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Low Rents Deflate Buy-to-let Bubble - The Times

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http://business.timesonline.co.uk/article/...1848857,00.html

"Low rents deflate the buy-to-let bubble

By Clare Francis

Potential investors are steering clear of the rental market as returns fall to their lowest level for three years

MANY mortgage brokers and lenders are convinced that the buy-to-let boom is over. Investors are not fleeing in droves, but market professionals report a drop in those buying new property as novice landlords have second thoughts.

Rental yields — income as a percentage of a property’s value — have fallen to their lowest for three years, according to Landlord Mortgages, a broker, making it harder for investors to cover their costs.

As profits are squeezed, many people who opted to become landlords in the past couple of years are finding it is not as easy to make money as they thought.

Melanie Bien at Savills Private Finance, a broker, said: “Times are hard for buy-to-let investors. Rental yields have fallen in some areas and tenantless periods continue to be a problem. The experienced investor with a portfolio of dozens of properties is better cushioned to weather this harsher climate than the new landlord.” - click on link for rest of article.

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Whereas the amateur BTLer with a portfolio of dozens of properties all mortgaged at 85% LTV are up the proverbial creek no doubt...

No, depends on when they bought I would think. Remember people are talking about 'yields' not absolute rent. Let me give an example. If I bought a flat 4 years ago for £175k and rented it out at £1000pcm thats a 7% yield. The flat now is worth £230k and rent has stayed the same so yield is now 5%. That makes no difference to me as I bought at £175k and the value has gone up. It only affects those looking to btl now.

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No, depends on when they bought I would think. Remember people are talking about 'yields' not absolute rent. Let me give an example. If I bought a flat 4 years ago for £175k and rented it out at £1000pcm thats a 7% yield. The flat now is worth £230k and rent has stayed the same so yield is now 5%. That makes no difference to me as I bought at £175k and the value has gone up. It only affects those looking to btl now.

That's not the right way to look at it, surely. You should be looking to sell now for 230k and invest elsewhere with a higher yield.

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The good news is that one of these guys will be subsidising the flat I buy in a few years time. He will have bought his BTL at k200, borrowed k30 against his 400k house in the burbs, and I will take it off his hands for 140k. :D

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were we not all being told 2 months ago that rental rates were going up strongly?

how short sighted are these fools that look at the income of just a 3 month period on a 25 year investment

or perhaps there just lying cheating baskets that are trying to squeeze the final dumbass for all there worth.

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That's not the right way to look at it, surely. You should be looking to sell now for 230k and invest elsewhere with a higher yield.

Not quite that easy. Once you take into account selling costs, capital gains tax and then buying costs again its not so clear. I did sell some stuff over a year ago, comercial mainly, I'm not sure I could buy it cheaper now. Not sure I want to do that again just yet

The good news is that one of these guys will be subsidising the flat I buy in a few years time. He will have bought his BTL at k200, borrowed k30 against his 400k house in the burbs, and I will take it off his hands for 140k. :D

[vulgar and inappropriate comments removed by moderator]

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Or in reality maybe you'll continue to choke your chicken like you are now :lol::lol:

As this only represents a 30% drop in house prices (compared with up to 50% possible drop) some BTLs might well be selling their wife & daughter to stave off bankruptcy.

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Guest Guy_Montag

Whereas the amateur BTLer with a portfolio of dozens of properties all mortgaged at 85% LTV are up the proverbial creek no doubt...

Don't forget they'll be paying 20% on the credit card they used to pay the deposit! :lol::lol::lol:

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“The key change this year is that experienced investors are still very active, but first-time landlords are dwindling.”

This looks set to continue as good investment opportunities become harder to find. The recent weakness in the housing market has been good for buy-to-let investors. It has knocked confidence, making potential buyers hold off and this has helped boost rental demand

Eh?

" It has knocked confidence, making potential buyers hold off "

How can they know this? All they know is that we're on low volume, but not the reasoning why.

:blink:

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[vulgar and inappropriate comments removed by moderator]

all those in favour of seeing the VULGAR AND INNAPROPRIATE COMMENTS say aye !!

sometimes I think this place is manned by humourless new-labour control freaks.

[Moderator comment - Please read the forum rules]

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That's not the right way to look at it, surely. You should be looking to sell now for 230k and invest elsewhere with a higher yield.

No, no, no! surely he should be mewing from it and buying several more properties!

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all those in favour of seeing the VULGAR AND INNAPROPRIATE COMMENTS say aye !!

sometimes I think this place is manned by humourless new-labour control freaks.

Hi,

Actually, I think it is a good idea. I was a bit sadened that one of me geeky-techy industry forum sites that I use regularly was closed down two days ago because of a mildly deflamatory comment and some choice language vaguely made in the direction of the MD of another North American firm. You do need to be a little careful, internet laws are becoming more draconian by the week. You can bet there is someone or other out there who would love to find an excuse to try an bring down a forum, they really are the ones with the hunour defecit problem. Crappy, I know, for the best I am sure.

Boomer

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all those in favour of seeing the VULGAR AND INNAPROPRIATE COMMENTS say aye !!

sometimes I think this place is manned by humourless new-labour control freaks.

