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Gloom Persists In Buy-to-let Market

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I read this in the hard copy version, but can't find a link on t'internet. So I'll quote the juicy bits.

"Fears have been raised about the long-term prospects of the buy-to-let market after it emerged that about a third of landlords are currently in negative equity.

"Some 40% of Bradford & Bingely customers [are in neg eq]. At Lloyds Banking Group it is 28.5%. The two lenders account for almost half of all UK buy-let-mortgages and were considered conservative in what is seen as the higher-risk end of the mortgage market."

[And I remember that lots of commentators were saying that BTL was a lot less risky than standard residential mortgages.]

"Economists fear that a rise in interest rates combined with declining rents could force landlords to sell at a loss or be repossessed. They fear a flood of low-cost housing could cause a second slump in house prices.

...because landlaords are largely on interest-only deals, rising rates will hit them harder than traditional homeowners.

"Despite the interest rate respite, pressure is mounting. According to research from Business Development Research Consultatns, tenants are increasingly falling behind on paytments. Some 30pc of landlords are contending with arrears compared with 18pc in March 2008."

Apologies for any typos in my transcription.

Source: Sunday Telegraph 16 Aug 09

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They fear a flood of low-cost housing

yes, i can see why we should fear stuff getting cheaper. :blink:

i don't know how we can survive by being able to actually afford stuff. :blink:

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Some 30pc of landlords are contending with arrears compared with 18pc in March 2008."

I can't believe that 30% of tennants are not paying their rent. Maybe they are but the number seems very high.

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I can't believe that 30% of tennants are not paying their rent. Maybe they are but the number seems very high.

someone told me housing benefit (LHA) pay again if the tenant spends the money. I don't know how true it its though

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Some 30pc of landlords are contending with arrears compared with 18pc in March 2008."

I can't believe that 30% of tennants are not paying their rent. Maybe they are but the number seems very high.

I imagine that those landlords with a portfolio rather than just the one BTL are more likely to experience this. It says 30% of landlords; not 30% of tenants.

If it was 30% of tenants, then the landlord with 100 properties would be in serious trouble. But a landlord with 100 properties and only one defaulting tenant would count towards the number of landlords experiencing a problem.

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http://m.telegraph.co.uk/article/6034954/

Looks like the main article has been *removed*, but this copy was left around. TFH.

To help landlords offload their debt burden, B&B has started to waive early repayment penalties with some success. Richard Banks, B&B managing director, said the lender is also encouraging landlords to move from interest-only to repayment mortgages.

Read as 'To help the bank offload the BTL burnden. Hey! We'll be your friend in this great long term investment, until it isn't and then you can feck off!' :lol:

Edited by XswampyX

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I know quite a few tenants who get housing benefit, it's not quite enough to pay the rent and so they top it up with £10 or so a week to get a better place. Quite a few of them have been going into arrears with the top up money just recently.

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The BTL 'market' never really existed. It was an artificial by-product of the credit boom that has disappeared into its own little hole again. Hopefully many of the do-nothing get-rich-quick landlords will do the same.

I'd really like to agree with you, but quite a few of the lenders are still offering BTL mortgages (with presumably some takers) and the house next door to me was purchased by a BTL in May. The w@nker doesn't seem too artificial to me, and I'm sure I'll enjoy the by-products of the HMO they are creating...

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I'd really like to agree with you, but quite a few of the lenders are still offering BTL mortgages ....snip

Well if that's true then it must be in rare regions where rents are equal to monthly mortgages. But where? Almost everywhere I see has rents between two thirds and half of what it costs to buy, and that's with unprecedented low interest rates. It doesn't make sense.

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Some 30pc of landlords are contending with arrears compared with 18pc in March 2008."

I can't believe that 30% of tennants are not paying their rent. Maybe they are but the number seems very high.

Bzzt. Your logic is broken.

Suppose 3 of 1,000 tenants are in arrears. The 1,000 houses are owned by 10 landlords, and each tenant in arrears has a different landlord. That's 30% of landlords contending with arrears, while 0.3% of tenants are in arrears.

Edited by porca misèria

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I know some who have to stump up 50% of the rent themselfs.

I have to "stump up" 100% of mine.

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someone told me housing benefit (LHA) pay again if the tenant spends the money. I don't know how true it its though

I doubt that very much. Otherwise every LHA recipent would be doing it.

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