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I am an EA, but don’t shout me down yet. I work for a small firm and we are not crooks!

Anyway I am really concerned about the BTL brigade and think there is going to be a mini disaster fairly soon.

There seem to me to be three types of landlord:

1. Old School Investors: have 10 – 100 properties, owned them for 30 – 10 years, buy a few properties per annum, geared at 0% - 50%, make a very good living. They only buy properties which cater for the typical renter: overseas worker, graduate, student. Look for £100 per week per room which is the busiest section of the market. All very sorted.

2. Small Time but smart landlord: Have 2 – 10 properties in good locations. Not greedy with the rent just like to keep voids down. Still only geared at 50% or so but margins a little tight. Can take a few hits with new boilers etc but not too many. Ultimately always in profit provided they plough rent excess into mortgage outstanding. MOST IMPORTANTLY have a range of investments and usually a six figure job.

3. New Landlords: these are the chaps I think are heading into deep trouble. They have 2 – 3 properties mortgaged to the hilt and the rent barely covers the mortgage. Any void, repair, loss of rent causes total panic! Typical example

Mr X

£450,000 flat

Mortgage £1687

Rent £1646 pcm

Service charge on his new build rubbish apartment £200 pcm

Other fees: £200 pcm (insurance, agents, inventories, voids, etc)

Annual loss: -£5292

However, and this is the best part, he will say to me, “Yes I know I am losing now but it’s for the long term.” Long term, long term! Yes in 10 years you will have lost £52,920! And you bought this property 20% over value anyway (although the developer told you you had a 10% discount it was 30% over prices anyway!) Finally in ten years the tacky new build will be a tacky “old build” and I doubt worth in real terms much more than it is today.

It seems that new landlords buy new build properties and make the rent up depending on the price, which pays no attention to the market. New builds are the worse BTL investments because:

They are small

Have terrible noise insulation

Have huge service charges

Look tatty very quickly

Feel like hotels

Are so ludicrously over priced

Tenants don't like them!

The facts are tenants now can afford to be so picky that they hold all the cards and landlords are suffering. The Old School landlords will ride the storm and one day the cycle will reverse. However the new BTL’s are going to struggle on and on. I really feel sorry for them, genuinely, at least they are trying to make investments.

I rent, I am an EA and I rent. Why? Well, in a period of price stagnation or deflation why the hell own a property? I pay my landlord a good monthly whack and he is happy. I have saved stamp duty, a 20% deposit, maintenance, buildings insurance, etc etc. The “lump” I would need for a deposit and stamp duty is better in the bank at 5% (good old ING) or being ploughed into my business / shares / etc. If the market turns I can give just one months notice and leave, whilst buying a property.

Money in property at the moment is dead money, local anomalies aside.

When I get the energy I’m going to have a moan about the “The Greatest Property Hype in Twenty Years: The Olympics”

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II rent, I am an EA and I rent. Why? Well, in a period of price stagnation or deflation why the hell own a property? I pay my landlord a good monthly whack and he is happy. I have saved stamp duty, a 20% deposit, maintenance, buildings insurance, etc etc. The “lump” I would need for a deposit and stamp duty is better in the bank at 5% (good old ING) or being ploughed into my business / shares / etc. If the market turns I can give just one months notice and leave, whilst buying a property.

Money in property at the moment is dead money, local anomalies aside.

When I get the energy I’m going to have a moan about the “The Greatest Property Hype in Twenty Years: The Olympics”

Welcome, Honest Estate Agent, yes I do believe that there are a few of you out there...but very few!

By the way, ING have just dropped their rate again...you may want to consider moving your cash.

What general area do you cover and how are things going overall?

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Um, Awooga... I dont believe your an estate agent, you could have fabricated the story its quite a big first post! Stick around for a while and Welcome to the forum who ever you are. Interesting post, a EA that has STRed, thats incredibly forward thinking for somone that needs to be uber positive about property all the time...

Edited by moosetea

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He's right on the economics though.

Just seen a set of letting accounts, had a couple of months empty between tenants, took the opportunity to redecorate (£2,000), result: £1,500 loss.

Now this is bad enough but the chap bought the house back in 2001 and has about £90,000 borrowed against the property which is probably worth in excess of £200,000. If he can't make any money out of it then the recent BTLs must be getting hammered.

