Jump to content
House Price Crash Forum
Sign in to follow this  
Armitage Shanks

Btl Landlord Bailing Out

Recommended Posts

My wife, nipper and I live in a rented house in an area of North Bristol near the M4 called Emerson's Green. It's one of those identikit 80s/90s estates with its own Sainsbury's, village hall etc - all very suburban and comfy. Having returned from a year's travelling (funded by the proceeds of our house which we bought about 8 years ago and sold about 3 years ago) we decided to wait til the next 'trough' before stepping back onto the ladder. Of course, it hasn't come yet, and getting back below the levels of 3 years ago is going to take a while, but I still feel as though we made the right choice.

For the first year on our return, we lived with the 'rents but we then decided to crack on with the baby-making. It all happened very quickly indeed (it can take months, my foot!!) so we had to take matters into our own hands and move out. We found this 3-bed place for rent in Emerson's which seemed to fit the bill size-wise, location-wise and condition-wise (clichéd magnolia throughout etc) so we signed up and moved in.

Now, all went swimmingly and we got to know our landlord fairly well owing to a few niggly heating and plumbing problems - he is a very affable chap who it transpired had invested heavily in similar properties in the vicinity. Some time ago, my wife expressed to him that if any of his other properties were becoming available in the near future we'd be interested in looking at them as this one is on the main road and the double-deckers do her nut. He was very amenable to the idea and often brought up the subject himself when we had cause to speak to him, citing a nearby house of almost identical spec that was set back a little from the road and slightly better kitted out. It seemd like a good idea to stay with a responsive and reliable landlord and we assumed that he was happy to have reliable, prompt-paying tenants who weren't trashing his house. It came as a surprise, therefore, when a letter dropped through our door just days after the latest conversation on this theme - serving us 2 months notice to move out. The house was being put on the market.

Now, we are very pragmatic and while we are a little disappointed to have been 'misled' into thinking that he was in it for the longer term and that our situation was fairly stable, we aren't naive enough to think that this is anything to him other than a business and we appreciate that if you rent rather than buy, you run the risk of being turfed out. As a result, we now find ourselves looking for another place to rent. Hey-ho, worse things have happened at sea, and all that...

The interesting bit of the story is that it isn't just the house that we live in that he is selling - he has 15 properties, all 2 or 3-beds and all in the same corner of the estate, going on the market at once.

£225,950

£220,995

£217,950

£216,950

£215,500

£211,500

£209,950

£209,000

£208,500

£206,500

£186,995

£175,995

£175,000

£169,995

£168,950

That's a cool £3 million-ish worth of property (list) being ditched in one fell swoop.

Now, I don't know if he has extenuating circumstances, and for all I know that may very well be the case, but I've heard on the grapevine that he's looking to invest elsewhere (which doesn't so much suggest that he needs to cash in now, rather that he wants to). I can't imagine it would take a huge number of BTL landlords with similarly sized portfolios in a relatively close proximity taking similar action to really set the ball rolling (yeah, I know, I know - it has already but this can only add to the momentum). If I were a local landlord with a similar portfolio, the question I might be asking myself is 'Can I afford not to sell now while I still might come out of this in the black?' If the answer to that is no, the supply/demand ratio soon becomes very unbalanced and you don't have to be Evan Davis to work out what happens next...

Interesting times - and if anyone knows of a 3-bed place available for rent in the near future in North-East Bristol, please drop me a PM! :)

Share this post


Link to post
Share on other sites
How close together are all these properties? Like Gordon Brown with his Gold, he is at risk of moving the market single-handedly...

You could walk to any of them from my front door within 3 minutes - I may try to plot them all on a google map later just for the hell of it.

Share this post


Link to post
Share on other sites

I guess we'll all be seeing a lot more of this in the coming weeks and months, unloading everything at once though is just plain stupid!

The more BTL landlords suffer though the better as far as I am concerned!! Even the nice ones.

Share this post


Link to post
Share on other sites

Have you looked on houseprice.net or similar to see if he is taking profits to invest elsewhere or is he just sellling because he's loosing money?

Share this post


Link to post
Share on other sites
Have you looked on houseprice.net or similar to see if he is taking profits to invest elsewhere or is he just sellling because he's loosing money?

Do you mean nethouseprices.com - the url you provided is a dead end? If so, I'm not sure how that will tell me how he's planning to invest his profit - doesn't it just tell you how much houses are sold for?

