Telegraph: the full shocking extent of the buy-to-let market collapse

[rantnrave]

Some Christmas cheer...

New research has exposed the scale of the fall in buy-to-let purchases in the year that the Government hiked stamp duty by 3pc on such transactions.

The number of properties sold to buy-to-let investors has fallen 63.7pc in the year to November in England and Wales, according to the estate agency Haart, dropping 8.2pc last month alone. In London, the number of such properties sold fell by 40pc.

It also reported that the number of landlords registering to buy properties is down 59.2pc annually. 

There was a big surge of transactions in March, before the stamp duty came in, followed by a sharp decline. 

Paul Smith, the chief executive of Haart, said: “The scale of decline in buy-to-let in just 12 months is deeply worrying - landlords have clearly pulled out of the market and are unlikely to return any time soon."

He has been a vocal opponent of the recent increases to stamp duty for homes over £1m and for buy-to-let investors, calling on the Government to end what he described as the "war on landlords" in which it cast them as "pantomime villains of the property market". 

He said: "Tenants are stuck in an intensely competitive market where rents are often more expensive than mortgages, because there are simply not enough properties available for lettings, and many landlords now have no choice but to pass the extra costs on to tenants."

Paul Smith, the chief executive of Haart, said: “The scale of decline in buy-to-let in just 12 months is deeply worrying - landlords have clearly pulled out of the market and are unlikely to return any time soon."

He has been a vocal opponent of the recent increases to stamp duty for homes over £1m and for buy-to-let investors, calling on the Government to end what he described as the "war on landlords" in which it cast them as "pantomime villains of the property market". 

He said: "Tenants are stuck in an intensely competitive market where rents are often more expensive than mortgages, because there are simply not enough properties available for lettings, and many landlords now have no choice but to pass the extra costs on to tenants."

Activity in the owner-occupier market was down too, with 21.3pc fewer new buyer registrations in the last year, and 30.9pc fewer first-time buyers. The research also found that the number of new tenants looking for homes was down 5.2pc, pushing down average rents.

A separate study by crowdfunding platform Property Partner reported a 6.8pc increase in new rental listings in the UK in November compared with  the previous month .

There was not an even picture across the country: in Bristol, it said there was a 162.7pc rise in such properties going on to the market in November, but in London there was a fall of 1.2pc.

http://www.telegraph.co.uk/property/house-prices/revealed-extent-buy-to-let-market-collapse/

Some pretty graphs at the link too.

[Riedquat]

After the earlier pretend sob stories about how bad it'll be for tenants, got to love the following bit: "The research also found that the number of new tenants looking for homes was down 5.2pc, pushing down average rents. "

[TheCountOfNowhere]

14 minutes ago, rantnrave said:

Some Christmas cheer...

 

 

Are they comparing now, with the rush to buy ?

 

These people are desperate or deluded or both

[MrMonkey]

Market in 'reacting to market forces' shocker.

[Si1]

5 minutes ago, MrMonkey said:

Market in 'reacting to market forces' shocker.

Yes, it's done exactly what the treasury bods intended and there's shock.

[Lovely Rum]

Paul Smith, the chief executive of Haart, said: “The scale of decline in buy-to-let in just 12 months is deeply worrying.."

 

[GrizzlyDave]

I'm delighted to read this.

Hopefully this will be the start of an epic crash, the worse the better; I want BTL to truly suffer - Jericho style.

No way will the Gov be able to save the market for a second time.

[Mapatasy]

9 minutes ago, Grumpysod said:

I am sat here with a big pile of cash in a world of stressed landlords and over mortgaged numpties just waiting for value to return, and once I buy I will never be seen in tenant land again, and I am sure there are millions like me.

I'm one of them... it's almost cost me my marriage though.

[Mapatasy]

6 minutes ago, GrizzlyDave said:

I'm delighted to read this.

Hopefully this will be the start of an epic crash, the worse the better; I want BTL to truly suffer - Jericho style.

Yes.

[StainlessSteelCat]

Fantastic news. Just need to turn the screws a little more so they have to sell. 

[Wayward]

54 minutes ago, StainlessSteelCat said:

Fantastic news. Just need to turn the screws a little more so they have to sell. 

agree...for a meaningful price correction we need a lot of forced sales...normally it is recession and unemployment that forces OOs to sell and this corrects the market...I will be happy to BLTers to perform this useful function this time.  I hope they lose their shirts.

[Fairyland]

As much as I want a full blown HPC I think TBPB are probably playing safe this time. Letting BTL collapse but not OO properties to save the wrath of voters?

The first phase has put a brake on new BTL investment. Would be good to see a graph of BTL vs OO transactions after March.

Anyone want to guess how the second phase will manifest? Close 100% BTL collapse? 60% BTL sell off? Or something even more catastrophic.

[blackhole]

How can the gov decouple the sales of collapsed BTL housing without bringing the whole average down?  To me they're tightly coupled hence BTL s24 has taken the wind out of a lot of HPI growth as of late.

[winkie]

For people to live contently they require a stake and security in the community they live and work in......have nothing, have nothing to lose....

Nothing wrong with btl.....but there is much wrong with low interest, io, highly leaveraged purchase of property to gain from people that only a few decades ago would be owning and buying that same home that today they have no other option but to rent....no opportunity to invest in their own and families future but to put their own hard working money into others pockets....;)

Edited December 9, 2016 by winkie

[MrMonkey]

Prices are set at the margins, and BTL investors will (when seeing yields and rental income fall, tax bills increase, and mortgage rates rise) have the flexibility that OOs do not have to cut prices to cash out. After all, an OO has to bear in mind where they will live next. A BTL investor, provided they are not going to go into negative equity through the sale, only have to match their return against their pride.

