Friday, Nov 10, 2006

BTL in trouble

FT.com: Buy-to-let beauties show their ugly side

Large numbers of buy-to-let investors are having their properties repossessed and sold off at auction as rising interest rates and over-development of new flats in some areas has meant that growing numbers of property investors are unable to meet interest repayments.

Posted by cash_buyer @ 01:23 PM (423 views)
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28 Comments

1. Rubberneck said...

Gosh, how sad. Appears the dog is now eating its own vomit.

Friday, November 10, 2006 02:15PM Report Comment
 

2. millard said...

Currently over half of repossessions are buy-to-let

should I feel a little gilty for smiling?

Friday, November 10, 2006 02:17PM Report Comment
 

3. Sam said...

wow, it's only been one day since the rate rise. amazing how this intrest rate thing works so well.

Friday, November 10, 2006 02:19PM Report Comment
 

4. paul said...

"burning the furniture" is an apt expression here I think.

Friday, November 10, 2006 02:32PM Report Comment
 

5. Crashman Returns said...

Easy come, easy go

Friday, November 10, 2006 02:45PM Report Comment
 

6. jimmytennor said...

This is the news we have all been waiting for, and predicting. As I posted yesterday, the media has reached a turning point, and I feel the next 12 months will prove what we (majority of) have been waxing lyrical about.

Hurrah!

Friday, November 10, 2006 02:48PM Report Comment
 

7. Anthony_l said...

So far so good. Only time will tell....

Friday, November 10, 2006 02:57PM Report Comment
 

8. magnifico said...

Yes, I think a cautious celebration is in order, maybe a shift towards better times for the Steady Eddies of this world.

Friday, November 10, 2006 03:23PM Report Comment
 

9. japanese uncle said...

Posted wrongly below, sorry. It is meant to be here.
-------------------------------------------------------------------------------


The large picture is:

Those BTL properties have been and will remain belonging really to banks and BSs all the time, where those stupid BTlers are supposed to pay extortionate fees in the form of mortgage repayment and repair/maintenance costs every month, in return for the illusionary satisfaction that they are owning properties, allowing them to think "Damn, I am too smart". The reality is they were induced into the death trap where just one careless silly decision will keep them under the slavery for the rest of their lives. Watch out

Friday, November 10, 2006 04:01PM Report Comment
 

10. Chillilizard said...

Even the good news on this site has a depressing side. :(

Friday, November 10, 2006 04:24PM Report Comment
 

11. Leedel20 said...

More rate rises please.

Friday, November 10, 2006 05:12PM Report Comment
 

12. C'mon Correction said...

This sort of news does point to real dangers ahead for house prices dropping. Also, there has been a definite shift in media sentiment.

However, I did smile when the BBC ran their report last night regarding the rate rise. They stated that one of the main causes of interest rate rise was because the economy could over-heat and was running too fast; they still get a little positive spin in there for Nu Labour!

The real reason growth is faster, is because debt is being consumed faster - most of the UK's GDP for the last 5+ years and growth in house values is almost entirely on the back of debt - that's it - no mircale economy I'm afraid. But the majority of the public don't understand that.

Friday, November 10, 2006 06:14PM Report Comment
 

13. monty said...

Not every BTLer is a jumped up yuppie buying five flats in Cardiff on a buy-four-get-one-free offer, thereby denying ya'll the "right" to own your own home - presumably this is where all this vitriol has its origins (that must be a Thatcher-"right", no?) BTL has been very aggressively marketed, not least of all as a second pension, and many of the "inexperienced investors" mentioned in the article are pensioners using what little savings they have left to lighten their load. Would your gloating sound as loud if these were pension plans going bust? Behind every repossession there lies miserable tale.

I trust you'll sleep well tonight. Shame on you.

Friday, November 10, 2006 06:44PM Report Comment
 

14. Onyerhike said...

It's dog eat dog out there, Monty !

Friday, November 10, 2006 06:53PM Report Comment
 

15. Sebastian said...

Yes monty, I am sure many of these BTL'ers have saved long and hard and through no fault of their own have lost their BTL portfolio.

For the millionth time, A HOME IS NOT A PENSION!

