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Buy To Let Repossessed

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Can't link it yet but it's written by Paul Farrow. Title : Buy To Let REPOSSESSED. Date : 22 July

You're gonna luv it.

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Where is it written.

Like I said, Money & Jobs section of the Sunday Telegraph (note how they manage to keep it out of Homes & Living, which leads with some commuter belt nonsense)

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Like I said, Money & Jobs section of the Sunday Telegraph (note how they manage to keep it out of Homes & Living, which leads with some commuter belt nonsense)

Found it read it like it.

Do you know who had the named Auction.

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Found it read it like it.

Do you know who had the named Auction.

Read it before. Talked like they were surprised that money could be lost in the property racket.

Typical stories of vast over-supply up in colchester, 2 bed flats sold by the property developer beginning with a "B" for 240K+ now not making 200K in resale, EAs saying they are not getting ANYONE in to view at these prices talk of properties going at auction for only 145K, with price drops of, wait for it,

30%

:lol::lol::lol:

Laugh? I nearly SH@t!!!

Edited by mbga9pgf

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Read it before. Talked like they were surprised that money could be lost in the property racket.

Typical stories of vast over-supply up in colchester, 2 bed flats sold by the property developer beginning with a "B" for 240K+ now not making 200K in resale, EAs saying they are not getting ANYONE in to view at these prices talk of properties going at auction for only 145K, with price drops of, wait for it,

30%

:lol::lol::lol:

Laugh? I nearly SH@t!!!

It's starting, like many on here said, in the BLT flats and the contagion will spread right across the market.

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Took me ages to find it, but got there eventually. Result! Made my day & hope tomorrows news is even better! dont know if this link will work -if not, then sorry

http://dailytelegraph.newspaperdirect.com/...int/viewer.aspx

Ha! No it doesn't work, but well done for locating it. Perhaps you could either:

1 ) tell us the process

2 ) printscreen it and post the capture as an attachment.

I have a hard copy but it would be welcome reading for many here. Cheers

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Ha! No it doesn't work, but well done for locating it. Perhaps you could either:

1 ) tell us the process

2 ) printscreen it and post the capture as an attachment.

I have a hard copy but it would be welcome reading for many here. Cheers

Worked fine for me, interesing reading but no surprise really. I think it's what most of us bears expected to happen with the overbuild of apartments. It just seems wierd to see it actually start happening.

Incidentally, went out to get a new gas cooker today( that's a whole page moan on it's own!) driving through areas I haven't been through for a while. Massive amounts of for sale/to let boards outside blocks of fairly new-ish apartments. 12 new flats near me finished approx 6 months ago, all still empty.

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Took me ages to find it, but got there eventually. Result! Made my day & hope tomorrows news is even better! dont know if this link will work -if not, then sorry

http://dailytelegraph.newspaperdirect.com/...int/viewer.aspx

Worked for me. Great artical! :)

The message is getting out there. The interesting thing to note is that the BLT brigade seem to be very willing to bail out... I thought they were in it for the long term. :unsure: They're toast.

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Copied from this link

Buyers of new-build flats whose developers offered financial incentives have seen the value of their investment plummet and the rental income struggle to cover the mortgage, writes PaulFarrow

Investors who gambled on rising house prices are getting their fingers burnt despite survey after survey claiming that the buy-to-let market is stable. Birmingham Midshires is the latest lender to trumpet the buy-to-let market. It claims the average return for a landlord was 13 per cent over the past year and argues that the fundamentals underpinning the buy-to-let market remain strong.

But the survey disguises the harsh reality that properties are being repossessed less than two years after first-time landlords made their foray into the buy-to-let arena and that some newbuild flats have plummeted in value by 30 per cent.

At an auction room in Covent Garden on Thursday, 52 of the 179 flats and houses that went under the hammer were on sale “by order of the mortgagee” – in other words, they were repossessed properties. A closer look at the auction catalogue reveals that many were newbuild flats that had been sold to buyers with incentives such as stamp duty and legal fees paid or rental guarantees, suggesting that they were bought by budding buy-to-let landlords.

Yet dozens of developments are still being built with offers of similar incentives. The fear is that novice investors are being lured by perks such as discounts on off-plan flats and guaranteed rents for periods of up to two years in the hope that they can sell for a capital profit when the subsidies stop.

The auction catalogue included half-a-dozen flats barely two years old at Henry Laver Court, part of a Barratt development in the heart of Colchester, Britain’s oldest town and a popular commuter zone for City workers. The flats sold, with incentives, for between £224,995 and £249,995 last year. Their reserve price at the auction last week was £140,000; five sold for £145,000, the other for £155,000. Local estate agents have similar flats in the development on the market for £180,000.

