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The Reality Of Btl

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I reported recently in an anecdotal that a lot of people I know are buying new houses and keeping the old one as BTL. Seems amongst the people I know to be spreading like a rash now.

The latest of my friends to be talking loudly about it has a kid, a wife working part time, and is himself on a fairly low wage. He lives in a fairly small house, barely big enough for his needs. His current situation is one in which opportunities to become wealthier by earned money are almost ruled out. And yet, he is talking about BTL, possibly with "mates".

What is it with this country? Can't people see something wrong with the picture: A country where people stretched to the limit, unable to afford more than a shoebox dwelling for themselves and family, can somehow generate cash to buy another house for somebody else to live in? WTF?

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I reported recently in an anecdotal that a lot of people I know are buying new houses and keeping the old one as BTL. Seems amongst the people I know to be spreading like a rash now.

Indeed.

Someone I know is doing the same (well, many others actually). It is the wealthy 'I'm moving house, but instead of selling the old one, I will keep it to rent out' brigade that may prolong things for some time yet.

Even the gf wants to do this, when we buy a house together.

CF

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Guest Bart of Darkness
I reported recently in an anecdotal that a lot of people I know are buying new houses and keeping the old one as BTL.

Sometimes this forced on them as is Plan B (Plan A was to sell the house -- which didn't come off).

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I managed to talk someone out of this the other day.

He said he was looking to buy a house in London (aged around 40), but thought it likely that he would be moving away in 2 years because of work. His plan was to keep the property and rent it out at that point.

I sounded a note of caution about the housing market and he said something along the lines of "well, it only goes up.... or at least in the long term."

When I used a few of the well-rehearsed arguments, he was interested and admitted he didn't know much about the market. He said he would go back to his wife and suggest they consider more carefully whether now was a good time to buy or whether they would be best continuing to rent until they move.

What amazed me was that they had actually already put in a couple of offers which had been rejected, yet hadn't really sat down and considered whether buying what was effectively going to be an investment property was a good financial decision.

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Sometimes this forced on them as is Plan B (Plan A was to sell the house -- which didn't come off).

Yes, well I have a personal anecdote concerning this...

My girlfriend and I just rented (two months ago) a pretty nice town centre flat, but have recently been told by our landlady (who I rather suspect is a FU*KING B1TCH) that she wants us to leave. As reason for this, she has cited my girlfriend complaining about the temperature of the water from the boiler, which is not over hot. We both like it in the appartment, and I phoned her and assured her that we did not want to move and argued that she should let us stay...she seemed to go for this, but just emailed me today and told me that they think it is 'more appropriate if you leave', giving the impression that we are trouble makers. We have not caused any trouble, and I assume that she doesn't enjoy voids etc...so I tend to think she is not being honest with us regarding her reasons for wanting us out. This becomes obvious when I consider the following:

...I checked the price of an identical flat for sale in the same block in order to calculate the yield she was getting out of us (£750 pcm) - the flat was back then (2.5 months ago) £209,995 in price - this gave her a yield of something like 4.8% (if I remember correctly..work it out if you want), which I was happy with - i.e. not a lot!

...after receiving the 'eviction notice' today I just checked the price of the identical flat again. Lo and behold it has not sold ( :rolleyes: ), and is now priced at £199,995. This is a drop of £10,000 in 10 weeks, or if you like 4.75%. Annualised this gives a price drop of nearly 25%!! As I see it there are two options then:

1) The silly moo just wants us out because we knocked £50 pcm off the rent in the first place and then didn't tip our hat in deference to the landed classes like we were meant to. She is still under the impression that BTL is a goer and expects to get someone else in immediately for more money.

2) She has noticed the rather alarming drops in value of similar (ahem...identical) properties over the past few months (although she thinks it is strange because she did not read about this in the Daily Express) and is now rather quickly trying to get us out and the property flogged off ASAP before the shit really hits the fan.

