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Btl Will Lose Money In 91% Of Regions By 2021


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Comments are a hoot, as always. BTL spivs, some of whom are on the record as previously saying that the changes will not stop them from buying (yeah right..) are now going all Goodfellas:

Rental property availability will go down, 80% of tenants cannot afford to buy, new would-be tenants are supplied by the EU daily etc etc.

Incorporation - anyone wanting to form a new UK company is encouraged mightily by the UK Govt and not harassed. You are saying that the Pru etc are a "fiddle"?

A remortgage is not a BTL mortgage, and so is an allowable cost. The money raised is then a cash buy of another BTL property which somewhat buggers Osbo's aim no? OK the gearing is no so good as it used to be, but I'll live with that.

Nominee is part of the family "company" - knows which side is buttered etc

B&Bs - Many tenants will be ex- by 2020 - where will they go?

Italian contracts - if the LL is making it possible for his daughter's friend to work at her dream job in London, she's not going to snout is she?

'Italian contracts'- LOL!

I seem to recall a month ago you were telling us about your earnest service provision remit, now it's all a heavy Soprano-style hard-nosed extortion racket.

You and your ilk are exactly the sort of individuals who should not be tasked with the weighty responsibility of provision of shelter. Sell up and bugger off.

Edited by The Knimbies who say No
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Pulling up drawbridge to new entrants.

Pushing the old entrants into the moat.

Free concrete shoes impressed upon you before you 'swim', branded mind, and legit - not knock-off concrete shoes. Want to be assured your concrete shoes are genuine? Look for "Genuine Clause 24 Concrete Shoes" stamped on your stupid forehead as they pitch you into the moat.

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This is an excellent chart from the Telegraph. The obvious conclusion from the tax changes was that leveraged BTL for higher rate tax payers no longer stacks up.

The typical new BTL property is still built with a 70%+ LTV. How many have been issued by banks since July - Mortgages that will not ceteris paribus wash their face post 2020.

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This is an excellent chart from the Telegraph. The obvious conclusion from the tax changes was that leveraged BTL for higher rate tax payers no longer stacks up.

The typical new BTL property is still built with a 70%+ LTV. How many have been issued by banks since July - mortgages that will not ceteris paribus wash their face post 2020?

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Even at "current profit" levels is it really worth it? The responsibility, the time and effort not to mention the opportunity costs for a few grand?

All about the hope of HPI....

Even the poxy current profits listed are before maintenance, management, and voids I think (unless I scan read too fast).

As you say, all about HPI. But it's been like this for a long time. I looked at BTL years ago (2003-ish?) and abandoned the idea as I don't do tulip-based investments[1]. Sometimes I wish I weren't so rational!

[1] Actually, I also decided that I like my passive income to be passive (BTL most definitely ain't passive judging by ear-wigged telecons and tales of landlord-woe from colleagues). Basically, I'm lazy.

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The assumptions behind the calculations

The Landlord...

  • ... is a higher-rate taxpayer. with a 75 per cent mortgage
  • He buys the averagely priced buy-to-let property now with a two year fixed rate mortgage charging 2.54pc, rising to 4.8 per cent thereafter

5 years ago I would imagine 5 yr fwd assumptions were much worse than that.

Certainly nobody was predicting 2.54% BTL rates in 2015.

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Even the poxy current profits listed are before maintenance, management, and voids I think (unless I scan read too fast).

As you say, all about HPI. But it's been like this for a long time. I looked at BTL years ago (2003-ish?) and abandoned the idea as I don't do tulip-based investments[1]. Sometimes I wish I weren't so rational!

[1] Actually, I also decided that I like my passive income to be passive (BTL most definitely ain't passive judging by ear-wigged telecons and tales of landlord-woe from colleagues). Basically, I'm lazy.

I had a redundancy at the start of the 21st C with a small payment. As part of the 'employers car package' we had to meet financial advisors. The options for a sound investment were i) With profit bond or ii) 5% deposit on a handful of properties. The first was clearly mental and the second, well, like you, I'm lazy. If I couldn't buy a property outright and forget about the price paid, and not care about rises and falls, and so treat the rent as the dividend on the stock, I didn't want the hassle of worrying about the property value.

Now, I just can't see the benefits of being a BTL landlord. I can only think that they must just see the rent check and never spare a thought for how much it is costing to run, else they'd all be in Bedlam.

As to the published figure, Lovely Jubbly.

Edited by LiveinHope
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This is the context. People didn't understand how BTL worked when it worked, and they don't understand why it's now f**ked. However, the incentives emerging from the personal taxation framework are now very different and eventually word will get around that BTL is a money pit not a pension. This will happen because leverage landlordism really is f**ked. It's over, regardless any insistence by vested interests to the contrary.

I agree with all of the post above. But this last point really struck a chord with me and is a very good point. In my opinion humans are very very bad at ever analysing and more importantly, UNDERSTANDING what has just happened and why. Let alone what is happeneing right now and what might possible happen in the future. This is why market efficency is generally not observable.

This lack of collective understanding is the reason my mate just sold his Twickenham terrace to a BTLer (who is taking leverage, not a cash buyer) for a 3.45% gross yield IF he gets his asking rent! So there are still a few greater fools knocking round who are driving the very very last drop out of this current market. We just need the last idiots to spend the last of their (borrowed) capital and the market will finally grind to a halt.

