Vast Returns On Minimal Initial Investments

[Time to raise the rents.]

http://www.in2perspective.com/articles/bri...from-abroad.jsp

British investors back from abroad

2nd Nov 2005, a Wednesday

With house prices back on the rise, deposit upon exchange falling back to 5% and numerous developer discounts, the UK buy-to-let market is attracting British investors back from abroad, say Assetz.

Between August 2004 - August 2005, the UK buy-to-let market was over inflated with developers asking prices that were often too high, even after off-plan discounts.

Following the recent downwards trend in interest rates in addition to bank pressure on developers to achieve sales targets, prices have become more realistic and opportunities in the buy-to-let market have returned once more.

Investors are currently enjoying good discounts on new properties and are usually only required to put in a total deposit on completion of between 5% and 10% rather than the 15% historically. The balance of the deposit is contributed by the developer in the form of a subsidised deposit, like those given to first-time buyers, or a cash-back rent guarantee. Not all lenders accept these types of incentives but those that do are reaping the rewards.

The deposit required on exchange is back to 5% in many cases, instead of the 10% developers were achieving last year. This means that investors have less cash tied up in investments on exchange and less cash required to complete too, leading to greater returns if prices rise. The built in equity through the discounts on purchase price also provide a safety net for any price falls.

Stuart Law, Managing Director of Assetz comments: "There has been a noticeable surge in UK investment purchases over the last month as UK investors realise there is money to be made on home shores again, without the hassle of overseas investments.

"According to Paragon, rents are rising at 10.5% per annum, suggesting that rental incomes will soon well exceed the cost of a buy to let mortgage and become profitable again. We expect to see house prices rising at 5 - 7% next year, offering the potential for vast returns on minimal initial investments."

[binbag]

And from the same edition "Interest rates more likely to rise"

http://www.in2perspective.com/nr/390510/31...71707A59C095433

[sign_of_the_times]

"According to Paragon, rents are rising at 10.5% per annum, suggesting that rental incomes will soon well exceed the cost of a buy to let mortgage and become profitable again. We expect to see house prices rising at 5 - 7% next year, offering the potential for vast returns on minimal initial investments."

love it love it love it

[slater14]

http://www.in2perspective.com/articles/bri...from-abroad.jsp

British investors back from abroad

2nd Nov 2005, a Wednesday

With house prices back on the rise, deposit upon exchange falling back to 5% and numerous developer discounts, the UK buy-to-let market is attracting British investors back from abroad, say Assetz.

Between August 2004 - August 2005, the UK buy-to-let market was over inflated with developers asking prices that were often too high, even after off-plan discounts.

Following the recent downwards trend in interest rates in addition to bank pressure on developers to achieve sales targets, prices have become more realistic and opportunities in the buy-to-let market have returned once more.

Investors are currently enjoying good discounts on new properties and are usually only required to put in a total deposit on completion of between 5% and 10% rather than the 15% historically. The balance of the deposit is contributed by the developer in the form of a subsidised deposit, like those given to first-time buyers, or a cash-back rent guarantee. Not all lenders accept these types of incentives but those that do are reaping the rewards.

The deposit required on exchange is back to 5% in many cases, instead of the 10% developers were achieving last year. This means that investors have less cash tied up in investments on exchange and less cash required to complete too, leading to greater returns if prices rise. The built in equity through the discounts on purchase price also provide a safety net for any price falls.

Stuart Law, Managing Director of Assetz comments: "There has been a noticeable surge in UK investment purchases over the last month as UK investors realise there is money to be made on home shores again, without the hassle of overseas investments.

"According to Paragon, rents are rising at 10.5% per annum, suggesting that rental incomes will soon well exceed the cost of a buy to let mortgage and become profitable again. We expect to see house prices rising at 5 - 7% next year, offering the potential for vast returns on minimal initial investments."

In a word. B0LLOCKS.

TTRT, as an aussie, I wouldnt expect you to know what happened last time round....

This is exactly what happened. Banks and developers came up with ever more fanciful ways of attracting buyers into an over inflated market.

Typical ruses were 'no deposit' (paid by the developer - but tucked into the price) 'cash back' (same again) and the best of all -

Shared Equity Deals - you buy 75% today and you agree to buy the other 25% in 5, 7, 10 years time at market value OR the 25% original price (whichever is the greater).....I picked up a few of these properties around 8, 9 and 10 years ago. It was a bonzanza! I had neighbours knocking on my door asking did I want to buy theirs as well....why? because their 'term' was nearing and they were going to have to find another 25% on a house that was now worth 55% of what they bought 75% for.....not a bank in the land would touch them...very sad. But they were stupid and greedy. I wasnt. I won.

You have been warned.....not by me. by history.

