sossij Posted November 12, 2012 Share Posted November 12, 2012 http://www.guardian.co.uk/money/2012/nov/12/buy-to-let-investors-renters?fb=native Rent seeking scum continue to coin it in Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted November 12, 2012 Share Posted November 12, 2012 notice to banker scum...you wont be seeing this coming, but you saw it here first. If you concentrate on BTL, there is a natural barrier you are going to hit...when half the population are BTL landlords, the other half are satisfied. There will be no more mortgages to lend. there are no more renters. And then you are going to expect those IO loans to cashout.... by by banks Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted November 12, 2012 Share Posted November 12, 2012 Meanwhile, in the real world, my rent has only increased by 2.5% over the six years I've been renting my current house, which is worth some 15% less than when I first moved in . Also, I have received considerably more interest on the money that I would have had tied up in the house (had I bought it rather than rented), than I have paid out in rent. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted November 12, 2012 Share Posted November 12, 2012 Meanwhile, in the real world, my rent has only increased by 2.5% over the six years I've been renting my current house, which is worth some 15% less than when I first moved in . Also, I have received considerably more interest on the money that I would have had tied up in the house (had I bought it rather than rented), than I have paid out in rent. I havent read the article, but its probably a press release by a banking whatever group...the mortgage market is collapsing, so they are trying to sell more punters into BTL. I mean, what actual reporting is this? there have been a lot of articles like this the last couple of weeks...the banks are getting more and more desperate, add in they are suffering 8% of their stock being in "forebearance", things are just getting worse all round.. Quote Link to comment Share on other sites More sharing options...
Si1 Posted November 12, 2012 Share Posted November 12, 2012 Meanwhile, in the real world, my rent has only increased by 2.5% over the six years I've been renting my current house, which is worth some 15% less than when I first moved in . in other words the yield on your house has gone up, just bad spin from VIs in the article Quote Link to comment Share on other sites More sharing options...
Injin Posted November 12, 2012 Share Posted November 12, 2012 I havent read the article, but its probably a press release by a banking whatever group...the mortgage market is collapsing, so they are trying to sell more punters into BTL. I mean, what actual reporting is this? there have been a lot of articles like this the last couple of weeks...the banks are getting more and more desperate, add in they are suffering 8% of their stock being in "forebearance", things are just getting worse all round.. Indeed, there was a big push in the sunday press about BTL. When you see a big push in this way it usually means the big guys getting out. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted November 12, 2012 Share Posted November 12, 2012 in other words the yield on your house has gone up, just bad spin from VIs in the article Yup . Quote Link to comment Share on other sites More sharing options...
Venger Posted November 12, 2012 Share Posted November 12, 2012 (edited) There's nothing wrong with investing in your own self-interests, but these BTL landlords still buying seem thrilled to take advantage of of others not being able to (and many probably not choosing not to), take mortgages to buy at these prices. On the premise that everyone needs a roof over their heads so non owners will have to rent. The average maximum loan-to-value available on buy-to-let mortgages remained at 75pc, with an average minimum rental cover of 125pc. I hope that margin-requirement affects newer BTL landlords when they come to renew their mortgage deals, if/when achievable rents slide. January 2012: Data released last week by Savills, the property services group, showed that private sector landlords have increased their share of the country's residential stock by 42 per cent since 2007, while the number of properties occupied by owners has fallen 2 per cent. Edited November 12, 2012 by Venger Quote Link to comment Share on other sites More sharing options...
RufflesTheGuineaPig Posted November 12, 2012 Share Posted November 12, 2012 The average maximum loan-to-value available on buy-to-let mortgages remained at 75pc, with an average minimum rental cover of 125pc. New BTL purchases aren't going to meet those requirements, only people who bought over 10 years ago. Quote Link to comment Share on other sites More sharing options...
Venger Posted November 12, 2012 Share Posted November 12, 2012 New BTL purchases aren't going to meet those requirements, only people who bought over 10 years ago. True for the majority, and it was those people I was thinking of. Those who've owned their own homes for 10 years or more. They can still be new to BTL of course. Homeowners wanting to improve their pensions by leveraging up on BTL (for the first time) or expanding their portfolios, to take advantage of a housing crisis for the young. I'd like to think there is a point coming where leverage wipes many of these BTL pension seekers out entirely. Yet from the tone of many recent articles, obviously the BTLers and maybe the banks think renting is going to be the long term future of things. Unless the banks stand ready to pull the plug on them later. Quote Link to comment Share on other sites More sharing options...
cybernoid Posted November 12, 2012 Share Posted November 12, 2012 (edited) Indeed, there was a big push in the sunday press about BTL. When you see a big push in this way it usually means the big guys getting out. Very biased piece in the sunday times money section. Quoted Savills (estate agent so no bias there) opinion that rents 'are expected to' rise 18% over the next five years. The other side of the coin got a brief mention from some financial advisor who said that 'investors attracted by the promise of high returns should consider the costs and risks involved'. But the rest of it was essentially saying pile in. Also quoted net yields of 4.1% outside london and 3.8% inside. As though that was a selling point. With a mortgage you'd only need annual falls of 2% and thats the profit gone, if you've no borrowing costs then obviously 4% would do it. Is that outside the realms of possibility in peoples minds still? Im not a conspiracy tin foil hat kind of a guy but this seemed to me to have a motive behind it. Quite disturbing. Edited November 12, 2012 by cybernoid Quote Link to comment Share on other sites More sharing options...