Shame on you! it would be nice if you sort would spare a thought for all those that have been deprived of owning a home due these "inexperienced investors". The only miserable tale behind these repossessions is the sad fact that some family / young couple could have actually made a home out these houses.

Friday, November 10, 2006 07:09PM Report Comment
 

16. magnifico said...

Monty, personally I've got a lot of sympathy if a weaker citizens category suffer because of being all but conned by unscrupolous wolves.
In the same way I cried when Pinocchio ( in the original book not Disney) was persuaded by Fox and Cat to bury all his possession in the hope of a money tree growing out of it.

Old and weak people have always been targeted by swindlers, BTL being not the only way in which this has happened.
Let's not forget that it was Society's greed that created the frenzy in the first place.

I shan't sleep well tonight, mainly because someone is dying of starvation, because his/her Country is indebted to its eyeballs to the land in which people feel that they never have enough.

Friday, November 10, 2006 07:17PM Report Comment
 

17. Zoltan said...

Monty,

I've been subsidizing my landlords "pension" for four years. When I had financial problems through ill health, it was a matter of "tough sh*t - pay the rent". I don't think you realise how many young people's very modest dreams of having a decent, settled place to live have been comprehensively messed up by btl, not to mention the raw deal most tenants get.

Now the boot's on the other foot, I'm going out to celebrate - so yeah, I may not be sleeping much tonight, but I won't be feeling any shame.

Zoltan

Friday, November 10, 2006 07:18PM Report Comment
 

18. talking rot said...

Monty

Don't worry old chap. I'll be sleeping very, very soundly tonight.

If it is tales of sorrow you want, for every 10 paper-money property millionnaires there are many more sad stories about couples who stand more chance of winning the lottery then owning their own home.

I'll make sure I snore extra loudly for all the second home owners and BTL-ers across the land.

Friday, November 10, 2006 11:21PM Report Comment
 

19. paul said...

I must confess I have little sympathy for second home owners.

Our predecessors thought the idea of owning more than one property as amoral. I kind of agree.

There are indeed people starving tonight in the UK. They are old or very young and living on or below the poverty line, with no savings or investments and no hope of a comfortable retirement.

I do think the social effects of economic policies are increasingly ignored in favour of appeasing a privileged minority of investors.

This is a small victory for them - lets hope they sleep a little better tonight.

Saturday, November 11, 2006 12:21AM Report Comment
 

20. inbreda said...

Monty - I slept very well last night. Thanks for your concern.

Possibly something to do with 10 pints of guinness.

Either way - I slept well, and that's what Monty was concerned about.

I wonder whether 10 pints of guinness has a quicker effect than a 0.25 rate rise. It does seem remarkable that only a day after a tiny rise so many people seem to have got into financial difficulty, defaulted on their mortgage, gone through repossession hearings, been repossessed and had their property auctioned all in time to be counted so that the FT can report on it.

Bit lame to blame the BoE for this one. A fool and his money...

Saturday, November 11, 2006 11:41AM Report Comment
 

21. Vietnam said...

a significant house price correction will not follow from intrest rate rises that arise from B of E wishing to moderate economic growth.

what do contributers think are the possible scenarios that will induce this.

Saturday, November 11, 2006 06:44PM Report Comment
 

22. tyrellcorporation said...

Brilliant headline on the front of the FT today - BTL in trouble... hussar!

This is the market I wan't above all others to be decimated! Throughly hacked off with amateur landlord parasites and orange middle aged women who think they are property developers - utter nonsense.

Saturday, November 11, 2006 07:56PM Report Comment
 

23. Bidin'matime said...

Funny, cos I slept well last night too. I've got some sympathy for those who have been persuaded to part with cash, but as others have said, they only did it to make money and they have to learn that life is full of risks. I took a risk in selling to rent - their luck is down, mine is up - my turn to sleep well...

Saturday, November 11, 2006 08:12PM Report Comment
 

24. indiablue19 said...

There have been many bad plans presented and made possible, if not extremely attractive, in the UK by government authorities and banks who should know better and who figure they can keep these schemes going long enough to collect some more votes and relieve the State of its responsibility for such things as pensions and reasonable incomes. In the course of this charade, they have made "investors" out of relatively astute people as well as nincompoops. As with all government quick-fix programmes, there is no guarantee how long they will stand behind their shabby creation. Now the results of these badly thought out financial escapades are coming home to roost.

