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Massive

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  1. Apologies Shed, I did wonder if I was misreading your point. I do enjoy zen too - shame I blundered right in and ruined it.
  2. Kagiso, I concur with many of your points - you obviously know the market, and its pitfalls. I don't like to equate the current market with past conditions, but nor can I find enough parallels to equate it to the dot com boom either. Everything you say about novice landlords and their potential affect on the market is true, but bear in mind that we've never been in this climate of energetic investment before. In a significant slump, the human herd mentality and aversion to risk would undoubtedly result in a rush for the door, but a new mentality has also emerged for the first time this century. There is a significant sector of the population still ready to buy at the first opportunity, particularly in a market that is becoming more affordable. I make no comment on the wisdom of this, but such a ready source of money has never been present before, and if we do see the beginnings of widespread devaluation, it remains to be seen how much bouyancy will be injected by such a large pool of eager purchasers.
  3. Shedfish, it's not that tenants can't afford mortgage payments - it's the capital outlay that's most often the problem. There is of course a great deal more expense involved in purchasing a property than just payment of mortgage interest. Not least of which are the deposit, stamp duty, and capital repayments. Add in all the other expenses, plus the perceived responsibility of a very large secured loan, and you quickly realise that ownership carries a prohibitively high entry cost, that tenancy does not. The extra cost of ownership is subsumed into the rent, but over time, making it affordable to those who cannot buy, whilst at the same time covering all the costs of the owner.
  4. You're correct that a great many investors have not experienced a falling market, or a hostile economic climate. This is the inevitable result of unsophisticated investors assuming that property is a sure thing. Of course, it isn't - any market requires not only an investment of money, but also of knowledge, talent, and time. The fact that so many novice landlords have invested also means that to a certain extent, the market has indeed been self sustaining. Yes, there is optimism, and whilst potentially dangerous, it isn't blind. Over the past year more people have come to realise the dangers, and whilst there is still growth in the market, there is still time to consider contingencies and allow equity to grow as a buffer against future falls. What happens to those who have invested unwisely when there is a slump in the market, as inevitably there must be one day? Do they ride it out? Or do they sell? Will there be enough Below Market Value purchasers on the sidelines to give them a soft landing? Of course, it all depends, and as you say, nobody can see the future.
  5. You're welcome REPO. Bullish as I am, I'm not so naive as to think my view is the only one that counts. I occasionally visit here to look at news on the home page, and peruse the prevailing sentiment regarding economic issues as they apply to the property business. I was tempted to post in defence of the London market, although having taken such a defensive stance, I feel it's more informative to be curious rather than confrontational. Whilst I'll certainly make clear my views, I'm also here to appreciate the opposing position.
  6. I feel I ought to tell you, I am one of them... Put it in property.
  7. If property were my only passion, then yes. I'm glad to say it's not - I was speaking from a business perspective, and I count myself lucky to be passionate about something that brings my family and myself the rewards that allow us to indulge all the other passions in our lives. Hal, indeed our opinions have differed elsewhere, but you shouldn't be dismissive - I don't hold a grudge, and nor should you. I appreciate your humour, and I'm willing to appreciate your point of view too.
  8. Hello REPO, you haven't confused me with someone else. To be honest, I hear little from unsuccessful BtL investors, simply because in the current climate, lack of success equates to stagnation. There are many excellent ways to make a great deal of money in the property world, however very few of them are immediately apparent. The most obvious pitfall that springs to mind is the currently unfashionable new build arena. I frequently discuss this area at great length, but in short, it's very easy to be sold a complete lemon. However, this doesn't result in financial ruin - poor performance simply results in an investment that doesn't do very much but pay for itself. No great profit, no great equity, and consequently, stagnation. Unsuccessful BtL investors therefore generally sit quietly on their assets, awaiting the future. As far as speculation is concerned, it tends to be muted. Those with property clearly don't dream of a crash, nor in many cases any kind of correction. But having practical experience of the market, wild optimism is also rare and ill-advised. If i might make an observation without prejudice, the majority of property bulls have a great deal more experience in the market than their counterpart bears, simply because many with a negative perception of property will consequently never invest. Discussion is therefore, on the whole, far less extreme, and tends to concentrate on the constructive resolution of business issues, rather than speculation on a future which is, by nature, impossible to forecast with accuracy. If you're a fan of A A Milne, I'd liken the typical property bull to Eeyore, whilst the typical bear is much more akin to Tigger. So in answer to your question, a typical BtL investor will adopt a wait and see approach until they feel their hand is forced. And as far as speculation is concerned, I suggest that whilst a modest correction is certainly possible, I consider a catastrophic crash unlikely, and this view is shared by many in the property world. I hope that helps to answer your questions.
  9. 90% LTV, 100% rental mortgages have been a useful feature of the BtL market for some time now. Maximum borrowing is still restricted by rental income, and indeed adjusted BBR (as per the article) so on the whole, financiallly over-extending remains no more likely than before. To achieve the loan, the rent still has to stack up. But the kitty sounds like a marvellous idea - where do I apply for my cut...?
  10. I operate in the BtL market, and as an entity it does indeed traditionally suffer from a flock mentality. But it is also correct that there is a new breed in the business, and with such a high proportion having entered the arena in only the last couple of years, I think it's anyone's guess how such an unknown quantity may react given adverse performance. But human nature being what it is, I very much suspect the same will hold true.
  11. Touche, my friend, but I must retort, au contraire! Indeed, property is my passion, and my wealth does depend upon it, amongst other things. However, I am an extremely sophisticated investor, and my portfolio is unique. I am concerned over the welfare of the economy, and not just my own short term gain. I am satisfied that my own investments are more profitable in a healthy, stable economic environment. I don't preach 'property at any cost', and if a cooling of the economy is what it takes, or indeed a correction of the market, then I welcome such a thing. However, I still see an abrupt crash of any market as a destabilising influence, and indeed an unlikely outcome in any event. It's unfashionable to fall between the two camps, but I believe the truth of the matter (as far as our financial future is concerned) may well be somewhere between the two extremes of the argument.
  12. Guilty as charged... I'm glad you noticed I'm not my usual self! Just indulging in a little bear baiting for light relief...
  13. Ah, what the hell. Let's enjoy ourselves, and let the future take care of itself.
  14. Truly cringeworthy. I'm a big bull, but I also consider myself a sophisticated investor. If these people are indeed representative of any segment of the property population, they deserve everything they (may or may not) get. Well worth a look for the remainder of the series, I think.
  15. Debtfree, the London market (for all the reasons I have stated) needs no boosting. Doubtless, without such tactics, prices may not have risen so far so fast, but are you seriously saying that there is no supply deficit of accommodation in the capital? Are you implying that this market is not driven by demand? That without manipulation of interest rates there would be no market? Burned Out - your coloured lines are very pretty. Pretty, but patently meaningless. Are you relating them in some way to the London property market? Underpressuretobuy, as I said, affordability plays its part in the scale and rapidity of appreciation, but it does not drive the fundamental market. Your scenarios are pure fantasy, but I'll indulge you. Of course large scale economic changes affect prices, and I have quoted many economic factors that do so. Johnny Cash, I tire of reiterating the same facts when your empty contradictions carry no evidence to counter my argument. You carry on laughing, and we'll just have to see who makes it to the bank. Liquid - indeed, by positive, I mean upwardly mobile. Whether this is indeed a good thing all round is debatable, and I for one would welcome a general cooling of the economy and less hyperbole in the property market, whether in the capital or the country as a whole.
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