I believe it is (2), which means she is not being honest with us. She has graciously ( :lol: ) offered to let us leave before the end of the minimum tenancy agreement (how kind!), which makes me think this is definitely the case.

The old b1tch can suck my balls if she thinks I am going to let her off so easily - we are going to stay until the end (September '06), by which time she will have, based on a projection of the current capital depreciation, lost another £15k or so capital before she even gets a chance to try and sell. I firmly expect the housing shitstorm to be well underway by this time, and she will be stuck with it.

HA HA HA HA HA HA HA HA HA!!!! :lol::lol::lol:

What was it Dr Bubb said? 'Renting well is the best revenge'.

p.s. this is in Hertfordshire

Edited by marko

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It is the wealthy 'I'm moving house, but instead of selling the old one, I will keep it to rent out' brigade that may prolong things for some time yet.

Even the gf wants to do this, when we buy a house together.

CF

Alarm Bell! <_<

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I reported recently in an anecdotal that a lot of people I know are buying new houses and keeping the old one as BTL. Seems amongst the people I know to be spreading like a rash now.

The latest of my friends to be talking loudly about it has a kid, a wife working part time, and is himself on a fairly low wage. He lives in a fairly small house, barely big enough for his needs. His current situation is one in which opportunities to become wealthier by earned money are almost ruled out. And yet, he is talking about BTL, possibly with "mates".

What is it with this country? Can't people see something wrong with the picture: A country where people stretched to the limit, unable to afford more than a shoebox dwelling for themselves and family, can somehow generate cash to buy another house for somebody else to live in? WTF?

This is so true. I had posted several weeks ago about my girlfriend's sister, who is a smug little be-otch. She bought a place in London, realized it was too small for her...then decided to buy a bigger place in an area just south of the city (Surrey? I think) and let out her first place. Now she brags that the rent she collects on her old place covers her mortgage and all associated expenses with owning the place, which I find hard to believe.

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Please refer to Shakers old thread Renting Badly Is The Best Form Of Revenge :P;)

But that is just it - we have not been troublemakers at all: I am always polite in my dealing with the old crone, and she has been pretty good too, to be fair. I just think she is telling me porkies when she gives me the ostensible reason for wanting us out is because she thinks we are not happy with the apartment (really, this is what she said!) despite my protestations that this is not the case....

...we were happy with it, but scanning the for rental section of the local estate agents website I see there are plenty of other properties available to rent, so I am not bothered. Moving is a bitch, but at least we won't move until she has lost another 15k or so. Cow. B)

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Please refer to Shakers old thread Renting Badly Is The Best Form Of Revenge :P;)

I would also add that it is immensely satisfying to see this happening to one of the greedy ba5tards in close up.

Does anyone know what will happen to the amount of properties available for rent as the crash gathers speed? As I see it there are two conflicting influences:

1) people selling BTL so amount of rental stock decreases allowing remaining renters to push up rents

2) desperate BTLers stuck with properties they can't shift, meaning plenty of rental stock remaining, and them being forced to lower their rents in order to get at least some income from their 'investments'.

Which way will it go? This is crucial stuff to a committed near-term renter!

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Alarm Bell! <_<

Don't worry, we aren't going anywhere for a while yet (2008 at the earliest I reckon). ;)

As for her keeping her old house, well we will see about that too. Depends if it is worth selling I suppose. If things crash as badly as some on here suspect, then we may as well keep it, as the yield will probably stack up then. We will not (and have no interest in) STR, by the way.

I wonder if there will be others in my position:

Reside at partners house.

Healthy (mine) deposit for new house.

Partner has Large equity in her house (75%).

Would like to move to bigger, better house.

What to do if prices fell by 50%:

By the looks of it, it is probably worthwhile keeping the gf's house and buying the new house with my savings as a good % deposit.

The equity we would get out of the gf's house would not make it worthwhile selling it!!

Just my rambling musings..............

CF

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people selling BTL so amount of rental stock decreases allowing remaining renters to push up rents

To sell, they need a buyer. If it's an FTB or STR, that's one less available tenant (or several if they have a family). If it's a BTL, it will still be for rent.