Share this post


Link to post
Share on other sites
Now, I don't know if he has extenuating circumstances, and for all I know that may very well be the case, but I've heard on the grapevine that he's looking to invest elsewhere (which doesn't so much suggest that he needs to cash in now, rather that he wants to). I can't imagine it would take a huge number of BTL landlords with similarly sized portfolios in a relatively close proximity taking similar action to really set the ball rolling (yeah, I know, I know - it has already but this can only add to the momentum). If I were a local landlord with a similar portfolio, the question I might be asking myself is 'Can I afford not to sell now while I still might come out of this in the black?' If the answer to that is no, the supply/demand ratio soon becomes very unbalanced and you don't have to be Evan Davis to work out what happens next...

Interesting times - and if anyone knows of a 3-bed place available for rent in the near future in North-East Bristol, please drop me a PM! :)

Looks remarkably to me as if he's calling the top of the market (or near offer!) and wants to crystallise his gains (how long has the estate been up? He's probably owned most of these from construction)

In his shoes I'd be looking to retire to Spain/ Cyprus or wherever....

Edited by cartimandua51

Share this post


Link to post
Share on other sites
Looks remarkably to me as if he's calling the top of the market (or near offer!) and wants to crystallise his gains (how long has the estate been up? He's probably owned most of these from construction)

In his shoes I'd be looking to retire to Spain/ Cyprus or wherever....

The estate has been up for a couple of weeks now and he's already chopping his asking prices. My gut instinct is that he's calling the top of the market too.

I'm pretty sure he's not owned them since construction (the data on sites like nethouseprices suggest he's owned them for maybe 4 years or so) and by the time you factor in conveyancing, EA fees, stamp duty, letting agency fees, maintenance costs, land registry searches, HIPs, capital gains tax and administrative costs, I don't think he'll have cleared enough to retire to the Costas quite yet.

Share this post


Link to post
Share on other sites

I think he has missed the top of the market. Also Flooding the market with his portfolio as the properties are all in the same the vicinity will drive prices down as I guess he won't be alone. One thing I learnt was when buying a property to live in or a BTL was make sure it has a high ownership/occupancy as when the crunch came there would be a flood of investor properties on the market. The Psychology works the same way as a Stock Market Crash as most people bail out as they don't know how far the market will drop. Also with loads of properties on the market in the same area Buyers (a rare species now) will be cautious thinking "Whats Up"

Edited by joey

Share this post


Link to post
Share on other sites

Unless he's highly geared he's probably better holding onto his properties.

I'm holding onto my BTL flat - if I sold it I could lose my money in the stockmarket, in commodities, in gold, or if inflation picks up, in cash!

:huh:

Share this post


Link to post
Share on other sites
I think he has missed the top of the market. Also Flooding the market with his portfolio as the properties are all in the same the vicinity will drive prices down as I guess he won't be alone. One thing I learnt was when buying a property to live in or a BTL was make sure it has a high ownership/occupancy as when the crunch came there would be a flood of investor properties on the market. The Psychology works the same way as a Stock Market Crash as most people bail out as they don't know how far the market will drop. Also with loads of properties on the market in the same area Buyers (a rare species now) will be cautious thinking "Whats Up"

I don't think he has problems finding tenants - there isn't exactly a glut of vacant rental property in this neck of the woods and, to the best of my knowledge, all 15 properties for sale are currently let. My guess is that he wants to beat the rush (although I think the horse may very well have bolted now as the market in Emerson's isn't exactly buoyant). As you say, psychology plays a big part in the markets and I'd be wary of offloading so many similar properties in such a close proximity at once if I were him, but then he's considerably wealthier than I am so what would I know?

Share this post


Link to post
Share on other sites
Unless he's highly geared he's probably better holding onto his properties.

I'm holding onto my BTL flat - if I sold it I could lose my money in the stockmarket, in commodities, in gold, or if inflation picks up, in cash!

:huh:

Maybe he thinks selling up and investing in, say, gold is the lesser evil - who knows? I just know that if it were me I'd wish I'd shifted them 9 months ago and got into something else.

Share this post


Link to post
Share on other sites
check oput what he paid and then you'll have an idea of his finances.It would be interesting to hear.Have you thought of suggesting to him that he reduce your rent and then you'll stay wiht a months notice.This is soemthing other HPCers have mentioned doing?

Let us know the scores on what he paid and we'll fill in the blansk

Having done a little digging around, and then done some back-of-a-napkin calculations, I think he'll be luck to clear £12k profit per property which makes me think even more that he's bailing out while the going is still good enough. I think it would only take a dip of about 10-12% for him to find himself in a negative equity situation and having to offload urgently - that might explain why he's dropping his asking prices already.

Interesting times ahead.

