yokel Posted June 2, 2008 Share Posted June 2, 2008 Just finished 60 - 65% gearing Houses better than flats. He's OK Quote Link to comment Share on other sites More sharing options...
DotBomb Posted June 2, 2008 Share Posted June 2, 2008 Just finished60 - 65% gearing Houses better than flats. He's OK Too early to tell isnt it? 50% fall would wipe him out wouldnt it? Quote Link to comment Share on other sites More sharing options...
Philgo Posted June 2, 2008 Share Posted June 2, 2008 He can't afford £175.00 to fix my boiler, so he must be strapped. Quote Link to comment Share on other sites More sharing options...
Scunnered Posted June 2, 2008 Share Posted June 2, 2008 (edited) Edited June 2, 2008 by Scunnered Quote Link to comment Share on other sites More sharing options...
Radge Posted June 2, 2008 Share Posted June 2, 2008 (edited) Even a 30% fall should screw him if he needs to remortgage any of his properties. Unless he's on long term fixed rates, with BTL mortgages falling off the books at a rate of knots he may be screwed by SVRs quicker than he thinks. Edited June 2, 2008 by Radge Quote Link to comment Share on other sites More sharing options...
ziknik Posted June 2, 2008 Share Posted June 2, 2008 What programme was it? Is there a listen again or internet link? Quote Link to comment Share on other sites More sharing options...
yokel Posted June 2, 2008 Author Share Posted June 2, 2008 He can't afford £175.00 to fix my boiler, so he must be strapped. He did give the impression of protesting too much. 5 live are having a running selection of emails from landlords and tenants - you could anonymously point out Mr Wilson's customer care record. Y Quote Link to comment Share on other sites More sharing options...
Telometer Posted June 2, 2008 Share Posted June 2, 2008 Too early to tell isnt it? 50% fall would wipe him out wouldnt it? No. Lets guess that 60-65% gearing (I doubt he's so uncertain of the numbers, FFS the difference is 7.5m on his borrowings - he's not that rich) actually means 68%. A 32% fall would wipe him out. And Paddles will point out that a 17.05% fall will result in margin calls... So a 22% fall would mean that he would have to contribute to the bank 5% of, say, 600 houses at 250k each = 7.5 million. He's shafted. If he really believes otherwise, then he's a fool. Quote Link to comment Share on other sites More sharing options...
yokel Posted June 2, 2008 Author Share Posted June 2, 2008 What programme was it? Is there a listen again or internet link? 5 live drive. Sorry can't find a listen again link, but I suppose they may put it on the website later. Quote Link to comment Share on other sites More sharing options...
Nicholas Cage Posted June 2, 2008 Share Posted June 2, 2008 No. Lets guess that 60-65% gearing (I doubt he's so uncertain of the numbers, FFS the difference is 7.5m on his borrowings - he's not that rich) actually means 68%. A 32% fall would wipe him out. And Paddles will point out that a 17.05% fall will result in margin calls... So a 22% fall would mean that he would have to contribute to the bank 5% of, say, 600 houses at 250k each = 7.5 million. He's shafted. If he really believes otherwise, then he's a fool. That's worrying because their business plan was to rent for the same price as a mortgage and costs, so a normal owner occupier would have the same problems. Quote Link to comment Share on other sites More sharing options...
harris Posted June 2, 2008 Share Posted June 2, 2008 No. Lets guess that 60-65% gearing (I doubt he's so uncertain of the numbers, FFS the difference is 7.5m on his borrowings - he's not that rich) actually means 68%. A 32% fall would wipe him out. And Paddles will point out that a 17.05% fall will result in margin calls... So a 22% fall would mean that he would have to contribute to the bank 5% of, say, 600 houses at 250k each = 7.5 million. He's shafted. If he really believes otherwise, then he's a fool. Sadly, he'll probably be OK as long as the rents keep coming in. If there is a big downturn there will be a lot of people going bust before him. Quote Link to comment Share on other sites More sharing options...
The Ayatollah Buggeri Posted June 2, 2008 Share Posted June 2, 2008 (edited) That's worrying because their business plan was to rent for the same price as a mortgage and costs, so a normal owner occupier would have the same problems. The difference is that a normal OO has another source of income, not dependent on the property market, with which to maintain his or her mortgage. In the Wilsons' case, they are utterly reliant on rental income to maintain the mortgage payments on the BTLs. If, for whatever reason (i.e. void periods or a market ceiling on how much rent they can charge), they cannot raise enough money from rent to pay the mortgage, then they can't afford to keep owning that property. And if it's in negative equity, they can't cover their liabilities by selling it, either. So when their fixed-rate mortgages on each property expire and they're faced with much higher mortgage bills, then unless they can pass the entire increase onto their tenants, they're in trouble. An OO with only one property, however, can to a certain extent absorb higher mortgage costs by spending a higher proportion of his or her income on the mortgage. They'll only be able to do that up to a point, but they'll have more room for manouvre than a BTL-er with no other means, besides rental income, of covering the mortgage payments. Of course in the first stages of the HPC they can subsidise the mortgage payments on some properties with rental income from others, but unless there's an upturn in property prices very soon, they won't be able to do that for very long, I'd have thought. The Wilsons' other mistake was to concentrate all their properties in one town, thereby making them especially vulnerable to a localised downturn. Edited June 2, 2008 by The Ayatollah Bugheri Quote Link to comment Share on other sites More sharing options...
harris Posted June 2, 2008 Share Posted June 2, 2008 The Wilsons' other mistake was to concentrate all their properties in one town, thereby making them especially vulnerable to a localised downturn. Apart from their smugness, the main reason I dislike them is that they have had such an effect on the property market in one area. Having said that, it may be that they end up shafting themselves as it may turn out that they have single handedly increased the market values in the area and that the prices will end up collapsing if they are no longer able to buy. Quote Link to comment Share on other sites More sharing options...
