Jump to content
House Price Crash Forum
cashinmattress

Buy-to-let Landlords Losing Property At Alarming Rate

Recommended Posts

Buy-to-let Landlords Losing Property at Alarming Rate

Wednesday 10 June saw the Council of Mortgage Lenders (CML) report that property owners with a buy-to-let mortgage are losing their homes at a rate that is over three times higher than normal homeowners, according to an article on the BBC News website.

The latest figures from the CML have revealed that in the first quarter of 2009 around 1,700 buy-to-let properties were repossessed by lenders. However, this figure rises to 4,100 when the number of properties that have been assigned a receiver of rent are taken into account.

Under those circumstances, a lender assigns a receiver to collect the rent on behalf of the landlord and allows the tenants to remain in the property even though the landlord has defaulted on the mortgage. As a direct result of the current recession, the number of cases assigned a rent receiver is rising at an alarming rate.

By taking such action, the lender is not forced to make hasty decisions about what to do with the property, as the interest of the mortgage is offset directly by the rent payments from the tenants.

It also helps to reduce the arrears that the landlord has accrued on the mortgage.

The figures are in stark contrast to one year previously, when just 300 properties were assigned rent receivers and 900 buy-to-let properties were repossessed.

The problem has been exacerbated by a high number of landlords that rushed into property purchases during the housing boom. Many people paid over the odds for a property with the belief that it would be an easy money-making scheme, and in many cases agreed to a purchase without even seeing the property.

It's all been one huge con, and most of the nation got sucked in.

You could probably fill a good few olympic sized swimming pools with the tears from these property losers. But hey, that's the folly of casino capitalism.

Share this post


Link to post
Share on other sites
Buy-to-let Landlords Losing Property at Alarming Rate

It's all been one huge con, and most of the nation got sucked in.

You could probably fill a good few olympic sized swimming pools with the tears from these property losers. But hey, that's the folly of casino capitalism.

Yup. We all know/know of people who piled in, licking their chops, not THINKING it through. It is the most CLASSIC example of a Pyramid Selling Scam I have ever observed. And, to cap it all, the "finance" provided to buy into it was so fantastically flawed, that it defied belief! Wannabe BTL Landlord goes along to Moneylender who gladly throws wads of cash at said Wannabe BTL LL -- and then, within minutes, "sells" the "mortgage" on to some poor schmuck round the other side of the world: it is totally WORTHLESS - but hey! - who cares!! The original Moneylender takes his [massive] cut, and proceeds onto the next wannabe BTL Landlord..... Thus - "money" is thrown like confetti.....

Pure LaLaLand...... And the FSA stood by and did NOTHING ---- NIET ---- NADA........

You couldn't make it up!! :P

--------------------

I STILL find it incredulous reading this [below] after 5 years!! NOTHING WAS DONE!!!!!

--------------------

The Money Programme started investigating mortgages last year. [2003!!!!!]

After months of undercover work, our film "Mortgage Madness" finally answered one of the great puzzles of the British housing boom: How some people were managing to meet the soaring cost of housing.

The answer was so simple, we found it almost unbelievable.

Some major British lenders had changed their lending rules in a way which allowed borrowers to get far bigger mortgages than they were entitled to.

All a borrower had to do was to lie about how much they earned.

http://news.bbc.co.uk/1/hi/business/3478635.stm

Edited by eric pebble

Share this post


Link to post
Share on other sites

..and yet the arch-dove Blanchflower consistently supported lower rates to facilitate the last mad blow-off that sucked a lot of these saps in.

then he gets a Knighthood. fvcking Medieval

Share this post


Link to post
Share on other sites
No get rich quick scheme ever works.

ahem, it does for thise that start it...and if you where a tie and work in the city, you get a fat pension and police guard as well.

Share this post


Link to post
Share on other sites
ahem, it does for thise that start it...and if you where a tie and work in the city, you get a fat pension and police guard as well.

Of course if you get in first then the get rich quick scheme works, providing you have the intelligence to get out when all the other mugs turn up.

