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fru-gal

Osborne Shakes Buy-To-Let To Its Foundations

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I used to think LL couldn't push up rents for reasons highlighted on here many times. However with unprofitable houses being sold off I think the higher earning renters could be corralled into what is left.

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I used to think LL couldn't push up rents for reasons highlighted on here many times. However with unprofitable houses being sold off I think the higher earning renters could be corralled into what is left.

As other posters have already pointed out, arguably the higher earning renters will be the ones buying the property offered by the buy-to-let sector for sale, hence average earnings of the remaining renters will fall.

Hence you could see a mechanism wherein the better rental property becomes void as the tenants move out having bought what used to be the worse rental property, (which they obvious then invest in improving). Now the prospective tenants being matched to the void property are the lower earning renters with the (heretofore) more expensive property. And what might be expected to happen next?

Edited by Bland Unsight

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As other posters have already pointed out, arguably the higher earning renters will be the ones buying the property offered by the buy-to-let sector for sale, hence average earnings of the remaining renters will fall.

Hence you could see a mechanism wherein the better rental property becomes void as the tenants move out having bought what used to be the worse rental property, (which they obvious then invest in improving). Now the prospective tenants being matched to the void property are the lower earning renters with the (heretofore) more expensive property. And what might be expected to happen next?

I could see high earners non savers being totally screwed as rents rise but no deposit to buy and the young staying longer in their childhood bedrooms as rent is too expensive and saving for a deposit and buying being the only realistic way to fly the nest.

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I could see high earners non savers being totally screwed as rents rise but no deposit to buy and the young staying longer in their childhood bedrooms as rent is too expensive and saving for a deposit and buying being the only realistic way to fly the nest.

The very large deposits required to buy even modest properties are just a part of prices being so high at present. Lenders want a big % deposit to protect them against a possible HPC, and a big % multiplied by a high overall house price = £££££

If prices fall back to something like 3x single incomes then I would expect % deposits to fall too as lenders will be less worried about further price drops, so it will be a lower % deposit multiplied by a lower house price = £

In my previous job I worked in London and the guy who sat next to me in the office was telling me about how he borrowed £5k from his mum which he used as the deposit to buy his first house in SE England in the 1990s. At the time I was a bit stunned to hear such a low figure connected with buying a house in a London commuter town, a FTB trying to repeat that trick today would need to have saved (or BOMADed) 10-20 times that figure.

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The amusing thing about that FT piece is that it runs over the same ground we've been running over here for literally years. When we make these arguments we are, according to other commentators on other fora, manipulative numbskull anarchists. Maybe the critics ought to consider that we're just stating the blindingly obvious and that the highly geared property investors are the manipulative numbskull anarchists. After all if you want the world to be organised to suit your purposes and reject any rule making that contravenes your personal interest, you've pretty much defined yourself as an anarchist. (The numbskull bit is an easier argument to make - betting everything on a single asset class, operating at high leverage whilst pretending to yourself that it's pension planning, and pretending to everyone else that you're providing a service; that's the definition of stupidity.)

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On a related topic.....someone (I wonder who?) is panicking in Cardiff. As part of my Saturday ritual I look at properties for the last 7 days on Rightmove in selected towns mostly along the M4. Cardiff is one such. If you search last 7 days for Cardiff you very quickly find a large number of properties, mostly BTL and especially in Cathays which is the student area all with the same agent. Now who could that be who's so keen to sell? :)

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BTW - it's a really interesting piece, full of info. Well worth signing up for the free access or using the google trick to reach the article without signing up.

Thanks for posting, fru-gal.

The CML charts are particularly worth looking at. It shows that approximately half of all BTL lending in any year is as a result of remortgaging (for new deposits), showing that the BTL pyramid model is still at the core or the industry; the speculative behaviour that drives the property118 speculators and which you so effectively assaulted in your book.

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On a related topic.....someone (I wonder who?) is panicking in Cardiff. As part of my Saturday ritual I look at properties for the last 7 days on Rightmove in selected towns mostly along the M4. Cardiff is one such. If you search last 7 days for Cardiff you very quickly find a large number of properties, mostly BTL and especially in Cathays which is the student area all with the same agent. Now who could that be who's so keen to sell? :)

The doctor does not plan to sell - she is going to raise the rents!

