Tuesday, May 12, 2009
A lesson for the greedy
BBC: Buy-to-let gone wrong
Staggering she was lent the cash to do this.
Posted by doomwatch @ 01:12 PM (2338 views) Add Comment
37 Comments
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1. lenny said...
And she would still like to buy more property - Dolly Dimple springs to mind.....
2. techieman said...
i'd like to teach the world to sing in perfect harmony.... about as likely or relevant
3. paul said...
"If I had money today, I'd go out and buy propatee"
A single mother of two who has recently started a business selling horses to pay for her mortgages.
She refuses to take responsibility for her predicament too, blaming the banks for not lending her the money. The narrator also implies that the banks are to blame at the beginning of the film.
I'm speechless.
4. general congreve said...
Not as dumb as she looks IMO. She milked the banks for a load. Did you see that property that had 50k repair work spent on it? Tenant damage, allegedly. Nonsense, it was damp etc. It was never renovated, she mewed the equity out of her portfolio into fictitious repairs and pocketed the money, that's why she's full of laughs and giggles in this report. Nice work, why the hell didn't I think of it.
5. Spectre said...
'ARROGANT' landlady Amanda De Gonville Morrison who illegally crammed ten people into a Gloucester house has been fined.
http://www.thisisgloucestershire.co.uk/latestnews/Gloucester-landlady-fined-cramped-housing/article-190566-detail/article.html
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7. tyrellcorporation said...
Confidence trickster, in a nutshell this shows how absolutely insane BTL got and how FSA regulation of lenders was a joke. The car crash was so obvious to us but everyone else was at it and danced while the music played. Bluddy annoying we're paying for this stupidity now.
8. str 2007 said...
gc
I noted the very same as you.
An interesting point though, she's felt some pain through property and would still go straight back in.
Most haven't felt any pain. in fact most have felt the warm cosseted feeling of cotton wool as interest rates have plummeted to support reckless borrowing.
General public will still buy houses, to the point I'm considering joining them - why fight the market.
Just been to look at a house that's been on for 2 weeks, already has 2 offers against it within 5% of asking price. It's like a crazed buying frenzy down here in Hampshire.
9. general congreve said...
"Hold your nerve and keep your powder dry str2007, the bulk of the enemy are still in the hills, this is only a Zulu scouting party testing the number of rifles you have. The real attack is coming later in far greater numbers. When it does, don't fire until you see the whites of their eyes!!!" As Michael Caine or that other bloke said in Zulu I think.
10. Not Buying Yet! said...
Any buying frenzy is on a small scale and is due to a severe shortage of stock (my local agents have taken on hardly any new stock in recent weeks, so it's a bit like the last days of woolies selling off dusty old rubbish at cut prices). By this time next year the full impact of unemployment and repossessions will have kicked in, agents will be flooded with instructions but hardly any buyers and then the BIG price falls will emerge. As for dimwits featured in certain news stories - you'll find plenty of like minded people in betting shops and casinos all over the country - they've lost everything and more yet just need to place one more bet to win it back - false optimism usually fuelled by a win at some time down the line but which, as with BTL investors, was all ploughed back and so lost. Just as the bookmaker is the only guaranteed winner in a horse race, so estate agents and others who cream off commission risk free are the only winners in the BTL gamble. Sadly, many of those still in the BTL game are too stupid to realise this.
11. alan said...
"The problem rests with the mortgage companies..." . "Starting on income of £22,000 she bought 50 properties"." It has led to her going to court many times to fight off recievers...". "Now she's selling horses to pay...". This is worse than Jerry Springer!
Someone must have got a lot of commission from those houses.
What's more she is still in denial. She will drown soon.
12. japanese uncle said...
At the end, she will have to go to her bank asking to borrow money for a rope.
13. Scorchio65 said...
Greedy bint!
If she hadn't been soooooo greedy then it wouldn't have become such a problem when the s**t hit the fan!!
14. techieman said...
japanese uncle - is that with or without soap?
15. str 2007 said...