[Time to raise the rents.]

In a word. B0LLOCKS.

TTRT, as an aussie, I wouldnt expect you to know what happened last time round....

This is exactly what happened. Banks and developers came up with ever more fanciful ways of attracting buyers into an over inflated market.

Typical ruses were 'no deposit' (paid by the developer - but tucked into the price) 'cash back' (same again) and the best of all -

Shared Equity Deals - you buy 75% today and you agree to buy the other 25% in 5, 7, 10 years time at market value OR the 25% original price (whichever is the greater).....I picked up a few of these properties around 8, 9 and 10 years ago. It was a bonzanza! I had neighbours knocking on my door asking did I want to buy theirs as well....why? because their 'term' was nearing and they were going to have to find another 25% on a house that was now worth 55% of what they bought 75% for.....not a bank in the land would touch them...very sad. But they were stupid and greedy. I wasnt. I won.

You have been warned.....not by me. by history.

As a local, I would have expected you to have known what went on last time and it certainly wasn't the above!

Words MIRAS, Exchange Rate Mechanism and Interest Rates spring to mind for me, but obviously not for you.

[slater14]

As a local, I would have expected you to have known what went on last time and it certainly wasn't the above!

Words MIRAS, Exchange Rate Mechanism and Interest Rates spring to mind for me, but obviously not for you.

The only word that springs to mind for me is - BUBBLE

BUBBLE last time and *ahem* BUBBLE this time.

[Marina]

Great news. Interest rate moves down 0.25% - lots of people think next one will be up but no, we are in a downward trend apparently.

TTRTR thinks Exchange Rate Mechanism, High Interest Rates

I think massive borrowing because people are so stupid. Credit became cheap so instead of paying down debt people borrowed more. So instead of a 50k mortgage at 12% we now have 150k mortgages at 6%.

I think - if the property market is heading for the brown stuff on historically TINY interest rates - what sort of armageddon is going to play out if they go up even 1%.

Last time round a whole generation had not been priced out of the market by speculators. The bubble has inflated to a much higher pressure this time. Last time when FTBs got priced out the market naturally started to cool. Even so it still crashed - a falling market is just as much of an oil tanker as a rising market. This time the market got chased up to lunatic highs by BTL virgins.

It is different this time round. We have an even more 'competitive' economy and it's the easiest thing in the world to sling people out of work.

We have the inexorable rise of China and India both making everything we want to buy cheaper than we can do it and, in the case of India, doing our outsourced IT cheaper.

And the drag on the economy of a million unnecessary public workers - all of whom have to provided with cast-iron pensions.

We have endured endless stealth tax rises - look at Stamp Duty - up to 5.5 billion from 675 million. But soon we are going to have to pay a lot more income tax. And they're predicting another 10% on Council Tax next year.

It's going to be a lot worse this time.

Edited November 3, 2005 by Marina

[Michael]

''The built in equity through the discounts on purchase price also provide a safety net for any price falls. '

...... These ARE the price falls you sad losers!

[Andrew McP]

Poor little hedgehogs scurrying towards the bubble bonfire. I almost feel sorry for them.

Andrew McP

[CrashIsUnderWay]

TTFR is a one trick pony. Like a lot of amateurs, he's made a bit of money over the last boom (he says) but even though he wasnt around for the last crash he wants to argue about it.

Well I WAS around for it, and almost bought a flat in Shepherds Stinking Bush for 75k (1 bed, tiny lounge). The proliferation of mad products did indeed mark the endgame, as was obvious even at the time.

The particular deal I was offered was - I'd put 2k (quite a lot of money back then) in a high interest account. The interest on this (and gradual depletion of capital) would partly offset the interest on the massive mortgage. Part of the payments would be 'deferred' for 2 years. At the end of the 2 years, the 2k would be totally gone, and another 5k in compound interest would have been added to the loan, but it didnt matter, did it, because 'prices always go up'. Oh, did I mention there was a 300 quid 'arrangement' fee for this?

At the time I worked in a major International Merchant Bank on a good salary, and had been reduced to even considering this because of the loony prices. (Less loony than NOW, I might add).

Obviously, when I thought about it, I realized what a MAD situation it had all become, so I pulled out, and eventually bought at 40% less than that in Notting Hill instead less than a year later.

By 1994 I could have had the shepherds bush flat for 45k or thereabouts. Prices always rise, mind.

What TTRFTTRT is trying to say, in his patronising, uninteresting, flatulent style is that 'this time its different, cobber'

<CretinAbuse>

No it isnt, sheepworrier. How many times do you need to be told? Now p!ss off back to balham and buy some more, you clown. See if you cant get your leverage closer to 100% so you go bust quicker.

Have a nice day / hope that helps.

