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Realistbear

Rental Yields Are "plummeting"

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http://www.citywire.co.uk/News/NewsArticle...ey%3dNews.Money

Rental yields continue to plummet, and with interest rates on the up, the rewards of buy to let look relatively unattractive in the short term, particularly for new investments.
Latest figures from specialist buy to let broker, Landlord Mortgages, show that gross yields on London buy to let properties are down to 5.38% in the second quarter of 2007 from 5.99% in the first quarter - less than can be earned by putting money on deposit.

With recession a virtual certainty* rental yields will break below 4% very soon as unemployment and high rents are like oil and water. No one is safe in the coming storm unless you are in cash and/or ST bonds.

_______________

* IMO, Big Al tried to warn us earlier this year with his "probably possible" statement but was shut down by those who must be obeyed in the event sheeple panicked.

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Must admit it feels really good at the moment to have no debt [not even an overdraft or over draft facility]. Hoping for another few months at least of the "good" times so i can be in as best position possible for the down turn.

Already have adequate provision should i loose my job and not be able to find new employment for 12 months but a little more protection would always come in handy

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Rental yields plummet

Isn't that the same as saying House prices keep going up?

not really. It means the BTL cost, overall, is going up that doesn't only include house prices but also the cost of borrowing either way the fact is BTL is getting riskier by the day. You don't need high house prices nor the high cost of borrowing for yields to plummet

http://www.housepricecrash.co.uk/forum/ind...showtopic=52368

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Latest figures from specialist buy to let broker, Landlord Mortgages, show that gross yields on London buy to let properties are down to 5.38% in the second quarter of 2007 from 5.99% in the first quarter - less than can be earned by putting money on deposit

THese figures of 5.38%- 5.99% can only be dreamed about by most newbie amateur landlords who bought into the BTL fantasy over the last 2/3 years many are struggling to make a profit after all costs and 1,000's are subsidising there tenants every month , many of these BTL dreamers will sink to the bottom with there property investments ......... :D

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Can someone answer me something that's been bugging me of late.

If the banks wont lend you hundreds of thousands of pounds to invest in the Stock Markets, Gold or other commodities, why do they continue to lend that sort of money to invest in BTL?

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Can someone answer me something that's been bugging me of late.

If the banks wont lend you hundreds of thousands of pounds to invest in the Stock Markets, Gold or other commodities, why do they continue to lend that sort of money to invest in BTL?

If you want to have a geared investment in something other than bricks and mortar there are plenty of brokers who will let you gamble on equities, gold, currencies.

Most people don't know this of course and think that bricks and mortar is the only way to leverage...

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Guest wrongmove
Can someone answer me something that's been bugging me of late.

If the banks wont lend you hundreds of thousands of pounds to invest in the Stock Markets, Gold or other commodities, why do they continue to lend that sort of money to invest in BTL?

Because banks have made billions over the years lending on property, through all the ups and the one short down in the early 90s. Banks are very rich organisations, if you hadn't noticed. If/when the market crashes, it will dent their profits, sure, but it is very unlikely to wipe out the billions they have already made from the boom.

However stocks really do crash, quite regularly. Lenders are not worried about "real" crashes - in a "real" crash, there is no negative equity - the property still covers the loan. Stock market crashes are rapid and nominal. Individual companies can simply disappear. Land cannot do this.

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Guest Yeahbutnocrash
Can someone answer me something that's been bugging me of late.

If the banks wont lend you hundreds of thousands of pounds to invest in the Stock Markets, Gold or other commodities, why do they continue to lend that sort of money to invest in BTL?

If you can let the property you get a 'guaranteed' return i'd suggest

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Can someone answer me something that's been bugging me of late.

If the banks wont lend you hundreds of thousands of pounds to invest in the Stock Markets, Gold or other commodities, why do they continue to lend that sort of money to invest in BTL?

Because house prices always go up. Don't you know anything?

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Guest wrongmove
Because house prices always go up. Don't you know anything?

:rolleyes:

No they don't! They dropped for a couple of years in the early 90's, don't you know?

(ok, apart from then, they have always gone up, true)

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rental yields are only relevant if the BTLers are interested in the yield. If rental yields fell to 0% but house prices grew 5% then they would still be ahead.

Yes I know house price growth has slowed, just questioning the importance of the yield data...I doubt yields has driven the growth of BTL, and I wonder if falling yields would drive landlords to sell.

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Guest Yeahbutnocrash
not really. It means the BTL cost, overall, is going up that doesn't only include house prices but also the cost of borrowing either way the fact is BTL is getting riskier by the day. You don't need high house prices nor the high cost of borrowing for yields to plummet

http://www.housepricecrash.co.uk/forum/ind...showtopic=52368

I agree it must be getting riskier for newbie btlers

However I'd say it's mis-leading to just assume falling yields have impacted the vast proportion of existing btl too adversely as a major factor in the stats has obviously been massive HPI which has increased portfolio values

But it's true that lately the IR increases will be forming an increasing part of the overall stats and making btl more expensive

Edited by Yeahbutnocrash

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