My Landlord Wants To Sell...

[sittingpretty]

Inflation is at its highest for 9 years even with certain key factors of Inflation taken out of the Inflation figures, people on the real mean average salary are looking at 7 times their wages to purchase a house.

The only way to reduce inflation in the economy and house prices is to take money out of circulation by raising interest rates...

There are many serial BTL landlords with large amounts of chained mortagages out there, which means large multiples of each Interest rate rise and stagnant rents will force sale or bankruptcy either way property will need to be sold fast.

The government will give Inflation some leeway but as for leting it get out of control, surely a valueless pound would be more catastrophic than a correction in the housing market.

The government will be paying more and more rents as this situation carries on with todays debt ridden youth unable to afford housing to purchase or rent, so their current income will soon turn into costs.

Edited September 22, 2006 by sittingpretty

[dog]

I hope affordability will return but I doubt if any of the main forecasts for 2007 will agree with your extreme predictions - In recent years the actual outcome has been fairly close to the predictions of the main experts (not those holding more extreme views)

I don't think I have made any extreme predictions. The 57% reduction in private pensions is a reality, not a prediction. The long bear markets in Germany and Japan were also a reality. The UK's falling competetiveness and rising unemployment is also reality. Added to this, the tax benefits on home ownership have dissapeared. The French, US and Australian property markets are in decline. The idea that British properties should be worth two or three times more than homes in other countries is clearly unsustainable. Where is the extremism?

[Guest Yeahbutnocrash]

I don't think I have made any extreme predictions. The 57% reduction in private pensions is a reality, not a prediction. The long bear markets in Germany and Japan were also a reality. The UK's falling competetiveness and rising unemployment is also reality. Added to this, the tax benefits on home ownership have dissapeared. The French, US and Australian property markets are in decline. The idea that British properties should be worth two or three times more than homes in other countries is clearly unsustainable. Where is the extremism?

Your earlier post stated: "The UK housing market is going to be torn to shreds by declining prosperity and rising unemployment"

Ok so this may not seem extreme to you but I expect this will be extreme compared to the more realistic market predictions for 2007 made by experts

However if you are right I can look forwards to buying some cheap property - Yipppeee!!

- Whan can I start?

[dog]

Your earlier post stated: "The UK housing market is going to be torn to shreds by declining prosperity and rising unemployment"

Ok so this may not seem extreme to you but I expect this will be extreme compared to the more realistic market predictions for 2007 made by experts

However if you are right I can look forwards to buying some cheap property - Yipppeee!!

- Whan can I start?

Experts? Experts? Who are the experts?

[Guest Yeahbutnocrash]

Inflation is at its highest for 9 years even with certain key factors of Inflation taken out of the Inflation figures, people on the real mean average salary are looking at 7 times their wages to purchase a house.

The only way to reduce inflation in the economy and house prices is to take money out of circulation by raising interest rates...

There are many serial BTL landlords with large amounts of chained mortagages out there, which means large multiples of each Interest rate rise and stagnant rents will force sale or bankruptcy either way property will need to be sold fast.

The government will give Inflation some leeway but as for leting it get out of control, surely a valueless pound would be more catastrophic than a correction in the housing market.

The government will be paying more and more rents as this situation carries on with todays debt ridden youth unable to afford housing to purchase or rent, so their current income will soon turn into costs.

I have seen a recent Mortgage Express survey of their B2L customers - They don't seem to be panicking but are in it for the long term

It seems that posters such as yourself whilst having no direct experience of actually doing B2L (as far as I can tell) band around these generalities about BTLers

[sittingpretty]

I have seen a recent Mortgage Express survey of their B2L customers - They don't seem to be panicking but are in it for the long term

It seems that posters such as yourself whilst having no direct experience of actually doing B2L (as far as I can tell) band around these generalities about BTLers

Most BTLers are Interest only and rely on capital growth for a return on their investment. It doesnt take rocket scientist to realise that the years of growth are now drawing to a close.

So what does the long term offer? Negative equity, large rental void periods and more interest only payments.

The only people in it for the long term have large amounts of equity or have a repayment mortgage and good salaries, in which case they will have an income as their equity increases.

Interest only BTLers are not in it for the long term, what can the long term possibly offer them, most are short term Investors moving to where the moneys at.

Edited September 22, 2006 by sittingpretty

[Marina]

What investors might do though is take a profit if they think they can invest the money more effectively elsewhere. So although I would agree that the landlords who are sitting on negative equity probably won't sell, the ones sitting on equity might

Well they might ... but many people are 'into' property as an investment because it is too easy to get burned in shares and bonds and gold etc.

If I had a second property with a nice bit of equity in it and everything going okay, it would take a lot more than a bit of negative sentiment to make me sell up and move into other investments.

Surely it is because property is seen as being so safe and certain that so many people are in it.

[dog]

I have seen a recent Mortgage Express survey of their B2L customers - They don't seem to be panicking but are in it for the long term

It seems that posters such as yourself whilst having no direct experience of actually doing B2L (as far as I can tell) band around these generalities about BTLers

Getting into BTL in the current climate (or even in the last year or two) is likely to be dumb, very dumb. Having done something very stupid, they have two choices.

(1) They can sell the property and lose a bit of money and a lot of self esteem.

(2) They can hang on and rationalise. Since there is no rational answer to buying BTL at the moment, the only thing they can say is that they are in it for the long term.

