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Mikhail Liebenstein

How Dumb Are Some Btlers - Foolish Research Example

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This article on myfinances.co.uk posted on the news feed, but I thought I'd post it as a topic as it shows just how flawed the maths and logic of the BTL industry now is:

Here is the link to the original artcle .

What amazed me was the method of presenting a fall in property prices as great for yield. Yeah, and if the price of the property falls to zero then you'll have infinite yield. Doh!!!!

Ian Potter, ARLA heard of operations, said: "We are seeing the beginning of the inevitable.

"Whenever property prices soften or fall, rental demand, rents and yields all increase.

"As we begin a year of uncertainty in the sales market, it is inevitable that our member letting agents should report that they have more tenants than properties available for them."

Whilst there is some logic to to the argument, it is really mixing truth with lies. It is true that if more people STR or hold off buying then there will be more people wanting to rent. But hang on isn't the shortage of property in fact a complete fallacy, so don't expect rents to rise anytime soon. And in fact the does mention that rents fell in the South East.

So there we have it. Falling rents and falling capital values - BTL is dead. But hey, but if capital values fall faster than the rent is falling the we have an increasing yields. Some BTLers would still then take this as good new.

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Guest The_Oldie

For what it's worth, I've just extended my rental agreement for another year at the same price.

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Average rents in the private rented sector have risen by an average of 4% for houses and 2% for flats in the three months to the end of February. These averages have been boosted by a 9% rise in Prime Central London and a 5% rise away from the South East. In the South East itself, rents fell slightly, by 2% for houses and 5% for flats. These figures are seen as emphasising the start of a new housing cycle...

The improvement in rents received includes an increase of well over £3,000 a year for renting a house and £1,500 for renting a flat in Prime Central London. Rents have risen in the rest of the country too, from an average of £931 to £981 for houses and £619 to £664 for flats. In the South East the average rent dropped from £1390 to £1361 a month for houses and from £ 930 to £882 for flats .In all the regions the cost of renting a house against renting a flat is around half as much again, between 48% and 61% higher.

http://firstrung.co.uk/articles.asp?pageid...&cat=44-0-0

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Guest DissipatedYouthIsValuable

I've been counting For Sale and To Let signs in Dorset and Somerset villages.

Seems to be plenty around and increasing in number.

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I'm in a fixed 2 year rental agreement. When that ends in March 2009, I won't mind an inflationary rise if it's insisted on but I'll negotiate hard for a cut using whatever information I've learned about my landlord's financial situation and level of fear in the meantime.

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Guest The_Oldie
I'm in a fixed 2 year rental agreement. When that ends in March 2009, I won't mind an inflationary rise if it's insisted on but I'll negotiate hard for a cut using whatever information I've learned about my landlord's financial situation and level of fear in the meantime.

I shan't try to negotiate a lower rent next year, as my landlord is a really nice person and his yield is only 2.5%. Even if house prices were to fall 50% in the next year, his yield would still only be 5%

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I shan't try to negotiate a lower rent next year, as my landlord is a really nice person and his yield is only 2.5%.

My landlord lives in Canadia (please don't correct my spelling on this, I have started a campaign to get the country renamed) so I've no idea how "nice" they are, and shall therefore have no issue in trying to negotiate a rent cut in a bear market.

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My landlord lives in Canadia (please don't correct my spelling on this, I have started a campaign to get the country renamed) so I've no idea how "nice" they are, and shall therefore have no issue in trying to negotiate a rent cut in a bear market.

Canada.

Couldn't resist.

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Guest theboltonfury
For what it's worth, I've just extended my rental agreement for another year at the same price.

Oldie, just about to try the same thing. What was your tact? I will be amazed if the LL doesn't suggest a rise. Did it get to ultimatum stage of you threatening to move out?

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Oldie, just about to try the same thing. What was your tact? I will be amazed if the LL doesn't suggest a rise. Did it get to ultimatum stage of you threatening to move out?

Yup me too. LL didn't even suggest a rise. Just extended with same terms.

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Guest The_Oldie
Oldie, just about to try the same thing. What was your tact? I will be amazed if the LL doesn't suggest a rise. Did it get to ultimatum stage of you threatening to move out?

No problem at all, I just said I'd like to stay for another year and he was delighted. To be honest, I'd have happily paid a bit more.

I suspect that he thinks his yield is closer to 10% rather than the true figure of 2.5% as he's owned the house for some years and probably thinks of yield as a percentage of what he paid rather than current market value as he should.

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Guest An Bearin Bui
Whilst there is some logic to to the argument, it is really mixing truth with lies. It is true that if more people STR or hold off buying then there will be more people wanting to rent. But hang on isn't the shortage of property in fact a complete fallacy, so don't expect rents to rise anytime soon. And in fact the does mention that rents fell in the South East.

They're not factoring in the supply of rental properties here either. It's going to become common, I think, to see more let-to-buy trends emerging as people try to sell for the 2007 price, find they can't and resort to letting out the property instead of selling up or staying put instead.

A colleague at work just did this - they had a 1-bed flat, wanted to upgrade to a 2-bed with garden so they decided to let out the first flat instead of selling. Allegedly because it'll be "a good investment" ( :lol::lol: ) but knowing the background and the fact that the rent doesn't cover the mortgage, I would say it's more likely that they knew they wouldn't make money on any sale as they bought recently so renting it out is the only way they can move. They're not exceptional so I'd imagine the supply of properties to rent will rise considerably as people find they can't sell at a profit and try to stave off the inevitable.

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They're not factoring in the supply of rental properties here either. It's going to become common, I think, to see more let-to-buy trends emerging as people try to sell for the 2007 price, find they can't and resort to letting out the property instead of selling up or staying put instead.

A colleague at work just did this - they had a 1-bed flat, wanted to upgrade to a 2-bed with garden so they decided to let out the first flat instead of selling. Allegedly because it'll be "a good investment" ( :lol::lol: ) but knowing the background and the fact that the rent doesn't cover the mortgage, I would say it's more likely that they knew they wouldn't make money on any sale as they bought recently so renting it out is the only way they can move. They're not exceptional so I'd imagine the supply of properties to rent will rise considerably as people find they can't sell at a profit and try to stave off the inevitable.

Exactly what I did in 1994. Couldn't sell my flat without making a loss so I rented it out and moved anyway. Initially I moved into another rental and then bought a place a year or so later, and eventually sold the flat in 1998.

I don't recall many conversations about house prices back in those days, everyone seemed not to want to discuss it as much as, say, last year.

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my rent hasnt gone up since i moved in here in sep 04

i haven't had to negotiate with my landlord

but look at it from their perspective

if you call their bluff and threaten to move out they have to find a new tenant

have a void period of NO income

and dont know if the new tenant will trash the place

and make the point that unemployment is rising so less quality tenants around

could always get DSS!!

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  • 297 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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