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I had a redundancy at the start of the 21st C with a small payment. As part of the 'employers car package' we had to meet financial advisors. The options for a sound investment were i) With profit bond or ii) 5% deposit on a handful of properties. The first was clearly mental and the second, well, like you, I'm lazy. If I couldn't buy a property outright and forget about the price paid, and not care about rises and falls, and so treat the rent as the dividend on the stock, I didn't want the hassle of worrying about the property value.

Now, I just can't see the benefits of being a BTL landlord. I can only think that they must just see the rent check and never spare a thought for how much it is costing to run, else they'd all be in Bedlam.

As to the published figure, Lovely Jubbly.

Yes, these were the types FAs that have been shutdown by the FSA. What a bunch of crooks!

Financial advise for products for who ever is bunging us the most commission.

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This is an excellent chart from the Telegraph. The obvious conclusion from the tax changes was that leveraged BTL for higher rate tax payers no longer stacks up.

The typical new BTL property is still built with a 70%+ LTV. How many have been issued by banks since July - Mortgages that will not ceteris paribus wash their face post 2020.

It no longer stacks up at current prices and yields - the obvious conclusion is that prices will fall once sentiment has caught up with common sense.

While BTL will no longer be the driver of crazy HPI it once was, unless a typical home buyer can leverage their income to outbid a typical BTLer using their income as rent then there is no end in sight to BTL.

I'm not doing a victory dance until I see what the real effects of Basel III are going to be.

Edited by Even Keel
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Comments are a hoot, as always. BTL spivs, some of whom are on the record as previously saying that the changes will not stop them from buying (yeah right..) are now going all Goodfellas:

A remortgage is not a BTL mortgage, and so is an allowable cost.

Hmmmm, some basic, basic errors there I feel. :huh:

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5 years ago I would imagine 5 yr fwd assumptions were much worse than that.

Certainly nobody was predicting 2.54% BTL rates in 2015.

Low rates have been bailing out the decisions of BTL speculators. This may have been seen as a short term benefit that encouraged BTL to support prices in the housing market (the safety valve that wasn't completely safe - h/t Donald Kohn via Bland Unsight) but it seems unlikely to be one of the long-term aims of such a policy, given the financial stability risk BTL may pose as set out by the Bank of England. Hence proposals to significantly increase BTL risk weights and establish macro-prudential regulation of the sector. The Telegraph's assumptions may well prove to be unduly optimistic this time around, given Basel III could potentially push BTL-specific market rates significantly higher than their scenario without any base rate movements at all (or even with a lower base rate). Time will tell.

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I agree with all of the post above. But this last point really struck a chord with me and is a very good point. In my opinion humans are very very bad at ever analysing and more importantly, UNDERSTANDING what has just happened and why. Let alone what is happeneing right now and what might possible happen in the future. This is why market efficency is generally not observable.

This lack of collective understanding is the reason my mate just sold his Twickenham terrace to a BTLer (who is taking leverage, not a cash buyer) for a 3.45% gross yield IF he gets his asking rent! So there are still a few greater fools knocking round who are driving the very very last drop out of this current market. We just need the last idiots to spend the last of their (borrowed) capital and the market will finally grind to a halt.

This is the worrying part for me ,if there's a credit line available some will still pile in ,then it`s a long time (providing they can cover cost via rental payments) before they admit /realise they have bought a pup.,,,then the next fool gives it ago

It`s no different from a sentiment/effect point of view than self cert / IO OO mortgages, which had to be regulated out of existence ,it would never have happened because people woke up and seen the risks

It look`s like the large portfolio game is out of the window .but the aspiring BTL`er of 1-2 places i`m not so sure

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A 30 property portfolio LL selling up is better than a handful of single property BTLers selling up.

Every little helps. Look on the bright side, etc :)

I`m trying to look at the bright side ,but i`m still having visions of 10-15 aspiring BTLers queuing up to buy that portfolio 2-3 apiece or 30 @ 1 apiece i`ve already watched it happened once before in the last 6 years ,but on the bright side this time around the hurdles are much higher

Could be wrong but what i`m seeing is BTL trying to sell up around my way the prices they are asking do not aligning with MMR + local wage so there's two possibility baring repossession/bankruptcy

They drop the price to whats affordable/financeable by an OO (can they do that without bankrupting themselves ?)

Or an aspiring BTLer buys (the finance is still available at this price)

Obviously these options are available now ,in a few years time there will possibly be only one

Another factor is the part of the country one is looking at

Realistically the answer to the abvoe will only been revealed over time

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There's a portfolio for sale near me (West Cardiff, reasonable area), 9 flats in a block, though not the entire block. Only for sale as a portfolio, not individual flats. On the 21st of this month, it will have been on the market for two years, and has never been reduced, as far as I can tell.

Also, another entire block of six flats for sale locally, again only as a job lot. On the market since August 2014, no reduction.

Will continue watching.

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There's a portfolio for sale near me (West Cardiff, reasonable area), 9 flats in a block, though not the entire block. Only for sale as a portfolio, not individual flats. On the 21st of this month, it will have been on the market for two years, and has never been reduced, as far as I can tell.

Also, another entire block of six flats for sale locally, again only as a job lot. On the market since August 2014, no reduction.

Will continue watching.

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There's a portfolio for sale near me (West Cardiff, reasonable area), 9 flats in a block, though not the entire block. Only for sale as a portfolio, not individual flats. On the 21st of this month, it will have been on the market for two years, and has never been reduced, as far as I can tell.

Also, another entire block of six flats for sale locally, again only as a job lot. On the market since August 2014, no reduction.

Will continue watching.

They might be subject to consolidation clauses (i.e. they can't redeem one BTL loan without their lender calling in all of their other BTL loans as well).

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