To date the rise of BTL has increased HPI; this can work jus as easily on the flipside, with investors knocking 10% off the price at a stroke to get out quickly as prices start to fall. This will inevitable feed through to the wider market. After all, sellers of homes will be in competition with each other regardless of whether they are OOs or BTL investors. In fact, BTL have the edge in that they do not need to be part of a chain and may be more motivated sellers if they are seeing the property as an investment losing money rather than a home to move up from. If BTLs lose 10% then so does every property of similar type.

In the past property falls have been restrained by sellers staying put rather than taking a hit on the value of their home. But a cohort of more motivated sellers would speed up the fall to a more realistic market value.

[Lavalas]

3 minutes ago, MrMonkey said:

Prices are set at the margins, and BTL investors will (when seeing yields and rental income fall, tax bills increase, and mortgage rates rise) have the flexibility that OOs do not have to cut prices to cash out. After all, an OO has to bear in mind where they will live next. A BTL investor, provided they are not going to go into negative equity through the sale, only have to match their return against their pride.

To date the rise of BTL has increased HPI; this can work jus as easily on the flipside, with investors knocking 10% off the price at a stroke to get out quickly as prices start to fall. This will inevitable feed through to the wider market. After all, sellers of homes will be in competition with each other regardless of whether they are OOs or BTL investors. In fact, BTL have the edge in that they do not need to be part of a chain and may be more motivated sellers if they are seeing the property as an investment losing money rather than a home to move up from. If BTLs lose 10% then so does every property of similar type.

In the past property falls have been restrained by sellers staying put rather than taking a hit on the value of their home. But a cohort of more motivated sellers would speed up the fall to a more realistic market value.

Oh I like this very much.

[MrMonkey]

Of course, the Government could put in more props or repeal tax changes to encourage BTL investment if the market starts falling - but at this point that would be a clear decision to support BTL at the expense of home ownership, which could easily backfire in public opinion given the public support for the changes to rules around BTL.

[blackhole]

1 minute ago, MrMonkey said:

Of course, the Government could put in more props or repeal tax changes to encourage BTL investment if the market starts falling - but at this point that would be a clear decision to support BTL at the expense of home ownership, which could easily backfire in public opinion given the public support for the changes to rules around BTL.

Given the current populist movements, this would simply add more fuel to that fire.  

[mrtickle]

4 hours ago, Si1 said:

Yes, it's done exactly what the treasury bods intended and there's shock.

Or as ProperLater wouldn't say, "unintended consequences" 

[Glental]

That's made my afternoon. I've never enjoyed reading the Telegraph as much as these past few months.

I received an unsolicited newsletter email today titled 'The UK's number one buy-to-let investment hotspot'. Keep an eye on Manchester....

[Saving For a Space Ship]

 

[Venger]

3 hours ago, Grumpysod said:

Is it even possible that many people on HPC could in a few years be using a site called Housepriceboom HPB because prices have become so cheap and homes have become so undesirable as an investment.

I am not that old and I can remember the last proper house price crash(1990) where whole new estates were mothballed and where some desperate sellers sold at any price in areas that were then sniffed upon and run down to become today's BTL hotspots.

 

I will never be a massive advocate of rising house prices though, I don;t even care if I live out my life in my own smallholding to see it not go up by a penny, will be good  seeing houses becoming homes again.

 

No.   I want housing so cheap that it becomes free (for future generations).  Progress.

 

 

Edited December 9, 2016 by Venger

[999house]

1 hour ago, Venger said:

 

No.   I want housing so cheap that it becomes free (for future generations).  Progress.

 

 

 

Exactly. I just want something to live in. Its anot an investment vehicle.

[Digsby]

Excellent news, the Governments plan is on schedule. Once prices start falling, existing BTLers will look to exit the market putting more downwards pressure on prices.

Those who get out near the top will still be making a tidy profit and will be looking for alternative investments - productive investments, giving the real economy a boost.

When price falls take hold, the only people other than the investors responsible for the bubble (thus politically irrelevant) kicking up a stink will be recent homeowners facing negative equity.

As I've said before, these people need to be helped (not because they are innocent but because they have popular sympathy) to soften the blow. The government should launch a "Help to Sell" scheme whereby anyone in negative equity wishing to sell is offered an equity loan at reasonable cost to make up the shortfall so that they can move on without being trapped. 

We should all be pushing for this imo as a sweetener to make it more politically palatable.

[doomed]

2 hours ago, Digsby said:

Excellent news, the Governments plan is on schedule. Once prices start falling, existing BTLers will look to exit the market putting more downwards pressure on prices.

Those who get out near the top will still be making a tidy profit and will be looking for alternative investments - productive investments, giving the real economy a boost.

When price falls take hold, the only people other than the investors responsible for the bubble (thus politically irrelevant) kicking up a stink will be recent homeowners facing negative equity.

As I've said before, these people need to be helped (not because they are innocent but because they have popular sympathy) to soften the blow. The government should launch a "Help to Sell" scheme whereby anyone in negative equity wishing to sell is offered an equity loan at reasonable cost to make up the shortfall so that they can move on without being trapped. 

We should all be pushing for this imo as a sweetener to make it more politically palatable.

This will not, and should not happen!