Thursday, Oct 16, 2008
Pity the amateur BTLers
FT: How buy-to-let turned into a mug’s game
Patricia, a single mother I encountered recently, is typical of buy-to-let casualties. Her mortgage costs on five buy-to-let apartments will shortly jump by £1,000 a month. Her rents do not even cover current interest and the value of the flats has fallen 20%. “I’ve just lost my job and I’m temping, so my income is reduced,” she said. “I don’t know what to do. It’s horrendous.” She is likely to lose all her properties, including her own home, and crystallise an unpayable £60,000 debt.
Mr Panayiotou expects lenders to start pursuing struggling buy-to-let landlords more aggressively over the next few months.
But Ajay Ahuja, a pioneering buy-to-let investor, told me he plans to buy hundreds of cheap properties when prices stabilise. Other bargain hunters will follow suit.
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. Renting2 said...
Realism setting in now. Still a few die hards like Ajay, buy now but regret sooner.
2. renting2 said...
Realism setting in now. Still a few die-hards like Ajay. But buy now regret sooner.
3. nooneo said...
All I can say really is:
"Let them eat cake" M.A. Shortly before her head parted company wiv' the rest of 'er.
4. jackas said...
"Their nest egg investments have hatched into cuckoos."
Ha ha
5. theboltonfury said...
jackas - very funny until you realise it's our nest egg savings that paying to sort out these greedy tw*ts
6. str 2007 said...
Note
There are still alot of Ajays out there.
The big question is are they savvy enough to have deposits in place to purchase when the markets fall. Or is Ajay so stupid he hasn't realised that he won't have any deposits once the market has fallen 25%.
I think we've all seen the video of the Laundrette guy who sold I think £700 million of property to a pension fund or some such last year.
I don't know his profit on that but lets for arguement sake say 25% = £175 million - 40% tax = £105 million.
Suppose he kept £25 million back to fund his life style etc.
He will almost certainly do the same trick again when the market falls.
Using this money as say £20k deposits against £80k flats (50% off peak) would allow him to purchase about 4000.
I doubt he's the only BTLer who got out in time (although granted most are in it for the long haul) tee hee.
But the savvy investors will come back in I believe when the numbers add up.
7. crash bandicoot said...
str 2007, While you are right about savvy investors moving back in, you have to remember that to make a profit they need to rent their flats out. The demand for BTL properties in recent years has been swollen by priced out FTB's (among others). Why would potential FTB's continue to rent a BTL flat, when they can buy it for less than their monthly rent? Maybe this will be the failure mechanism for "professional" BTL'ers
8. str 2007 said...
Very good point crash bandicot. And to be fair one I've used myself before.
But equally, using that arguement' how did BTL 'pioneers' get going back in the nid to late '90's ?
I don't think if things repeated there would be anything like the steep price rise curve we've seen. But at 3-5% per year capital growth, it's still easy money when things are leveraged up.
9. fancypants said...
property speculation will be dead for at least a generation. The pain from this crash will be so large that the cultural desire for it will be quashed, banks wouldn't lend for it, governments will legislate to hinder it.
10. This comment has been removed as it was found to be in breach of our Blog Policies.
11. This comment has been removed as it was found to be in breach of our Blog Policies.
12. This comment has been removed as it was found to be in breach of our Blog Policies.