are those who MEW on existing houses.
Or put another way, debt used to be a function of income, but now it is a function of existing debt.
The banking system that requires ever expanding debt, can only issue new debt by refinancing existing debt.
Prepare for a depression NOW. It will be here by 2010-2011.
3. cyril said...
@LP - can you write shorter summaries please otherwise the news thing runs out pf space before people have had a chance to comment.
4. planning4acrash said...
Maybe that's why the Government wants crossrail, will we have bankers re-deployed during the Greatest Depression to manually dig a hole right along London?! I have a feeling that artists pushed out to Stoke Newington will soon have bigiou studious in Canary Wharf as the banks move out, he he!!
5. Darren said...
This doesn't add up even for 'rich' landlords with existing portfolios, unless prices keep on rising to provide enough equity on existing properties, they can only extract so much money before more money has to be 'generated / made' to keep the whole scheme working.
Buying properties and renting them out always was a rich person's game. It is the Lenders who temporarily changed this but are now changing things back to how they were. The whole thing was / is an unsustainable experiment, nothing more.
My advice to BTL amateurs is, find a real source of income, find a job, work for your money like most other people.
6. sold 2 rent 1 said...
The debt bubble is so close to its peak with existing debt recycled into new debt.
Higher assets leads to higher debts and again higher assets
It is similar to the Chinese stocks bubble.
Much of Chinese companies' profits are made up from shares they own that have gone up in value.
Higher shares leads to higher profits leads to higher shares.
The Chinese stocks bubble still has some way to go as they are still making good profits from traditional business too.
Our property bubble has left income refinaced debt behind as it is no longer viable.
7. drewster said...
@p4c: I don't think we'll be seeing artists moving into Canary Wharf loft-studios. According to a story in MoneyWeek yesterday (link below), the art market is inflated by rich bankers flaunting their wealth. When lay-offs hit the City, rich bankers won't need art to show off; the mere fact that they still have a job will be enough to prove their status. The value of top works of art will plummet again.
http://www.moneyweek.com/file/37464/why-you-wont-get-rich-by-investing-in-art.html
Your idea of thousands of navvies digging a big trench through London in a state-sponsored make-work programme seems more likely. During Japan's lost decade (following their 1990 housing crash), the government invested heavily in public works to keep the economy afloat. Now we have the olympics to build for. Coincidence? Hmm......
8. Pjd123 said...
We're all for house prices coming off.
I don't get the schadenfreude about bankers or anyone losing their jobs. planning4acrash you must be a rather bitter petty individual.
The type of depression you are hoping for will hit and hurt everyone, it won't be the bankers who suffer the most.