The BTL IO mortgage rates thread

[disenfranchised]

I hope this one will be interesting!

I want to keep this going so hope to come back and update. The method I'm using is:

Money supermarket search (until not available, then any source)

£160k property

Interest only, fixed or tracker, 25 years

60% LTV (£96k)

75% LTV (£120k)

80% LTV (£128k)

85% LTV (£136k)

Please feel free to update!

Today...

60% LTV

75% LTV

80% LTV

85% LTV

Specialist broker (2.5% arrangement fee, no first time LL, 6.33% SVR)

[Bland Unsight]

Don't forget that the Bank of England now have a series for BTL mortgage rates within the on-line 'Interactive Database' here, then drill down:

Quoted household interest rates>Secured lending (mortgage) rates>Fixed>Buy-to-let 2 year, 75% LTV - IUMZID4 - Monthly

The full drill down from the 'top' is

Interactive Database > Tables > Interest and Exchange Rates>Quoted household interest rates>Secured lending (mortgage) rates>Fixed>Buy-to-let 2 year, 75% LTV - IUMZID4 - Monthly

It's a wonder it isn't better known! 

[disenfranchised]

I generally read HPC via a phone - had a look, but I'll have to leave that one for the laptop/desktop users 

I thought scanning money supermarket was interesting in itself - 156 products vs 0 products for 75% vs 85% LTV.

Anybody on 'industry standard' 75% LTV right now is basically trapped onto the SVR for their current product by a 5.1% drop in their previous valuation, as then they are into over 80% specialist lending territory higher than their current SVR - and the SVRs are 4.5%+ which is game over for anybody living off rental income unless they are balls deep in high yield HMO.

A small dip in prices will hit hardest in the northerly areas the BTL to infinity crew charged into chasing yield over the past few years which have seen little capital appreciation. If they set one up at 75% LTV in Luton 18 months ago it's got to fall 10% to be any more expensive to remortgage and 15% to be ruinously expensive. 75% deals taken since about 2005 in parts of the North could be more vulnerable - especially if they bought it in any decent condition and it's been BTLerised since. 

I think it's closer to blowing up in their faces than most people realise. The BTLers seem to be focussing on future tax bills at their current interest rates, but they aren't seeing the looming interest rate / lending multiples risks clearly in a wobbling dried up market.

Coincidental election announcement today? I wonder.

 

 

 

[Growlers2]

You missed the most significant thing from the above - the fact that interest rates are so low

Ignore the SVRs, OOs and LLs can borrow at under 2% at 75Pc LTV. That's nuts and I'd have to agree with the conclusions of another poster (can't remember name) that rental yields are higher than this across the country.

 

Why would you sell an asset yielding 4pc for example if you are able to borrow at these rates? It's not about availability of credit imho it's about rental yield Vs cost of borrowing.

 

The lack of products in the 85pc bracket is immaterial in my opinion. It's likely due to the interaction between regulations (rental cover) and the tax changes.

[monkeyprojects]

2 minutes ago, Growlers2 said:

Why would you sell an asset yielding 4pc for example if you are able to borrow at these rates? It's not about availability of credit imho it's about rental yield Vs cost of borrowing.

The question you should be asking is not why would you sell an asset yielding 4% but why people are still borrowing insane sums of money and buying a leveraged asset (potentionally very overpriced) that generates a 4% yield...

And what happens when those greatest of greatest fools can no longer do so...

[interestrateripoff]

Can't they just put the rent up to cover the cost.   

[Growlers2]

19 minutes ago, monkeyprojects said:

The question you should be asking is not why would you sell an asset yielding 4% but why people are still borrowing insane sums of money and buying a leveraged asset (potentionally very overpriced) that generates a 4% yield...

And what happens when those greatest of greatest fools can no longer do so...

How can it be over priced if it is yielding greater than the cost of credit? That's my point.

Any price falls will lead to increased yields and thus stability in prices is likely.

