Tuesday, Jun 23, 2009
BTL investors are so selfless. Ahem.
LandlordZONE: Buy-to-let investors maintain positive sentiment
Fascinating final paragraph suggesting BTL investors are actually contributing to the good of society and not just lining their own pockets: “Rented accommodation is of immense value to the community, offering flexibility and choice. Currently, individual private investors are being prevented from investing in the sector by lenders’ imposing unfavourable mortgage terms. This research shows that there is appetite to invest in the sector, but it’s now a question of whether mortgage lenders will match the demand.”
Posted by james in london @ 08:35 PM (849 views) Add Comment
14 Comments
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1. quiet guy said...
An amuisng find, James. Basically, buying a BTL property is a financial invest. It's about making money. All the stuff about 'value to the community' is moonshine.
Imagine a BTLer gazumping a FTBer then saying they did it for good of the community (let's ignore the fact that it's probably a lousy investment anyway.) Pure BS.
2. shipbuilder said...
To me it's pretty simple - there is natural demand for renting and natural demand for buying. The problem that we have had is that the supply of rentals due to 'investment' has outstripped the natural rental demand. In this situation, the overhang of supply can hardly be said to be 'serving the community' - it has a negative effect, in fact, because it is 'forcing' people to rent who would rather buy.
3. inflation is eating my savings said...
Apologies for the hijack. Our lease is up for renewal (in Scotland). They want to tie us in for another year, whereas traditionally in Scotland, it was a rolling thing after the first year. We can walk, but we like it here, but given the current cliff top situation, we would be liable for the rest of the rent due if we had to jump away. We have been here 2 years already. The Citizens advice said fack off (actually it was more like fook off). Cold comfort for change. Anyone know any tricks? We have offered a generous 3 month notice period, but they refused. The landlord is some Trust in NZ, but the agents seem to be handling it. Would anyone like to join me in a mobile HPC leaflet campaign in Fife? Outside the agents? I wonder if they are playing hardball because the selling side of their business is fooked.
4. quiet guy said...
@inflation is eating my savings
Until a few years ago, I'd dealt with small private landlords who were happy with rolling contracts and as little as a month notice, by the tenant or the landlord.
The first time I used an agency, I was surprised that they would not be flexible after the first six months but that seems to be the norm. You say "traditionally in Scotland, it was a rolling thing after the first year" but is there any real legal backing for this? The fact that the CAB gave you the brush off doesn't sound encouraging.
It's awkward if you're concerned about losing your job but unless there is a real Anvil of Doom hovering over your job, could you get unemployment insurance?
No easy answers here, I suspect.
5. inflation is eating my savings said...
Thanks QG- no anvil of doom (touching wood).
It used to stipulate in the contract that at the end of the lease, either could terminate at 1 or 2 months notice. The agencies around here seem to have moved into fixed contracts renewed at the end of each year. They can get rid of you in 2 months. You have to wait until the end of the lease, or pay up the rent due until the end of the lease. If they fill the property, they cannot take money off you, but they can charge you for advertising etc.
I suppose one could just not pay, but we had a good relationship with them until recently. I had thought the CAB were supposed to help you here, but it was very hard-nosed take it or leave it. Fine with shares and other investments, but not your home.
Are you Ian Duncan-Smith?
6. peter_2008 said...
The BTLs contribute as much to the society as the land grabbing aristocrats in medieval England.
BTLs are just like those aristocrats, who deprived, slaved and robbed off basic human rights of generations of poor farmers who don't own lands. In an ironical twist, it was land grabbing that brought the aristocrats' own downfall. The BTLs will repeat the history.
7. quiet guy said...
@shipbuilder
"Are you Ian Duncan-Smith?"
That brought a smile to my face. I'm a nobody.
"The agencies around here seem to have moved into fixed contracts renewed at the end of each year. They can get rid of you in 2 months."
WTF? That's the weirdest letting contract I've ever heard of. I have to agree that it sounds as though the agent is pushing his luck. I'd be very surprised if that contract could be enforced if taken to court (obviously, I have no idea what I'm talking about now.)
Best of luck with a tricky situation shippy. Perhaps it's best to sign and play hardball if they try to remove you. Sometimes it's not worth worrying too much about what might happen but deal with the real problems when they arise?
8. gone-to-colombia said...
BTL is a reasonable business provided that the BTL demand and ability to buy does not skew the housing market.
However, the BTL brigade, or should I call that the new or soon to be poor, were not working upon a mere expectation of rental income, they expected huge gains in asset value. Without this reward most BTL wannabes will avoid the housing market.
Over here in Colombia we are several years behind the UK. Yet, what we are starting to experience is a more extreme form of the UK situation. Here, the price gains were much higher, the fall will be much greater. I have noticed builders going out of business, apartment blocks left half built, developers running away with punters money, and rents falling fast.
I am negotiating a 25% rent reduction right now.
The rent to value ratio had grown to an unsustainable position.
Here where interest rates are over 10% is was only possible to get a 3% return on rent returns.
Clearly this defines a vastly over inflated valuation of property.
Because rents are based upon real incomes but mortgages are based upon unrealistic salary multipliers and liar loans.
9. lenny said...
@gone-to-columbia
I should think that any chance of huge capital gains are now out of the window for some time in the UK.
But your comments on Rentals in Columbia are looking similar to the way thing were going in the USA in early 2005 before their crash started. We first looked at buying a house to live in for 4 (winter) months a year in the Las Vegas area and then looked at renting it out for the remaining time maybe on a 6 month tenancy to help pay the taxes and running costs.
Looking at the yields on a yearly basis the figures were around 3% to 3.5% but with the 50% price drops I don't think their rental yields have increased much. There is still a huge over-supply of rental homes in the area so rents can easily be reduced, unless the landlord prefers an empty property....
10. Sensiblebear said...
@inflation
Take a look at the OFT's guidance on unfair contract terms. They may not be able to enforce such a contract if it is deemed unreasonable.
There is advice here http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf
although I think it is written under English and Welsh law so may not fully apply to Scotland.
11. uncle tom said...
I'm expecting rental demand to be fairly strong until the market finally bottoms, at which point it will rapidly evaporate.
That rents are falling at the moment shows just how much over-supply of lets there are.
As I've said before, the killer for BTLers who try to ride the storm, will be the collapse of their rental income.
12. inbreda said...
@inflation
if the reason you think you might have to jump is to buy then I'd sign up to the year (perhaps try to get a discount for doing so?) cos house prices are not going to recover for at least that period of time. There will be no urgency to buy before then.
13. inflation is eating my savings said...
Thanks to all.
Sensible bear- a very interesting document- I have a feeling that "core items" such as rent and duration of tenancy are not considered here, but it is good to know that there are guidelines out there to protect.
14. uncle tom said...
Inflation,
Modern law tends to be worded in a goal-seeking format; there is a great fondness for the word 'reasonable'.
Unless some old statute provides otherwise, I would expect the tenancy period to have to be 'reasonable'.
I suspect that asking someone to sign up for a year's tenancy is probably not considered 'unreasonable'. Asking them to sign up for three years might be viewed differently.
It would be much easier if you could have friendly chat with your landlord, but if they are hiding behind a letting agent, you probably have to take it or leave it.