[Marina]

So many words, so little real content again... Bolleaux

The clown BTLs of the past few years who have got in at the highs will be the first out ('readily' or not) because they are the gullible highly leveraged sheeple who have been so easily persauded by the VI's that buying at the peak/near peak of a housing cycle is a good investment. Okay, you say it often enough you'll believe it. The simple fact is people don't like to realise a capital loss - especially when they know if they hang on prices will recover. I wonder if you have ever heard about people being advised to set a stop-loss on shares? This is common advice handed out by professionals to amateurs because it is human nature to hold on to paper losses in the hope the market will turn and the losses will turn into gains. In shares this doesn't happen that often, in property, history shows us that prices always recover. So hanging onto losses is a very good idea. You don't understand this but the poor old sheeple do.

As for BTL "entrenched British psyche" babble that you have been spoon-fed by the VI's so easily, I haven't been spoon fed it, I am not a BTL investor or a property investor - I observe that millions of others have been spoon fed it. This is your big problem. You see everything from your viewpoint. You don't observe what other people are doing. You don't realise that it is other people's actions that make a market, not your sneering at the sheeple. it is a nonsense regurgitated by the property porn shows of recent times that will implode as quickly as they exploded onto our screens.

The property market doesn't give a feck about you. You're not in it and you can't afford to be in it. Your actions don't count.

Getting into BTL in the current climate (or even in the last year or two) is likely to be dumb, very dumb. Having done something very stupid, they have two choices.

(1) They can sell the property and lose a bit of money and a lot of self esteem.

(2) They can hang on and rationalise. Since there is no rational answer to buying BTL at the moment, the only thing they can say is that they are in it for the long term.

Of course there is a rational argument. If property goes up 3% a year for 25 years it doubles in price. So even if you are subsiding the rent by a couple of hundred quid a month, it is still a very good investment.

You might not see it but that doesn't matter. Millions do - and they are the ones driving the market and pricing you out.

[Nationalist]

It's got to be down to interest rates. Unemployment etc are individual events which affect odd people here and there. IR affects everyone sooner or later in the UK. It's a blanket phenomenon. If IRs go up enough so BTLer can't afford their mortgages they will sell, all of them, at the same time. And at exactly the same time people will try to trade down and repos will flood the market and FTBs will completely give up on getting on the ladder.

I'm convinced though that the govt would sooner chew off its own arms than allow IRs to rise unaffordably; a falling pound will not be defended by this administration, and an accurate inflation index calculator will not be used.

[sittingpretty]

The property market doesn't give a feck about you. You're not in it and you can't afford to be in it. Your actions don't count.

Of course there is a rational argument. If property goes up 3% a year for 25 years it doubles in price. So even if you are subsiding the rent by a couple of hundred quid a month, it is still a very good investment.

You might not see it but that doesn't matter. Millions do - and they are the ones driving the market and pricing you out.

So your earning 3% - £2400 subsidy per year on your equity, maintenance costs, hassle, void periods and getting no closer to ownership.

I don't think many of the Interest only clan will stick it out, I agree many investors who are better geared will be fine.

[dog]

It's got to be down to interest rates. Unemployment etc are individual events which affect odd people here and there. IR affects everyone sooner or later in the UK. It's a blanket phenomenon. If IRs go up enough so BTLer can't afford their mortgages they will sell, all of them, at the same time. And at exactly the same time people will try to trade down and repos will flood the market and FTBs will completely give up on getting on the ladder.

I'm convinced though that the govt would sooner chew off its own arms than allow IRs to rise unaffordably; a falling pound will not be defended by this administration, and an accurate inflation index calculator will not be used.

Japan had a property crash with zero interest rates. France has lower interest rates and the property market is falling despite a much cheaper market. Higher interest rates would stuff the property market overnight. Even with low interest rates however the market is still stuffed.

[grey shark]

Japan had a property crash with zero interest rates. France has lower interest rates and the property market is falling despite a much cheaper market. Higher interest rates would stuff the property market overnight. Even with low interest rates however the market is still stuffed.

Agreed , overhere it's sentiment which is controlled by the media a 1/4 point hike every now and again will help but sentiment is the key , we need the bearish news on the front pages of the papers and on our TV screens everyday then it would all change in days .

[CrashDive]

The property market doesn't give a feck about you. You're not in it and you can't afford to be in it. Your actions don't count.

You might not see it but that doesn't matter. Millions do - and they are the ones driving the market and pricing you out.

Marina dear, your understanding is limited at best in a host of areas, embarrassing for you.

You have no idea about my interests in property or any other investment I may hold.

Numbers can drive the market so far, but in the cold light of day there comes a point when the economic fundamentals take precedence, not the 'herd' instinct driven by fear and greed.

We have now reached that point and slowly the herd sentiment is turning bearish until eventually they will be like lemmings off a cliff as they realise the dreadful situation they are in. Numbers of sheeple can only take you so far, bit like pyramid schemes.

[Guest Yeahbutnocrash]

Most BTLers are Interest only and rely on capital growth for a return on their investment. It doesnt take rocket scientist to realise that the years of growth are now drawing to a close.

So what does the long term offer? Negative equity, large rental void periods and more interest only payments.

The only people in it for the long term have large amounts of equity or have a repayment mortgage and good salaries, in which case they will have an income as their equity increases.

Interest only BTLers are not in it for the long term, what can the long term possibly offer them, most are short term Investors moving to where the moneys at.

I think you have made some good points as there would seem to be less profit there for IO BTLers especially the late comers

Some of them will have been persuaded to buy new property by certain incentives which give them the feeling they have some initial equity or profit (eg. deposit paid or instant equity if bought off-plan) - How long the benefits are sustained is anyones guess

On the other hand you are making some assumptions

- Yes the current period of growth is at an end it seems but there may be growth (or they'll hope there will be growth) in the future so they may choose to go for the long term option

Also there will be BTLers with a mix of repayment & IO along with all those who have plenty of equity from the last 6 or 7 years of HPI who will all plan to stay in for the long term

Edited September 22, 2006 by Yeahbutnocrash