[spyguy]

10 minutes ago, Growlers2 said:

How can it be over priced if it is yielding greater than the cost of credit? That's my point.

Any price falls will lead to increased yields and thus stability in prices is likely.

You'll find those IRs are not fixed for the length of the loan.

If they were then, yep, go on, knock yourself out. Although people will find getting that 4$ yield harder than they think - tenants and all that.

 

 

[Bland Unsight]

1 hour ago, Growlers2 said:

Any price falls will lead to increased yields and thus stability in prices is likely.

Price falls impact LTVs, raising the existing borrowers interest rate payable to SVRs, which are 4.5% to 6%.

Will knife-catchers offset forced sellers, given the amount of heavy weather the Bank and Treasury are sending the BTL sector?

[monkeyprojects]

1 hour ago, spyguy said:

You'll find those IRs are not fixed for the length of the loan.

If they were then, yep, go on, knock yourself out. Although people will find getting that 4$ yield harder than they think - tenants and all that

+1. All those rates are teaser rates at the end of the period the borrower will have to remortgage and hope that similar rates are available. 

Even then those rates are scarily close to a 4% return once you factor in S24 - that 2.64% is probably 3.3% depending on your total income.

Just now, Bland Unsight said:

Price falls impact LTVs, raising the existing borrowers interest rate payable to SVRs, which are 4.5% to 6%.

Will knife-catchers offset forced sellers, given the amount of heavy weather the Bank and Treasury are sending the BTL sector?

No as was shown in 1990 - when house prices are falling its virtually impossible to find a buyer. Even in 1994 a buyer was so rare that we could play sellers off against one another...

[monkeyprojects]

It's also nice to see that Northern Rock has returned to the old days of utterly stupid lending albeit that they are probably protected with the 60% value property.

[Gush]

38 minutes ago, Bland Unsight said:

Price falls impact LTVs, raising the existing borrowers interest rate payable to SVRs, which are 4.5% to 6%.

Will knife-catchers offset forced sellers, given the amount of heavy weather the Bank and Treasury are sending the BTL sector?

+1 there is a misconception among BTLers that when prices fall all other factors will remain the same and their gamble becomes even more profitable because prices is less. 

[frederico]

I'm beginning to think more about the election timing and the things May has said.

Time will tell of course and it's very difficult to trust politicians at the moment.

Cost of housing has to significantly drop or wages rise to correct the financial mess. I don't think wages are going to rise.

Interesting times.

As usual the MSM and opposition are caught in the headlights.

It looks like 75% or higher LTV BTL need to start praying.

[Mr Foster]

Easy credit and low interest rates has indeed changed the whole investment game, not just for housing, but for bonds, stocks, arts etc. Consider the below group of people:

1. Pensioners - Bank interest is below 1%, so an investment property yielding 4% is better for the income they desperately need for retirement.. plus, property price only go up, right?

2. BTL investors - while property price goes up and they can service the interest payments, leverage helps them. Although the stamp duty, PRA and S24 changes this.

3. Foreign investors - During 2012-2014, london prices were raising at 10% a year.. this is a no brainer.

4. First time buyer - Interest rate is so low that their monthly payment is lower than rent... after many years of HPI, they want to buy in the fear of missing out.

5. Downsizing/upsizing - again, if mortgage rates are so low, and there is no other investment yieldingmore than 4%, just rent out the original property rather than sell.

There you see, cheap credit and low interest rates have resulted in all of these groups entering the housing market because it seems the right thing for them to do at the time..  now stamp duty, PRA and S24 changes have level the playing field a little, when interest rates do go up (early next year?), things will then really turn.. unless we have another global financial crisis before that.

All this is telling me the sentiment is not going to turn in a big way for a little while yet (for a 20% + crash), until mid/late next year, I suggest we all save our energy/time and come back to this forum in a year's time.. enjoy the summer

[drunkincharge]

"My focus has been on people on average incomes trying to buy an average home. There is obviously a link between the top end of the market and the bottom end ... and, as with any tax change, in time, it's important to keep it under review. But it’s not a decision for this department” he told Prisk and other MPs on the committee.