Mike H Posted June 2, 2008 Share Posted June 2, 2008 I had no idea who these Wilson folk were until I found this:- http://www.guardian.co.uk/money/2006/dec/1...ess.houseprices Blimey! Quote Link to comment Share on other sites More sharing options...
Telometer Posted June 2, 2008 Share Posted June 2, 2008 That's worrying because their business plan was to rent for the same price as a mortgage and costs, so a normal owner occupier would have the same problems. No it's not worrying. An owner occupier won't suffer a margin call. He will sit in his property, with his negative equity, and the bank will expect him to pay it off before he retires. Just like he was going to anyway, whatever the market did. An OO will have lost some money, but prices will go back up again - they always do - over a long enough period. Wilson was in it for the capital gains - not the income. If rents drop so that they no longer cover the mortgage (and remember he has cornered the market in Ebbsfleet or somewhere equally nice) then what is he to do if he has negative equity. If he has a company, if I were him I'd be selling the houses I acquired first - so as to book the largest book profit - and then dividending up the income. If a sole trader, I'd be quivvering. Just remember that if house prices drop 40% from their peak (and they're probably 15% down at the moment I guess from reading another thread about Kent) his business is worth nothing. Nil. Diddly squat. I feel very sorry for him, it must be a real worry. Quote Link to comment Share on other sites More sharing options...
Nicholas Cage Posted June 2, 2008 Share Posted June 2, 2008 The difference is that a normal OO has another source of income, not dependent on the property market, with which to maintain his or her mortgage. In the Wilsons' case, they are utterly reliant on rental income to maintain the mortgage payments on the BTLs. That makes a lot of sense, although other BTL owners should have it worse if it's their income source not normal OOs though. Quote Link to comment Share on other sites More sharing options...
Its time to buy Posted June 2, 2008 Share Posted June 2, 2008 They have cornered the market - if it was a supermarket, the monopoly commision would have said something. Quote Link to comment Share on other sites More sharing options...
Flat Bear Posted June 2, 2008 Share Posted June 2, 2008 Sadly, he'll probably be OK as long as the rents keep coming in. If there is a big downturn there will be a lot of people going bust before him. as long as the rents keep coming in That is the key Will they get higher voids/non payment periods? Quote Link to comment Share on other sites More sharing options...
Slumpmonkey Returns Posted June 2, 2008 Share Posted June 2, 2008 I feel very sorry for him I don't - he's a scumbag boomer who has profited from pricing young people out of the market. The Wilson's are life's bottom-feeders! Quote Link to comment Share on other sites More sharing options...
The Ayatollah Buggeri Posted June 2, 2008 Share Posted June 2, 2008 Will they get higher voids/non payment periods? Unless average incomes go up in proportion to the monthly payments on BTL mortgages, he won't be able to raise rents in order to cover his increased outgoings, because his tenants simply won't have the money to pay them. If one of his tenants has a pay rise of 2.5% and his mortgage payments have gone up by 5%, then his tenant will look somewhere else before trying to absorb such a big rent rise. The fact that he owns so many properties in a single town might cushion him from the effects of that to a certain extent, but there'll only be so far he can go before people find other solutions (move back in with parents, seek employment elsewhere, commute), leaving him with a place he can't let at a rent which would cover his costs. Quote Link to comment Share on other sites More sharing options...
Te Mata Posted June 2, 2008 Share Posted June 2, 2008 60 - 65% gearing I think that a bit tough to believe to be frank. Perhaps at a 2007 Foxtons style valuation, but on realizable liquidation value today? Hmmmm Quote Link to comment Share on other sites More sharing options...
Telometer Posted June 2, 2008 Share Posted June 2, 2008 That makes a lot of sense, although other BTL owners should have it worse if it's their income source not normal OOs though. Other BTL owners will be able to cover shortfall from their own income from their proper job. But once the Wilsons need a further £1m a year... they'll have to go back to school mastering. Another thought on the margin calls - if all the mortgages are with the same bank then the bank will be the one with the problem even more than the Wilsons... 700 houses on the market in Uggsfleet all at once will stuff the local market. Quote Link to comment Share on other sites More sharing options...
scuuzeme Posted June 2, 2008 Share Posted June 2, 2008 Just remember that if house prices drop 40% from their peak (and they're probably 15% down at the moment I guess from reading another thread about Kent) his business is worth nothing. Nil. Diddly squat. I feel very sorry for him, it must be a real worry. Why do you feel sorry for him? He's had plenty of opportunity over the past couple of years to sell some of his property and realise some of the capital gains on the earlier purchases. If he persists in believing that it's a sound business practice to continue with his leveraged model in today's climate then I can't see any good reason to feel sorry for him if it turns into a disaster. Quote Link to comment Share on other sites More sharing options...
scuuzeme Posted June 2, 2008 Share Posted June 2, 2008 I think that a bit tough to believe to be frank. Perhaps at a 2007 Foxtons style valuation, but on realizable liquidation value today? Hmmmm Especially all in the one highly localised market. Quote Link to comment Share on other sites More sharing options...
mikeymadman Posted June 2, 2008 Share Posted June 2, 2008 (edited) This is if he's telling the truth - and he has a vested interest in making things seem just a little rosier than they might be! "> Hello. I need to remortgage 150 BTL properties. My business is wonderful. Can you help? < Are you the guy that was on the radio last night saying you were folked unless you could get this loan? > Errr, well, it's not quite like that, you see... < No." Also - he may not have 35-40% equity in the properties the first time he can't afford to buy the next one on the market and keep the local prices artificially high. Edited June 2, 2008 by mikeymadman Quote Link to comment Share on other sites More sharing options...
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