</CretinAbuse>

[Timmy Manson]

At the time I worked in a major International Merchant Bank on a good salary, and had been reduced to even considering this because of the loony prices. (Less loony than NOW, I might add).

And this surely is a key point. If well educated economically literate people are refusing to/ aren't able to enter the market.......which really means they are able to but unwilling to on the current terms i.e 100% mortgage etc. then it is ultimately doomed to fall.

A large number of economically illiterate people in the UK have been given enough rope to hang themselves by the mortgage lending industry, and have proceeded to put thenselves in a financially untennable position as a result.

[dogbox]

the UK buy-to-let market is attracting British investors back from abroad, say Assetz.

This conflicts with my experiences. A growing minority of ex - uk residential LLs (myself included) are finding fantastic value abroad.

Globalisation applies as much to property investment as it does to any other business sector.

To be balanced though, I have to admit many B2L people I know are increasing thier portfolios. Always remember these guys have tried pensions and savings plans and found them more than wanting. Property is the only class they trust long - term. Perhaps they are right to sit - tight, not sell if prices fall and await the next series of sudden capital appreciation waves, which always come given time. At least they will have assets in place to benefit from appreciation waves where - as the bears on the side have nothing.

[sign_of_the_times]

This conflicts with my experiences. A growing minority of ex - uk residential LLs (myself included) are finding fantastic value abroad.

Globalisation applies as much to property investment as it does to any other business sector.

To be balanced though, I have to admit many B2L people I know are increasing thier portfolios. Always remember these guys have tried pensions and savings plans and found them more than wanting. Property is the only class they trust long - term. Perhaps they are right to sit - tight, not sell if prices fall and await the next series of sudden capital appreciation waves, which always come given time. At least they will have assets in place to benefit from appreciation waves where - as the bears on the side have nothing.

wrong again doggybollox.......

as an STR bear, I have 350k earning plenty of interest right now........hardly nothing is it ????!

meanwhile, your property keeps on falling in value, but chin up...in 10 years time you might be back to where you are today.

Edited November 3, 2005 by sign_of_the_times

[dogbox]

wrong again doggybollox.......

as an STR bear, I have 350k earning plenty of interest right now........hardly nothing is it ????!

meanwhile, your property keeps on falling in value, but chin up...in 10 years time you might be back to where you are today.

I also have money in Bank earning interest. After 40% Tax and allowing for inflation I earn about 1%. Wow - what a shrewd investment!

[erranta]

http://www.in2perspective.com/articles/bri...from-abroad.jsp

British investors back from abroad

2nd Nov 2005, a Wednesday

Following the recent downwards trend in interest rates in addition to bank pressure on developers to achieve sales targets, prices have become more realistic and opportunities in the buy-to-let market have returned once more.

Investors are currently enjoying good discounts on new properties and are usually only required to put in a total deposit on completion of between 5% and 10% rather than the 15% historically. The balance of the deposit is contributed by the developer in the form of a subsidised deposit, like those given to first-time buyers, or a cash-back rent guarantee. Not all lenders accept these types of incentives but those that do are reaping the rewards.

Highly amusing!

What these marvelous investers don't realise is that councils are going screw them big-time.

In the North East there is ALREADY a voluntary nannystate 'scheme' for landlords to register their houses and come up to a certain 'standard' of upkeep.

If the tennants complain, landlords are 'forced' to bring the house up to council letting standards - which costs 10's of thousands for old victorian rundown terraces!

As you can imagine - this will be one step away from being introduced NATIONWIDE and is only one step away from rent price regulation!

So all these BTLetters get stuffed with having to pay out their savings on upgrading Britains ageing Housing Stock!

Nearly all Victorian houses need to be re-roofed @ a minimum!!

[Levy process]

I think - if the property market is heading for the brown stuff on historically TINY interest rates - what sort of armageddon is going to play out if they go up even 1%.

That is such a valid point: The absolute value of interest rates is not the only thing that matters. It is not like there is some 'low' value which automatically produces growth for ever. Any particular interest rate sets a particular cost for a mortgage. As rates fall, the reduction is made up by increasing the capital cost (although it doesn't work like that for cars etc, does it - wonder why?). Once the new equilibrium is reached, any further growth in the cost of houses must be due to something else (like wage growth, speculation etc).

Imagine everything else held fixed (no wage increases, no other way in which the amount of money people have in their pockets can change). Then imagine a steady interest rate. What possible mechanism is there for meaning that any rate (low or high) will go on producing endless house price growth? I'd love to hear about it if there is one.

It makes no sense to go on appealing to "low interest rates" as being a reason for endless HPI. Continuous falls in rates, maybe. But that is not happening. Now, imagine rates go up by 5% from where they are. In percentage terms that is VERY big, because rates are low at the moment. So a small upward shift equals a large percentage shift, and is much more damaging than rates going from 10 to 15% for example.

