Btl , A Symptom Not The Cause?

[buyinbrazil]

Ok, pants title but....

My better half goes on a tennis holiday, a load of Surrey mums. She is the only one without a portfolio of BTLs. My bro has three " as a pension" , almost everyone where I work have them. The Surrey mums seem to run them as a hobby, others see them as tangible security in an uncertain world, often accompanied by the line " I'm providing a service" .

Now, if they were, en mass , to step back from " providing a service" then perhaps properties would sell at more like sensible prices. When I say sensible, I mean prices where the rest of society can run with some balance, rather than the headless chicken mortgage slaves/ priced out renting class working their butts off, with a decadent " in the boat" class being fed by them.

I own my modest home, have done for many years, but it pains me to see the destruction to our society that this causes.

Our local tennis club has literally no members between 18 and 50. It's teeming with 60 plus, many if whom have multiple properties and live in five bedroom houses. It's so far gone, yet we seem to accept it as normal. Families live in rabbit hutches, both parents gone all day to. Service their debts I guess. This is not how we have evolved thus far.

So, who to blame. I go for governments for leaving the sector so untouched .they could chose to tax it into extinction, but they know their bank mates would be screwed. As it is our society is paying a high price, the real effects of we have yet to see.It seems that heads down, blinkers on, folk don't see the price we will all pay for this selfish way if life . " I'm alright jack" seems to be the way we live our lives. At what cost and who can I blame for the dysfunction? And don't say mrs T, though she must be in part to blame, for encouraging such attitudes. Don't even start me on university fees!

Rant over !

[Sandwiches33]

I understand your frustration but dont worry about it, there is one critical flaw in there plan, time. They are all old or getting older you say 60 +? its a lot of trouble renting a house unless there is HPI it is a lot of hassle for very little return are they going to be fixing odd jobs when they are 72? Every house is in a permanent state of decay. Of course they wont still be renting it when they get older there plan is too sell it but our economy is winding down many jobs are gone and many young folk face a truly terrible job market. As well as automation there just aren't any new jobs of note. Young people are already choosing different ideals and ambitions from there parents, they know all about the debt slavery and either cant or wont throw huge sums of there Labour into a house. Many choose travel or just partying and I dont blame them at all. Its a big ass pyramid scheme and if I had a quid for every self inflated f*ckwit who thinks they are a genius cause they are part the way up the pyramid I would be very rich with real money not an inflated asset.

Just bide your time the shift has already started, so many factors exerting pressure now the result is going to be brutal.

I just wanted a house to live in, now I dont give a shit and am going to actively enjoy what is starting to happen. Just for example my landlord came to see me the other day, I know they are in major shit, and they were trying to ask how long i might rent for if i would be interested in buying the house I gave nothing away I could smell the fear. This is called the free market and it goes up and down so if you are over leveraged get ready for the down.

Another example, I am surrounded by houses for sale, gorgeous bungalow just down from me, great for a family. Just an old lady in it, house bound because the drive is too steep. Uses electric scooters and such. She cant maintain it anymore but is trapped because she wants 250k for it or at least family want that and they also need money for her retirement care. Nobody round here can afford that wages are some of the lowest for young folk so when I cycle past she just sits looking trapped with "sad face".

Age comes to us all and its coming to a lot of pensioners who all have to sell. If they think I am funding there retirement they are very much mistaken Ill continue just being renter scum and I am one of the very few who an afford one of there houses.

This stupid game is over I see fear and panic all around but maybe if people spent there time building a proper business or learning a proper tradeable skill or saving things of actual value instead of leeching off others through property they wouldn't be in this mess.

I have lots of patience, zero sympathy and I am lurking round the herd looking to pick of the weak when the panic fully starts

[simonj]

Very good post. I too have zero sympathy

[janch]

Agree wholeheartedly tooo........

[MattW]

Good thread, great posts.

A rental anecdotal of my own.

I rent from a Housing Association on a private shorthold tenancy basis. Been in this flat for exactly 4 years now. The rent has gone up £120 a year (a tenner a month) on each anniversary EXCEPT for August 2014-2015. Seems like common sense has prevailed, the HA have looked at the market and realised that the rent they're already charging me is competitive.

[Venger]

I own my modest home, have done for many years, but it pains me to see the destruction to our society that this causes.

Our local tennis club has literally no members between 18 and 50. It's teeming with 60 plus, many if whom have multiple properties and live in five bedroom houses.

I believe it. I know it.

A bit of a lift, just reading a run of contempt for the hpi-ers, and overpayers and over-leveraged and HPI-prouders.

Brace yourself for the HPC Choir though. They are worse than Brown/Blair/Mev/Greenspan and all the bankers rolled into one. Market turns, and they play games of excuses for all buyers crazy decision to pay 4 times+ what a sane person would pay, worrying about their position, claiming they are victims of a-z. And that was when prices were 30% lower than today. It's going to be so important to lay into them, when they begin to sing again, if/when the market begins to turn weaker.

No retreat, no surrender.

[Sandwiches33]

I believe it. I know it.

A bit of a lift, just reading a run of contempt for the hpi-ers, and overpayers and over-leveraged and HPI-prouders.

