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Warwickshire Lad

The Effect Of House Flippers On Prices

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Although we often deride BTL speculators for causing the excessive demand that has been driving up prices, I've been wondering how much price rises have been due to demand simply from "house flippers".

By that I mean those speculators who have been simply buying with a normal Interest Only mortgage and not even bothering to occupy or rent out the house - just keeping it for 6-12 months and then flogging it on.

I've been reading this evening about HPI in far-flung corners of Scotland, where prices are at 20%+ up on the year (even the bloody Shetland Islands up 23% :blink: ) and wondering why in places like that there is even a proper market for Buy-To-Let ?

During this bubble, to what extent have Estate Agents been deluged more with straightforward house flipping scum rather than the BTL brigade ?

Because sometimes it has struck me that the official number of BTL mortgages (526,000) still seems low to make me question whether it has been the big driver of this out-of-control HPI like most people think.

How much HPI has actually been caused by the "flippers" who don't show up in the statistics. Who has caused house prices to go up by 23% in the Shetland Islands in just one year ?

Answers in this thread or on a postcard please. Any anecdotals out there ?

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Property flipping has always been an investment strategy of property investors I guess, but I've been surprised by the recklessness of some in recent times.

Anecdotally I came across this thread on singingpig recently.

http://www.singingpig.co.uk/discussion/forum/?f=41&m=69545

In this example an investor had actually exchanged on 4 off plan properties in Bradford without any means of financing the purchase (i.e. without a mortgage) or any get out clause in the contract, but purely in the expectation of 'flipping' it.

In the absence of any buyers the investor now stands to lose at the very least 4 deposits and possibly more.

I think the general tenet your post is right. High prices cannot be justified by BTL alone as these are naturally limited by rental income. This market has been driven by property flipping and an expectation of selling to a 'greater fool'

Edited by JST

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Have you noticed the last post?

"if a lot of investors have tried to flip, unsuccessfully, why dont they take out a class action for misrepresentation. i know of a couple of groups who are doing this at the moment on off -plan developments where the figures dont stack by a long shot."

Surely they won't have a hope?!?! Wouldn't the judge (or whoever) say why did u pay such a price when the rent didn't cover the mortgage? I.e. Speculation - and YOU lost out!

"That's Life..."... I could break out into a song...

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Have you noticed the last post?

"if a lot of investors have tried to flip, unsuccessfully, why dont they take out  a class action for misrepresentation.  i know of a couple of groups who are doing this at the moment on off -plan developments where the figures dont stack by a long shot."

Surely they won't have a hope?!?! Wouldn't the judge (or whoever) say why did u pay such a price when the rent didn't cover the mortgage? I.e. Speculation - and YOU lost out!

You would think.

It's difficult to avoid the sense of schadenfreude that the idea of angry property speculators attempting to take out class actions for misrepresentation against estate agents/new build developers brings

Edited by JST

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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