Japanese Uncle
You seem to have mis-read her personality trait - she doesn't care, oh and is devious and lies - no-way that house had had £50k refurbishment done 5 years ago.
general congeve
LOL
I know it's what I keep trying to convince myself, but believe it or not as a comparison to renting (£850 per month for a 3 bed semi), buying a 5 bed detatched (putting 40% down comes to £658 per month interest only.
I've also had a look through most mortgage landers riteria and they are all still lending 3-4 times joint or 5 times main + 1 times the other. My point being providing they are lending the people will take it.
The only 2 big questions I see are
1/ Will unemployment continue to rocket - most say upto 3.2 millionn or so, but as Flashman said the other day - what are the calculations for that ? - What if they don't go that high.
2/ The question of when and how high interest rates will go.
16. str 2007 said...
Sorry I meant to finish last post.
Interest rates in Japan have been low for a very long time. Perhaps Japanese Uncle can explain why they could keep them low in Japan and not here ?
Have we reached another level of interest rates where by they will go up but in 1/8 increments instead of 1/4 increments but in total will now only fluctuate the base rate to say maximum of 2.5% to take account of the fact there is so much borrowed money.
17. str 2007 said...
techieman
No-one still makes Soap on a Rope do they ?
Your showing your 'level of experience' ;-)
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19. easybetman said...
She is professional, but unfortunately a overleveraged one - like Lehman, Bear Sterns, RBS. It works very nicely on the way up, but unfortunately, very badly on the way down.
20. techieman said...
str2007 - i still have my Brut soap on a rope intact from the 80s or 70s! A long story and one which i dont think i am able to share here!
21. drewster said...
@str2007,
She could have had £50k refurbishment done if she was ripped off by cowboy builders. Or if the house was in a truly dreadful state in the first place. But I think your suggestion - pocketed the dosh - rings most true.
Hold out on buying though. Look at the FT article on how auction prices are 25% below estate agent prices - that shows *at least* how much further we have to fall.
@tyrellcorporation,
Bluddy annoying we're paying for this stupidity now.
Quite right. Why is nobody taking up this point? Why is everyone blaming the bankers when the BTLers are just as much - if not more - to blame?
22. general congreve said...
Techieman @ 15 - Wouldn't sniff that soap by the sounds of it ;)
str2007 - Understand your concerns that we may get locked into long term low interest rates and therefore the market will stabilise. However, we are different than Japan. Japan was a surplus country and still is. Therefore it was making money and the govt. could afford to prop up its' zombie economy and keep interest rates low. They were also able to inject liquidity at a rate of 3% GDP per annum to boost the economy because there was a savings rate of 6%, so they weren't going out of pocket following the policies they did, even though it was a stupid policy.
We, on the other hand are in a big debt sh1t. We need to borrow the money to do our QE'ing and our creditors aren't going to keep lending it. Soon interest rates will need to go back up to attract investment in govt. gilts and the 2nd phase of repossessions, business closures, unemployment etc. will get going. House prices will fall much further as a result.
Be brave, str2007, be Michael Caine in Zulu!
23. str 2007 said...
drewster
re: the ft article, I did skim over that and as I read it they were pointing to the fact the auction discount has reduced to 25% from 40% from estate agents prices. Now wether that is estate agents valuing at lower levels or the auctions getting higher bids I'm not sure.
You also say at least how much further we have to fall - auctions are different and should always be at a discount to estate agents. Further have you considered the fact that the banks put reasonable repossessions through estate agents and the rubbish out to auction. This would also show an auction discount.
techieman
Your piece of soap will be worth something one day if you hang onto it long enough. Maybe you should try and get it autographed by Henry Cooper before he pops his clogs to really boost it's value.
gc
It was a film and Michael Caine was paid a huge some of money to stand around saying brave things in face of not really getting hurt atall.
I'm so sorry to shatter your reality.
Good film though.
I'd love to have been a fly on the wall at that G20 meeting.
