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Magpie

"you Clearly Don't Just Dabble In This"

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Some high comedy in the Homes and Property bit of the Evening Standard (sadly I don't think it's online) tonight.

"Landlord ("Company director") Nina Gardiner wants to sell up, after her tenant's refusal to pay rent by standing order threatened her mortgage"

Basically the journalist is sympathising with this woman's plight. She has bought a 2-bed £414K (yes, £414K) flat in Fulham and was assured by the agency that they would get tenants to pay by standing order. But the first tenant cancelled the standing order and was often three months in arrears (apparently she had the temerity to complain that the air conditioning was broken, and expected compensation). As a result she "had to pay penalty charges on her mortgage". The second tenant pays on time but hasn't taken out a standing order, and sometimes pays late, meaning she "risks penalty charges".

The agency has, not unreasonably suggested she keep a month or so's mortgage interest in reserve but apparently she is still not happy. The last line of the article is her saying that "You clearly don't just dabble in this, you've got to go into it having a complete understanding of it as a business. If I could sell the flat I would."

Remarkable that a company director would go into a £400K business expecting that you could just "dabble in it". And that she would be so stupid as to undertake such a business with apparently zero reserves to cover any problem such as late payment that might arise. What is she going to do if she gets a void?

I don't usually go for the theory that BTLs are operating on a knife-edge, but this is a pretty good example that some of them have no idea or margin for error. But she presumably can't sell because she would have to either try to sell while a tenant was in place, or deal with several months (minimum) of mortgage payments while she tried to shift it. Basically she didn't think it through and expects our sympathy...

Entertaining, if infuriating reading if you can get hold of it.

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"Remarkable that a company director would go into a £400K business expecting that you could just "dabble in it". And that she would be so stupid as to undertake such a business with apparently zero reserves to cover any problem such as late payment that might arise"

Ahh, but...

Many are in because BTL was "the place to be".

It is the bandwago effect writ large. And if others are doing it, it must be good? Right?

Exactly right - it just smacks of "All my friends were talking about their BTLs at dinner parties, so I wanted one too..."

Not as easy to get out of as some fads though. I was also entertained by Rosie Millard's article on Sunday where she did the sums on making an exit from one of her BTLs and realised that after selling costs, CGT etc she would actually have far less than she'd imagined. And I think she already tried to sell her Hackney house, evicted the tenants, tried to get an inflated price for three months or so then gave up and let it out again.

It makes me wonder how much some of these people will have to lose before they get out. It's one of those situations where the losses look much more real once you sell up. As long as you go along you can fool yourself it's just a temporary shortfall. In fact you've lost a lot of money, you just haven't realised the loss yet.

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But I was assured on the other thread that BTLs are experts who are in for the long term, and won't just sell up when their executive flat is worth far less than their mortgage which their rent won't cover.

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But I was assured on the other thread that BTLs are experts who are in for the long term, and won't just sell up when their executive flat is worth far less than their mortgage which their rent won't cover.

Not by me you weren't, though I do think that not all of them are as dim as this example.

What I do personally think is that the mentality that they are in it for the long-term may mean that there isn't the quick rush for the exits that some here expect. As I say above, some of them will fool themselves about short term losses in the hope of long term gains. Some will hang in there for a long time simply because selling up will make them bankrupt, whereas hanging on in there leaves them with some hope. Some bought early enough that they can cope with a bit of a fall, and still hang in there for the long term. So there are all sorts, and I'm not convinced they will all get out as fast as I'd like them to.

The loss of faith in pensions is a large part of the "property is my pension" mentality. I'm not sure that small falls will force all BTLs out of the market overnight. Unless there are massive falls (and I know that's what you're expecting) I would think that there will still be more investment and BTL activity in the market than there was a decade or two ago, and that may affect the equilibrium level of house prices. If there are the truly massive falls you're predicting, then I'll admit I was wrong on that, but that's my guess.

But this looks to me like a new-build, and like many I expect the crash in new-builds to be severe. There I think it may well be exacerbated by panic from BTLs as prices start to fall seriously. And it's a pretty good bet that any BTLs dabbling in new-build are of the fairly dim variety. So I think she's a good example of the most stupid of a breed.

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Guest muttley

She's one of the new breed Pollyanna BTL landlords. No need to save for a rainy day, because it never rains. :rolleyes:

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"Remarkable that a company director would go into a £400K business expecting that you could just "dabble in it". And that she would be so stupid as to undertake such a business with apparently zero reserves to cover any problem such as late payment that might arise"

Sadly I don't find it remarkable at all based on my experiences of company directors.

Ignoring the obvious nepotism of family businesses*, there is an additional and significant proportion of "directors" who have only one obvious talent - that of playing the system in such a way as to get promotion. Qualities such as vision, insight, inspiration and leadership are sadly missing.