Share this post


Link to post
Share on other sites
Maybe he thinks selling up and investing in, say, gold is the lesser evil - who knows? I just know that if it were me I'd wish I'd shifted them 9 months ago and got into something else.

Don't forget the CGT situation has shifted radically, if he's only held them for 4 years or so.

Share this post


Link to post
Share on other sites
Maybe he thinks selling up and investing in, say, gold is the lesser evil - who knows? I just know that if it were me I'd wish I'd shifted them 9 months ago and got into something else.

In a slow market and if not reduced significantly the properties could be on the market for years, we are entering unchartered territory and don't know how bad things will get and low prices will go, we have the CREDIT CRUNCH on now and we are going to get a run of job losses as companies can't get cheap loans, nor loans full stop to keep their business running. With stocks, Gold etc you can get out in a couple of seconds, property it could take years .

Share this post


Link to post
Share on other sites
or at least thinks he is.If he goes into negative equity he could find them coming after his main assets.

looked at the map and he has all the hallmarks of a classic 'recent' BTLer ie buying all in the same neck of the woods.The shrewder ones who got in when the return on capital was 10%+ would have spread themselves a little more widely.I must say if he's carrying debts then kicking out the tenants is a bad idea.

Have you considered offering to stay for a lower rent?

Sorry, forgot to answer that question earlier. We've not had to offer to stay for a lower rent, our landlord has made the same offer to all of his tenants - month-to-month contracts at 50% rent if he's not sold the house. It doesn't provide the family and I with much security but I guess house sales rarely go from viewing to completion in less than 6 weeks and given that we've had no viewings yet, I suppose we can bank on being able to stay until mid-May at least.

Edited by Armitage Shanks

Share this post


Link to post
Share on other sites
Sorry, forgot to answer that question earlier. We've not had to offer to stay for a lower rent, our landlord has made the same offer to all of his tenants - month-to-month contracts at 50% rent if he's not sold the house. It doesn't provide the family and I with much security but I guess house sales rarely go from viewing to completion in less than 6 weeks and given that we've had no viewings yet, I suppose we can bank on being able to stay until mid-May at least.

Even if he does sell, the average completion time is around 8 weeks so you've got your two months notice anyway.

Unless he finds a cash buyer which would be extremely lucky on his part.

Read the '10% deposits now the norm' thread in the anecdotals and you'll see that lenders are getting really, really picky and surveyors are downvaluing.

He'll be lucky to break even on these properties - if I were in his shoes I'd be cacking myself.

Top of the market was second half of last year!

BTW - Greetings from Weston-super-Mare.

Edited by Scott

Share this post


Link to post
Share on other sites
he has 15 properties, all 2 or 3-beds and all in the same corner of the estate, going on the market at once.

:lol: seems like he's like he's on course to make his own self made crash .

Stick with it Armitage paying half rent is at least some bonus for you .

If your wanting to stay there for as long as you can , you could always try to put off any prospective buyers that come round , i'd be polite BUT make the place untidy , beds not made , clothes hanging off radiators , maybe a smell coming from some where . Maybe don't even flush the Armitage Shanks for a few hours , and leave something floating in it ;) that should put most wanabee buyers off .

Edited by grey shark

Share this post


Link to post
Share on other sites
Even if he does sell, the average completion time is around 8 weeks so you've got your two months notice anyway.

Unless he finds a cash buyer which would be extremely lucky on his part.

Read the '10% deposits now the norm' thread in the anecdotals and you'll see that lenders are getting really, really picky and surveyors are downvaluing.

He'll be lucky to break even on these properties - if I were in his shoes I'd be cacking myself.

Top of the market was second half of last year!

BTW - Greetings from Weston-super-Mare.

The 90% LTV discussion is quite interesting and it certainly restricts the number of prospective buyers out there. What are the top end salary multipliers looking like these days? Back when I bought my last house around 2001, 3.5 x first salary + 1 x second salary was the norm so I presume that if the LTV percentages are tumbling as the lenders become more picky, the salary multipliers are too?

My landlord's average list price is about £200k so, based on a 90% LTV and a salary multiplier of, say, 4.5 x first salary + 1.5 x second salary, and DINKY couple with a £20k deposit would have to be earning £33k and £21k respectively - not megabucks, granted, but comfortably above average and it rules out yet more prospective buyers.

Oh, and greetings to you in W-S-M. How's the mud?

Share this post


Link to post
Share on other sites
:lol: seems like he's like he's on course to make his own self made crash .

Stick with it Armitage paying half rent is at least some bonus for you .