The purpose of the meeting was to examine Javid’s department’s Housing White Paper, released earlier this year; the Communities Secretary reiterated his belief that a situation such as today’s, where the ratio of average house prices to average household income was approaching a record high of 8.0, meant that we were in ‘a broken market’.

Referring to the General Election, Javid told committee members that “anything we say today is as representatives of the current government and anything a future government does may change.”

https://www.estateagenttoday.co.uk/breaking-news/2017/4/stamp-duty-no-change-imminent-predicts-communities-secretary

I thought this was interesting from another thread. Sajid Javid and May have been repeating this 'broken market' line and they recognise the disconnect with wages. I think they are actually on the case! Can they pull a masterstroke like S24 did to BTL to get wages in line with prices?

[frederico]

41 minutes ago, drunkincharge said:

"My focus has been on people on average incomes trying to buy an average home. There is obviously a link between the top end of the market and the bottom end ... and, as with any tax change, in time, it's important to keep it under review. But it’s not a decision for this department” he told Prisk and other MPs on the committee.

The purpose of the meeting was to examine Javid’s department’s Housing White Paper, released earlier this year; the Communities Secretary reiterated his belief that a situation such as today’s, where the ratio of average house prices to average household income was approaching a record high of 8.0, meant that we were in ‘a broken market’.

Referring to the General Election, Javid told committee members that “anything we say today is as representatives of the current government and anything a future government does may change.”

https://www.estateagenttoday.co.uk/breaking-news/2017/4/stamp-duty-no-change-imminent-predicts-communities-secretary

I thought this was interesting from another thread. Sajid Javid and May have been repeating this 'broken market' line and they recognise the disconnect with wages. I think they are actually on the case! Can they pull a masterstroke like S24 did to BTL to get wages in line with prices?

Indeed, but i don't want to get my hopes up, the current generation of politicians are not people of their word.

[disenfranchised]

3 hours ago, Growlers2 said:

You missed the most significant thing from the above - the fact that interest rates are so low

Ignore the SVRs, OOs and LLs can borrow at under 2% at 75Pc LTV. That's nuts and I'd have to agree with the conclusions of another poster (can't remember name) that rental yields are higher than this across the country.

 

Why would you sell an asset yielding 4pc for example if you are able to borrow at these rates? It's not about availability of credit imho it's about rental yield Vs cost of borrowing.

 

The lack of products in the 85pc bracket is immaterial in my opinion. It's likely due to the interaction between regulations (rental cover) and the tax changes.

I think you are missing the point. It is not about yield it's about cost vs income.

If you ignore S24 for a minute, leveraged BTL makes money because there is a margin between interest paid and rent received - as you are saying.

And yes, that gap exists. Let's take your 4% yield. Interest is typically 2%, so at 75% leverage, there is around a 2.5% operating margin.

However, access to that interest rate is dependent upon the LTV ratio - if the value of the property decreases and the rent stays the same, then yes, the gross yield goes up. That's largely irrelevant.

The value of the loan outstanding remains the same, so the leverage gets higher - and that in turn will remove access to the low interest rate.

A £200k property at 75% LTV today that achieves £8k in rent per annum has your 4% gross yield. If the interest on the loan is at 2% then it costs £3k to service the debt and leaves £5k for other costs and profit.

The SVR for the 75% mortgage above is 4.74% - so when the fixed rate expires, if they don't remortgage then the interest jumps to £7,110 leaving just £890 to cover all other ownership costs.

Easy, you say - just don't get stuck on the SVR!

Let's say the property declines in value 2.5% to £195k - now the LTV is 76.9% so the max 75% mortgage product doesn't apply, its the max 80% product at 2.64% that applies. The yield has gone up 0.1% but the interest costs have gone from £3000 to £3960 - a stonking 32% increase. That £5k for other costs and profit drops to £4040.

