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Fairyland

Btl Backfired?

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Met someone Yesterday. Very very upset.

His house in zone3 was rented out for last 8yrs when he moved in Bucks for his job. Used London HPI as collateral to buy a mansion in Bucks, peak time (Feb 2016), to beat stamp duty March deadline. Tenant stopped paying rent for last 6 months. Had hard time evicting tenant and cleaning the house. Solicitor bills went around £4,000.

Him: Tenants left too many things behind, floor to ceiling rubbish, difficult to enter the house.

Me: Did you hire any removal service to help you?

Him : No they quoted too much!

Me: Really?

Him: yes, it was more than three large skips of waste.

Me: Oh dear ...

Him: It is too much mortgage on both properties.

Me: Yes. Did you recover the rent? it may help you with your mortgage.

Him: No. I will have to spend more money on the solicitors to recover the rent.

Me: So, are you planning to sell off London property now?

Him: Yes, but not just now. May be in a couple of months time.

Me: Ah yes, you need to redecorate.

Him: No, that is already done but prices have gone down now so I will wait till they recover ...

Didn't want to ask anything more.

Don't know how many more are in this situation?

Edited by Fairyland

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Questions I should have asked him:

1) When he rented his house out was his mortgage changed from Repayment to Interest Only?

2) He was himself renting in Bucks for a long time. If his rent was almost same as the rent he received then he made no profit by renting out?

3) Because he has two houses now will he have to pay CGT when he sells the first one?

4) To avoid CGT does he plan to rent it out again or is has he badly burned his fingers by 6+ months void plus solicitor charges?

5) If he sells now, he bought when the shires peaked and he will sell when London is going down will this reduce his margin significantly?

6) Would the banks have thought about it before lending for the second property?

Finally, does anyone really gain a fortune from BTL???

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..and this is the mentality at the beginning of crashes, then the falling knife becomes even harder to catch.

To change this mentality probably means doing a U turn on the path of greed. Sounds difficult?

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I do love a good anecdotal but there is a seperate place for these.

Funny tho if true

This made me laugh

" to buy a mansion in Bucks"

"Him : No they quoted too much!"

Lives in a mansion,...cant afford a sudden expense.

I've seen at first hand these london "winners" moving to the shires and paying crazy money for houses locals wouldnt touch.

Now such people are in line for a London crash and a double whammy Shires crash.

Tough f**king luck I say.

Edited by TheCountOfNowhere

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I do love a good anecdotal but there is a seperate place for these.

Funny tho if true

This made me laugh

" to buy a mansion in Bucks"

"Him : No they quoted too much!"

Lives in a mansion,...cant afford a sudden expense.

I've seen at first hand these london "winners" moving to the shires and paying crazy money for houses locals wouldnt touch.

Now such people are in line for a London crash and a double whammy Shires crash.

Tough f**king luck I say.

yes, I know there is a separate place for anecdotes but I also wanted to ask those questions(in post 2) regarding BTL, lending practice, reduced margins, troubles encountered and discover the real face of BTL. Is it too good to be true.

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yes, I know there is a separate place for anecdotes but I also wanted to ask those questions(in post 2) regarding BTL, lending practice, reduced margins, troubles encountered and discover the real face of BTL. Is it too good to be true.

I know a couple of BTLers.

One I dont see much now and one I talk to now and again.

The jist of my conversation is related to:

"1) When he rented his house out was his mortgage changed from Repayment to Interest Only?"

He's BTL mortgages were all IO.

I asked what would happen when he had to pay the money back....he said...and I am not joking...he said, he's remortgage.

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Friend of mine purchased a flat in 2000's on interest only. He purchased a family home and rents out the flat. His view is exactly the same.

As far as I am aware, interest only is no longer acceptable to the BOE....so, they will be forced to remortgage at repayment terms or worse....not being able to remortgage at all!

I know a couple of BTLers.

One I dont see much now and one I talk to now and again.

The jist of my conversation is related to:

"1) When he rented his house out was his mortgage changed from Repayment to Interest Only?"

He's BTL mortgages were all IO.

I asked what would happen when he had to pay the money back....he said...and I am not joking...he said, he's remortgage.

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I commented to someone over the weekend that people can rationalize the stupidest plans - and once they have there is nothing you can do to resolve it....

This is one of those cases where a lack of knowledge (best time to sell is Easter-June or September-October) and unwillingness to face reality means the future will be worse...

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I commented to someone over the weekend that people can rationalize the stupidest plans - and once they have there is nothing you can do to resolve it....

This is one of those cases where a lack of knowledge (best time to sell is Easter-June or September-October) and unwillingness to face reality means the future will be worse...

Hopefully.

Just for him...not us. :lol::lol::lol::lol:

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" Had hard time evicting tenant and cleaning the house. Solicitor bills went around £4,000. "

mmm yes they never mention this in these property shows do they?

I actually dont blame these tenants at all either, maybe there is a big change in life circumstance, when SHTF are you gonna pay rent or feed your kids? Rents are way to high for most people as the stats show. How many landlords are prepared for this as the economy tumbles?

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The most important question of all, has he been declaring the rent on his London home and paying the right amount of tax to HMRC?

there should be a reward system to let HMRC know about stuff like this, I reckon I could make it into a 2nd income stream with all the dumb amateur landlords I know who don't bother doing this.

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Anecdotally a friend of mine from London who rents a 3 bedroom house in Windsor (services) for ~£150 a month didn't want to get left behind on the property ownership wagon and bought a 2 bed bungalow in Egham about five years ago as an investment. Extended up into the room and let out to four foreign students. He's been trying to sell for over a year now with very little interest. Marketed as an investment opportunity as he cant afford to leave empty on market and yes it's an IO mortgage too.

I told him to be cautious before he jumped in and he could exit now for a tidy profit but holding out for the big money. I suspect hell be catching a falling knife.

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