Those investors who failed to put down a big deposit will have mortgage repayments in excess of £1,200 a month, while the rental value is only around £700 a month and plunging valuations are leaving them in negative equity territory. It gets worse: there are dozens of properties vying for every tenant. Investors who have been unable to cut their losses and run have been forced to hand in the keys to their lender.

“People are cutting their losses – or at least they are trying to,” says James Francis of William H Brown, the Colchester-based estate agent. “We have got owners coming in asking what their properties are worth. They want us to put the flats on the market for up to £249,995 but the resale values are realistically below £200,000. People will have to take a massive drop in price if they want to shift the properties. We are not booking for viewings at these price levels.”

Francis says flats with incentives on new developments are still being sold despite it being a “dying market”.

In the North, several landlords who bought flats in a development in Liverpool are already counting the cost of buying off-plan through a property association. The association offered flats for sale at a discount because it was able to negotiate cheap deals by taking a number of properties in a new development at an early stage, and so get a “wholesale’’ price. The rationale is that the property will have risen in value and the member can turn his off-plan investment into a handsome profit.

Colin Pitchley paid £139,000 for his offplan two-bedroom flat in Liverpool two years ago. The association reckoned the property would be worth at least £153,000 when it was completed last year. But when Pitchley remortgaged he discovered that the property was worth just £121,000 and he has had to reduce his mortgage by £20,000 to qualify under the lender’s buy-to-let criteria.

Fortunately for Pitchley he had the means to reduce the mortgage and he has tenants in the flat – the rent now covers the new lower mortgage. But other landlords in the block may not be so fortunate. “Once the value of £153,000 was not achieved all the sums fall apart. A group of us went to a solicitor, but we were told we hadn’t got a leg to stand on – all the clauses were in the small print,” says Pitchley. “The flat would need to be worth around £160,000 for me to break even.”

Paul Walshe of Moore Blatch, the repossession specialist, warns would-be investors that buy-to-let is a long-term game. He recalls a number of flats that went on the market at a development in Plymouth as soon as the rental guarantee period came to an end.

“All of a sudden a dozen or so flats were up for sale, which drove the prices down,” he says. “The buy-to-let market is saturated. Experienced investors who have been in the sector for a while will have made decent gains, but amateur landlords need to tread carefully. Profit margins have reduced significantly because of the proliferation of new-build flats.”

Experts fear the number of repossessions will only increase. The number of buy-to-let mortgages rose by 50 per cent last year to 330,000, according to the Council of Mortgage Lenders. But over the same period the Bank of England has raised interest rates by 1.25 percentage points, piling pressure on inexperienced investors – and a further rate rise is expected soon.

Recent figures from the Royal Institution of Chartered Surveyors revealed that the percentage of landlords offloading properties had jumped to its highest level in two years. But if prices fall, as they appear to have in certain areas of the market, then selling out could prove problematic.

Ben Dowman of the Andrews Robertson, the auctioneers, says an increasing number of repossessed newly built flats have come to its auctions over the past year from various sites across the country from Cumbria in the north through the Midlands to Essex.

“A lot of people have jumped on to the buy-to-let bandwagon and they have been overenthusiastic with their purchases following good marketing from sellers and they underestimated the rental requirements,” says Dowman. “I can only guess that expectations on the rental front are not being met. Yields [rent expressed as a percentage of a property’s value] were marginal in the first place. The rate rises mean that rents are no longer covering the mortgages.”

Barratt says it offers a range of packages, which include help with the deposit or legal fees paid, and similar kinds of assistance for investor buyers. A spokesman says: “At some developments, incentives may include a rental guarantee period, to help investors in the early period of a development and to provide a breathing space to furnish and let the property. We only make a limited number of these guarantees available.

“The properties in question [at Henry Laver Court] were purchased just over a year ago. They were not sold with a rental guarantee period but with other incentives that we offer from time to time. We are not aware of any increase in repossessions of investor properties as rental guarantee periods come to an end, nor have we seen any increase in properties falling in value.”

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to the bulls who have questioned what many of us have claimed about cost of renting versus buying, please see the figures in the article - they describe exactly what we have been saying for ages - maybe as it is written independently in the press you might now believe it!

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from the article:

"A [barratt] spokesman says: “At some developments, incentives may include a rental guarantee period, to help shift the fuggers investors in the early period of a development."

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from the article:

"A [barratt] spokesman says: “At some developments, incentives may include a rental guarantee period, to help shift the fuggers investors in the early period of a development."

“The properties in question [at Henry Laver Court] were purchased just over a year ago. They were not sold with a rental guarantee period but with other incentives that we offer from time to time. We are not aware of any increase in repossessions of investor properties as rental guarantee periods come to an end, nor have we seen any increase in properties falling in value. Then again we haven't actually looked. And to be honest, we don't actually care because we got our profit. Thanks.”
Edited by the end is nigh

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