Not great but far from bust.

However, if the property value takes a further turn downwards or the risk appetite or underwriting cost of lenders takes only a minor knock from here, it IS game over. 

The SVR for the 80% product is 4.94% - but that's a variable rate and can go up. If we assume it doesn't then interest costs leap to £7410. Only £590 is left to cover all other costs before taking a profit. We are now into a loss making proposition in reality WITHOUT S24.

All it takes to get here is for lenders to take the same attitude to 80% LTV as they currently take to 85% LTV.

If that doesn't happen, then all the landlord needs to "trap" them on that SVR and be unable to access a new cheap deal is a 6.5% reduction in property value from the original £200k to £187k - that takes their LTV over 80% and they are stuck at the mercy of the SVR.

Incidentally, if that SVR nudges up just 0.4% from 4.94% to 5.34% - game over, interest costs are now £10 more than the rent.

Hopefully this makes sense and explains just how rickety some of these guys positions are before S24 starts taxing them into the ground.

Of course there are plenty of BTLers who grabbed one property a couple of years ago and still work who aren't in this exposed position, it's the leveraged up serial buyers with multiple property portfolios that have chased the market up who are in trouble with a small tightening of lending or single digit value reductions.

If you consider a single property BTLer in my town who got themselves a property like the one I rent at 75% LTV a couple of years ago, lets say for £200k - it's going to be worth  £220k at the moment and rent at 4-4.2% yield - let's say 4.1% = £9k a year in rent. The price rises have dropped their LTV to a touch over 68% so they are quite safe. They can weather a 9% value reduction before they start bumping out of a 75% LTV deal. At the minute they are paying £3k in interest on a £9k rental income leaving £6k for other costs and profits. With S24 rolled out, if they are already a higher rate tax payer then they end up with 20% relief on £3k which is £600, so their tax liability is 40% of £8400 which is £3360 leaving them with £2640 in profit which is really not a lot! A 15% downturn puts them over the 80% and trapped on the SVR. Interest costs now £7410, their tax bill rises to over £3k which is more than they are making - so they are into loss.

However, given that they have other income, they are more likely to use some of it (or another source of credit) to pay down a bit more capital when they remortgage to keep themself in the cheap rates - if they are really determined then it's only loss of income, bigger hikes in borrowing costs or bigger drops in value that are really going to force them out.

[RushRoad]

3 hours ago, monkeyprojects said:

+1. All those rates are teaser rates at the end of the period the borrower will have to remortgage and hope that similar rates are available. 

Even then those rates are scarily close to a 4% return once you factor in S24 - that 2.64% is probably 3.3% depending on your total income.

 

You can get a 10 year fix for 2.49% if you are worried that rates will go up and most buyers are not landlords so this should be seen in the eyes of renting or buying your own home

 

3 hours ago, monkeyprojects said:

No as was shown in 1990 - when house prices are falling its virtually impossible to find a buyer. Even in 1994 a buyer was so rare that we could play sellers off against one another...

 

Land registry only goes as far as 1995 which shows that transactions were about 800,000 that year, given the population and housing stock has grown that shows that homes were transacting just fine

[RushRoad]

1 hour ago, disenfranchised said:

I think you are missing the point. It is not about yield it's about cost vs income.

If you ignore S24 for a minute, leveraged BTL makes money because there is a margin between interest paid and rent received - as you are saying.

And yes, that gap exists. Let's take your 4% yield. Interest is typically 2%, so at 75% leverage, there is around a 2.5% operating margin.

However, access to that interest rate is dependent upon the LTV ratio - if the value of the property decreases and the rent stays the same, then yes, the gross yield goes up. That's largely irrelevant.

The value of the loan outstanding remains the same, so the leverage gets higher - and that in turn will remove access to the low interest rate.