Why should you expect the same sort of people who mismanage businesses to manage their own finances any better?

*I am aware that there are many capable family firms with family members making up the majority of the board. I am also aware of the rule of thumb that suggests that such firms normally last only three generations - first to create, second to build and the third generation loses the lot...

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Sadly I don't find it remarkable at all based on my experiences of company directors.

Ignoring the obvious nepotism of family businesses*, there is an additional and significant proportion of "directors" who have only one obvious talent - that of playing the system in such a way as to get promotion. Qualities such as vision, insight, inspiration and leadership are sadly missing.

Why should you expect the same sort of people who mismanage businesses to manage their own finances any better?

*I am aware that there are many capable family firms with family members making up the majority of the board. I am also aware of the rule of thumb that suggests that such firms normally last only three generations - first to create, second to build and the third generation loses the lot...

Fair point - I suppose it's more remarkable that anyone could be that naive. The fact that she is proud to boast of being a director at the same time as displaying such incompetence only adds to the comedy.

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But I was assured on the other thread that BTLs are experts who are in for the long term, and won't just sell up when their executive flat is worth far less than their mortgage which their rent won't cover.

i think you're referring to me, and my point was that most BTLers are probably in better shape than you think and are in it for the long term... but there are ogoing to be a few in trouble, mainly those with new builds.

Magpie... you have again expressed my thoguhts more eloquetly than i could!

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i think you're referring to me, and my point was that most BTLers are probably in better shape than you think and are in it for the long term... but there are ogoing to be a few in trouble, mainly those with new builds.

Magpie... you have again expressed my thoguhts more eloquetly than i could!

But it will be the few who are in trouble who will have to sell their properties and set the market price.

Billy Shears

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But can't you buy a whole house in Fulham for £400,000? In fact £390,000, and you might be able to get it for less!

http://www.rightmove.co.uk/viewdetails-635...pa_n=1&tr_t=buy

Yes, I find £414k for a 2 bed BTL rather ridiculous and I've lived in Fulham for many years. A really decent 2 bed is usually ~£350k, so this must be something amazing. If so, it doesn't sound like rental material. A 6% yield would be £477 a week :o . The only people rich enough to pay that, would surely buy. It doesn't add up as an investment at all.

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Yes, I find £414k for a 2 bed BTL rather ridiculous and I've lived in Fulham for many years. A really decent 2 bed is usually ~£350k, so this must be something amazing. If so, it doesn't sound like rental material. A 6% yield would be £477 a week :o . The only people rich enough to pay that, would surely buy. It doesn't add up as an investment at all.

But she's got tenants, who don't reliably pay the rent. I'd presume that they aren't "young professionals" then. The whole plan just gets worse and worse the more it is examined.

Billy Shears

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i think you're referring to me, and my point was that most BTLers are probably in better shape than you think and are in it for the long term... but there are ogoing to be a few in trouble, mainly those with new builds.

Magpie... you have again expressed my thoguhts more eloquetly than i could!

there is a larger proportion than you think who are "dabbling" with no idea of business, no idea of their own business, and who went into it because it was the "in" thing to do, thinking there was little work or knowledge needed. This woman is a prime example and there are a lot more out there. You must have come across these people you're an EA arent you?

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The loss of faith in pensions is a large part of the "property is my pension" mentality. I'm not sure that small falls will force all BTLs out of the market overnight. Unless there are massive falls (and I know that's what you're expecting) I would think that there will still be more investment and BTL activity in the market than there was a decade or two ago, and that may affect the equilibrium level of house prices. If there are the truly massive falls you're predicting, then I'll admit I was wrong on that, but that's my guess.

Spot on.

Nail on head.

Just my take on things too. ;)

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Rosie's article is enlightening,

shows why some landlords/landladies may hold until the banks foreclose:

Maths Lesson: http://property.timesonline.co.uk/article/...2140007,00.html

When propery prices come down to around the same as when purchased the CGT will no longer be an issue. Or more importantly when acknowledged they have.

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Rosie's article is enlightening,

shows why some landlords/landladies may hold until the banks foreclose:

Maths Lesson: http://property.timesonline.co.uk/article/...2140007,00.html

I thought it was interesting the way she had a brief moment of common sense, admitting that maybe she should sell. Then did the sums which weren't to her liking. Then by the end of the article she lets the flimsy idea that CGT might be lower in future outweigh the reality that she is currently in debt and over-extended.

Back to denial then...

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So, how about organising a national tennant strike... ? Should put a blip in the house prices if a couple of hundred thousand households accidently forget to pay the rent for 2 months...