Jail Them All Posted November 12, 2012 Share Posted November 12, 2012 Indeed, there was a big push in the sunday press about BTL. When you see a big push in this way it usually means the big guys getting out. Yes, it'll be a good while before the entrepreneurs realise what they've done Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted November 12, 2012 Share Posted November 12, 2012 If anyone wants to vote me in as PM I will instigate an 80% Capital Gains Tax on BTLs. For my first year of office - only - there will be a special reduction of the rate to whatever the vendor's income tax band is. Quote Link to comment Share on other sites More sharing options...
Panda Posted November 12, 2012 Share Posted November 12, 2012 Indeed, there was a big push in the sunday press about BTL. When you see a big push in this way it usually means the big guys getting out. Where you been, missed that avatar................ Quote Link to comment Share on other sites More sharing options...
7upfree Posted November 12, 2012 Share Posted November 12, 2012 Very biased piece in the sunday times money section. Quoted Savills (estate agent so no bias there) opinion that rents 'are expected to' rise 18% over the next five years. The other side of the coin got a brief mention from some financial advisor who said that 'investors attracted by the promise of high returns should consider the costs and risks involved'. But the rest of it was essentially saying pile in. Also quoted net yields of 4.1% outside london and 3.8% inside. As though that was a selling point. With a mortgage you'd only need annual falls of 2% and thats the profit gone, if you've no borrowing costs then obviously 4% would do it. Is that outside the realms of possibility in peoples minds still? Im not a conspiracy tin foil hat kind of a guy but this seemed to me to have a motive behind it. Quite disturbing. It's total rubbish. BTL yields of 3.8% are totally atypical. As a general, net yields are 50% of gross yields when you take into account all of the fees and costs. The big one which is always omitted is the necessary accrual for a new bathroom and kitchen every 10-15 years or other capital and revenue expenditure. It's fantasy accounting to omit these costs - and that's before any interest rate sensitivity analysis is performed. We had an accidental BTL that was only 50% geared and it lost money every year without fail - and that's with very few voids. The only profit we made was derived from the fact that it was purchased in 1998. People keep talking about interest only mortgages being the next big mis-selling scandal for the hard of understanding. It will pail into insignificance compared to BTL for those of that disposition. Quote Link to comment Share on other sites More sharing options...
Panda Posted November 12, 2012 Share Posted November 12, 2012 You see, there are two kinds of people in this world: the workers and the hustlers. The hustlers never work and the workers never hustle... Days get shorter and shorter, nights longer and longer, before you know it, your life is just one long night with a few comatose daylight hours BTL......................Nite............... Quote Link to comment Share on other sites More sharing options...
tomandlu Posted November 12, 2012 Share Posted November 12, 2012 The only profit we made was derived from the fact that it was purchased in 1998. How the hell do you manage that (losing money on a BTL bought in 1998)? To put it another way, if you're losing money on a 1998 BTL, then later entrants must be haemorrhaging the stuff... Can you elaborate? Genuinely interested... Quote Link to comment Share on other sites More sharing options...
RufflesTheGuineaPig Posted November 12, 2012 Share Posted November 12, 2012 If anyone wants to vote me in as PM I will instigate an 80% Capital Gains Tax on BTLs. For my first year of office - only - there will be a special reduction of the rate to whatever the vendor's income tax band is. Backdate it 10 years. Quote Link to comment Share on other sites More sharing options...
peahead Posted November 12, 2012 Share Posted November 12, 2012 http://www.independent.co.uk/property/house-and-home/property/buytolet-glory-days-may-soon-be-over-8303480.html Hurrah! Quote Link to comment Share on other sites More sharing options...
isg Posted November 12, 2012 Share Posted November 12, 2012 Meanwhile, in the real world, my rent has only increased by 2.5% over the six years I've been renting my current house, which is worth some 15% less than when I first moved in . Also, I have received considerably more interest on the money that I would have had tied up in the house (had I bought it rather than rented), than I have paid out in rent. That's good for you and also good for your landlord potentially. I used to rent my flat in london out when I lived in Sydney for 5 years. I let it at the low end of market rates and kept the rent to the tenant the same for 5 years because I was making more than 50% more than my mortgage was costing me. As a landlord I would want to keep a regular payer in the house for some such as myself security is more important than getting the peak rental income and avoiding rental voids. Quote Link to comment Share on other sites More sharing options...
