Friday, Jan 25, 2008
Buoyant to the end (despite the need for an emergency rights issue)
Mortgagestrategy: Total returns for B2L tripled in 2007
Total annual returns for buy-to-let investors tripled in 2007 to £34,000, research out from Paragon reveals. In percentage terms, Paragon says investors would have seen a 21% total annual return in 2007. This compares to just 7% in 2006 or £11,000. The buy-to-let specialist says continued demand for rental accomodation has also spurred strong rental growth in the new year.
Posted by jack c @ 02:01 PM (730 views) Add Comment
12 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. paul said...
Aren't those Paragon Propagandists bankrupt yet?
2. jack c said...
Not quite yet Paul - end of Feb and they should be Para-gone
3. crash bandicoot said...
Wow, this is beyond me. 247% of landlords said that they were 519% better off in December, compared to the 265% that were still facing 487% of shortfalls although price falls of 0.1% have added 121% to their overall expectations.
I will attempt to clarify this: mortgage = £800 per month. Rent = £450 per month. You are 5crewed.
4. george monsoon said...
How can you have more than 100% of anything?
5. Davros said...
The only people who'll believe this are those in denial.
Houseprices can only go up don't you know?
6. techieman said...
These numbers are irrelevant. The fact is you normally get a spike at the top of a market. When the fall starts people then dont believe it - "how can it have gone up so much and now come down" so they Fink its just a setback and everything will be rosy again. In Commodities and Stockmarkets this happens alot - the best percentage gains are often at the end of a boom, but somehow people think houses arent commodities - so they are not subject to the same economic laws as everything else. While commodity gains are often relative (to property) speedy, they are all subject to the same laws. When something is overbought, it can be more overbought, then more overbought and more overbought, until at some stage the peeps realise the king is wearing no clothes. At that point they head for the exits in herd mentaility. You can look at any mania chart and you will see this but you can understand how people cant understand it. On the face of it how can the largest gain in a number of years swing into the largest loss, without touching the sides. Well it can and (almost certainly) will.
7. jack c said...
If Paragon go under at the end of Feb 2008 which many widely anticipate then it will send a huge shiver throughout the BTL sector and IMO accelerate the "swing" to which techieman refers.
8. crash bandicoot said...
George, I was implying that the results are nonsense. If anyone really thinks that BTL investors are seeing 21% returns they should speak to their nurse about upping their medication. I am not really sure how they arrive at the percentage figures, but it will be a smoke and mirrors effect rather than a real profit. The one thing that we can be sure about is that you can't go out and buy a house today, then let it out and make anything like these figures. You would be doing well to make any kind of profit in fact given that current rents are about half the mortgage cost on a similar property. BTW you can have more than 100% profit - but not loss. That should please the BTL crew.
9. techieman said...
Crash - now im confused!!! - You can have more than 100% loss, if your deposit is 10% and property falls 20% thats 10% negative equity or a 100% loss (but have lost 200% of your money) so it depends on how you view it , if it fell 30% you would have a 200% loss etc, etc. Of course the property itself cant lose more than 100% of its value - the joys of leverage.
10. inbreda said...
Fair point techie!!
11. it_is_going_with_a_bang said...
Before I rented my place the landlord had to drop the price to get it rented.
It is up for renewal notice next month.
If they think they are getting anything more than Gordon's 2% they can find another tenant and lose about £1500 in rental income in the mean time.
They can try and get a few £ a month but risk losing £1500 outright and losing a good tenant.
A quick look at Rightmove tells me there are 93 properties to rent within 3 miles that meet my requirments.
I know who's wearing the trousers in this 'relationship' and it's not my landlady!!
Maybe even a rent reduction? ;-)
12. crash bandicoot said...
Whoops! I never thought of it that way. I was thinking of it in a losing 100% of its vaue way. Anyway back on message, can you see where the 21% annual return comes from?