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Sympathy for the BTL devil?

Patrick Collinson lets rip. Again.

Today we carry more stories of buy-to-let disasters. We feature Geoff Morris, whose £3m portfolio has turned to dust, and Chris Miller, who is £3.5m in debt to the buy-to-let lenders. Do I feel any sympathy? No, not a drop. But it's crucial that we tell the story of the meltdown of the buy-to-let market....

We can blame lots of people. A Labour government should have nipped the buy-to-let explosion through tax measures, but were mesmerised by the fake prosperity of Britain's property casino. That lenders behaved irresponsibly is now beyond doubt. But at its core was simple human greed that is now rapidly turning into fear.

http://www.guardian.co.uk/money/2008/mar/2...gtolet.property

Negative Equity horror story - sad, but it's the reality we're now facing...

http://www.guardian.co.uk/money/2008/mar/2...enews.mortgages

And possibly the best:

Buy-to-let investors who fear they may be left homeless

http://www.guardian.co.uk/money/2008/mar/2...investmentfunds

"When the flats are sold at auction, they are unlikely to fetch much more than £3m, leaving me with debts of about £3.5m. The others who bought similar portfolios are in the same position.

" I was stupid to do this. The valuations were unrealistic. My only chance is to sue the valuers - I am exploring that via a class action."

Sue the valuers! Love it! :lol:

Lap it up, folks...

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Sympathy for the BTL devil?

Patrick Collinson lets rip. Again.

http://www.guardian.co.uk/money/2008/mar/2...gtolet.property

Negative Equity horror story - sad, but it's the reality we're now facing...

http://www.guardian.co.uk/money/2008/mar/2...enews.mortgages

And possibly the best:

Buy-to-let investors who fear they may be left homeless

http://www.guardian.co.uk/money/2008/mar/2...investmentfunds

Altough I ahve little sympathy for investors who get it wrong I do believe that people who give property investment advice shoudl be regulated like allother investment advisors. I do not expect it would do little good but it would make them think twice.

Sue the valuers! Love it! :lol:

Lap it up, folks...

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Posted wrongly. Try again

Altough I hae little sympathy for investors who get it wrong I do believe that people who give property investment advice should be regulated like allother investment advisors. What is the differenec? I do not expect it would do little good in protecting investors at least but it would make them think twice . (Krusty beware)

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Remember all those dumb bulls that used to post on here about how negative equity doesn't really matter unless you have to sell?

They didn't want to listen to me when I said that people would get stuck on high SVR after their discount came to an end.

I feel vindicated big time.

Yes, the feeling of "I told you so" and the smugness is increasing by the day. I bored everyone with my predictions of house price woes for ages, now I`m boring them by shouting "I told you this would happen".

Nice feeling though.

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Lets sue somebody.Anybody. I WANT MY MONEY BACK!

More like can we go back in time , say 5 years and start again , and pretend this housing mess never happend :rolleyes: .

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Geoff Morris, 61, who lives in St Neots, Cambridgeshire, had had enough of stockmarket speculation by 2003.

"I decided to try property. I went to a free workshop, was very impressed, and signed up for the full course. I aimed to get as many properties as I could, as quickly as possible"

"I admit I threw all caution to the wind. I assumed others would do the due diligence for me - after all I was paying," he says. "I put deposits down on properties still to be built in places like Manchester, Middlesbrough and Leeds, even though I had never been to any of them. And I bought into Florida - again, totally sight unseen." Then he started to purchase the flats.

"All this was to be my pension. Everyone selling property told me I could not rely on the government or insurance companies. But this was the most expensive mistake of my life.

I had to put money down on these properties as they were not on a gifted deposit basis. "I managed to get the cash using a mix of zero-interest credit cards, personal loans, and when that ran out, remortgaging my house. Now I realise I substantially overpaid."

Morris is today living on £157 a week in benefits, owes £100,000 on credit cards and personal loans, is in £200,000 negative equity, and Northern Rock has a suspended repossession order on his home for the £200,000 he owes it.

"I never made the money I was promised. The rents never matched the interest payments. Buy-to-let was a fantasy for me because I never checked anything. "I was so enthusiastic I just went ahead. Some of my properties were never built even though I had put down deposits. Others have been repossessed. I now have nothing."

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Stop it please .. no more .. my ribs are aching from all this laughing.

The thing I find truly scary is the middle aged professionals who believed what developers / estate agents and valuers told them -- f***wits are getting what they truly deserve - at least they have the grace to admit it was their own stupidity and greed that got them into it.

And who will pick up the final bill for the fiasco ? - you and me and the great british tax payer, savers too.

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The crux of the problem is that they owe nearly £170,000 to Northern Rock
...live in a three-bedroom semi near Wellingborough, Northamptonshire, which they bought for £151,500 last August
They also have a £15,000 secured loan on the house

So they have borrowed £35000 more than they paid for the house. The article doesn't comment on this, or give any indication what they spent it on.

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Just months ago, Miller and Morris believed they had buy-to-let portfolios valued in millions - Miller's came with a £7.5m tag. Morris had contracted to buy flats developers valued at £3m.

Now Miller owes a variety of lenders some £3.5m. Miller accepts he has no excuses. "I was a director of a company selling new-build flats to investors that we found through newspaper adverts.

"Between May 2006 and November 2006, I believed what we told them, and I bought 31 new two-bedroom flats, which, I was told, were worth £7.5m - 10 in Cardiff, eight in Manchester, six in Burslem, Staffordshire with the other seven spread around England."