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The CML charts are particularly worth looking at. It shows that approximately half of all BTL lending in any year is as a result of remortgaging (for new deposits), showing that the BTL pyramid model is still at the core or the industry; the speculative behaviour that drives the property118 speculators and which you so effectively assaulted in your book.

not necessarily for new deposit raising (though some surely will be)

maybe as a result of fixed / discounted rate mortgages coming to an end and similar too

maybe even MEWing for living expenses as discussed previously

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On a related topic.....someone (I wonder who?) is panicking in Cardiff. As part of my Saturday ritual I look at properties for the last 7 days on Rightmove in selected towns mostly along the M4. Cardiff is one such. If you search last 7 days for Cardiff you very quickly find a large number of properties, mostly BTL and especially in Cathays which is the student area all with the same agent. Now who could that be who's so keen to sell? :)

Been building up for a long time now there`s an incredible amount of student type flats for sale all over that area

Edited by long time lurking

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Cathays is one of my watch areas on Rightmove as I'm wondering what the effect of the multitude of build-to-let springing up will have in Cardiff.

I've seen a few big purpose-built student accommodation blocks arrive over the last few years and whilst I'm not sure they cater to the home students so much, there is a drive towards increasing international student numbers.

[EDIT: The international students do seem to gravitate more to that type of accommodation...]

Edited by after8mink

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The doctor does not plan to sell - she is going to raise the rents!

http://www.rightmove.co.uk/property-for-sale/Cathays.html?maxDaysSinceAdded=3&index=10

This lot seem to specialise in BTL in Cardiff:

http://www.rightmove.co.uk/property-for-sale/find/CPS-Homes/Roath.html?locationIdentifier=BRANCH^58239&includeSSTC=true&_includeSSTC=on

Interesting the amount of student investment shite coming to the market in Cardiff.

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On a related topic.....someone (I wonder who?) is panicking in Cardiff. As part of my Saturday ritual I look at properties for the last 7 days on Rightmove in selected towns mostly along the M4. Cardiff is one such. If you search last 7 days for Cardiff you very quickly find a large number of properties, mostly BTL and especially in Cathays which is the student area all with the same agent. Now who could that be who's so keen to sell? :)

This journo for another one, or at least it seemed so from the article; a life of spend.

http://www.rightmove.co.uk/property-for-sale/property-26566224.html

http://www.housepricecrash.co.uk/forum/index.php?/topic/201720-liz-jones-mk2/

Edited by Venger

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Woah.

Ros . says: Read about me on my member profile

29/07/2015 at 18:12

Reply to the comment left by “Simon ” at “29/07/2015 – 17:45“:

I suggest you keep out of it. You don’t know what you’re talking about. Troll.

You may hate landlords, but you have to understand that if we go down, we’ll be taking a lot of people with us.

http://www.property1.../#comment-60364

Quoting who...? Doesn't really matter.

The main problem for me is that the money I pay out each year to the mortgage companies, is magically re-defined by HMRC as ‘income!!’ How can money I pay out be called ‘income’?

I have worked out that with a 3% rise in interest rates, which is quite possible over the next few years, my current £50,000 income will become £5,000 (as I will pay £45,000 more in mortgage interest payments). SO WHILE MY ACTUAL INCOME WILL BE £5,000, HMRC WILL TELL ME IT IS £95,000 AND PRESENT ME WITH A HUGE TAX BILL. And if interest rates rise further, as my income becomes a negative, they will tax me even more. You couldn’t make this thing up. It is an effective confiscation of assets, as I will have to sell everything (if my houses aren’t repossessed first) and make people homeless in the process, as there will be a glut in the market of all private landlords with mortgages (because this crazy policy makes BTL unsustainable) and house prices could fall drastically with the over-supply. First time buyers won’t suddenly have the deposit and credit ratings to get mortgages and buy these houses. I think they will stay empty in poorer areas and get snapped up by corporations in more well-to-do areas. But it is uncharted waters, and anything could happen.

Dear oh dear...

Landlord has defaulted on mortgage, we are being evicted.

We have a shorthold tenancy agreement in place but 5 months in we have been served with an eviction notice from the landlord’s bank. We have followed the relevant procedure to delay the process by making an application to court and filling in the N244 form etc.

What annoys me is the landlady knew about this before allowing us to sign the tenancy agreement (she admits this in her email to me) and failed to give us a notice of possession. The first I heard of the repossession was when a bailiff knocked the door giving us notice to leave.

We’ve accepted we have to leave but I’d like to know who we should be paying rent to now as there has obviously been a breach of contract on the landlady’s part. Should we still give it to the letting agents or do we withhold it? When does the tenancy end in cases like this?

Any advice would be great

Yours, stressed out,

Gail

Ros 27/07/2015 at 13:04

I completely disagree with you trying to sue the landlady. If you don’t lose out financially on the rent and if you get your deposit back, why would you kick this person when she is down?

She must be in dire financial straits to have her house repossessed. I think a little human kindness would be good.

As landlords we are facing the possibility of having our houses repossessed in their thousands because of a measure proposed in the Budget which is going to bankrupt many of us. All we need is to get sued by our tenants as well.