Again, there was no lack of rental properties in the last crash... and, don't forget, if interest rates rise there'll be a ton of people desperate for lodgers to help pay the mortgage.

Finally, let's face it: there are absolutely vast swathes of 'executive apartments' blighting the country now. If they're repossessed and dumped on the market, there'll be a huge oversupply of rental properties.

Edited by MarkG

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The more BTLers the better. They will make rents go down and when the shi* hits the fan there will be more properties (due to speculative building) available at cheaper prices.

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The more BTLers the better. They will make rents go down and when the shi* hits the fan there will be more properties (due to speculative building) available at cheaper prices.

Can I ask you guys what properties you will be buying when the prices hit the floor. I think it's established that 2bed recent newbuild flats in City Centres are going to get hammered, as are probably the small 2 bed matchbox sized starter homes, having been overcolonised by the BTL brigade and not being particularly desirable.

What makes you think that there is suddenly going to be a huge amount of good quality, well priced family homes out there as opposed to people dumping their crap on the market....... ?

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What makes you think that there is suddenly going to be a huge amount of good quality, well priced family homes out there as opposed to people dumping their crap on the market....... ?

For the same reason that there were plenty of good quality, well priced family homes for sale in the last crash: whatever happens, some people have to sell. No-one I know who bought back then had to settle for a crap flat in a crap area, they bought decent-sized houses for a fraction of today's prices.