A £200k property at 75% LTV today that achieves £8k in rent per annum has your 4% gross yield. If the interest on the loan is at 2% then it costs £3k to service the debt and leaves £5k for other costs and profit.

The SVR for the 75% mortgage above is 4.74% - so when the fixed rate expires, if they don't remortgage then the interest jumps to £7,110 leaving just £890 to cover all other ownership costs.

Easy, you say - just don't get stuck on the SVR!

Let's say the property declines in value 2.5% to £195k - now the LTV is 76.9% so the max 75% mortgage product doesn't apply, its the max 80% product at 2.64% that applies. The yield has gone up 0.1% but the interest costs have gone from £3000 to £3960 - a stonking 32% increase. That £5k for other costs and profit drops to £4040.

Not great but far from bust.

However, if the property value takes a further turn downwards or the risk appetite or underwriting cost of lenders takes only a minor knock from here, it IS game over. 

The SVR for the 80% product is 4.94% - but that's a variable rate and can go up. If we assume it doesn't then interest costs leap to £7410. Only £590 is left to cover all other costs before taking a profit. We are now into a loss making proposition in reality WITHOUT S24.

All it takes to get here is for lenders to take the same attitude to 80% LTV as they currently take to 85% LTV.

If that doesn't happen, then all the landlord needs to "trap" them on that SVR and be unable to access a new cheap deal is a 6.5% reduction in property value from the original £200k to £187k - that takes their LTV over 80% and they are stuck at the mercy of the SVR.

Incidentally, if that SVR nudges up just 0.4% from 4.94% to 5.34% - game over, interest costs are now £10 more than the rent.

Hopefully this makes sense and explains just how rickety some of these guys positions are before S24 starts taxing them into the ground.

Of course there are plenty of BTLers who grabbed one property a couple of years ago and still work who aren't in this exposed position, it's the leveraged up serial buyers with multiple property portfolios that have chased the market up who are in trouble with a small tightening of lending or single digit value reductions.

If you consider a single property BTLer in my town who got themselves a property like the one I rent at 75% LTV a couple of years ago, lets say for £200k - it's going to be worth  £220k at the moment and rent at 4-4.2% yield - let's say 4.1% = £9k a year in rent. The price rises have dropped their LTV to a touch over 68% so they are quite safe. They can weather a 9% value reduction before they start bumping out of a 75% LTV deal. At the minute they are paying £3k in interest on a £9k rental income leaving £6k for other costs and profits. With S24 rolled out, if they are already a higher rate tax payer then they end up with 20% relief on £3k which is £600, so their tax liability is 40% of £8400 which is £3360 leaving them with £2640 in profit which is really not a lot! A 15% downturn puts them over the 80% and trapped on the SVR. Interest costs now £7410, their tax bill rises to over £3k which is more than they are making - so they are into loss.

However, given that they have other income, they are more likely to use some of it (or another source of credit) to pay down a bit more capital when they remortgage to keep themself in the cheap rates - if they are really determined then it's only loss of income, bigger hikes in borrowing costs or bigger drops in value that are really going to force them out.

 

But BTL is a small part of the purchase market, around 70,000 properties will be purchased with BTL this year which is ~6% of transactions

Around 34% is cash, 30% FTBs, 30% Home Movers, 6% BTL

I can see BTL falling a further 1/3rd so to 4% of transactions but since its a small part of buying anyway it would only mean a 2% overall fall in demand assuming the other 3 big groups do not see an uplift in buying. FTB numbers have been growing for some time and are nearly double what they were at the low point in 2009

 

 

 

[Bland Unsight]

6 hours ago, RushRoad said:

I can see BTL falling a further 1/3rd so to 4% of transactions but since its a small part of buying anyway it would only mean a 2% overall fall in demand assuming the other 3 big groups do not see an uplift in buying. FTB numbers have been growing for some time and are nearly double what they were at the low point in 2009

You like to put your calculator through its paces.