Ah the one I wanted.

Ros . says: Read about me on my member profile

03/09/2015 at 17:09

Reply to the comment left by “Lisa Stux” at “03/09/2015 – 16:54“:

Hi Lisa.

There must be quite a lot of anecdotal evidence both ways; what the Government has not done is any research which gives an accurate picture. If owner-occupiers were competing with landlords in this way in some of the areas where I own properties, there wouldn’t be properties languishing on the market for months. In a very short street where I am considering selling my first house as part of the Big Sell-off, the only house for sale has been on the market for 5 months. Neither landlord nor owner-occupier is interested. I also believe I was not in competition with anyone when I bought my houses – no estate agent rang me up to tell me about them. I walked into the office like everyone else. The only time I was given ‘preferential’ treatment was when I bought my very first house to live in – the estate agent knew what I wanted and rang me up.

I don’t know of any reliable statistics on this issue, so it’s mostly just conjecture.

Let's see what competition there is for the sell off BTL houses, at the asking prices the BTLers believe they are worth. :)

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Cathays is one of my watch areas on Rightmove as I'm wondering what the effect of the multitude of build-to-let springing up will have in Cardiff.

I've seen a few big purpose-built student accommodation blocks arrive over the last few years and whilst I'm not sure they cater to the home students so much, there is a drive towards increasing international student numbers.

[EDIT: The international students do seem to gravitate more to that type of accommodation...]

To the extent that the advertising hoardings for the new and newish purpose-built blocks are partially / mostly in Chinese and feature photographs of young Chinese women.

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To the extent that the advertising hoardings for the new and newish purpose-built blocks are partially / mostly in Chinese and feature photographs of young Chinese women.

I must admit I've not actually seen any advertising for them due to my route to work, but it wouldn't surprise me if they are being targeted. It's just been my experience of where the concentrations of particular nationalities seem to congregate. I'm not singling out Chinese here, but they are definitely being marketed at by the universities due to their increasing middle class and more disposable income.

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Woah.

Quoting who...? Doesn't really matter.

Ah the one I wanted.

Let's see what competition there is for the sell off BTL houses, at the asking prices the BTLers believe they are worth. :)

totally hilarious.

I loved this:

"You may hate landlords, but you have to understand that if we go down, well be taking a lot of people with us."

err, who exactly?

the banks? I suspect not now.

tho tenants? I don't think so.

the estate agents? they will be happy when sales volumes return to normal.

who are they going to take down exactly?

sounds like a frightened little boy to me.

I'll happily take a haircut from the banks if we get to see these people get what they deserve.

oh, wait, we already have.

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Woah.

Quoting who...? Doesn't really matter.

Ah the one I wanted.

Let's see what competition there is for the sell off BTL houses, at the asking prices the BTLers believe they are worth. :)

I suspect those prices will be 60% move than any first time buyer, generally, can afford.

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growlers, on 18 Oct 2015 - 1:20 PM, said:snapback.png

http://www.rightmove...dded=3&index=10

This lot seem to specialise in BTL in Cardiff:

http://www.rightmove..._includeSSTC=on

Interesting the amount of student investment shite coming to the market in Cardiff.

Woah.

Thats just one agent you need to look at the big picture to get the full WOAH factor

I think there are massive problems ahead for these muppets as there`s very few earning enough in this part of the world to bail this lot out at those prices

like i have said before the smart money left that game a long time ago

Its been plain to see that the big corporates had their sights set on the student sector in this part of the world ten year ago

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Lots of business people have repeated failures in business before they find successful ones and don't always look to bailouts.. BtLers had better take that into account and look to their next business venture - and the sooner the better for them. Home based nail bars seem to be pretty profitable in the UK at the moment.

Edited by billybong

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..seems to be taking the property wizards some time for the facts to sink in..they should remember they are running a business and need to act quickly to new regulation to protect themselves ... :rolleyes:

They might consider a strategy that addressed reducing portfolio size in a timely fashion, i.e. selling everything now.

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growlers, on 18 Oct 2015 - 1:20 PM, said:snapback.png

Thats just one agent you need to look at the big picture to get the full WOAH factor

I think there are massive problems ahead for these muppets as there`s very few earning enough in this part of the world to bail this lot out at those prices

like i have said before the smart money left that game a long time ago

Its been plain to see that the big corporates had their sights set on the student sector in this part of the world ten year ago

Yeah, must be why they are fighting so hard. They watch the market and must know how illiquid it is for all that shit on the market.

From my brief skim, Cardiff looks like an even worse BTL hell hole than London even! Shame. Well lots of those areas are about to undergo a OO renaissance :)

Edited by growlers

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