Thursday, Oct 16, 2008
Stating the obvious
FT: How buy-to-let turned into a mug’s game
Doesn't really say anything that regular readers here don't already know, but a good read. The author is at least honest enough to say that he's a BTL landlord himself.
Posted by richc @ 10:34 AM (753 views) Add Comment
10 Comments
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1. inbreda said...
They will all have to admit it sooner or later - it's a vital part of the cleansing process. Unfortunately being dragged outside and beaten to death for all the hardship they have caused is not part of the process.
2. matt_the_hat said...
For anyone even slightly thinking of buying residential property remember: - property prices are an illusion like CDO etc etc no one knows what they are `worth', debt however like many people are about to find out is real.
3. sold out said...
I wonder how long it will be before nu-labours BTL bail out.With Brown saying "i will do everything i can to keep BTL families in their homes"
4. doomwatch said...
Finally, the truth will out.
5. nooneo said...
I recently read an article about 6 months ago, (I'm sorry, I have tried to find it but can't) that was about a group of BTL landlords in manchester, that had a series of problems with rent defaulters. These defaulters were mostly foreign and less traceable than UK citizens and were simply moving in, not paying rent, staying until the eviction notice arrived and moved on. The BTL landlords, after a time, realised that these fraudsters were simply moving from one BTL property to another. So deperate for new tenants that they only had to apply for between 1 and 5 or so BTL apartments before someone would either not do a credit check or indeed the letting agent pretended to (I live in a rented property and I have proof that the letting agent that runs my property never did a credit check on either me or my partner, although they told the actual owner they had - They did charge us for it though).
The net result, according to the article, was that these landlords realised this and starting checking the agents were doing credit checks everytime.
6. d'oh said...
nooneo - yes, my agent charged like a wounded bull to do a credit check, but I can prove that almost nothing if anything was done. No work check, no credit check etc. Disgusting.
7. phdinbubbles said...
How I lost 35 pounds fast. Read how I lost 35 pounds in just 3 months reads the advert for the diet "as seen on oprah" at the top of this discussion. Made me chuckle. How I lost 35000 fast. Read how I lost 35000 pounds in just 3 months with BTL, would be more appropriate.
8. uncle tom said...
The BTL ship is holed beneath the waterline - in very much the way I, and others on this site, have predicted for several years now.
Perhaps a third of all the one million BTL mortgages outstanding are now on equity zero - or worse. Many landlords were reliant on equity liberation to make good the shortfall between income and interest payments, and are now in financial crisis.
For those who plan to sit out the storm, the killer detail will the fall in rental income. While this will not be as severe as the fall in capital value (I predict that rents will typically fall by 15% - 20%) it will ruin the finances of those teetering on the brink.
Of the million BTL mortgages, I predict that a quarter will be sold, a quarter will be kept, and the remaining half repo'd...
9. Luckyjim said...
uncle tom
I agree that a fall in rental income would be a kicker, but why would it fall ? I know the obvious answer is the recession but actually this will increases the number of people on benefits and getting their rent paid for them. Housing benefits are incredibly generous - and paid directly into the landlord's bank account. There will also be people on good incomes who cannot get a mortgage.
But there will come a point where BTL becomes attractive again. If you had the cash, where else would you out a few hundred thousand pounds ? In the bank ? In the stock market ? In your heavily taxed pension scheme ?
This is why I believe there is a floor to house prices.
For all those mugs who piled in to BTL way to late there were many other who realised thay had missed out on a opportunity and are waiting for that opportunity to come again.
10. quiet guy said...
@Luckyjim
Agreed, there must be a floor to house prices and some people may will be able to make profitable investments in property in the future.
Less clear is whether the banks will tolerate the amateur free-for-all we have seen in recent times. Look what happened to Bradford and Bingley. I also ask you to consider the moral aspect of what you are doing. BTL done right offers a reasonable service at a reasonable price. I have had the good fortune to have had decent landlords in the past but I consider myself lucky in that respect. BTL done wrong is a social disaster: a transfer of wealth from the young to the old.