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Evening Standard: "b T L Bubble Will Burst"

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http://www.thisismoney.co.uk/mortgages/buy..._id=56&ct=5

Buy-to-let bubble 'will burst'
Nick Goodway,
Evening Standard
21 June 2007
The buy-to-let housing market is a bubble waiting to burst, a leading City commentator warned today.
OTHER STORIES
* Why does Gordon Brown pick his nose in Parliament?
* What details for tenants' deposits?
* How do I get rent deposit back if my landlord has gone bankrupt?
* Should I sell before the crash or rent my flat out and wait for the next boom?
James Hamilton, banking analyst at Numis Securities, said: 'A lot of people have made very good money in the past from buy-to-let. But if the housing market goes flat, there is every likelihood that many of them will want to sell up.'
Hamilton warned that there were
massive potential problems
because many individuals have invested huge amounts of their total wealth in buy-to-let. 'Some retail investors have taken the very high risk strategy with such a high concentration of their money in a single asset class.

The mainstream press are really getting on the HPC bandwagon! Can you imagine the ashen faces of the commuter-BTLers wondering if they should have got out months, if not years, ago? Message to brain: SELL SELL SELL

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Can you imagine the ashen faces of the commuter-BTLers wondering if they should have got out months, if not years, ago? Message to brain: SELL SELL SELL

erm . . . no, not really. Everyone knows it depends on what you've bought and when you've bought it. Period conversions bought over 3 years ago are still bangin' in the profits for BTLers. Sure, your new build in some identikit estate in the ar5e end of Hertfordshire or next to a flyover in East London is gonna be losing you money all day long if you've recently bought it but most other assets in good locations will perform adequately.

GC2 is postponed for another quarter . . .

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erm . . . no, not really. Everyone knows it depends on what you've bought and when you've bought it. Period conversions bought over 3 years ago are still bangin' in the profits for BTLers. Sure, your new build in some identikit estate in the ar5e end of Hertfordshire or next to a flyover in East London is gonna be losing you money all day long if you've recently bought it but most other assets in good locations will perform adequately.

True, but very few are safely in the former category. A lot of BTLs are fairly recent and a lot of them have been buying the crap property you mention, and subsidising it from their own pocket. So they will be screwed. And they will rush for the exits. And prices will be set at the margins as usual, so they will drag down the price of everything around them. You don't actually have to sell your house for it to lose value!

:lol:

p.s. really interested in the nose-picking story too!

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erm . . . no, not really. Everyone knows it depends on what you've bought and when you've bought it. Period conversions bought over 3 years ago are still bangin' in the profits for BTLers. Sure, your new build in some identikit estate in the ar5e end of Hertfordshire or next to a flyover in East London is gonna be losing you money all day long if you've recently bought it but most other assets in good locations will perform adequately.

GC2 is postponed for another quarter . . .

Most of the recent 400k+ BTLers are in the business because they believe or have been led to believe that property prices always go up( which is true in the long term).But what they do not realise that there has always been long periods of little or no growth at all in HPI, Example 1991 to 2000. Once HPI subsides and they see the only thing they are gaining by being a BTLer is the hassle of tennets,Banks wanting there mortgage and void periods of letting a lot will jump ship.

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True, but very few are safely in the former category. A lot of BTLs are fairly recent and a lot of them have been buying the crap property you mention, and subsidising it from their own pocket. So they will be screwed. And they will rush for the exits. And prices will be set at the margins as usual, so they will drag down the price of everything around them. You don't actually have to sell your house for it to lose value!

It runs to more than quality - several people I know have entered on duff calculations - used the nice high rental value the selling agent suggested, assumed full occupancy and no maintenance, worked out they could just about cover the interest on the fixed rate deal. Factored in the HPI and it was a "winner".

The properties in question were good candidates for BTL - the numbers were just wrong. In some cases the people probably had the income to cover a vacant period - others were running on an oily rag - I tried to warn of possible problems - yes one of my BTLs has been occupied for 5 years without break by a model tenant. But take another and the cost of the eviction for non-payment of rent and the risible weekly settlement agreed in court - (in fact lucky it was so low - when he did a complete runner we didn't miss the income :lol:) then by the time we had the place back it needed more money to put it back into a rentable state. It's all very well saying "I'm in it for the long term" if you have no money to smooth over the short-term bumps. Advice fell on deaf ears in all bar one case - and these people are typically intelligent, sensible and risk averse.

Add in the interest rate rises that also hit the primary home mortgage and cash flow problems will drive many landlords out of the market.

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Take a look at the website that was advertising at the bottom of this article...it's scary.

Apparently people pay you money to buy property that you get income from every month by simply remortgaging and MEWing your profit, simple. Why didn't I think of that :blink: Click on the first video testimonial and I think the guy gives away their "secret". When this thing unwinds that guy may find he's just spent alot of money taking out a very expensive and time consuming £50K loan. People are going to learn the hard way what leveraging means.

Interesting to see that a site that is ramping property says the returns for a conventional property let are pityful.

Enjoy.

http://www.propertymentor.co.uk/?gclid=CO7...CFQrlQgod5GhMEg

Edited by Foobar

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