House Price Crash Feared As Buy-to-let Landlords Sell

[Greenstuff]

I would not be surprised to hear fatty Brown come up with a scheme to "help" renters by subsidising their rental increases. It will be spun as helping those who cannot afford their rents, but is really a bail-out of the BTL crowd, their lenders, and the property market in general. Nothing would surprise me.

It's called housing benefit.

[Killer Bunny]

We have said for a long while the three reasons for the bubble were:

Too much credit/debt available

Falling IRs

Rising BTL

All are rapidly reversing, therefore...

[gavp]

I would not be surprised to hear fatty Brown come up with a scheme to "help" renters by subsidising their rental increases. It will be spun as helping those who cannot afford their rents, but is really a bail-out of the BTL crowd, their lenders, and the property market in general. Nothing would surprise me.

Isn't that what Housing Benefit is?

[BandWagon]

I read this part, and my heart just bled...

There is also evidence that landlords have been trying to increase rents to cover their higher mortgage payments, even where local market conditions are unable to withstand increases. Many tenants have simply walked away, leaving landlords with voids.

Come on tenants, don't you feel enough charity in your hearts to prop up failing BTL businesses?

[uro_who]

I thought there was some interesting psychology behind the David Haq section. 'He is happy to keep his portfolio as its capital value is rising at 8% per year'. Mmmmm. That was last year. With bits of London falling at 7.8% in a single month on rightmove how long will he remain happy I wonder.

Although only 10% might be small number players, these will have a huge impact on the market and valuations. Most big BTL players get off on calculating the value of their portfolio every day. They'll be rapidly on the prozac and the properties on the market if they see the future yacht and place in the Cap D'Antibe going down the swanny. Many will want to liquidate their portfolio before the new dream is a static caravan in Skeggy.

Not to knock Skegness/Ingoldmelds you understand.

Edited September 23, 2007 by uro_who

[Sledgehead]

PLEASE take a second to re-read this from the Observer article :

Nigel Jolly, 49, an internet entrepreneur from Didsbury, Manchester, has considered selling his investment property, a four-bedroom town house, nearby. He bought it for £120,000 in 1997 and it is now worth £340,000. He has a 7.6 per cent, interest-only mortgage for £165,000 - only 53 per cent of the property's value - yet his monthly mortgage payments of £1,050 exceed his rental income of £815. 'The uncertainty in the property market makes you feel like it would be a good time to get out. I have little room for manoeuvre, however. I am tied into what is now a very expensive mortgage,' he says.

Forget his mortgage woes for a second and look @ the capital sums. Assuming mortgage LTV ratios prevalent around the time, in 1997 he probably had a mortgage debt of ~£100k. 10 years of HPI has TRIPLED the value of his property, yet he now owes £165k.

Yes, he can sell and wipe out the debt, but think about the process that has led him to owe more now than 10 years ago. Think of the lifestyle arrangements that have seen 10 years pass, without so much as a penny being repaid. Instead he has increased his debt by ~65%.

He claims to be an internet entrepreneur, yet 10 years of easy money and a dotcom boom have left him with a shortfall of £65k, funded by equity withdrawl. How will this guy survive a recession? How many are in the same boat?

Edited September 23, 2007 by Sledgehead

[redgenieuk]

http://observer.guardian.co.uk/cash/story/0,,2174919,00.html

It is the smaller landlords - the ones with two or three properties - who are more vulnerable, since they may not be able or willing to take a longer view,'

Or if you had a lot of properties you could sell up now, make a killing and buy them all up later for peanuts?

If you had a lot of properties in one town, you could cause it, so best to drip feed them at an attractive price and let the sheeple take the pain.