Miller, 52, a qualified solicitor who specialised in property work, lives in Bedford. He says: "I bought into this as everyone else was doing it, including the other directors. Even as a director of a firm selling flats, I could not see the game being played. And if I could not see it, then how could you expect the investors we attracted in with our marketing, to understand what was going on?"

He now alleges the expected rents - and hence the valuations based on them - were grossly over-optimistic. Valuers told him to expect monthly rents as high as £855 for a one-bed flat, when, in reality, they never got more than £400-£500.

A valuation survey for a one bedroom flat in Cardiff in August 2006 showed a £209,800 price tag. Yet the valuer said that similar flats in the same block were selling at £177,000.

"The gap of around 15% was a 'gifted deposit'. The value was pushed up artificially so I could get an 85% mortgage on the £209,800. The reality was that I got 100% of what I actually spent - around £177,000. The gifted deposit scheme meant I did not need to put down a penny of my own money."

The valuer quoted an expected £855 a month rental income on the Cardiff flat if "let to a corporate client", less to an individual. The £855 was almost exactly the monthly mortgage interest on the buy-to-let loan.

Agents in Cardiff now cite rents in a similar flat in the same block at £475 a month - little more than half Miller's promised income.

Miller also used gifted deposits on the other 30 properties, almost all with loans from buy-to-let specialist GMAC.

"In all, I owed GMAC £6.4m. My monthly interest was £29,252 but all I ever cleared a month after costs was around £15,000. What we had expected was that interest would be covered by the rent - while the capital values would produce profits when we sold."

GMAC passed most of the loans on to others including offshoots of Bradford & Bingley and Britannia.

The monthly loss from the low rents was unsustainable. Now two properties have been sold; 28 repossessed; and the other flat is in the repossession process. "When the flats are sold at auction, they are unlikely to fetch much more than £3m, leaving me with debts of about £3.5m. The others who bought similar portfolios are in the same position.

" I was stupid to do this. The valuations were unrealistic. My only chance is to sue the valuers - I am exploring that via a class action.

"The lenders could make me bankrupt but that would get them nothing. Their only hope is, if I pursue a successful legal case."

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It looks bearish reading it on the interweb. But the print version of today's Guardian Money Section is awesome.

5 whole pages out of 10 (including the big headline on the front) on housing/borrowing woes. All with a running banner of Credit Crunch: the fall-out

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Presumably this is a prime example of the culture of innovation and risk-taking that Nu Lab seems to want to make the basis of the UK economy. Essentially we have taken huge gambles and found innovative ways to make ourselves bankrupt.

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Guest pioneer31

Anyone care to buy some paintings? I want £100,000 for them but in 5 years time you'll be able to sell them for 5 times that amount.

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Valuers told him to expect monthly rents as high as £855 for a one-bed flat, when, in reality, they never got more than £400-£500.

The valuer quoted an expected £855 a month rental income on the Cardiff flat if "let to a corporate client", less to an individual. The £855 was almost exactly the monthly mortgage interest on the buy-to-let loan.

Staggering.

Exactly how difficult is it to check what kind of rents a flat will pull in? A few searches on EA sites? It's so simple a chimp could do it.

And to be quoted a rental amount that virtually matches the amount required to pay the mortgage off?? Alarm bells should have rung. What a coincidence the amounts match, and it's only achievable *if* a corporate client is found. Wouldn't any sane person make sure there was a good safety margin?

It's understandable people jumping on an alternative to dodgy pensions, but this is just reckless stupidity.

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Guest happy?

Many moons ago the once disrespectable New Musical Express carried its own cynics' definitions:

"Star" was one who believed his own publicity. In the world of BTL "Fool" would as easily fit the description.

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Miller, 52, a qualified solicitor who specialised in property work, lives in Bedford. He says: "I bought into this as everyone else was doing it, including the other directors. Even as a director of a firm selling flats, I could not see the game being played. And if I could not see it, then how could you expect the investors we attracted in with our marketing, to understand what was going on?"

" I bought into this as everyone else was doing it " :lol: classic herd mentality , like a herd of buffalo we all bought into it and charged straight for the cliff edge .................

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Make it a condition that all bankrupt BTLers wear a large yellow BTL patch on their backs so that the rest of society can see what a parasite looks like. Let them all burn.

How is it possible for Miller to buy 31 flats if there is a property shortage ?

Edited by Daft Boy

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Many of these BTL'ers were around in the last crash, where thousands lost everything. I felt desperately sorry for many of those who lost their homes in the last crash. However, this time round they should have known better. Therefore I have no sympathy whatsoever for them!!

And as for the couple who re-mortgaged & got an additional loan - what for? to live the good life I expect. They deserve to lose it all.

And as for a group of BLT'ers trying to sue someone.....what a joke. They'll probably apply for legal aid!!

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Morris is today living on £157 a week in benefits, owes £100,000 on credit cards and personal loans, is in £200,000 negative equity, and Northern Rock has a suspended repossession order on his home for the £200,000 he owes it.

...why the "suspended repossession" ....is this a sign of the times from the new owners Gordo, his crew and we as tax payers...?.....are the government embarrassed about repossessing....?..... <_<

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quit stocks in 2003 [ok 3 year bear market]

tried property in 2003 onwards

My god, this was the start of the parbolic upleg??? Very bad luck to lose on the biggest bull runs in property in modern history....

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  • 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%



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