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cashinmattress

Buy-to-let Hit Hard By The Recession

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Buy-to-let hit hard by the recession

Buy-to-let has been hit hard by the recession, with consumer confidence declining.

According to a survey by Unbiased.co.uk looking at property investment, nearly a third of Brits believe buy-to-let will make a loss in the current economic environment, with a further quarter believing investors will just about break even.

The research highlighted a generation gap, with one in ten of over-55's cautious of the buy-to-let market, and expecting those with investments to "lose a lot of money". At the younger end of the survey, one in ten 18 to 43-year-olds believe the investment will still make money, according to the Unbiased.co.uk research.

David Elms, chief executive of Unbiased.co.uk, said: "The years of the booming property market made investing in bricks and mortar very attractive. But unfortunately this boom couldn’t continue forever and those invested in the buy-to-let property market may now be facing losses due to the current economic climate.

"Furthermore, the number of buy-to-let mortgages on offer has greatly reduced, meaning those lenders remaining in the buy-to-let space have tightened their lending criteria making funding even harder to find for potential landlords."

Some eight per cent of Londoners surveyed said buy-to-let was still a good opportunity to make a lot of money.

Mr Elms added: "If you are considering becoming a buy-to-let landlord, or if you are struggling with existing mortgage repayments, we urge you to speak to a whole of market mortgage adviser for the best possible advice on your situation.

"A whole of market mortgage adviser can also talk you through the opportunities and potential pitfalls of the buy-to-let market and whether this is appropriate for you."

Buy-to-lose? Buy-toilet? Bacon-tomato-lettuce?

Naw, its just that letting properties are a zero sum game AT BEST, but in this climate, a guaranteed loss leader.

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You'd need to be mad to enter the BTL market at this point, but properties bought pre HPI are still turning over tidy profits for landlords.

e.g. single bedroom flats bought for >20k 10 years ago still renting for £300 pm in my area. You'll still get posters here telling you that they're making a loss because the property dropped to 2004 prices in this crash. Irrelevent, as the business as a whole may be de-valued, but the return on original investment is still good!

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The banks have limited funds the only way to ration is to have tighter lending criteria.

This recovery will run out of steam unless they can somehow find new money to get into consumers hands, however if this is debt it will only delay the inevitable collapse.

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You'd need to be mad to enter the BTL market at this point, but properties bought pre HPI are still turning over tidy profits for landlords.

e.g. single bedroom flats bought for >20k 10 years ago still renting for £300 pm in my area. You'll still get posters here telling you that they're making a loss because the property dropped to 2004 prices in this crash. Irrelevent, as the business as a whole may be de-valued, but the return on original investment is still good!

Yes but landlords could have sold post HPI and get a better return elsewhere!

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Yes but landlords could have sold post HPI and get a better return elsewhere!

And some did. The two landlords i know are a builder and a plumber (bathroom & kitchen installer really, but don't tell HIM that!) respectively, and both freely admit that it's simply not worth the time and effort to do this. They see the rent as a 'guaranteed income' in a city with two universities, and they don't have the knowledge/inclination to look at other alternatives.

I would add that the upkeep of the flat's cost them nothing (being 'in the trade') and they rarely return full deposits because of the damage they're student clientele manage to cause...... allegedly!

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You'd need to be mad to enter the BTL market at this point, but properties bought pre HPI are still turning over tidy profits for landlords.

e.g. single bedroom flats bought for >20k 10 years ago still renting for £300 pm in my area. You'll still get posters here telling you that they're making a loss because the property dropped to 2004 prices in this crash. Irrelevent, as the business as a whole may be de-valued, but the return on original investment is still good!

Whilst that's entirely true, BTL was still a pretty rare beast back then, so there won't be many in that position. The best part of 60% of BTL mortgages were taken out from 2004 onwards.

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Comes down to the yield doesn't it? Some places have quite a favourable rent to buy ratio. It's all about research and those that do it will find a way to make a profit. The amateurs who take a punt will be the losers. But this is always true, whether it's starting up a business or backing a horse...

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