See my post above

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Not quite that easy. Once you take into account selling costs, capital gains tax and then buying costs again its not so clear. I did sell some stuff over a year ago, comercial mainly, I'm not sure I could buy it cheaper now. Not sure I want to do that again just yet

[vulgar and inappropriate comments removed by moderator]

Get a life Mr Moderator!! My comments were not vulgar on what I presume to be a site frequented by adults! See Goats post and you will see. I have read comments on here describing btlers and 2nd homers as 'scum as bad as granny muggers' and much much more. Those comments were never deleted. Grow up, you are not at church!! Pathetic

[Moderator edit; Your comments were reported by a member. They were considered offensive and that's the end of the matter]

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The good news is that one of these guys will be subsidising the flat I buy in a few years time. He will have bought his BTL at k200, borrowed k30 against his 400k house in the burbs, and I will take it off his hands for 140k. :D

You hope...........................

Don't be smug until it's happened, who knows what will happen in the future. If you do, let me know the Chelsea Man Utd Score, scorers and time of goals and I'll head to the bookies today..............

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Get a life Mr Moderator!! Those comments were never deleted. Grow up, you are not at church!! Pathetic

Methinks it is you, DRS, who need to 'grow up'. So stop spitting the dummy and be a good boy. If you don't like the rules, then, dear sir, you don't have to enter the forum. :blink:

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Methinks it is you, DRS, who need to 'grow up'. So stop spitting the dummy and be a good boy. If you don't like the rules, then, dear sir, you don't have to enter the forum. :blink:

Its not the rules I have a problem with, its the way the are and then often not implemented. You may have difficulty understanding that

:rolleyes::rolleyes::rolleyes:

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Mewing?? What the hell is that??

:blink::blink::blink:

MEW = Mortgage Equity Withdrawal

Borrowing money secured on the increased value of your property.

E.g. You buy a house in 1996 for £50000. It is now worth £150000, so you can borrow £100000 for a new car, plasma telly, holidays, higher mortgage repayments etc. if you wish.

There is a catch though. You have to pay it back. ;)

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MEW = Mortgage Equity Withdrawal

Borrowing money secured on the increased value of your property.

E.g. You buy a house in 1996 for £50000. It is now worth £150000, so you can borrow £100000 for a new car, plasma telly, holidays, higher mortgage repayments etc. if you wish.

There is a catch though. You have to pay it back. ;)

Thank you :) Know the concept just not the abbreviation. No problem in a rising market I suppose

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DRS

its just as much a problem in a rising market that a falling one.infct probably more.

The only time its not a problem is if your downsizing(selling big house for small shit heap)

MEW is all they ads on tv, take out a loan now, and at the bottom it says loan secured on property.

once the money is spend the mortgage/loan repayments are increased, higher house prices have made people think there wealthier when infact there not.A house is a house is a house.Its the same house you bought for 50k thats now worth 200k, it is still somewhere to live.Only diffrence is youve lived the high life for a greater debt, they adverts talk of holidays or a new car simply because they dont care what you spend the money on, you could tell them you have a gambling habit and will spend the lot at the racetrack and they will still give you it.There is no risk when you have the loan covered by the value of the house to the loan company.

But the person taking it out instead of ended up as many wish to be debt free and not have to pay mortgage payments instead there just increasing the payments.Kinda sad realy.Personally when i buy a house to live in as a home i couldnt care less if the value of it goes up, i want somewhere to live thats all not somewhere to use to increase my debt.

I believe most mew is done to pay off credit cards, then the good life carries on till the cc's are maxed out again.Instead people should live within there means.Eventually the people will go to the loan company and be refused as the prices have stopped rising and thats the point i believe many people are at now, and the consumer slowdown has begun exactly becuase of this.

And people think there richer, yeah only richer if you move into a rented bedsit the rest are actually poorer.

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DRS

its just as much a problem in a rising market that a falling one.infct probably more.

The only time its not a problem is if your downsizing(selling big house for small shit heap)

MEW is all they ads on tv, take out a loan now, and at the bottom it says loan secured on property.

once the money is spend the mortgage/loan repayments are increased, higher house prices have made people think there wealthier when infact there not.A house is a house is a house.Its the same house you bought for 50k thats now worth 200k, it is still somewhere to live.Only diffrence is youve lived the high life for a greater debt, they adverts talk of holidays or a new car simply because they dont care what you spend the money on, you could tell them you have a gambling habit and will spend the lot at the racetrack and they will still give you it.There is no risk when you have the loan covered by the value of the house to the loan company.

But the person taking it out instead of ended up as many wish to be debt free and not have to pay mortgage payments instead there just increasing the payments.Kinda sad realy.Personally when i buy a house to live in as a home i couldnt care less if the value of it goes up, i want somewhere to live thats all not somewhere to use to increase my debt.

I believe most mew is done to pay off credit cards, then the good life carries on till the cc's are maxed out again.Instead people should live within there means.Eventually the people will go to the loan company and be refused as the prices have stopped rising and thats the point i believe many people are at now, and the consumer slowdown has begun exactly becuase of this.

And people think there richer, yeah only richer if you move into a rented bedsit the rest are actually poorer.

ok now I see what you mean. Never have or would do that. I don't borrow to buy anything(except prop of course) If I don't have the cash I can't afford it

These companies prey on the most vulnerable in society, sad really

Edited by DRS

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  • 301 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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