For all the late arrivals in 2007, I think you will be found to be the mugs.

Share this post


Link to post
Share on other sites

Perhaps this thread should be 'Late-to-the game' landlords losing property at alarming rate?

Have those that got in early already exited the market or are they still exposed? Some will be able to absorb 40 to 60% drops but late-comers to a ponzi scheme usually get burnt.

Share this post


Link to post
Share on other sites
Perhaps this thread should be 'Late-to-the game' landlords losing property at alarming rate?

Have those that got in early already exited the market or are they still exposed? Some will be able to absorb 40 to 60% drops but late-comers to a ponzi scheme usually get burnt.

Yes, this is true, but they will lose out by having to fork out with higher interest rates as their LTV margins drop.

There is no upside to the speculative property game at this time. As financial investments go, it was, and still is a poor choice.

Share this post


Link to post
Share on other sites
Perhaps this thread should be 'Late-to-the game' landlords losing property at alarming rate?

Have those that got in early already exited the market or are they still exposed? Some will be able to absorb 40 to 60% drops but late-comers to a ponzi scheme usually get burnt.

With a bit of luck some of the early exiters will be looking at the cash in the bank, earning no interest, and the green shoots, market bottom talk and then ploughing it all back in to snap up the 'bargains'. :lol::lol::lol:

Share this post


Link to post
Share on other sites
Yes, this is true, but they will lose out by having to fork out with higher interest rates as their LTV margins drop.

There is no upside to the speculative property game at this time. As financial investments go, it was, and still is a poor choice.

I suppose it's a bit like holding shares - buying shares is one thing but the difficult part is actually realizing your profit(s) and selling at the right time. With property you need a willing buyer and they seem either spooked with job uncertainty or else unable to buy since prices are far too high.

Most BTL mortgages are interest only, meaning that the loan is never paid off - that means it's the banks that actually own all these houses :lol: . When things get tight in a recession as you try to keep a roof over your head the mortgage is the most important thing to pay - for your family's sake and yours but with a BTL the fight and struggle to do this may not be there. Expect to see landlords dumping property that is suffering from rental voids back onto the lender.

Edited by crashologist

Share this post


Link to post
Share on other sites
I suppose it's a bit like holding shares - buying shares is one thing but the difficult part is actually realizing your profit(s) and selling at the right time. With property you need a willing buyer and they seem either spooked with job uncertainty or else unable to buy since prices are far too high.

Most BTL mortgages are interest only, meaning that the loan is never paid off - that means it's the banks that actually own all these houses :lol: . When things get tight in a recession as you try to keep a roof over your head the mortgage is the most important thing to pay - for your family's sake and yours but with a BTL the fight and struggle to do this may not be there. Expect to see landlords dumping property that is suffering from rental voids back onto the lender.

Yes, the moral implications of the good old interest only mortgage were trampled under foot by the masses of 'house owners' who should never have been.

Meh. Nobody put a gun to their head, so screw them.

Share this post


Link to post
Share on other sites

My LL came round on Tuesday and said that she hadn't paid the mortgage since January. She's got 2 months to sell the house before they reposess it. I will have moved out before then. :(

Share this post


Link to post
Share on other sites
Perhaps this thread should be 'Late-to-the game' landlords losing property at alarming rate?

Have those that got in early already exited the market or are they still exposed? Some will be able to absorb 40 to 60% drops but late-comers to a ponzi scheme usually get burnt.

IMHO, if early in the game LLs were successful their bankers would have encouraged them to increase their portfolio. My ex LL certainly did. bought a couple of flats 2007 ish....that upped his fleet to 5.

quite likely, he used the equity in the other three to provide security on the new ones.

He is vulnerable.

Share this post


Link to post
Share on other sites
IMHO, if early in the game LLs were successful their bankers would have encouraged them to increase their portfolio. My ex LL certainly did. bought a couple of flats 2007 ish....that upped his fleet to 5.

quite likely, he used the equity in the other three to provide security on the new ones.