[sign_of_the_times]

I also have money in Bank earning interest. After 40% Tax and allowing for inflation I earn about 1%. Wow - what a shrewd investment!

who cares about inflation when house prices are falling ? I'm saving for a house, not a Plasma TV.

after all, my money will buy me a whole lot more house in 2 years time than it would have done when I banked it last year.....

don't you agree, doggy ?

[IP Newcomer]

http://www.in2perspective.com/articles/bri...from-abroad.jsp

"According to Paragon, rents are rising at 10.5% per annum, suggesting that rental incomes will soon well exceed the cost of a buy to let mortgage and become profitable again. We expect to see house prices rising at 5 - 7% next year, offering the potential for vast returns on minimal initial investments."

What? Paragon are admitting that the cost of a BTL mortgage is in reality less than the rent?

Come on Consa, you planted this story, didn't you.

[deano]

Highly amusing!

What these marvelous investers don't realise is that councils are going screw them big-time.

In the North East there is ALREADY a voluntary nannystate 'scheme' for landlords to register their houses and come up to a certain 'standard' of upkeep.

If the tennants complain, landlords are 'forced' to bring the house up to council letting standards - which costs 10's of thousands for old victorian rundown terraces!

As you can imagine - this will be one step away from being introduced NATIONWIDE and is only one step away from rent price regulation!

So all these BTLetters get stuffed with having to pay out their savings on upgrading Britains ageing Housing Stock!

Nearly all Victorian houses need to be re-roofed @ a minimum!!

In a resession situation the goverment have already realised that they will pick up the tab for rent through housing benefits straight to landlords. Rent regulation will be on thier minds; they also plan a set HB level per person not based on the property. That means that the unemployed won't end up living in luxury one beds while the working live in hovels paying for them through the tax system.

Edited November 3, 2005 by deano

[dogbox]

who cares about inflation when house prices are falling ? I'm saving for a house, not a Plasma TV.

after all, my money will buy me a whole lot more house in 2 years time than it would have done when I banked it last year.....

don't you agree, doggy ?

I think we talk at cross purposes on this forum.

When I refer to investment I have in my mind 'methods to significantly increase my capital'. I guess putting money in the Bank as you are, is the right thing to do given your plan to buy back in in the short term.

I wish you well and think you stand a fair chance of achieving your goal. The only worrying issue is whether the great unwashed have so much love for property investment that the slightest real dip in prices will suck - em back in.

[slater14]

TTFR is a one trick pony. Like a lot of amateurs, he's made a bit of money over the last boom (he says) but even though he wasnt around for the last crash he wants to argue about it.

Well I WAS around for it, and almost bought a flat in Shepherds Stinking Bush for 75k (1 bed, tiny lounge). The proliferation of mad products did indeed mark the endgame, as was obvious even at the time.

The particular deal I was offered was - I'd put 2k (quite a lot of money back then) in a high interest account. The interest on this (and gradual depletion of capital) would partly offset the interest on the massive mortgage. Part of the payments would be 'deferred' for 2 years. At the end of the 2 years, the 2k would be totally gone, and another 5k in compound interest would have been added to the loan, but it didnt matter, did it, because 'prices always go up'. Oh, did I mention there was a 300 quid 'arrangement' fee for this?

At the time I worked in a major International Merchant Bank on a good salary, and had been reduced to even considering this because of the loony prices. (Less loony than NOW, I might add).

Obviously, when I thought about it, I realized what a MAD situation it had all become, so I pulled out, and eventually bought at 40% less than that in Notting Hill instead less than a year later.

By 1994 I could have had the shepherds bush flat for 45k or thereabouts. Prices always rise, mind.

What TTRFTTRT is trying to say, in his patronising, uninteresting, flatulent style is that 'this time its different, cobber'

<CretinAbuse>

No it isnt, sheepworrier. How many times do you need to be told? Now p!ss off back to balham and buy some more, you clown. See if you cant get your leverage closer to 100% so you go bust quicker.

Have a nice day / hope that helps.

</CretinAbuse>

CrashisunderWay,

Now that is one tricky little product!

I have read it and re-read and it still makes my mind spin trying to work it out....

I thought I'd heard them all until you came up with this one....lol....dontcha just love them banks and developers

Isnt it very strange how its all playing out EXACTLY the same as last time. I honestly thought it would be a different trick this time. I'm a little dissapointed that the banks and developers have resorted to this pile of dog doo again....rather like once bitten twice shy - oh hang on!....the trick is still working on the under 30's isnt it! :angry:

....I like the hedgehogs running to the bubble bonfire - I'm having that for a quote on me tag!