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Made up stories dont help the site, If your a EA great, its useful :) If your not then your post only damages the reputation of HPC, especially when parts of your post seem useful and relavant.

Edited by moosetea

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I am an EA, but don’t shout me down yet. I work for a small firm and we are not crooks!

Anyway I am really concerned about the BTL brigade and think there is going to be a mini disaster fairly soon.

There seem to me to be three types of landlord:

1. Old School Investors: have 10 – 100 properties, owned them for 30 – 10 years, buy a few properties per annum, geared at 0% - 50%, make a very good living. They only buy properties which cater for the typical renter: overseas worker, graduate, student. Look for £100 per week per room which is the busiest section of the market. All very sorted.

2. Small Time but smart landlord: Have 2 – 10 properties in good locations. Not greedy with the rent just like to keep voids down. Still only geared at 50% or so but margins a little tight. Can take a few hits with new boilers etc but not too many. Ultimately always in profit provided they plough rent excess into mortgage outstanding. MOST IMPORTANTLY have a range of investments and usually a six figure job.

3. New Landlords: these are the chaps I think are heading into deep trouble. They have 2 – 3 properties mortgaged to the hilt and the rent barely covers the mortgage. Any void, repair, loss of rent causes total panic! Typical example

Mr X

£450,000 flat

Mortgage £1687

Rent £1646 pcm

Service charge on his new build rubbish apartment £200 pcm

Other fees: £200 pcm (insurance, agents, inventories, voids, etc)

Annual loss: -£5292

However, and this is the best part, he will say to me, “Yes I know I am losing now but it’s for the long term.” Long term, long term! Yes in 10 years you will have lost £52,920! And you bought this property 20% over value anyway (although the developer told you you had a 10% discount it was 30% over prices anyway!) Finally in ten years the tacky new build will be a tacky “old build” and I doubt worth in real terms much more than it is today.

It seems that new landlords buy new build properties and make the rent up depending on the price, which pays no attention to the market. New builds are the worse BTL investments because:

They are small

Have terrible noise insulation

Have huge service charges

Look tatty very quickly

Feel like hotels

Are so ludicrously over priced

Tenants don't like them!

The facts are tenants now can afford to be so picky that they hold all the cards and landlords are suffering. The Old School landlords will ride the storm and one day the cycle will reverse. However the new BTL’s are going to struggle on and on. I really feel sorry for them, genuinely, at least they are trying to make investments.

I rent, I am an EA and I rent. Why? Well, in a period of price stagnation or deflation why the hell own a property? I pay my landlord a good monthly whack and he is happy. I have saved stamp duty, a 20% deposit, maintenance, buildings insurance, etc etc. The “lump” I would need for a deposit and stamp duty is better in the bank at 5% (good old ING) or being ploughed into my business / shares / etc. If the market turns I can give just one months notice and leave, whilst buying a property.

Money in property at the moment is dead money, local anomalies aside.

When I get the energy I’m going to have a moan about the “The Greatest Property Hype in Twenty Years: The Olympics”

The saddest part of the post is the (correct) description of new build flats (sorry...apartments). This country has just had the biggest opportunity to build quality housing for this generation and generations to come since the post war period.

Instead this opportunity has been wasted by building poorly constructed, mass produced boxes that meet the needs of business and vested interests rather than local communities.

In a decade some of these will be slums.

This country has learnt nothing.

We do not have a shortgage of land. We are not incapable of building quality homes in decent envrionments. We are not incapable of building sustainable communities.

There is no reason...no reason at all...why this country could not produce quality housing in decent communities at an affordable price for all our citizens.

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Awooga or not, made-up story or not, the points made by the poster are very valid, in my opinion. Shoebox new builds do not have the "good bones" that older, high-quality properties do. In 10-15 years' time, these new builds will be aging (often ungracefully) and unless they have a prime location or some other unique, attractive quality, it will be very hard to resell them.

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I know Viki P very well she works just over the other side of the office. She told me about the site this morning. I can assure you although she was "mucking around" I am serious. And have banned for from making any more silly comments.

Her joke is good though about property clubs.

Anyway I am rolling now:

Here are some things you might not know about that I feel will effect the market:

Letting Agents Going Out of Business: Since 1999 property prices have doubled / trebled so EA fees for SALES have doubled / trebled. So the average fee in our business has gone from £4k + VAT to 10K +VAT. However rental values have decreased so the average fee for lettings and management has gone from £1200 +VAT in 1999 to £1000 in 2005.

