Tuesday, September 5, 2006

Rosie Millard extols the virtues of BTL

Happy birthday, buy-to-let

The effect on the nation of the buy-to-let craze has been astonishing. Property has become regarded as a natural alternative to the classic pension. “There is now a lack of trust in the financial sector,” says Justin Urquhart Stewart, an investment specialist, “and people have looked round for something more certain. They want something they can touch, and think they understand. Property fits the bill." Analysts have predicted the private rental sector will expand from its current level to answer for 15% of all housing stock over the next 10 years. Will the small-time buy-to-let landlord be part of this growth? It’s hard to see why not. Apart from anything else, it’s the only investment that you can go and walk around in. The physical feelgood factor is probably the most important quality in buy-to-let investing.

Posted by little professor @ 01:12 AM (555 views)
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8 thoughts on “Rosie Millard extols the virtues of BTL

  • little professor says:

    Note the investment specialist’s words: people “want something they can touch, and *THINK* they understand” [my emphasis].

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  • Why does this articel not mention the following?
    1. Buy to let has to be managed. Either at cost or with personal effort.
    2. There is the potential for making losses, voids repairs, excess interest .
    3. Interest rates are rising
    4. Current Yields are low. Prices are above the median trend.
    5. It is an illiquid investment

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  • 6. Rosie Millard is a BTL invester herself

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  • Those Banks have been very, very clever and have moved the majority of investment risk from themselves to the Amateur Lanlord. The Amateur Landlord borrows a large sum and pays interest; so Banks sell more mortgages then they otherwise would have done. The Amateur Landlord takes all the risks and foots the maintenance bills – the Banks have no risk to face. If property prices crash and the Amateur Landlord can not sell, the Banks can repossess in order to recover some of their losses. From the Banks point of view, it is a dream scheme.

    Sadly the mentality of the stock trading floor now stalks the housing market of the UK. Is this a good thing?

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  • talking rot. In a bank there are staff responsible for “selling products”. They are bonused on how much they sell. They do not care is the debts go bad because by the time this happens they have banked their cash and moved on. Therefore whatever the long term effect they will sell.
    I believe if in fact a crash does come it would have a serious destabilishing effect on the banks as there capital ratios would be eroded. Currently we are tracking around 30% above the MV trend for properties. If there is a short term reversion to trend and repossessions rise the banks exposure could be significant.

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  • bald man,

    Don’t the banks repackage the debt and sell it to hedge funds?

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  • No doubt Millard is struggling to sell off her portfolio of BTL. I wonder how much the “hassle” factor will cause people to tire of BTL. I know two people this year who have got out of BTL purely because it’s more hassle than what it is worth.

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  • The very fact that it has been such an astonishing ‘craze’ is evidence enough for me as to how it will end.

    New BTL investers are either very rich, or very stupid.

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