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Buy-To-Let Sector Loses Its Shine

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The lack of financing for our plucky BTL entrepreneurs is a national disgrace.

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One replied at length, saying that he had 55 properties, bought with SVR mortgages: “I can’t remortgage because I’ve only got about 15% equity across the portfolio, but now banks want 25%. If interest rates go up 1%, I will find it hard. A 2% base rate will bankrupt me, forcing me to default on a £6m portfolio.

What a dick :D

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Unfortunately, for every one like him, there are 10 that have 50% equity. And, when he defaults, they will be the ones who buy up the 'portfolio'.

As long as rents stay high, why wouldn't they?

Yeah of course. I forgot that as soon as prices drop a bit all the investors will pile in and snap up the bargains.

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You might want to kid yourself that doesn't happen. Because it does happen, I can't join in the joint denial.

Of course many BTL investors will be buying. Just as they will be buying at every point of the falling market right to the bottom.

But are there enough investors to replace all the owner occupiers who can't buy? I very much doubt that. Mortgage funding for them is just as hard as it is for the rest of us and as this article shows their portfolios are often highly leveraged and very vunerable to IR rises.

That Idea that investors can hold up the entire housing Market alone is a myth with no factual evidence to support it.

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Unfortunately, for every one like him, there are 10 that have 50% equity. And, when he defaults, they will be the ones who buy up the 'portfolio'.

As long as rents stay high, why wouldn't they?

I don't get it. On one hand we say that BTL yields are terrible, relying on capital gains and low interest rates to make any money. On the other hand, you say rents are high. Which is it? FWIW my landlord barely makes 5% before costs & fees, which in my book is terrible.

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You might want to kid yourself that doesn't happen. Because it does happen, I can't join in the joint denial.

Im sad to say I agree with you. It will / does happen. Not feeling very large bearish at the mo, me.

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Unfortunately, for every one like him, there are 10 that have 50% equity. And, when he defaults, they will be the ones who buy up the 'portfolio'.

As long as rents stay high, why wouldn't they?

If you have 50% equity in 5 properties, interest rates are rising and house prices are falling, why would you want 25% equity in 10 properties? Just to try and lose even more capital? Increasing leverage on the way down is suicide.

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Unfortunately, for every one like him, there are 10 that have 50% equity. And, when he defaults, they will be the ones who buy up the 'portfolio'.

As long as rents stay high, why wouldn't they?

You don't get 50% equity by buying at todays prices.

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I don't get it. On one hand we say that BTL yields are terrible, relying on capital gains and low interest rates to make any money. On the other hand, you say rents are high. Which is it? FWIW my landlord barely makes 5% before costs & fees, which in my book is terrible.

rents are high compared to wages, rents are low compared to house prices.

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  • 259 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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