Here's something for you to work out.

Imagine a household of potential FTBers, Mr & Mrs Maybe-Tenant.

Why don't you see what the Maybe-Tenants can afford to pay for a house with a 15% deposit and with 40% of their earned income going on a post-MMR repayment mortgage.

Then compare that to what what a leveraged landlord can afford using a 75% LTV mortgage and with the same 40% of the Maybe-Tenant's after-tax income now used to service an interest-only BTL mortgage at a 125% interest cover ratio (prevailing BTL market underwriting standards this time last year)

Then repeat the exercise for a leveraged landlord and at  60% LTV and with 145% rental cover (today's typical BTL underwriting standards).

All calculations at the stress rate of course, because whilst you pay the pay rate (obvs) lending is assessed at the stress rate.

I predict that you're going to get a nasty surprise because not all demand is created equal - the terms under which credit is extended also matter.

Edited April 21, 2017 by Bland Unsight

[disenfranchised]

6 hours ago, RushRoad said:

 

But BTL is a small part of the purchase market, around 70,000 properties will be purchased with BTL this year which is ~6% of transactions

Around 34% is cash, 30% FTBs, 30% Home Movers, 6% BTL

I can see BTL falling a further 1/3rd so to 4% of transactions but since its a small part of buying anyway it would only mean a 2% overall fall in demand

What's that got to do with selling?

BTL accounts for about 5.2m properties of which 1.7m is mortgaged, accounting for about 16% of all outstanding mortgages by value.

Leverage on recent lending is high and rising despite house price increases:

That indicates people are leveraging up to buy more. About 1.5m BTLs are in the hands of about 100,000 people, then about 0.5m are in the hands of 3,500 people. That sort of concentration is much more likely to be a primary source of income and much less able to cross-subsidise property or fend off issues.

The stats seem to hint at that particular cohort being a fairly large chunk of the outstanding mortgage balance and high leverage. Even if they are not, and are just average, 32% mortgaged up out of 2m = 640k. If half are recent purchases = 320k, if 35% are leveraged over 75% already = 112k properties 

If conditions change even slightly then they could all be on the market at once.

That's nearly 10% of the total property you expect to sell in 2017. 

Who is going to buy it?

BTL mortgaged buying has been hoovering it up... but you expect that to decline?

You can clearly see from the first chart that BTL has been grabbing market share - now you expect it to start falling away.

Few people have bought many properties.

Now, you need many people to buy 1 property?

MMR rules simply make that impossible at current prices.

Then what happens?

Edited April 21, 2017 by disenfranchised

[RushRoad]

9 minutes ago, Bland Unsight said:

You like to put your calculator through its paces.

Here's something for you to work out.

Imagine a household of potential FTBers, Mr & Mrs Maybe-Tenant.

Why don't you see what the Maybe-Tenants can afford to pay for a house with a 15% deposit and with 40% of their earned income going on a post-MMR repayment mortgage.

Then compare that to what what a leveraged landlord can afford using a 75% LTV mortgage the same 40% of the Maybe-Tenant's after-tax income used to service an interest-only BTL at a 125% interest cover ratio (prevailing BTL market underwriting standards this time last year)

Then repeat the exercise for a leveraged landlord and at  60% LTV and iwith 145% rental cover (today's typical BTL underwriting standards).

All calculations at the stress rate of course, because whilst you pay the pay rate (obvs) lending is assessed at the stress rate.

I predict that you're going to get a nasty surprise because not all demand is created equal - the terms under which credit is extended also matter.

 

 

70,000 purchases will be made this year with BTL mortgages out of some 1.2 million total purchases so BTL is about 5.8% of the market.