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I thought it was interesting the way she had a brief moment of common sense, admitting that maybe she should sell. Then did the sums which weren't to her liking. Then by the end of the article she lets the flimsy idea that CGT might be lower in future outweigh the reality that she is currently in debt and over-extended.

Back to denial then...

Rosie seems to have done quite well as far as I can see.

She probably borrowed virtually all the money invested in this property, but even if she didn't she has still made a substantial clear (on paper as she qualifies it) profit of £89,660 over 6 years (excluding net rental income) on this property, if the valuation is correct.

This amounts to 6.89% net compound pa.

How many of us can ever hope to save or acquire £14,943 pa?

An even greater achievement if you consider that probably none of the investment capital is hers given the public disclosure of her finances.

Whichever deductions you may care to subtract from the gain, she has still made serious money.

Who is in denial?

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So, how about organising a national tennant strike... ? Should put a blip in the house prices if a couple of hundred thousand households accidently forget to pay the rent for 2 months...

Or maybe a Fosters Stella strike? Sorry just being silly

I have nothing against landlords or anyone owning property (or anything for that matter) I am not a communist.

It must be quite off putting for the established professional landlords in this country to see these new "chav" BTLers bring their industry into disrepute.

I would have thought, traditionally to become a landlord there would be a high capital outlay, with lots of tied up capital. They would need a complete knowledge of tenancy and housing law and understand their legal and moral responsibilities, they would also need a good buiness sense and knowledge about building/construction and maintenance matters. They would know what the actual market rent was, not the dream rates and know the current demand for their property type. It would not be looked on as "making a killing in the property market" but purely as a business like any other with capital appreciation just a factor.

In general a lower return on capital than most other businesses but safer steadier returns. Im sure these professionals will be happy when things get back to normal for them, and you an I will probably have a little more respect for who we rent off.

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Or maybe a Fosters Stella strike? Sorry just being silly

I have nothing against landlords or anyone owning property (or anything for that matter) I am not a communist.

It must be quite off putting for the established professional landlords in this country to see these new "chav" BTLers bring their industry into disrepute.

I would have thought, traditionally to become a landlord there would be a high capital outlay, with lots of tied up capital. They would need a complete knowledge of tenancy and housing law and understand their legal and moral responsibilities, they would also need a good buiness sense and knowledge about building/construction and maintenance matters. They would know what the actual market rent was, not the dream rates and know the current demand for their property type. It would not be looked on as "making a killing in the property market" but purely as a business like any other with capital appreciation just a factor.

In general a lower return on capital than most other businesses but safer steadier returns. Im sure these professionals will be happy when things get back to normal for them, and you an I will probably have a little more respect for who we rent off.

You must be joking - landlords have historically been greedy inconsiderate scumbags. The only thing that keeps them in line is government regulation - otherwise most properties would be dangerous, decrepit death traps (which is good for profits, naturally).

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Had a call from a friend yesterday complaining that trade was bad and he was thinking of ways to make more money.BTL,I think that`s agood idea he said.Bearing in mind that at age 47 he bought a new build house for 170k with borrowed deposit only a year ago I was gob smacked.How much would a flat be your way I asked.Oh,about 100k was his reply.Grabbing a calculator,I did the math.Ahhhhh,I think you are going to be in for about a -1% return if it all goes smoothly I pointed out.

My take on it is that if more people had good mates like me,I think the BTL boom would grind to a rapid halt!!!!!!!!!!!!!!!!!! :lol:

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now i have seen it all........

and who said people in the south were educated..!!!

i cant beleive things have got this far. this is a scabby, nasty looks like ex la shack.

and its worth how much...??? nearly a million dollars..haha....!!!

people in london area must be plain stupid.

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Rosie's article is enlightening,

shows why some landlords/landladies may hold until the banks foreclose:

Maths Lesson: http://property.timesonline.co.uk/article/...2140007,00.html

I like the quote about "the richest person I know has never sold anything". What would it mean to own a load of stuff, but to never be in a position to realise the value by selling it. In what sense is it wealth if it can't be converted into something else, or unless one can actually use it?

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Actually i think it probably has a name... some kind of itis I guess.

You get the same way in shops like ikea... walk around looking at price tags of x00's then you get to the 'stick it in the bag its only £15' section. By the time you get out you are lucky to be only a couple of hundred down on tat you didnt want in the first place.

Here you think, ok I'm earning well, I want a place to live. 3.5x gives me ooo £175k mortgage. A nice little house would be nice, garden, garage. Oh I see, I can get a 1 bed flat for 175. Ok, 1 bed is too small. £225k for a small 2 bed, ok, I can stretch to that. Oooh but a nicer one for £280... maybe I can get some cash off dad, knock a bit off the price ... interest on thats only a bit more than I pay in rent.

value fatigue or something...

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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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