Tuesday, Aug 17, 2010
Will they never learn? The real effect of low interest rates...
Telegraph: Number of second homes reaches record high
''The latest second homes statistics from estate agent Knight Frank said numbers rose to 245,384 in 2009, up 2.6 per cent on the previous year. Numbers dropped 0.4 per cent in 2008. Knight Frank said rental holiday properties enticed buyers because their rents offered a 7 to 8 per cent return.''
Posted by hpwatcher @ 09:41 AM (1381 views) Add Comment
10 Comments
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1. tyrellcorporation said...
I was in an EA the other day when an orange 60 year old woman walked in and demanded to see the list of pwopertees (in the area I'm also looking in Exeter). She then exclaimed it was for an investment and she was looking to get a family in (to extort cash out of them). Families are priced out of buying and yet the market has reached a point where they can just about scrape together £1300 a month rent. I overheard her saying her money was working much harder for her if it was invested in housing than if it festered in an account somewhere - this is exactly what the BoE wanted to happen!
2. mark said...
she could have bought fine or art, it is simply because they are brainwashed into thinking it makes them money
Owning BTL is only good if you cover your costs each month and the property price goes up, the big problem is every now and then it gets trashed, has empty periods, needs a refurb, laws change and you have to comply, gas checks, elecy checs, new this new that, tenants phoning at 2am saying they need a lightbulb, vietnamese growing plants in the lounge under strong lights, unpaid debts being chased from debt collectors, unpaid council tax, fraud, police breaking the door down because they want to see those plants, the list goes on and on, I have seen a housing council worker renting a house and he trashed it, when he left it took around 20,000 quid to put it right, did the police want to know? of course not...
It is only a good investment when the going is good and prices are on the up, you should always have an exit strategy planned.
3. mrflibble said...
@1. tyrellcorporation...
Shame you didn't have a big orange Tango glove to match her face, the two could have been reunited in harmony *lol*
I'd like to experience a period when you can go wrong with bricks and mortar...
4. mark wadsworth said...
Excellent! This is yet another underlying aim of Home-Owner-Ism - for there to be fewer and fewer owner-occupiers and more and more tenants and landlords and second-home owners. It's all part of the plan!
5. mark said...
what was that film Mel Gibson was in he thought the world had a plan against him..
6. tyrellcorporation said...
@Mark 'she could have bought fine art'
You only have to watch that sickening program Antiques Roadshow to realise all these gits own all the valuable antiques too.
7. sureseam said...
Mark @ 2:
> Owning BTL is only good if ....
The perverse view on this is to do a BTL on high LTV in the expectation of hyper inflation.... Of course if there were any danger of this then mortgages would become harder and harder to get with lower and lower LTVs required.
{Whistles quietly}
8. general congreve said...
@7 - Exactly. A friend of mine bought last year, not because he didn't think houses were likely to head down in the short term, but:
a) Because of hen-pecking wife wanting a nest
b) Because he was one of the last ones to get a 6% mortgage fixed for 15 years (just days before it was withdrawn) and is banking on inflation eating his mortgage over that term. A pretty good bet in my opinion.
Currently the longest fixed rate I could find on moneysupermarket was around 4.99% for 5 years. Not a single fixed rate on there for longer than 5 years. So the banks are obviously of the same opinion. If you buy now on a 5 year fix you'll probably be renewing in the middle of a major interest rate hike sh1t storm.
9. Will said...
7 - 8% return?
Half that may be possible when you eventually find a tenant, less of course agents fees, legal and ongoing running costs etc etc.
Oh and taxation on any real profit you think you have made.
Turning orange obviously removes any traces of brains you may have had.
10. Fubared said...
Don't these mawons ever learn? Oh my, oh my, oh my....well they won't be getting any sympathy from me when they see a return to rates of 15% ....and quite possibly more.
BTL landlords are living in a dream, they think that there will always be 'Bob Cratchets' around to let to - but what they don't realise is how protected tennants are from eviction. Already I have seen a number of tennants who simply 'run out of money' through job loss and now are sitting in the landlords house, not paying and not moving.
This hits the real mawon BTL landlords who do half a job. No tennancy agreement, no deposit scheme "Oh I don't need to worry about that, the guy / girl seems OK" - I seem to recall them saying in the past (during the boom). All the amatuer BTL'ers and forced BTL'ers (those who wanted to sell but couldn't) - are all about to find out what being a landlord is all about.
Very sad, but it's not just a case of getting a tennant and 'watching the money roll in' - that was the BOOM time way of doing things - now we're in recession and things are different.
Already there's an oversupply of houses onto the market - spurred by all those speculators who weren't serious enough about selling to pay for a HIPs - but now they're gone they're happy to 'stick it on and see what happens' - as there's no cost to doing so.
It's like sitting in a movie already knowing the end and listening to the pathetic wails and screams around you as people are surprised by the plot - a plot which is essentially copied from another era.