I am not happy to see pensioners suffer, nor first time buyers, nor young people who took on more than they can handle. I am only happy to see frivolous economic nonsense exposed for what it is -- a cheap and shoddly substitute for any real concern for the welfare of the UK and any of its citizens.

Saturday, November 11, 2006 11:13PM Report Comment
 

25. geed said...

It must be noted that there will always be a requirement for rental properties. Council housing is a thing of past.

My father is a builder who has bought, sold and renovated property for over 40 years, he is by all accounts an "expert". He currenty has three rental properties in his local area that are all paid for, not a penny owed. The houses are fully renovated with double glazing, central heating, new kitchens and bathrooms. The homes want for nothing and offer quality, value for money living. His tenants are usually young families that are saving to buy a new home or young professionals not wanting to buy in a heated market.

These homes WILL provide my father with a steady income for his pension and a lump sum should he choose to sell one/all of the homes. He will probably buy more properties should the market turn as he has vowed not to participate in this current bubble.

This is what my father does, it is part of his business just as a car salesman deals in cars and a farmer rears livestock. It has been his life. So I agree with the above sentiments, young amateur BTlers and lax lending laws have contributed to the bubble, we must be careful not to take sweeping generisations in condemning every landlord. There are many hard working, conscientious landlords out there providing a much needed service.

And for the record, i can afford to buy a home at present but i choose to rent until, hopefully, value for money returns to the market.




Sunday, November 12, 2006 02:15AM Report Comment
 

26. harold said...

Tyrell, agree absolutely. The problem with rising asset prices is that any fool can make money and idiots are encouraged to consider themselves expert in a field they know little about. Many will get hammered - particularly those with large loans. There will be an IR level that flushes out the vulnerable BTL landlords - wonder if 5% is it? Maybe 5.5% is needed before BTLers try to sell on mass.

Geed, I'm sure no one begrudges your father his business - only wish there were more responsible landlords like him.

Sunday, November 12, 2006 09:52AM Report Comment
 

27. Nohpc said...

Harold you mean greedy landlords like him. Geed's dad is waiting for a market to crash so he can snap up many cheap properties with his positive equity. Who knows how many he will buy? 2, 3 maybe more. More properties into the hands of a well off property developer and out of the hands of a young family. You can't have it both ways. A BTL landlord is in it for one thing and one thing only and that is the money. To say he is some kind of honorary landlord is nonsense.

Monday, November 13, 2006 12:17AM Report Comment
 

28. geed said...

Nohpc...

Understand your frustrated with the bubble and so am I, but my father has developed property when the market is buoyant and when it is stagnant. He has owned rental properties before the phrase "BTL" was even coined. He is not waiting like a vulture! He currently believes the market is over-valued, many of us do on this site. Should the market turn he may purchase another property. It wont be greed, it will be a rational business decision based on simple economics. Thats what he does, its part of his business.

There are plenty of houses in the UK (dont believe the government spin), currently they are just too expensive for both you and my father. When/If the market bottoms out there will be property out there with your name on it, one for me and maybe one for my father.

Remember; not a penny owed, my father has not borrowed your hard earned savings from the bank to "speculate" in the housing market. This is his own money, money he has legitimatley earned through hard work.

You right, he is in it for the money but he conducts his business in good faith. He is not a charity and nor does he consider his tenants a charitable cause, they require a service and he provides that service to the best of his ability. Do you own a business or are you employed by a company? either way you too are in it for the money, you wouldnt get out of bed in the morning if there wasnt the prospect of a big fat pay cheque at the end of the month. Do you own any shares? Do you have savings and search for the best interest return? Yep, your in it for the money.

Nohpc its called business. If you work hard, do not overstretch yourself, live within your means and value all you have earned, you too may be able to invest in your future whether it be property or shares.

Harold; It appears you definitely understood my post, I wasn't ruffling feathers just giving a real example of a decent landlord (OK ,so I am biased he is my father after all!) providing a service. Mark my words he has been stung by tenants damaging property before they have departed and leaving with months of rent outstanding so it is not without risk. Bring on the correction....


Monday, November 13, 2006 11:33AM Report Comment
 

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