Do you think they all made Gordon Brown get down on his knees and beg before they'd agree to help him ?
The thing is if the UK and USA both go down, then who will Jpan and China sell all their stuff to.
I can't help thinking some sort of deal will have been done to keep us afloat and spending.
In a normal world I agree you would expect interest rates to shoot upto 8-10%, but that didn't happen and if it did now the whole country would simply collapse.
24. little professor said...
Funny how it says she "made £3m on buy-to-let" - I wonder how much actual cash she ever actually had. If she had £3m worth of houses but £3.1m in mortgage debt and charges then she was poorer than your average council estate dweller.
Anyway here are some of the addresses from the vid:
Home address
Amanda Jayne de Gonville Morrison
Parklands House
30-32 Parkend Road
Gloucester
Gl1 5Al
BTL 1
96 Stanley Road
Gloucester
GL1 5DH
BTL 2
63 High Street
Gloucester
GL1 4SP
BTL 3
3 Sudmeadow Road
Gloucester
GL2 5HD
25. techieman said...
str2007 - re your point to Drewster i posted this earlier today..... http://www.housepricecrash.co.uk/newsblog/2009/05/blog-dcb-in-technicolour-23339.php - take a look at what six six six says. The point is that this (if the data holds up) COULD be used as a lead indicator, you may be able to use tech analysis on this.
Not only that but where there are alot of repos, since the retail market aint working - the EAs need to liquidate a loss quickly to ascertain the bad debt owed by the punter. therefore it wont JUST be dross going there.
26. Karma4all said...
In this let's not pay the bill economy, I'm hoping that the goverment will come up with an initiative to pay the Inland Revenue with freshly printed money so I don't have to pay tax anymore.
27. general congreve said...
Str2007 @ 18
Caine was reacting a real battle mind, and yes he was acting, but it is the spirit of what he is conveying that I want you to emulate my friend :)
As for the G20, yes, I agree a deal was done. China cut everyone some slack, they're not stupid. They need a breather to gradually shift that $2 trillion worth of IOU's into real assets without getting rumbled and crashing the dollar. When they've got out of the dollar they'll be ready to pull the plug.
As regards interest rates, something has got to give. This country is backed into a corner economically. Do you really think house prices will fly back up against a back ground of record levels of personal and national debt, collapsing industry and booming unemployment. Interest rates will have to rise to promote gilt sales or stop inflation, one of the two.
I suppose it's possible a crazy govt. will abandon gilt sales, QE to the moon and let inflation run riot to escape debt. In that case buying a house now to protect your cash might be a good idea. Who knows, maybe it is a tougher call than shooting a wave of angry Zulu Warriors at point blank with a Lee Enfield after all.
28. general congreve said...
@ 21 - typo - renacting!
29. drewster said...
str2007,
- auctions are different and should always be at a discount to estate agents
Not necessarily. In the boom times, auctions actually fetched higher prices - that's what the graph in the FT article shows. In the boom years auctions were fetching 100-120% of estate agent value (the methodology may be slightly dubious of course).
Normally I'd agree though, auctions should fetch less because there are fewer buyers at auctions. That's yet another sign of just how crazy things were in the boom days.
techie @ 6pm,
That's kinda my point, auction values appear to be leading indicators of price movements. It would be even better if we could see their methodology and raw data of course.
On second thoughs, I suspect the graph is just showing time delays. If I buy a house through an estate agent today, it will be 8-12 weeks before the sale is actually registered. However if I buy at auction the sale is registered within less than 4 weeks; sometimes within less than one week. So the graph could just be capturing the price change between weeks 4 and 12. Thoughts?
30. drewster said...
Graph repost for discussion purposes:
31. str 2007 said...
Techieman
Tuesday, May 12, 2009 07:23PM
Report Comment
Thanks for that link, I did add a post to the thread, basically along the lines of yes it could be a good measure of sentiment. But perhaps not of the type of housesI/we would want to buy to live in.