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** The Housing Market, now with added dual-liability, twice the burden, twice the strain ***

~~~~ Now available in new compact laminated boxes* ~~~~

*one colour option available

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Can I ask you guys what properties you will be buying when the prices hit the floor. I think it's established that 2bed recent newbuild flats in City Centres are going to get hammered, as are probably the small 2 bed matchbox sized starter homes, having been overcolonised by the BTL brigade and not being particularly desirable.

What makes you think that there is suddenly going to be a huge amount of good quality, well priced family homes out there as opposed to people dumping their crap on the market....... ?

some of the amateur BTL muppets will be in such a financial mess they will have to move

out of their good quality homes into the sh*thole BTL they bought at/near the peak!!

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some of the amateur BTL muppets will be in such a financial mess they will have to move

out of their good quality homes into the sh*thole BTL they bought at/near the peak!!

Surely even the biggest idiots will only have secured their BTL portfolio against the BTL properties, they can let those go. In effect all they will be on the hook for is the MEW they did for the deposit, for 90odd percent of them that's not going to be more than £50K (or less than £300 a month)....... - or am I way out ?

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Can I ask you guys what properties you will be buying when the prices hit the floor. I think it's established that 2bed recent newbuild flats in City Centres are going to get hammered, as are probably the small 2 bed matchbox sized starter homes, having been overcolonised by the BTL brigade and not being particularly desirable.

What makes you think that there is suddenly going to be a huge amount of good quality, well priced family homes out there as opposed to people dumping their crap on the market....... ?

Detached.

I would imagine that the price of these will fall (as well as the starter type homes you described) due to the increased differential between the starter home and the next rung up etc, but not by as much.

Example of the 'Differentials' not being like for like:

100K FTB place: Differential = 150K

250K Semi: Differential = 250K

500K Detached

If the FTB property fell by 50%, we get the following prices which will maintain the differentials at their present level.

50K FTB place: Differential = 150K: Price fall = 50%

200K Semi: Differential = 250K: Price Fall = 20%

450K Detached: Price Fall = 10%

So, looking at it from a differential standpoint, the crappier the house, the worse the fall, the better the house the less the fall..........

I am depressing myself here..............

Someone debunk my logic please. Why would the detached necessarily get anywhere near the same % loss as a FTB property (same argument for the semi)

Need a beer now. :(

CF

Edited by Control Freak

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Surely even the biggest idiots will only have secured their BTL portfolio against the BTL properties, they can let those go. In effect all they will be on the hook for is the MEW they did for the deposit, for 90odd percent of them that's not going to be more than £50K (or less than £300 a month)....... - or am I way out ?

Well the amount they MEWED may have disappeared from their primary home, so if they've bought a BTL at the top and lost the equity, they've added to their home mortgage and may end up in negative equity. With rates possibly rising, if they are hooked into short term deals they may feel the pinch later on!

Edited by OzzMosiz

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I reported recently in an anecdotal that a lot of people I know are buying new houses and keeping the old one as BTL. Seems amongst the people I know to be spreading like a rash now.

The latest of my friends to be talking loudly about it has a kid, a wife working part time, and is himself on a fairly low wage. He lives in a fairly small house, barely big enough for his needs. His current situation is one in which opportunities to become wealthier by earned money are almost ruled out. And yet, he is talking about BTL, possibly with "mates".

What is it with this country? Can't people see something wrong with the picture: A country where people stretched to the limit, unable to afford more than a shoebox dwelling for themselves and family, can somehow generate cash to buy another house for somebody else to live in? WTF?

Quite a few of my colleagues at work are doing this. My wks have been recruiting like mad recently and it is common for new starters from London etc to rent out their old house to help pay for a second house relocated closer to here.

I'm looking to do something similar (only in a few years' time). Keep house 1, rent it out to pay towards house 2. However, the tax implications make it more complex than that as you need to do it in a way that gets the most tax relief.

Edited by Without_a_Paddle

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Well the amount they MEWED may have disappeared from their primary home, so if they've bought a BTL at the top and lost the equity, they've added to their home mortgage and may end up in negative equity. With rates possibly rising, if they are hooked into short term deals they may feel the pinch later on!

You see, I think it's only a tiny minority who are overstretched lilke that. To do that, they would have had to MEW several times and gear up more than £100K for a detached house or so.... do you really think that many people are into nearly £670K of BTL - I don't.

I think you will have a lot ogf choice of city centre flats and be fighting investor landlords for them (at low prices) then there will be little volume and far too many buyers chasing far too few BTL landlord excess MEW forced sales of decent houses - but what do I know.

I think a lot of you are a) a bit too gleeful at the moment and b ) a bit too optimistic, if the price falls a bit what's the difference in cost to you when you factor in increased IR - everyone else will just sit still and ride it out......

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I think a lot of you are a) a bit too gleeful at the moment and b ) a bit too optimistic, if the price falls a bit what's the difference in cost to you when you factor in increased IR - everyone else will just sit still and ride it out......

Increased IR and reduced price is easier to pay than high price and low IR. Any overpayments on the first scenario reduce the debt far more than the second scenario!

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But that is just it - we have not been troublemakers at all: I am always polite in my dealing with the old crone, and she has been pretty good too, to be fair. I just think she is telling me porkies when she gives me the ostensible reason for wanting us out is because she thinks we are not happy with the apartment (really, this is what she said!) despite my protestations that this is not the case....

...we were happy with it, but scanning the for rental section of the local estate agents website I see there are plenty of other properties available to rent, so I am not bothered. Moving is a bitch, but at least we won't move until she has lost another 15k or so. Cow. B)

She is being a cow, all that intimation that somehow you're the problem. She's the problem, she's the bloody problem, thinking she should be able to make a small fortune from the casual owning of someone else's home without providing a decent service. Her and her tepid bloody water. They really do have a spectacularly over-developed sense of entitlement. You can run yourself ragged trying to please landlords - I've done it for years and they don't appreciate it. In their eyes tenants are peasants trying to rip them off. But strangely also pay them huge amounts of rent each month (although a declining amount, thankfully). You and your girlf stay put if it suits you, Marko, all power to your elbows. We need a citizen smith emoticon!

p.s. I'd also call her on the veiled insults - tell her straight that you don't care for her insinuations. Why should you put up with that krap? The lack of service is one thing but insulting you is just a bridge too effing far. Grr!

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  • 302 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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