Now lets consider £1000 to let the property (viewings, petrol, wages, etc) and manage it all year (produce monthly rental statements, collect rent, arrange repairs, wages, etc). Essentially the sums just don't add up anymore.

Also legislation: increased legislation is making managing property very tough for managing agents. We are responsible for everything and be sued by both the landlord and tenant.

So Letting EA's are making less money, face more legislation, and increased congestion charges, parking fines etc.

Many EA here are declining property management full stop. With less income you can only afford to pay relatively small wages yet these staff need to be bright enough to understand new legislation and tenancy law. So you need cleverer staff who will accept less wages, this does not happen.

Finally our letting negotiators in 1999 used to make 40k. A good wage back then. Now they make 25k at best. Rents are less so fees are less, increased competition has driven down fees, extra expenses have driven down salaries.

So you the landlord are being serviced by increasingly badly paid staff, who in turn are less capable, so the service is getting worse, when really it needs to get better.

We are lucky in that we have been trading for many years and have a good client base. However I feel that plenty of "bucket shop" Letting EA's are going to get in real trouble. 3 have close round here in the last year. Incidentally 2 landlords have gone bust too!

What does this mean for the market? Not sure but I see from the site you hate EA’s so you may feel better!

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I know Viki P very well she works just over the other side of the office. She told me about the site this morning. I can assure you although she was "mucking around" I am serious. And have banned for from making any more silly comments.

Not very bright is she? Think of all the credibility you may have lost as a company with her silly remarks. Think of all the lurkers visiting this site who were made aware of your company. So I would say your post may be genuine and sincere, more like a damage limiting exercise. ;)

Great Website For A Small Estate Agent

Edited by fedupwaiting

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The Honest Estate Agent

Letting Agents Going Out of Business: Since 1999 property prices have doubled / trebled so EA fees for SALES have doubled / trebled. So the average fee in our business has gone from £4k + VAT to 10K +VAT. However rental values have decreased so the average fee for lettings and management has gone from £1200 +VAT in 1999 to £1000 in 2005.

Thing is are these fee levels sustainable? In a rising market obviously yes as they were being obtained, however in a falling market I doubt the majority will have the money to stump up to make the moves that they want. Another reason why I see further reduced transaction volumes.

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Definatly not hate, we have a few EAs on this site, and i went on a few dates with saturday girl EA. She had some lettings annacdotes that seem to line up with yours, were sceptics when a story is sold too well, but if you are an EA thats your job.... One question..

Do you see reduced demand from tenants because people are house sharing more/living at home for longer?

Edited by moosetea

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Good post HEA!

Whoever you are, you clearly know what you're talking about re the types of property investor. There is money to be made in property, providing you are the right type of investor. Capital gains is a mugs game. I know a couple of the type 3 landlords and it hilarious discussing property investment with them. They just haven't got a clue and they don't seem care about covering their bases. I'm planning on buying them out when the crash comes :-)

MattLG

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Since 1999 property prices have doubled / trebled so EA fees for SALES have doubled / trebled. So the average fee in our business has gone from £4k + VAT to 10K +VAT.

This I think is one of the problems with the whole system. The EA has a vested interest in pushing up prices rather than just getting deals done. This ultimately makes for a less efficient market.

In the oil market brokers receive a fixed commission per barrel on each deal they put together, regardless of price. Hence their primary interest is in volume, not price. This increases liquidity and price transparency and makes the market more efficient.

Perhaps EAs should be paid a fixed commission per square foot.

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Moonsetae:

Demand: No it has been a very busy summer lots of tenants chasing few properties in their price range.

However the new BTL brigade has still suffered! Most demand this summer has every summer has been from grads and students.

What do they want?

Budget £90 - £150 per week

Good locations

Double bedrooms

Good transport

What have new BTL brigade bought?

2 beds for £500pw so no grads or students can afford them, anyway new BTL would not accept grads or students only "City Professionals"

Surprisingly most City Professionals actually own a property in which they live with their family.

New builds in terrible location (why do you think the land was cheap?)