Yes it was a brave battle (numbers wise) but I must admit I don't particularly think that the 'old fashioned' way of fighting when you pitched rifles against spears (to make sure you won) demonstrates much intelligence. In fact as they continued with the same method into the trenches where there was mass slaughter when they used the same 'cunning' techniques against machine guns.
My point - Being beligerent and failing to adapt to the prevailing conditions as they unfold can result in significant loss.
I know how we all like to be right about HPC and come up with all the different reasons why it will continue, but are we just being Lord Melchits and ignoring the actual facts because of our 'religion' to a 40% fall.
Witrh regards to houses bouncing back up. I have seen a few now with asking prices at approaching 20% from those at peak. However they are going within a week or 2 and getting virtually asking price.
The people who are putting their houses up for sale aren't stupid and will start to ask more and discount less.
Will they re-reach 2007 levels. I don't know, but where I am the market is not just moving but on fire. That doesn't bode well for further falls. There would need to be a significant catalyst. Higher interest rates by at least 2-3% quite quickly. Given they were only bringing them down in 1/4 points per month. My moneys on them going back up at 1/8th point per month which could take us 2-3 years to get 2-3% higher interest rates.
Also as you say we're basing our interest rate rises on government gilt sales failing but the government sticking to that method of raising cash.
32. str 2007 said...
Sorry my 2nd paragraph above was to general congeve.
33. general congreve said...
str2007 @ 25 - Agreed, a bit of a cheeky way to do battle with bullets versus spears, and what the hell were we doing on their land in the first place? But ethics wasn't the point, it was about having Cainesque steel nerves, even if aided by a little politically incorrect firepower ;)
I'm not a bear because I'm willing prices to drop, I just think the situation, the data and history points to further drops in house prices. However, it could well be true that adhering to 'old school' tactics could lead to a massacre of str's, if prices go up whether by inflation or the market just picking up again.
Seeing as you sold in 2007 at the top maybe you'd be wise to hedge your bets and buy back in now. Personally, in your position, I'd be inclined to hold fire for a month or three, to get a better picture of things (until you see the whites of their eyes).
34. str 2007 said...
My first confession is I sold STR in 2004 and started posting here in 2007 after having spent some time on an FT forum.
I can see how the tag misleads and makes me look like a market expert. It wasn't meant to.
In fact I didn't sell to rent, I sold to go to France but it didn't quite work out and I knew things were close enough to the top by mid 2005 not to risk buying back in.
To that end I guess we're approaching 2004 prices where I got off, so to a degree I've got my money back but I'm not in profit in anyway.
Until the last few weeks when I've been witnessing a buying frenzy Iwas fairly convinced we'd be heading back to 2002 maybe even 2001 prices.
This may still happen and I'll be gutted if I've jumped back in too soon.
But I definately think the market and crash is different to the one in the noneties and comparing it to that one I think is a big mistake.
Firstly there was no BTL then.
Secondly not many people had seen a house price crash recovery.
Thirdly Interest rates went up very high and everyone got a real shock that made them think twice.
This time round all those 3 main points are the polar opposite.
Everyone here expects a flat line to this hpc with a slow recovery.
IMO no vigour has been beaten out of the general public and currently you could end up seeing a 'V' shaped recovery.
Now that isn't to say the 'V' shaped recovery wouldn't form a double top and fall again as alot of share prices do, however I just can't wait another 3-4 years if that's going to happen.
I'll work on the basis that if houses halve in value then the next step up the ladder will be twice as close.
35. quiet guy said...
@str 2007
Interesting comments.
Have you tried putting in any cheeky offers? There was a contributor to the blog called LuckyJim who said that he negotiated a big discount on a new build, if my recollections are right.
Having a chunk of equity gives you more options.
36. str 2007 said...
QG
I'm now positioned where I'm going to be and the search is norrowed right down.
No 'New Builds' in the area.
As for cheeky offers - chance would be a fine thing. Anything that's coming on that isn't a nail in some way or overpriced has gone within 2 weeks.
I'd say anything decent is fetching pretty much asking price.
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