7upfree Posted November 12, 2012 Share Posted November 12, 2012 How the hell do you manage that (losing money on a BTL bought in 1998)? To put it another way, if you're losing money on a 1998 BTL, then later entrants must be haemorrhaging the stuff... Can you elaborate? Genuinely interested... I will dig out my tax return details when I get a minute. Basically, we were getting £500 per month on a flat worth £90k so give or take 6% yield. Interest on a £50k mortgage was @ 4% so around £2k per anum. Factors fees - £500 per anum 1 month rental void - £500 per anum 1 month council tax - £120 Letting Agent fees - £1200 Repairs - £100 - £500 per anum Cleaning - £50 Accrual for painting, decorating, new kitchen, bathroom and other capex on a 5-15 year basis - at least £1k per anum Share of accountants fees for tax return - £100 Advertising, lease renewal fees, £100 That's before you factor in capital repayments on the loan. Oh and rents moved by 3% in around 8 years! Take into account inflation and it's not looking too clever. Of course in a new build flat some of the costs will be less just now but many bought in the late 90s 2000s will be very tired and need money spent. Quote Link to comment Share on other sites More sharing options...
cybernoid Posted November 12, 2012 Share Posted November 12, 2012 A general rule of thumb Ive come across from people who are actually interested in making money from BTL is you want a minimum of a 10% yield based on renting the place for 11 months of the year. Very much finger in the air but a useful rule of thumb. A place that can rent for 500 a month is only worth buying if you can get it for 55k or less. Seems to ring true for the last example. A typical new build 2 bed monstrosity that rents for 700 a month is worth 77k as an investment. By any sensible measure prices are 2-3 times what they should be. No surprise to anyone here Im sure. Buying and hoping for capital appreciation is not a sensible strategy. It just so happened to have worked for the last 10 years, but we won't see anything like that again in our lifetimes. Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted November 12, 2012 Share Posted November 12, 2012 It's total rubbish. BTL yields of 3.8% are totally atypical. As a general, net yields are 50% of gross yields when you take into account all of the fees and costs. The big one which is always omitted is the necessary accrual for a new bathroom and kitchen every 10-15 years or other capital and revenue expenditure. It's fantasy accounting to omit these costs - and that's before any interest rate sensitivity analysis is performed. We had an accidental BTL that was only 50% geared and it lost money every year without fail - and that's with very few voids. The only profit we made was derived from the fact that it was purchased in 1998. People keep talking about interest only mortgages being the next big mis-selling scandal for the hard of understanding. It will pail into insignificance compared to BTL for those of that disposition. Thanks for posting. This business of taking the rental income from a BTL, dividing it by the sale price and calling it a yield is going to separate a lot of fools from their money. Facts remain facts. If there was a big difference between what renters could afford in rents and what BTLers could make by letting then it would be squeezed by competition. Contemporary rent seekers bidding for assets with debt are on a hiding to nothing. Any idiot with a small chunk of change can get into the BTL game. A 20 year asset price bubble has given lots of people that chunk of change in the form of supposed equity. Hence the barrier to entry is very low. Lots of people buying up property and trying to rent it out will mean lots of churn in the private rental sector and accurate price discovery. Low wage inflation and high inflation in other costs will keep rent inflation tepid, despite the hundred prognostications to the contrary from ARLA. The BTL game was always a greater fool based leveraged bet on the asset price bubble. Late entrant BTLers are heroes - gamely giving up their bubble equity to recapitalise the banks. The more of them the better. The only thing that strikes me as interesting is for how long the losses will have to continue before the great unwashed realise that they are being mugged by the banks. Quote Link to comment Share on other sites More sharing options...
Bland Unsight Posted November 12, 2012 Share Posted November 12, 2012 Buying and hoping for capital appreciation is not a sensible strategy. It just so happened to have worked for the last 10 years, but we won't see anything like that again in our lifetimes. +1 With one caveat - it was only capital appreciation if nobody was getting funny with the money in which the price was denominated. That ship sailed. The only way to see that kind of price inflation continuing will require the value of our money being destroyed. Quote Link to comment Share on other sites More sharing options...
Imminent_plunge Posted November 12, 2012 Share Posted November 12, 2012 A general rule of thumb Ive come across from people who are actually interested in making money from BTL is you want a minimum of a 10% yield based on renting the place for 11 months of the year. Very much finger in the air but a useful rule of thumb. A place that can rent for 500 a month is only worth buying if you can get it for 55k or less. Seems to ring true for the last example. A typical new build 2 bed monstrosity that rents for 700 a month is worth 77k as an investment. By any sensible measure prices are 2-3 times what they should be. No surprise to anyone here Im sure. Buying and hoping for capital appreciation is not a sensible strategy. It just so happened to have worked for the last 10 years, but we won't see anything like that again in our lifetimes. Yes but isn't it more about taking on a mortgage and getting mug tenants to pay it off for you and it's a bonus to make a bit extra on top...? Because you own a house outright at the end of your mortgage term yet haven't paid any money towards it, your tenants do it for you Quote Link to comment Share on other sites More sharing options...
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