Brace yourself for the HPC Choir though. They are worse than Brown/Blair/Mev/Greenspan and all the bankers rolled into one. Market turns, and they play games of excuses for all buyers crazy decision to pay 4 times+ what a sane person would pay, worrying about their position, claiming they are victims of a-z. And that was when prices were 30% lower than today. It's going to be so important to lay into them, when they begin to sing again, if/when the market begins to turn weaker.

No retreat, no surrender.

This is a big problem with our society a lack of personal responsibility and accountability. I see it in all aspects of life and when this kicks off we will see epic bleating and whining. When things get tough I am expecting them all to run to daddy government to fix like a spoilt princess.

Still a big HPC is really gonna screw the BBC daytime schedule, maybe they will have to put on proper tele instead of some ridiculous quiffed twit going round houses for a couple who seem incapable of using the internet or looking in the paper despite having 500k to spend on a flat.

[worried1]

BTL is definitely a symptom rather than being the cause. The cause is a government determined to keep house prices inflated at all costs and people keen to benefit from these policies as much as possible.

If you are an older person in your £2m Surrey house with a lot of money sitting in the bank earning next to no interest and you see property prices going up by 20% a year, what else are you going to do other than get involved?

It is basically free money. You put down a £65k deposit on a £250k flat and probably walk away with a £5k annual profit from renting it out. Much better than the bank interest on the £65k you have invested, but perhaps not worth the hassle with the tenants/voids etc? That doesn't matter if the market clicks up by another 20% and the flats value increases by £50k. Hell, why even bother renting it out at all?

Things are getting a bit wobbly now because people are getting worried that the HPI won't be there going forward. If we have reached the peak, BTLers will have to go back to just profiting from the yield like in the old days, and most of them aren't used to that because they only piled into it in the first place when constant HPI made it impossible to ignore.

The ironic thing is that BTL could actually accelerate the crash when investors start piling out. The housing market mantra is that 'prices always go up in the long term', and I am sure that is true, but if you are only holding on to a property because it is going up in value (i.e. no utility gained from actually living there) then the natural instinct must be to drop it as soon as possible when prices are falling.

[bearwithasorehead]

BTL is definitely a symptom rather than being the cause. The cause is a government determined to keep house prices inflated at all costs and people keen to benefit from these policies as much as possible.

If you are an older person in your £2m Surrey house with a lot of money sitting in the bank earning next to no interest and you see property prices going up by 20% a year, what else are you going to do other than get involved?

It is basically free money. You put down a £65k deposit on a £250k flat and probably walk away with a £5k annual profit from renting it out. Much better than the bank interest on the £65k you have invested, but perhaps not worth the hassle with the tenants/voids etc? That doesn't matter if the market clicks up by another 20% and the flats value increases by £50k. Hell, why even bother renting it out at all?

Things are getting a bit wobbly now because people are getting worried that the HPI won't be there going forward. If we have reached the peak, BTLers will have to go back to just profiting from the yield like in the old days, and most of them aren't used to that because they only piled into it in the first place when constant HPI made it impossible to ignore.

The ironic thing is that BTL could actually accelerate the crash when investors start piling out. The housing market mantra is that 'prices always go up in the long term', and I am sure that is true, but if you are only holding on to a property because it is going up in value (i.e. no utility gained from actually living there) then the natural instinct must be to drop it as soon as possible when prices are falling.

What yield?

[worried1]

What yield?

That's the problem. People have lost sight of the yield because the capital gain has been so high.

A flat near me has just sold for £495k and has gone straight onto the rental market at £1,600 per month. Even with bank rates this low, not many people would have bothered with the hassle of BTL for a sub-4% yield a few years ago. Now they do, because they just assume that the value of the flat will shoot up each year.

The BTLer in this example has got even bigger problems because he has paid probably £50-60k more than even the bubble price for the flat in the first place. He needs HPI to continue even just to sell it for what he has just paid.

[Flopsy]

The BTL'ers I know have an emotional investment in being LLs and I'm not sure how that changes things when a crash occurs. They like being "Lord of the Manor" and their property portfolio give them a sense of superiority that means that a small loss or receiving a small return isn't going to change this idea. Owning property is still a power thing for them.

It's not going to bother them with a huge crash unless there is some other change like having to pay a proper council tax level because they can no longer find a tenant or a huge tax bill from the government because the system changes. The BTL'ers I know are happy just to give the extra homes to their children and they will be happy to give them to their Grandchildren when the time comes.

Edited September 5, 2014 by Flopsy

[renting til I die]

The BTL'ers I know have an emotional investment in being LLs and I'm not sure how that changes things when a crash occurs. They like being "Lord of the Manor" and their property portfolio give them a sense of superiority that means that a small loss or receiving a small return isn't going to change this idea. Owning property is still a power thing for them.

It's not going to bother them with a huge crash unless there is some other change like having to pay a proper council tax level because they can no longer find a tenant or a huge tax bill from the government because the system changes. The BTL'ers I know are happy just to give the extra homes to their children and they will be happy to give them to their Grandchildren when the time comes.

It might if they can't rent (due to lack of demand, wages, jobs) and the property becomes an asset that is costing them money to maintain as well as losing nominal value.