He is vulnerable.

Yes I agree with you. Lenders encouraged 'draw-down' - the process of re-evaluating property, and then releasing the supposed equity from the difference between initial purchase price and new evaluation price upto 85% (the maximum LTV lowered from 75% in the past). This money was then used as the deposit for new loans. This was encouraged by all parties involved - mortgage brokers, solicitors, valuers, lenders. I haven't read too much of this in the press (yet). Someone could have done this a few times and if they cashed in their chips could have walked away rich. Yield data from the rents was basically ignored.

Edited by crashologist

Share this post


Link to post
Share on other sites
Yes I agree with you. Lenders encouraged 'draw-down' - the process of re-evaluating property, and then releasing the supposed equity from the difference between initial purchase price and new evaluation price upto 85%. This money was then used as the deposit for new loans. This was encouraged by all parties involved - mortgage brokers, solicitors, valuers, lenders. I haven't read too much of this in the press (yet). Someone could have done this a few times and if they cashed in their chips could have walked away rich.

Like the Wilsons.

excpet few would have cashed out...they were all in it for the long term.

Share this post


Link to post
Share on other sites
Like the Wilsons.

excpet few would have cashed out...they were all in it for the long term.

Yeah, just one more roll of the roulette wheel. People thought that their pensions would be taken care of - they didn't do the maths. A Ponzi scheme requires new people to join the pyramid. This could only happen if people's wages rose upwards or else lending multiples were relaxed. Companies were not going to give big pay rises so lending multiples increased. It's not much said on here, but to be fair to mortgage brokers (if only a little), by providing Liar Loans this allowed people to get a mortgage. Borrowers had little choice if they wished to buy. The problems occured when people didn't think about possible scenarios for their own finances, the housing market, and the wider economy. Many weren't financially savvy to do this, they didn't understand the construction industry either. Financial advisors have their own agendas too - sadly this was to make money. GREED took over.

Edited by crashologist

Share this post


Link to post
Share on other sites

Caveat Emptor.

John Morris, an airline pilot who is not related, said he used a Simon Morris buy-to-let package to buy two flats at Kelso Heights in Leeds in January 2006, in each case with a loan from the West Brom­wich of £204,000. Valuers used by the West Bromwich certified each property was a four-bed let worth £237,999. Morris says an independent revaluation he commissioned later revealed each property was in fact a three-bedroom flat, worth no more than £155,000 at the time. The rental returns do not cover his mortgage.

"This is ruining my life," he said. "There is a danger of my going bankrupt as my money pot is diminishing." He said the West Bromwich was not proposing to sue the valuers who were acting for it, but has suggested Morris merely hand in his keys and surrender the properties at a loss.

http://www.guardian.co.uk/business/2009/ju...-police-inquiry

Share this post


Link to post
Share on other sites
I met a chap with a BTL, today.

Nice chap, retired, bought the flat a few years ago as it was "the done thing". Was £240K, now on the market for £170K (without a sniff), been vacant for months. Thankfully, it's not causing him any great distress as it doesn't represent a huge part of his overall net worth, but he sure wishes he'd never set eyes on the damn thing.

This is very, very commonplace now.... It was SUCH a massive pyramid scam. I am amazed at the number of "intelligent" people who fell for it. Absolutely AMAZED.

Share this post


Link to post
Share on other sites
My LL came round on Tuesday and said that she hadn't paid the mortgage since January. She's got 2 months to sell the house before they reposess it. I will have moved out before then. :(

why did she tell you she hadn't paid the mortgage? seems odd. i would have thought she would ust say that due to hard times we have to sell this property ASAP, can you leave.

Share this post


Link to post
Share on other sites
My LL came round on Tuesday and said that she hadn't paid the mortgage since January. She's got 2 months to sell the house before they reposess it. I will have moved out before then. :(

Is she blonde and does she drive a 4x4 ? I think I might know her ...

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   296 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.