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http://www.telegraph.co.uk/money/main.jhtm...nbarratt126.xml

...Struggling housebuilder Barratt has held preliminary talks with major UK banks about creating joint ventures to own and rent out new homes it is struggling to sell.

Barratt is one of a number of housebuilders hoping to secure funding from banks such as HBOS.

The plan envisages a joint venture vehicle created between the housebuilder and a financial backer. The joint venture would then buy the houses at near cost price and rent them out to the private market, according to a report in today's property magazine Estates Gazette.

The plan is to potentially create property vehicles holding thousands of homes, large enough to float on the stockmarket as tax efficient real estate investment trusts....

Were Barratt to create a vehicle to go into this sort of market they would effectively be a massive private landlord with all the scale of economy this brings. They would also surely attract interest from REIT as well.

Is this the last nail in the coffin of the BTL fantasy - those without a large deposit must surely now regret ever having gone anywhere near a 'portfolio'.

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The govt should buy them and use them as military acommocation. Oh I forgot our govt is broke.

Well in 12 months hopefully the govt will be able to buy them for 12K each and there goes the housing problem... except that in 5 years if they are good the tenants will buy them at knock down prices because the govt in the country whoever and whatever colour just loves to give away its advantage.

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It's like that time I started my own railway, leading out from my back garden in the early 1800s. Who'd have thought the big boys would muscle in later?

That's funny! :D

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http://www.telegraph.co.uk/money/main.jhtm...nbarratt126.xml

...Struggling housebuilder Barratt has held preliminary talks with major UK banks about creating joint ventures to own and rent out new homes it is struggling to sell.

Barratt is one of a number of housebuilders hoping to secure funding from banks such as HBOS.

The plan envisages a joint venture vehicle created between the housebuilder and a financial backer. The joint venture would then buy the houses at near cost price and rent them out to the private market, according to a report in today's property magazine Estates Gazette.

The plan is to potentially create property vehicles holding thousands of homes, large enough to float on the stockmarket as tax efficient real estate investment trusts....

Were Barratt to create a vehicle to go into this sort of market they would effectively be a massive private landlord with all the scale of economy this brings. They would also surely attract interest from REIT as well.

Is this the last nail in the coffin of the BTL fantasy - those without a large deposit must surely now regret ever having gone anywhere near a 'portfolio'.

This sounds to me like a rerun of the Business Expansion Scheme (BES) of 1990s.

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This is absolutely MASSIVE news.

Imagine you're the proud owner of a "portfolio" of 2 bed flats in a new build block; you've already taken an absolute bath on the capital value and worse still, you're having to subsidise the mortgage payments because the rent falls short each month by 150 quid or so since you remortgaged, but somehow you're managing to keep your head above water until.........

The block recently completed next door by Barratts has just been taken over by one of these JVs and is undercutting the average local rent to fill their properties.

The only question left for you answer is can you afford the petrol to run the engine long enough for the fumes to fill your car?

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In order for it to work they have to find someone willing to invest lots of money (No selling one off at a time)

And then to ensure profits rents need to be undercut to ensure they're filled...

What if the investors were local authorities? Buying houses at cost and renting them out at council house rent levels.

That way there'd already be a system in place for managing the lets.

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I cant see this getting off the ground the gummint knows that the effective sale price per unit will be about 30-50% off high and this will kill private investment.

even at 50% off the yield will be what say 8%... its not enough seriously not enough for anyone with the ammount of cash they want more so they can charge a 1% fee before returns etc

mind you the pension funds may be buyers on long term capital appreciation sory :rolleyes:

This is a desperation move because they cannot sell at numbers to make a profit, ie they are insolvent.

put them up for auction

if we dont we will have zombie banks for the next 20 years!

mate the crash is truely here now.

Edited by kiwi

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I cant see this getting off the ground the gummint knows that the effective sale price per unit will be about 30-50% off high and this will kill private investment.

even at 50% off the yield will be what say 8%... its not enough seriously not enough for anyone with the ammount of cash they will need.......

mind you the pension funds may be buyers on long term capital appreciation sory :rolleyes:

I suppose it all depends on "what near cost price" is. Does anyone on here know what kind of margin the big building firms were turning on a 2 bedroom "executive apartment" last time they sold one?

It would be hilarious if, as the article suggests, these vehicles actually got launched as REITs, underwritten by HBOS. A pile of cr@p funded by a pile of cr@p. Yup, sign me up for loads of those shares....

Edit - Oh by the way, Kiwi; your Tri Nations is turning into a bit of bear market too, eh? Shocker today.

Edited by Paddles

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I cant see this getting off the ground the gummint knows that the effective sale price per unit will be about 30-50% off high and this will kill private investment.

even at 50% off the yield will be what say 8%... its not enough seriously not enough for anyone with the ammount of cash they want more so they can charge a 1% fee before returns etc

mind you the pension funds may be buyers on long term capital appreciation sory :rolleyes:

This is a desperation move because they cannot sell at numbers to make a profit, ie they are insolvent.

put them up for auction

if we dont we will have zombie banks for the next 20 years!

mate the crash is truely here now.

Fook!!!! :blink:

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This sounds to me like a rerun of the Business Expansion Scheme (BES) of 1990s.

from Housing Policy on the BES :

"Companies providing new or newly converted properties for renting were given a tax discount on investments

and freedom from capital gains tax. The scheme resulted in a new supply of about 80,000 rented homes.

It was calculated that making the same amount of money available to housing associations could have provided

80% of this output, while making them accessible to lower income tenants and capable of being retained in the

rented sector for the long term.

The BES Scheme was ended after 4 years in 1993."

They'll screw the BTLers' and they'll let somebody else take care of the long term.

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It's like that time I started my own railway, leading out from my back garden in the early 1800s. Who'd have thought the big boys would muscle in later?

(Joking apart, REITs are always in on the death of a bull market. There is a reason that at this culminative point in history there are no giant, national (never mind multinational) private landlords of note (I'm talking in the IBM, Walmart, BP league). The returns are ****.)

I think the reason is fairly obvious. The above industries are relatively stable, yes they have ups and downs, but there will always be revenue and profit assuming occasional tweaks to the business if things get a bit off course.

With housing there are different factors. Number 1 is that why would any large landlord of the sort suggested hang onto property in the latter stages of a bull market? Most would say, hang on we're getting 4% gross yield on this stuff and could get 6% in the bank. So most would have disposed of their portfolios.

Secondly the collapse phase, it is hardly likely that any large lumbering company could survive a sudden down turn as we are now seeing. You might set such a firm up, but if prices fall 30% you're toast. To be honest its just the same as for all other buy to let investors, many will also be toast. In the case of private individuals they can put on a brave face and tell their friends its not so bad, but public companies have to report - any such firm would now be down by 90%, have been split up and bits sold on.

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The govt should buy them and use them as military acommocation. Oh I forgot our govt is broke.

The new build estate where I live the MOD is moving army families in from the nearby Catterick base. I have also heard that another development, in Darlington, has sold 60 houses to the MOD for housing soldiers. I would be mightly displeased if I paid 340k for my house only to find the developer selling houses cheaply for MOD housing.

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Im sure I read on this site that there was only a 12% margin on new build properties so even at cost price this would not represent a significant discount.

That just doesn't sound right, does it? But then, if their biggest ticket cost item is the land and that's been part of the bubble, I suppose it does.

But... the land bought for property completed this year was purchased 10, 15 years ago, so strictly speaking, the "cost price" of these properties is low.

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  • 399 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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