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PropertyGuru

A 7% Fall Will Ruin 1 In 5 Btl'ers

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Half would be ruined and some more would sell up because "43% have invested for capital gains and yield"

this actually shows the complete unsustainability of the current situation, and yet the incredible ability of 'hope' to triumph over 'brains'.

If you factor transaction costs, voids, unexpected repairs and tenant subsidies into it, these johnny-come-too-lates need about 12% a year just to break even.

Incredible.

Talk about lack of business sense.

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Data validity.

This article is based on flawed data and likely to be misleading. Firstly, the survey is a self-selecting sample of ARLA's members. Secondly, ARLA's membership is unlikely to be representative of BTL landlords as a whole.

Perhaps people could comment on how many landlords they know of who belong to ARLA and what type of landlord they are in terms of business experience, number of properties, etc.

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Data validity.

This article is based on flawed data and likely to be misleading. Firstly, the survey is a self-selecting sample of ARLA's members. Secondly, ARLA's membership is unlikely to be representative of BTL landlords as a whole.

Perhaps people could comment on how many landlords they know of who belong to ARLA and what type of landlord they are in terms of business experience, number of properties, etc.

Talk about unscientific! The ARLA's is the best available data. They invented buy to let! The best available data gives the best available picture. If you can find any better data, please post it. I'd agree that the ARLA is unlikely to be completely representative of landlords as a whole, but it's more skewed towards the professional BTL rather than the recent property porn inspired amateurs. IMO, the ARLA surveys underrepresents the rank amateurs involved; considerably more than the ARLA's stated 50% of BTLs are in fact jonny come latelys who will easily by wiped out.

Having said that, future surveys may not be quite so accurate, especially if some HPCers go and participate in the latest ARLA survery. The ARLA surveys have previously been for ARLA members only; it appears they're also running a parallel, unrestricted survey this time!

www.arla.co.uk/btl/btlrlsurvey.htm (PLEASE DO NOT CLICK ON LINK, BUT COPY & PASTE INTO YOUR BROWSER'S ADDRESS BAR - This avoids referral logs) - It would perhaps be best (if you feel like participating in the survey) to not necessarily do it today, but at some time over the next few weeks or so. Referral logs or a sneak could inform the ARLA, and today's surveys could be wiped. Of course, if you have a PC at work and at home, they will have different IP addresses and you could do the survey twice. ;)

Question 11: "If house prices were to fall, would you sell your residential property investments" - Now, why would the ARLA be asking that? :)

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"13.8% of BTLs have been landlords for less than one year.

7.4% have been landlords for 1 year.

21.2% of BTLs have been landlords for 1 year or less"

I've have not come across many landlords who are members of ARLA in Leeds or London where I have both worked as a housing lawyer.

Incidentally, I'm seeing an increase in unlawful eviction and landlord harassment - mainly by the amateur brigade - and I'm also seeing an increase in mortgage problems. Its a good time to be a housing lawyer.........bad time to be a purchaser!

Edited by Take me to the cleaners

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Data validity.

This article is based on flawed data and likely to be misleading. Firstly, the survey is a self-selecting sample of ARLA's members. Secondly, ARLA's membership is unlikely to be representative of BTL landlords as a whole.

Perhaps people could comment on how many landlords they know of who belong to ARLA and what type of landlord they are in terms of business experience, number of properties, etc.

Ross could be right. The ARLA data by definition focuses on the more 'professional' end of the BLT market.

the real position could be MUCH worse

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"13.8% of BTLs have been landlords for less than one year.

7.4% have been landlords for 1 year.

21.2% of BTLs have been landlords for 1 year or less"

?

13.8% + 7.4% = 21.2%? It was just a 5 minute back of the fag packet calculation. It wasn't my idea - It was landlord's in this thread. It was only to refute the ridiculous supposition that high numbers of seasoned professional landlords will prevent a crash.

The figures speak for themselves: http://www.arla.co.uk/news/230606.htm - Page 8 - Over 50% of BTLs are rank amateur jonny com latelys (less than 3 years) who will easily be wiped out by a relatively small drop (they bought 7 years too late). The 50%+ of amateurs will bring the seasoned pros down with them. The TV property porn brought the greater fools in, temporarily sustaining the market, whilst making it more fragile.

Anyway, BTLs only account for - is it? - 8% of the market.

Anyway, who cares? It's the end of massive excess liquidy that will cause the HPC, not just these 1999 dot com investors.

Edited by Pooh Bear

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The 50%+ of amateurs will bring the seasoned pros down with them. The TV property porn brought the greater fools in, temporarily sustaining the market, whilst making it more fragile.

I doubt it. The seasoned pros are either out (like moi) or have degeared back beyond the 60% safety level (safety level - if it drops more than 40% the UK as a whole will have rather more to worry about than a bit of neg equity...)

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I doubt it. The seasoned pros are either out (like moi) or have degeared back beyond the 60% safety level (safety level - if it drops more than 40% the UK as a whole will have rather more to worry about than a bit of neg equity...)

Good point. How about the rank amateurs will take most of the seasoned pros capital gains with them?

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Good point. How about the rank amateurs will take most of the seasoned pros capital gains with them?

If you have a 40% safety buffer, then you're the one that gets to see all the other buggers go to the wall & pick up their properties for next to nothing at auction: IOW, you'd make a killing (if this ever actually happened & you had the balls to hold and hold and hold until things picked up again that is).

Phil

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Good point. How about the rank amateurs will take most of the seasoned pros capital gains with them?

I don't understand what you mean by 'take most of the seasoned pros capital gains with them'.

How do they take someone else's gains anywhere?

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Interesting analysis, Durch.

For '50%' to become '35%', what timescale and what inflation would be necessary? 5 years? 10?

It's important to me because I could either retire (young :-) or get ready to take advantage of the next cycle.

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Let's face it - many properties have trbled in value in the last ten years. A 40% drop can hardly be considered to be a "crash" Unless of course you've invested in BTL in the last few years :lol:

fatso

How's the Ferrari going PG ?

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In 2003 Goldman Sachs published a study into housing busts.

This covered 15 countries, and 29 busts in 30 years.

This relates quite well to an approximate 15 year property cycle although this does vary slightly.

(UK 1974, 1989, 2004?)

The average real decline in house prices was 27%, over 4½ years.

In a couple of countries (Finland 89-93 and the Netherlands 78-82) prices fell 50%.

In the UK in previous housing busts prices fell 33% (73-77) and 30% (89-93). Interesting that the 70's bust was bigger than the 90's bust.

This current cycle has been far bigger than any of these, I'm expecting prices to fall 30% in nominal terms, and over a 5 years period with wage inflation at 4%, this will equate to a 50% drop. I won't be at all surprised to see significantly more.

In the last boom prices in London hit 8 times earnings, then quickly dropped to 4 times earnings in the bust.

If the current bubble bursts like any of the others, a London house currently valued at £500k will be selling for about £350k, dropping from 10 times average earnings down to 5 times average earnings over 4 or 5 years.

Buying opportunites still look many years away....

Edited by BandWagon

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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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