If your wanting to stay there for as long as you can , you could always try to put off any prospective buyers that come round , i'd be polite BUT make the place untidy , beds not made , clothes hanging off radiators , maybe a smell coming from some where . Maybe don't even flush the Armitage Shanks for a few hours , and leave something floating in it ;) that should put most wanabee buyers off .

It will certainly be interesting to see what happens to his asking prices as time wears on - although I'm too much of a softy to be doing anything to put off prospective buyers. And besides, if I didn't make the bed, the house sale would be the least of my worries - the missus would have me strung up!

In truth, I guess I am just trying to be very pragmatic about the whole thing - the situation I find myself in is one that I knew full well was possible when I decided not to get back on the ladder after my travels. While I find the whole BTL thing a bit of a moral minefield, I can appreciate that it is my landlord's livelihood and there are far more immoral ways to try to make money in my opinion.

We are just going to sit tight for now and watch with interest. :)

Share this post


Link to post
Share on other sites
have to agree thats great news.It may seem a little weird but he wont be able to sell them.You could be there for a year at half rent................ ;);)

have you checked the prices for the area on nethosueoprices etc

You've done well here,trust me,nothings gonna shift for months if theyre not priced to seell.

Are they so priced?

The list prices aren't particularly cut-throat at the moment.

Take this house, for example. It is one of my landlord's and is on at £217,950.

This house, for sale privately on an adjoining road, is an identical build and is on for 'Offers in Excess of £215,000'.

I've a feeling that in pricing terms he might be caught between the devil and the deep blue sea. He can't afford to drop the prices too much as he'll end up making a loss on them but, at the same time, he can't afford not to drop them because, if he hasn't shifted them and the prices creep down low enough, he may find himself in negative equity and without enough rental income to cover his mortgage repayments.

On the face of it, a £3M portfolio of property sounds like a very nice thing to have but I can't help feeling, right now, that I am quite content in my debt-free bubble, waiting to see what happens to the world's economies over the next few years.

Share this post


Link to post
Share on other sites
The 90% LTV discussion is quite interesting and it certainly restricts the number of prospective buyers out there. What are the top end salary multipliers looking like these days? Back when I bought my last house around 2001, 3.5 x first salary + 1 x second salary was the norm so I presume that if the LTV percentages are tumbling as the lenders become more picky, the salary multipliers are too?

My landlord's average list price is about £200k so, based on a 90% LTV and a salary multiplier of, say, 4.5 x first salary + 1.5 x second salary, and DINKY couple with a £20k deposit would have to be earning £33k and £21k respectively - not megabucks, granted, but comfortably above average and it rules out yet more prospective buyers.

Oh, and greetings to you in W-S-M. How's the mud?

Yep, the mud is muddy as always.

When I bought my first house in 1995 (blimey that seems like ages ago now) my financial adviser at the time told me not to go above 3.5x salary and I've always held to that principle.

I've witnessed first hand what happens in a recession/house price crash. My brother and his wife lost their property when their mortgage payments pretty much doubled in the early 90's. My step-dad ran his own business that was doing well until the recession in the mid 90's meant he and my Mum were turfed out of their lovely house as he kept using the house to get more finances thinking the recession would finish sometime soon.

And like you, the wife would nag me for not making the bed too.

I've every confidence you'll be in the property for a while yet ;-)

I'd be cacking myself if I only had one BTL with just 12k equity in it. That 12k equity will soon disappear only to be replaced with neg equity and then a property that ain't gonna sell cos he's chasing the market down.

There's every possibility that you'll be turfed out in 18 months as the place (along with all his others!) is repossessed! But again you'll get notice of this.

Good luck, I hope it works out for you. And if you have to get another place, all the best getting a decent landlord, they're hard to find.

Regards

Scott

Share this post


Link to post
Share on other sites

I'd be cacking myself if I only had one BTL with just 12k equity in it. That 12k equity will soon disappear only to be replaced with neg equity and then a property that ain't gonna sell cos he's chasing the market down.

Regards

Scott

So this bloke has 15 properties, with about 12k equity in each? His average asking price is 200k so he's got a 6% buffer to play with when it comes to negotiating sale prices. I'm sure most sales are completing for less than asking so he's potentially going to make no capital gain at all. Really worth the effort ? I think not.

Share this post


Link to post
Share on other sites
: Maybe don't even flush the Armitage Shanks for a few hours , and leave something floating in it ;) that should put most wanabee buyers off .

Sheeeeesh that is foul (and would do the trick). Where on earth do you get ideas like that? Is it in some Urban Guerrilla Warfare manual?? :ph34r:

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 293 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.