One double bedroom and one single bedroom

Near “emerging transport” i.e. a tube line is planned. Maybe in 10 years it will gain value as there has been a “positive change” however there is the small matter of 10 years to wait. The mortgage needs paying!

Only me: sorry I don't understand you question fully, I am an EA after all!!

Fedupwaiting: she is a silly girl hands up! She does not really talk like that though.

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Guest The_Oldie

I know Viki P very well she works just over the other side of the office. She told me about the site this morning. I can assure you although she was "mucking around" I am serious. And have banned for from making any more silly comments.

You would have enjoyed more credibility had you come clean about your company identity. The fact that you took out a new hotmail address especially for this forum identity shows that it was not your original intention to reveal your vested interest. Shame you forgot about the IP address though :rolleyes:.

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Guest Charlie The Tramp

What have new BTL brigade bought?

2 beds for £500pw so no grads or students can afford them, anyway new BTL would not accept grads or students only "City Professionals"

What is the percentage of your client base are these new BTLs?

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I am an EA, but don’t shout me down yet. I work for a small firm and we are not crooks!

Anyway I am really concerned about the BTL brigade and think there is going to be a mini disaster fairly soon.

There seem to me to be three types of landlord:

1. Old School Investors: have 10 – 100 properties, owned them for 30 – 10 years, buy a few properties per annum, geared at 0% - 50%, make a very good living. They only buy properties which cater for the typical renter: overseas worker, graduate, student. Look for £100 per week per room which is the busiest section of the market. All very sorted.

2. Small Time but smart landlord: Have 2 – 10 properties in good locations. Not greedy with the rent just like to keep voids down. Still only geared at 50% or so but margins a little tight. Can take a few hits with new boilers etc but not too many. Ultimately always in profit provided they plough rent excess into mortgage outstanding. MOST IMPORTANTLY have a range of investments and usually a six figure job.

3. New Landlords: these are the chaps I think are heading into deep trouble. They have 2 – 3 properties mortgaged to the hilt and the rent barely covers the mortgage. Any void, repair, loss of rent causes total panic! Typical example

Mr X

£450,000 flat

Mortgage £1687

Rent £1646 pcm

Service charge on his new build rubbish apartment £200 pcm

Other fees: £200 pcm (insurance, agents, inventories, voids, etc)

Annual loss: -£5292

However, and this is the best part, he will say to me, “Yes I know I am losing now but it’s for the long term.” Long term, long term! Yes in 10 years you will have lost £52,920! And you bought this property 20% over value anyway (although the developer told you you had a 10% discount it was 30% over prices anyway!) Finally in ten years the tacky new build will be a tacky “old build” and I doubt worth in real terms much more than it is today.

It seems that new landlords buy new build properties and make the rent up depending on the price, which pays no attention to the market. New builds are the worse BTL investments because:

They are small

Have terrible noise insulation

Have huge service charges

Look tatty very quickly

Feel like hotels

Are so ludicrously over priced

Tenants don't like them!

The facts are tenants now can afford to be so picky that they hold all the cards and landlords are suffering. The Old School landlords will ride the storm and one day the cycle will reverse. However the new BTL’s are going to struggle on and on. I really feel sorry for them, genuinely, at least they are trying to make investments.

I rent, I am an EA and I rent. Why? Well, in a period of price stagnation or deflation why the hell own a property? I pay my landlord a good monthly whack and he is happy. I have saved stamp duty, a 20% deposit, maintenance, buildings insurance, etc etc. The “lump” I would need for a deposit and stamp duty is better in the bank at 5% (good old ING) or being ploughed into my business / shares / etc. If the market turns I can give just one months notice and leave, whilst buying a property.

Money in property at the moment is dead money, local anomalies aside.

When I get the energy I’m going to have a moan about the “The Greatest Property Hype in Twenty Years: The Olympics”

Reverse awooga-sorry but it is just too good to be true... ;)

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Only me: sorry I don't understand you question fully, I am an EA after all!!

The average savings rate is something like 6% of salary. Even if the prospective buyer/seller is earning £50K that £10K seller's fee is over 3 year's savings, without the prospect of capital gain and lumping the costs onto the mortgage will people be willing to see these sort of sums dispappear from their savings? Now add on all the other costs - stamp duty, legals, moving and refurb/updating/carpets/furniture where are people going to get the money for this? MEW has provided it in the past, in a falling market it can't to the same degree.

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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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