Tuesday, Sep 12, 2006

The inconvenient economics of amateur BTL

No Monkey Business: Buy-to-let: bets with the housekeeping

The buy-to-let fashion has not increased the 10% of the UK housing stock accounted for by the privately-rented sector only facilitated a shift in ownership to a lot of amateurs. They are running a business inside their household finances.
Its now a bad business to be in, with prospects of negative cash flows (including financing costs) and virtually no long-term real growth to compensate. They are also likely to be the wrong people to be running it. Negative cash flows will severely hurt many middle-income households and threaten important savings goals. There is widespread ignorance of the true cash-flow variance, the magnitude of realistic expected returns and proper bases of comparison with other assets. This leads to sub-optimal long as well as short-run decisions.

Posted by stuart fowler @ 10:15 PM (533 views)
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2 Comments

1. the bald man said...

All those considering BTL should read.

Wednesday, September 13, 2006 10:31AM Report Comment
 

2. Sam. said...

Interesting, it also means that the professional BTLers are getting out. Kind of suggests they know something the others dont.

Wednesday, September 13, 2006 05:07PM Report Comment
 

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