What this 5.8% of the market can or can not bid does not set the price

It would perhaps be more reasonable to look at what a couple on the minimum wage can afford come 2020 the min wage is going to be £9 ph so a couple working 40h a week 51 weeks of the year would get a combined income of £36,720. Multiply that by 4.5 x and see a 15% deposit and it gives a budget of £194,400 which probably puts 75% of the country into affordable basket for those even on the minimum wage

Even a single person on the minimum wage has the option to spend close to £100,000. Birmingham + 40 miles shows a hit for 5,000 properties for £100k or less

Simply put the idea that there is a problem everywhere is not true, outside the SE pretty much everywhere else is affordable for a couple on min wage and often just a single person on the min wage

[RushRoad]

3 minutes ago, disenfranchised said:

What's that got to do with selling?

BTL accounts for about 5.2m properties of which 1.7m is mortgaged, accounting for about 16% of all outstanding mortgages by value.

Leverage on recent lending is high and rising despite house price increases:

That indicates people are leveraging up to buy more. About 1.5m BTLs are in the hands of about 100,000 people, then about 0.5m are in the hands of 3,500 people. That sort of concentration is much more likely to be a primary source of income and much less able to cross-subsidise property or fend off issues.

The stats seem to hint at that particular cohort being a fairly large chunk of the outstanding mortgage balance and high leverage. Even if they are not, and are just average, 32% mortgaged up out of 2m = 640k. If half are recent purchases = 320k, if 35% are leveraged over 75% already = 112k properties 

If conditions change even slightly then they could all be on the market at once.

That's nearly 10% of the total property you expect to sell in 2017. 

Who is going to buy it?

 

 

There is no way all the property will come on the market at once, at best it will be over 2 years so your 112,000 becomes 56,000 a year assuiming all your other assumptions are reasonable which I am not sure of

However...... as another post of mine on another thread shows, there has been two big periods where landlords were big sellers. In the 1970s landlords sold lots of homes and the private rental sector crashed in size yet prices went up 10x in nominal terms and fell 5% in real terms. In the 1980s there was also a selloff of private rental homes and again prices went up in nominal terms but fell 5% in real terms.

I do not see why this time around its different. I would not disagree that one road may indeed by landlords sell off a million homes over the next 10 years but that will not necessarily lead to a house price crash in real terms and even more unlikely in nominal terms as the 1970s and 1980s shows.

If we look at just the min wage its going to go up 20% over the next 3-4 years from £7.50 to £9.00 thats a lot of inflation. Real crashes happen as per the 1970s/1980s but nominal crashes are much rarer as per the 1970s/1980s real 5% crash being completely covered and then some by inflation.

[RushRoad]

24 minutes ago, disenfranchised said:

What's that got to do with selling?

Then what happens?

 

 

Looking at that graph, it looks like the owned outright BTL grew by more than 1 million units between 2004-2014

Why would you expect that to not happen again in the next 10 years? I am not saying its going to happen but whats changed to stop the growth in owned outright rentals?
If not much then will it continue to grow?

[LittlePig]

33 minutes ago, RushRoad said:

 

 

There is no way all the property will come on the market at once, at best it will be over 2 years so your 112,000 becomes 56,000 a year assuiming all your other assumptions are reasonable which I am not sure of

However...... as another post of mine on another thread shows, there has been two big periods where landlords were big sellers. In the 1970s landlords sold lots of homes and the private rental sector crashed in size yet prices went up 10x in nominal terms and fell 5% in real terms. In the 1980s there was also a selloff of private rental homes and again prices went up in nominal terms but fell 5% in real terms.

I do not see why this time around its different. I would not disagree that one road may indeed by landlords sell off a million homes over the next 10 years but that will not necessarily lead to a house price crash in real terms and even more unlikely in nominal terms as the 1970s and 1980s shows.

If we look at just the min wage its going to go up 20% over the next 3-4 years from £7.50 to £9.00 thats a lot of inflation. Real crashes happen as per the 1970s/1980s but nominal crashes are much rarer as per the 1970s/1980s real 5% crash being completely covered and then some by inflation.

What has the minimum wage got to do with house prices?